The company of the future - In a Circular economy

The concept of a circular economy has become quite the buzzword in global discussions around the future of sustainability, and rightly so. It is so elegant in its actual simplicity as it merely mimics what nature is already doing, and has been doing for many years. And although nature has developed itself into a complex network of interactions and cycles, the basic principle is still elegantly simple: NOTHING ever gets wasted. Nature consistently works to maintain these natural balances and to restore it where these balances have been affected. That is what makes nature incredibly resilient. We can certainly learn from it if we are to create truly sustainable societies.

The current economy, on the other hand, is largely linear, meaning virgin materials are taken from nature, used to make products, which are then used and eventually disposed of. Simply put, it means that a lot of what enters leaves again as disposable waste or emissions, which needs to be replaced again by raw materials. From a business process perspective it is highly inefficient. In contrast, a circular economy is an economic and industrial model that is restorative by intent and design. It replaces the concept of waste with the one of restoration and aims to decouple economic growth from the use of virgin resources. 

Most principles of a circular economy, such as recycling, re-usage, renewable energy, etc., are existing concepts that have now been brought together under the ambit of a circular economy, seen that they all have one thing in common: their lifecycles are circular and not linear.

But how would such a circular economy look like from a company perspective? To answer this, we have listed and briefly discussed some of the main components we see as the backbone of what will form a near circular company in the future.

Input-Output circularity:

Various materials enter operations and are called inputs. These can vary from equipment to consumables to raw materials that are used to make the final product. Seen that matter cannot be created or destroyed (but can be transformed), all inputs must also output, thus forming a balance. In a linear system, most non-product outputs are waste. This waste is in various forms such as mineral waste (waste rock, tailings, slag, etc.), non-mineral waste (steel, plastic, old equipment, paper, etc.), water, and waste energy (heat that is radiated, pressure that is released, etc.). Emissions are also outputs and will be discussed under zero-emissions circularity below. In an Input-Output circular system, these wastes are put back into the system, forming a cycle. Examples include re-usage, reduction and recycling of wastes, keeping equipment in use longer, and recovering energy losses (eg. co-gen plants).

Zero-emissions circularity:

As is described in the input-output circularity section above, emissions are part of the outputs that form some of the more pertinent direct pollution sources at various operations, hence it being singled out here. Having zero emissions circularity means simply to contain the emissions for reduction, re-usage, recovery, or treatment, thus forming the required cycles and becoming inputs somewhere else. Examples include simply lining of seepage sources (dams, storage facilities, etc.) to allow re-usage of the water, capturing emissions and treating the gas to form a co-product, using emissions to generate energy, and eliminating emissions (reduction) through process changes.

Energy circularity:

Without doubt, the future of energy generation lies in emission-free renewable energy. Emission-free renewable energy is energy generation and storage that does not emit greenhouse gasses directly and are sourced from non-finite sources. The best known renewable sources include wind, solar, water (hydro), geothermal, and waves. All these energy sources (sun, water, wind, geothermal) are non-finite, while other emission-free sources, such as nuclear, are finite and generate dangerous wastes. Most of the renewable energy generation is however variable and thus requires large scale storage solutions. Significant improvements are being made to scale efficiency of energy storage and bring down costs. Large scale battery storage installations are increasing, with some of the largest being the 100 MW (soon to be 150 MW) Hornsdale power reserve in South Australia. This battery storage has proven so effective that an expansion, slated for completion in 2020, will further increase the capacity by another 50%. Storage solutions are capable of stabilising the grid and make the transition to full renewable energy possible. Transportation is also moving towards fully electrical, with the current balance tipping in favour of battery electric vehicles. According to statista, there was 3 290 800 electric vehicles on the road by 2018, a number which has increased by nearly 70% between 2017 and 2018. It would thus not seem impossible anymore to picture a future where industry operates an electric fleet (either battery electric vehicle or fuel cell electric vehicle).

Restorative circularity:

Almost every operation has an actual footprint. Restorative circularity refers to the capability of the site to be restored to its original state, or near original state. In mining this concept is called closure and is well regulated. But in other industry, most operations have no set closure date (end of life is mostly when the market forces its closure, thus unscheduled). The concept of restorative circularity captures the need for every operation, no matter where or what industry, to be at least capable of being restored to its pre-construction state or near its pre-construction state (self-sustaining), even though there might not be a closure date. If full restoration is not possible, there is the offsetting option, where the site becomes the new site for another activity, meaning the site becomes virtually recyclable indefinitely, always being used and thus cutting the impact any new site would have caused if it was established on a virgin piece of land (greenfields). Typical full restoration completes a cycle from pre-construction to construction, operation and back to pre-construction. Restoration in nature is a core function that forms an ecosystem’s resilience.

Some indicators are available to measure circularity on a company level, such as WBCSD’s Circularity Transition Indicators (CTI), the Ellen MacArthur Foundation’s Circularity Indicators, and the Circular Economy Toolkit. Assessment of impacts on a more lifecycle basis (process oriented assessment) would greatly support the circularity performance of companies. These are called a Life Cycle Impact Assessment (LCIA) and various methodologies have been established for LCIA’s, of which the most comprehensive and widely adopted methodologies centre around the ReCiPe and IMPACT 2002+ models. The European union’s joint research center (JRC-IES) has created the International Reference Life Cycle Data System (ILCD) handbook, which, as quoted from the EU’s site, “provides a common basis for consistent, robust and quality-assured life cycle data and studies”. Also at the forefront of Life Cycle Thinking and specifically the LCIA is the United Nation’s Life Cycle Initiative, who has numerous publications available on LCIA characterisations (at midpoint and endpoint), characterisation factors, and guidelines on how to do LCIA.

For any further reading on a circular economy, please see the WBCSD’s and Ellen MacArthur Foundation’s work on a circular economy.