02 May 2019

Your 3,359 Word Guide to Mastering the Circular Economy and Waste Hierarchy in 2019

Your 3,359 Word Guide to Mastering the Circular Economy and Waste Hierarchy in 2019


Introduction

The circular economy is now commonly referred to as a mega-trend. Less trendy but also similar is the ‘waste hierarchy’. Recycling and sustainability are topics of increasing interest in business (and of course a social context). We will explain the competitive advantages of the circular economy and the waste hierarchy, give examples of these models and show how to apply them to your own work and business.


What benefit you will get from the post

By the end of this article you will understand what the circular economy and waste hierarchy are. This means knowing how the models work and why they are important. Above all, we will look at the similarities and differences between them and their strengths and weaknesses will be evaluated.

We will look at some businesses which use these processes and how to benefit from them yourself. This is interesting because whether it’s you personally or your organisation which is interested in sustainability, the economic and performance value which can be harnessed is vast.


Making a thesis

Understanding and applying the Circular Economy and Waste Hierarchy is applicable to many (if not all) industries. This then can lead to unlocking huge amounts of value for different types of organisations. These applications can largely be grouped into five areas:

Internal performance – the attitudes and processes in the ‘back office’ of a company

Service – how the organisation structures delivering its customer-facing value

Product – direct innovation and development of tangible offers for the market

Image – external communications and marketing applications such as brand image

External environment – collaboration or consideration of natural environment and partners


Context

Traditionally there has been a ‘linear’ model for the global economy, particularly following the industrial revolution. This is described as ‘take, make, consume, throw-away’ and has typically been dependant on vast quantities of cheaply available resources and energy. We should also consider ‘planned obsolescence’, where there is an intentional lifespan on products in order to encourage repeat purchases. As an outcome of this, more direction is being given by bodies such as the EU to limit the ineffective use of resources.

There is also growing social interest in the themes of sustainability and environmental consideration in business practice. Businesses which are applying ‘circularity’ or a consideration of waste management and recycling in their business operations are finding opportunity rather than pressure.


Definition of Circular Economy

The circular economy is a model of both production and consumption. It involves leasing, reusing, sharing, repairing and recycling existing materials and products in ways which extends their lifecycle for as long as possible.

Practically, the objective is to reduce waste to a minimum by finding ways to extract all possible value from resources. Products or components at the end of their life can be repurposed in another use, whether for an entirely new product or as part of a whole.


The typical model for the circular economy is as follows:

  • Raw Materials: Fresh materials such as wood and metals enter the economy, to be used in production and manufacturing processes. These materials then form the basis of products which can then begin a ‘circular’ lifespan.

  • Design Process: The first real step in the circular economy is through the initial design process itself. This means actively considering how products and materials can be implemented into their second life, right from the start, for further down the line. Business models, services and products all undergo planning and design, and so can have this circular perspective.

  • Production + Re manufacturing: Products at this point can be manufactured using a process which facilitates a circularity of the product at a later point. Products produced at this point may also be made using materials from a previous life cycle (recycled materials).

  • Distribution: once completed, products are distributed to points of retail and into the possession of customers. This is particularly where a company’s service or a marketing plan can involve emphasis on the circular economy.

  • Consumption, re-use, repair: Once in possession of an end-user or customer, a product is used or consumed. For some products, it may be possible to maximise their life cycle at this stage, or the product which is no longer usable can be discarded and moved onward.

  • Collection: This stage presents service opportunities as a business model, and typically means that a product avoids traditional disposal and the useful materials enter the next stage rather than go to waste e.g. landfill.

  • Recycling: Usable materials are extracted and collected, sometimes then combined with raw materials, completing the ‘circle’ of this model. Returning to the design stage, this can then consider the availability and feasibility of recycled materials to be implemented into the production and re manufacturing stage.

  • Residual Waste: This stage is the output of the circular economy, where materials which cannot be recycled can not continue in the model. Ideally, this amount is minimised and developments in material usage and recycling efficiency help to make this as less as possible.




Definition of the Waste Hierarchy

An EU Directive introduced the highly influential notion of ‘waste hierarchy’. This outlines an order in preference for the handling of waste management. As a goal this aims to minimize the amount of waste generated and to develop a better waste management process. This can be seen as a tool for planning in advance the way which resources will be used. It can also be used ‘in the moment’ for making decisions, ideally to identify ways in which further value can be taken from something before landfill.

Traditional waste management has used a commonly known approach consisting of the three R’s (Reduce, Reuse, Recycle). The EU has now introduced a more elaborate five-step waste management hierarchy, listing the actions in the order of priority, from most favourable to least favourable:

1. Prevention or minimisation in waste generation includes practices such as using less material in design and production, stimulating the longer use of products and using less hazardous substances. Ideally, the aim is to not create waste in the first place. Second to this is minimisation and creating the smallest amount of waste which can be achieved.

2. Reuse gives used products a second life before they become waste and includes practices such as cleaning, repairing or refurbishing products or their parts without other re-processing. This can be applied by considering whether something is still functional and might not need to be thrown away immediately.

3. Recycling involves any recovery operation where waste materials are reprocessed into new products or raw materials. It also includes composting and other reuse of biodegradable waste, such as food or garden waste.

4. Recovery produces energy and materials from waste and includes predominantly incineration of residual waste that cannot be otherwise recycled, anaerobic digestion, gasification and pyrolysis. In short, this is using the waste material as a fuel for creating electricity.

5. The final step is the disposal of residual waste through landfill and incineration without energy recovery. Obviously, this is the least effective approach and is the bottom of the process.






What are the Differences?

A clear way of understanding the differences between these two models is that the circular economy is a framework for business processes from start to finish in a continuous loop. It has an emphasis on planned circularity of products and maximising the value of materials at every stage. It is representative of a wider system, involving multiple stakeholders and organisations.

The waste hierarchy is a way of looking at waste from any given process and assigning a grade or preference for how it should be approached or dealt with; this is typically for one type of possible waste from one organisation (rather than a wider system).

For example, if a company uses a certain type of packaging, they would use the model working from the top and ideally aiming for ‘prevention’ of waste in the first place as a priority. If this is not possible, then continuing in levels of favourability, with regular disposal sitting at the bottom. After prevention comes minimisation, so the target could be set to use as close to the right amount of packaging as possible.

Next, could this packaging be ‘reused’? At the bottom then ‘disposal’ is the final resort and least favoured option. This is at the bottom as it means no additional value has been extracted for all involved – no financial savings and less environmental sustainability.

To apply this example to the circular economy, this would take the view of the packaging itself as a product – how could it be designed to be reusable? What materials could make it reusable? How could the customer reuse it? How recyclable would it then be, and how could it re-enter and continue looping in the model?



Summary of the Circular Economy

So why is this approach so valuable? While it does focus on reducing waste and recycling, the benefits of the circular economy (or sometimes referred to as the ‘cradle to cradle’ concept) are more varied. It looks to increase the productivity of resources that we consume. By adopting this more responsible and forward-thinking approach to material usage, the circular economy can in fact deliver a more competitive global economy, which creates enormous space to participate in extremely profitable domestic and global trade opportunities. The environmental impact of production and consumption is also reduced.

Barriers

It could however be said that the circular economy is more aspirational. It requires more time, effort, planning and, to a certain extent expertise, to bring the ‘closed loop’ model to life. It relies upon much more collaboration too. Whilst joined-up thinking should not be discouraged, it can be hard to focus an organisation on the ‘long game’ when more short-term pressures such as cash flow, customer services and logistics are of more immediate concern for many firms. Businesses can take a great financial risk by leading the way with a new concept and disruption to an already functioning process can be viewed as unnecessary.



Summary of the of Waste Hierarchy

The waste hierarchy has stood the test of time and this is probably because it is very easy to understand, even for people with less involvement in the energy or resources industry. In an industry with frequent volatility and opposing opinions it provides simple clarity as to what actions and behaviours should be prioritised; while limited and more appropriate for individual cases of dealing with wastage, this approach is easy to implement and is something that any individual or business can commit to.

Barriers

When considering how to get the most value from a sustainable approach, the waste hierarchy model might end up being quite limited after initial planning. That is because it tends to represent only one piece of the machine which leads to a successful business plan. By looking at how waste can be recycled or used for energy production, that means it can have a ‘second life’ without being entirely wasted. However, what would that process look like? Using a circular model, we can evaluate spaces for designing a product or system from the beginning to have an intentional and measurable path.




Opportunities and Statistics

So, what are the statistics which support the circular economy? What are the financial reasons for considering this shift in process? Here are some key points and statistics:

  • 1. EU companies could save €600 billion – which is equivalent to 8% of turnover annually- while also reducing total annual greenhouse gas emissions by up to 4% through waste prevention, eco design and re-use.

  • 2. Moving towards a more circular economy could reduce pressure on the environment, improve the security of the supply of raw materials, encourage innovation, boost economic growth and create 580,000 jobs alone in the EU.

  • 3. Improved quality of life for consumers due to better designed products with a longer lifespan, which would save them money in the long term.

  • 4. A growing number of influencers, celebrities and public figures have since lent their endorsement to the circular economy and its related principles. The list includes Brad Pitt and other actors such as Arnold Schwarzenegger and Meryl Streep.

  • 5. Geopolitical concerns are increasingly cautious of global instability provoked by commodity supply disruption. A circular economy could decouple economic growth from resource consumption, helping to stabilise some of these issues.

  • 6. Large corporations are piloting innovative business models based on leasing, product performance, remanufacture, and extended lifecycle design. Their efforts are likely to accelerate with the emergence of business-led platforms for collaboration, such as the Circular Economy 100.

  • 7. Although the circular economy also relies on the participation of SMEs, involvement from this sector remains limited. A survey of almost 300 small businesses across England, France and Belgium found close to 50% had not heard of the concept, leaving considerable opportunity for taking a strategic leading advantage.

  • 8. Some nations are already starting to implement sustainable policy – China has set up CACE, a government-backed association to encourage circular growth and Scotland has issued its ‘circular economy blueprint’.

  • 9. Sustainable business could generate 50,000 new jobs in the UK over the coming years and attract £10 billion of investment in new waste management infrastructure, boosting GDP by £3 billion.

  • 10. Effective waste management could add an additional £1.4billion in revenues for the UK economy if all potentially recyclable material was captured for recycling.

  • 11. Manufacturers are the most likely to see the benefits quickest given their dependent use of raw materials –it has been argued that a subset of the EU manufacturing sector could realise net materials cost savings worth up to $630 billion per annum by 2025.




Examples of business models

Next, we can evaluate some examples of businesses which are applying sustainability, considering both the waste hierarchy and the circular economy.


A recycling solution to beach plastic pollution: Van de Sant Innovations

January 13th 2019 was the moment of truth for Robert Milder. This Dutch founder and CEO of Van de Sant Innovations from Emmen entered the Dragons Den. This successful TV show on BBC Two has been a well-known program in England for years with an average of over 3 million viewers per episode.

Roberts pitch was explaining the need for durable but stylish furniture which also addresses the global issue of waste beach plastic. His plastic filled chairs were a great hit with the investors, who offered him his required funding. This shows a circular business model and a ‘re-use’ from the plastic waste of previous processes. Plastic recovered from beach pollution is cleaned and can be shredded to a fine level, providing the filling for ‘Scandinavian style’ furniture. This appeals to business owners as it can address the status and public image of being a participant in the circular economy.


Sustainability and electric vehicles: Connected Energy

Connected Energy produces commercial energy storage systems which use ‘second life’ electric vehicle batteries. This approach places the company in the ‘re-use’ section of the waste hierarchy, however, is a business model which embodies the circular economy, utilising surplus resources in a way which is valuable for car manufacturers, the environment and stationary energy projects which are interested in battery storage. The outputs of the process are also eventually recycled. This provides a crucial sustainable route for electric vehicle batteries, while also enables sustainability for both commercial users and public infrastructure projects.

Many countries are now introducing incentives and targets for higher numbers of electric vehicles on the road over the coming years. Connected Energy uses the batteries from electric vehicles which have finished their road-life and use these batteries in containers, to work as energy storage which can help optimise renewable energy installations or help keep the electricity grid balanced and operational.


A circular subscription service concept: VIGGA

VIGGA combines a fully-designed circular process with the higher stages of waste hierarchy e.g. prevention and minimisation. Through a circular subscription concept, VIGGA offers high-quality children’s clothes which have been produced ethically, at an attractive price. This model is possible as clothes are ‘hired out’ to subscribers.

For the monthly subscription fee, a customer gets 20 pieces of clothing in their child’s size. When the clothes become too small (which happens frequently for growing children!), they are replaced by new sets of clothes, one size bigger. Next, these clothes are delivered to another baby, resulting in a circular process. Furthermore, textile waste is reduced by 70-85%.




Approach and Suggested Reading: Natural Capitalism

It would be incomplete to discuss the circular economy and sustainable solutions for the world economy, without talking about the book ‘Natural Capitalism’. A lengthy and detailed exploration of this topic, it was originally published in 1999, and put forward four key points for achieving sustainability and a healthy circular economy globally:


Dramatically increase the productivity of natural resources

This represents a major business opportunity by adapting the wasteful and destructive flow of resources which commonly result in depletion and pollution. Through changes in both production, design and technology, future-facing companies are developing ways to make natural resources stretch five, ten, even 100 times further than they do today. These major resource savings often result in higher profits than small resource savings.

Shift to biologically inspired production models

Natural capitalism advises not only to reduce waste but to eliminate the very concept of waste. In a closed-loop production system which is modelled on copying nature’s designs and systems, every output is returned harmlessly to the ecosystem as a nutrient, like compost, or becomes an input for manufacturing other products. These systems can also be designed to replace the use of toxic materials, which can limit the system’s ability to reprocess materials.

Move to a solutions-based business model

Traditional business models for manufacturing relies on the sale of goods. In this new model, value is delivered as a flow of services—providing clean clothing, for example, rather than selling washing machines. This model creates a new perception of value, a move from the collecting and purchase of goods as a measure of value to one where it is measured by the satisfaction level of changing expectations for quality, usability, and performance. The new relationship works for the benefit of both providers and customers in ways that reward them for implementing the first two mentioned innovations of natural capitalism (continuous sustainability and maximising the use of resources).

Reinvest in natural capital

As a future goal, business must restore, sustain, and expand the planet’s ecosystems so that they can produce their resources even more abundantly. Pressures to do so are mounting as human populations and needs grow, the costs resulting from deteriorating ecosystems rise, and the environmental awareness of consumers increases. These pressures create business value, for example as customers may be willing to try a new product and pay a higher cost if it fits with their demand for sustainable products.



Conclusion

As there is more interest in how businesses can be more sustainable, there are emerging bodies with expertise on the topic which create new avenues for innovation and awareness of companies that have developed solutions targeting wasted resources and pollution.

Two groups which encourage a circular economy and effective consideration of the waste hierarchy are The Circular Economy 100 (CE100) and Circle Economy. Their websites are also full of information and helpful resources.

CE 100 was founded by Ellen MacArthur; the CE 100 is a very well-known organisation focussed on promoting the uptake of the circular economy in a strategic and collaborative way. Some of the largest organisations in the world such as Apple and Nike are active members.

Circle Economy is a Netherlands based non-profit organisation which also supports collaboration projects between its members and gives a platform for their voice through various forms of media and research.

We have reached the end of the guide. You likely now have a better understanding of the waste hierarchy and the circle economy, especially how they link to recycling and sustainability which can have a positive impact in multiple ways.

Please consider these models for your own life or organisation and if you would like any more information on the topics then you can contact Connected Energy at any time for guidance or support.



About us: Connected Energy’s British designed battery storage systems and energy optimisation expertise are rapidly changing the way industrial and commercial energy users can capitalise on load flexibility. Our mission is to catalyse smarter, sustainable approaches to energy use.