Circular Economy (and Global Material and Waste Flows), Part III

Where does everything go?

The last posting on the circular economy (CE) was back in August 2014 and discussed how to measure progress and the role of big data. The focus was on more sustainable behavior and how we might encourage consumers to consider sustainable products. In that context manufacturing needed to increase the yield (efficiency of conversion of materials in to products) in a number of processing operations by identifying “insights” into production that were overlooked due to complexity of the process, large numbers of variables, many differing process stages, etc. And the use of “big data” was one solution.

The circular economy idea, as introduced in part 1 of the posting on the subject  strives to convert our current “linear economy” (paraphrased as “take, make, dispose) where we convert resources into products, use them until they wear out, break or become out of style, and then discard them, to a circular economy. According to a recent EU report, a linear economy is one wherein systems retain the added value in products for as long as possible and eliminate waste. In addition, resources are kept within the economy when a product has reached the end of its life so that the product can be productively used again and again and hence create further value. (Source: “Towards a circular economy: A zero waste programme for Europe,” Communication from the Commission to the European Parliament, The Council, The European Economic and Social Committee and the Committee of the Regions, COM(2014) 398). 

If we think of our planet as a closed system (sort of like a space station floating in the ether) then nothing is really created beyond what we have already and nothing really disappears as there is “no where for it to go!” So if we look at the extraction of minerals and other raw materials, their conversion into products and use, and then their end of life (usually disposal), the “circularity” relates to the reuse of materials and resources so that we keep within the limits of their availability for all time. Once materials are extracted from the environment and subsequently converted into something our “system” (referred to below as the socioeconomic system (SES)) uses them or stores them and eventually outputs or disposes of them. In one sense circularity measures the degree to which once materials are used they find their way back into the system for productive use. This is complicated. Some materials, as in buildings, stay “in the system” for a long time before being expelled. Others, like cell phones, may be substantially shorter lived. Within the system we can recover and reuse, or extend the life of, products containing these materials and, hence, enhance circularity. Or we can expel them as waste.

The objective in this posting is to explore what our current state of circularity is with respect to materials.

First, it is beneficial to dig a bit deeper into what circularity is in terms of the circular economy. Perhaps the best information on what is, and is not, included in the circular economy, is from the Ellen MacArthur Foundation. They have a number of reports with some based on McKinsey and Company analysis done of the foundation — check their website for info. In one recent publication, A New Dynamic: Effective Business in a Circular Economy (Ellen MacArthur Foundation, 2013) they outline some 15 characteristics differentiating a linear from a circular economy. Some examples from this publication include:

• The linear economy externalizes costs in search of production cost reduction whereas the circular economy internalizes costs in search for quality service/performance and low risks.
• Linear point of sale ends responsibility while circular considers business responsibility extends beyond point of sale and includes rent/lease/recovery.
• Linear creates waste streams for municipalities and individuals/society to deal with and circular reduces waste streams and creates value streams instead.
• Linear encourages standardization to add to efficiency and ease of consumption while circular encourages standardization of components and protocols to encourage repair, recovery and reuse.
• In linear economy prices reflect only the private costs of production, distribution, sales, etc. while in circular prices reflect the full costs aided by reduction of externalized costs.
• Linear taxes labor which encourages labor productivity by substituting capital or energy while circular taxes waste, non-renewables, and unearned income.
• The linear economy views recycling as another flow of raw material and overlooks the lost embedded energy and quality.
• Linear economy transforms natural and social capital into financial capital using short term preferences with a preference to rapid, large flows while circular (re)builds capital (stocks) from which to derive more and better flows over the long term.

These, plus the rest of the 15 characteristics, define how the elements of the circular economy link back into the system. Recall the “butterfly” diagram from the earlier posting on the circular economy. It is a mirror image with the “biological materials” on the left side showing the return material stream in a biological system and the “technical materials” on the right side also showing the links back in the system. The diagram shows parts manufacturers, product manufacturers, service providers, consumer/users, collection and then energy recover and landfill. The links are designed to reduce the “leakage” (loss of materials, energy and labor — expelled from the system) to disposal and landfill buy re-introducing materials back into the system as appropriate. The ideal situation is when products are extended in their use by increasing lifetime, remanufacturing or refurbishing.

One big question is: what are the material flows and waste production and recycling — meaning “how circular is the global economy?”  It is important to determine the current state of circularity so that one can have a benchmark against which to track improvements or see the effect of individual or collective efforts.

Interestingly, this is the title of a paper published in the Journal of Industrial Ecology in March 2015 by Willi Haas and colleagues (full title: How Circular is the Global Economy?: An Assessment of Material Flows, Waste Production, and Recycling in the European Union and the World in 2005; DOI: 10.1111/jiec.12244). The paper points out some different strategies for advancing circularity. Loops can be closed through recycling and reuse first. Then one can include shifting from fossil to renewable energy energy sources and converting efficiency gains into reducing the overall level of resource consumption. Recycling is very advanced in some sectors, like metals, but energy requirements for recycling can be high and lower quality or contamination of recycled materials can lead to down-cycling or increased use of virgin material use or drive development of lower quality products.

But the main thrust of the paper is to lay out the flow of materials in the world with a view to determining current levels of “circularity.” A simple model of the economy-wide material flows (from resource inputs imports and extraction to outputs of wastes and emissions and exports) and the different flows and processes quantified in the study is shown in the figure below.  In the figure EoL waste = end-of-life waste; DPO = domestic processed output.

The figure outlines the material circulation within the socioeconomic system (SES). This is the system referred to above. It distinguished distinguishes three pathways of material flows of high relevance for the CE: energetic use; waste rock; and material use. They propose a set of key indicators to track material flow in this system:

a) Material size: PMs (gigatonnes [Gt] and tonnes per capita [t/cap])
b) Stock growth: Net addition to stocks as share of PMs (%)
c) Degree of circularity within the economy: recycling as share of PMs (%)
d) Biodegradable flows: biomass as share of PMs (%)
e) Throughput: DPO as share of PMs (%)

Here PMs are domestically processed materials as the sum of apparent domestic consumption of materials (DMCs); extraction plus imports minus exports and recycled materials.

Then, following this set of indicators, the authors prepared a Sankey diagram of material flows through the global (world) economy, below. Details of the data that make up the chart are in the paper. You may have to click on the figure to see all the detail.

The authors state that the degree of circularity of the global economy measured as the share of actually recycled materials in total processed materials is quite low – only 6%. Most of the  processed materials (66%) left the global economy as wastes and emissions and a large fraction (27%) were net additions to stocks of buildings, infrastructures, and other goods and products with long life spans. the material embodied in these products will enter the recycling stream only after significants periods of time. They note that materials used for energy generation dominate the inputs (44% of all processed materials). Although only 6% of all materials processed by the global economy are recycled and contribute to closing the loop, if all biomass is considered a circular flow regardless of production conditions, the degree of circularity increases to 37%.

Two important observations can be made. First, there is a tremendous “accumulation” of materials due to in-use stock (from buildings to automobiles to appliances.) This is of course increasing as affluence increases overall accompanied by increased consumption and pollution increase (remember the IPAT equation?!). Thus, the system is bulking up on materials. If we consider the  large amount of materials used for energy generation, closing the loop is not possible. That will keep the degree of circularity for those materials low.

Second, to induce real circularity, attention to reducing the barriers for recycling materials used as raw materials in other processes or applications is important. This will require all the technologies mentioned in prior postings,  eco-friendly design of products (including buildings and infrastructures), increasing product longevity, provides the same service with lower material requirement, and enabling re-manufacturing,  repair and resale, and designing in product upgrades, modularity and component reuse.  and, finally, also EOL
recycling.

Here’s where manufacturing comes in! The statement “reducing the barriers for recycling” includes manufacturing products to allow them to be disassembled, materials extracted in as clean a state as possible and reused. Design is of course important but it is the synergy between design and manufacturing that enable this. Modularization, another challenge addressed by manufacturing technology, aids product longevity. And, more efficiently using materials, converting them into products (improved yield at a minimum) will allow provision of the same product service with lower material requirements. That will help reduce the amount of “bulking up” — whether in construction, consumer products or others.

Approaches to the manufacturing challenges reviewed in the last paragraph have been mentioned in earlier postings. Manufacturing (in the broadest sense) is one of the key drivers (if not the key) to enabling a circular economy.