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It's crucial to create circular value chains

13 December 2021
Article by Ana Ramos and Viviana Correia Pinto, project managers and researchers in Circular Economy at INEGI


This article could begin by framing the climate emergency, the intensive, inefficient and inconsequential use of natural planetary resources that brought us to the current growing scarcity of resources, to alarming levels of pollution and greenhouse gas emissions. But what's left to say about the climate crisis that hasn't already been said?

In the aftermath of COP 261, in which fragile commitments and promises of "more ambitious goals" reigned, society's pessimism grows, and for good reason. More than words, we need solutions.

Industry has a fundamental role to play in this turning point, as 45% of global emissions are associated with the manufacture of products, and to ensure the simultaneous recovery of the economy, it is imperative to adopt truly disruptive strategies.

This means, in part, an effective commitment to the circular economy, as a model of sustainable development based on the reduction, reuse, recovery, regeneration and recycling of resources. It is a significant restructuring of the productive logic, which requires a systemic thinking with regard to the processes that have existed since the 1st industrial revolution emerged – but which has undeniable benefits.

It's not easy to compare the full circular economy to the current scenario of «extract – produce – use – discard». But one thing is certain - waste is an endemic problem in our economy, with high monetary losses. Just consider, for example, that in Europe 31% of food is wasted along the value chain2. Or that 10-15% of materials are wasted during construction. Or even 20-40% of the energy in buildings could be profitably conserved or reused2. Or even that, of the plastic waste that was collected in the European Union for treatment in 2018, only 32.5% was recycled3.

Today, the global economy is only 8.6% circular, however two years ago it was 9.1%3. This trend is explained by the still high extraction rates, the continuous increase in the accumulation of stocks and the growing, but still reduced, levels of end-of-use processing and recycling4.

In 2030 forecasts drawn up by the Ellen MacArthur Foundation for Europe, the circular approach would translate into 1.8 trillion/year in economic gains, 48% less CO2 emissions, and 700 thousand jobs created5. It is, therefore, urgent that we move from the ideation phase to acceleration and implementation.

The time for change is now. The European Union has assumed the development and implementation of a sustainable economy as an objective, whereby the transformation of companies is supported by action plans at national and European level, with specific financial instruments, including the opportunities of the recovery and resilience plan. Alongside this, the EU has approved its biggest research and innovation support program ever, with €95.5 billion to support the necessary technological leap.

Solutions for a circular economy multiply along the value chain

During the IN Conference INEGI 2021, organized by INEGI on October 21st, these themes were highlighted and two ideas prevailed: solutions for a circular economy multiply throughout the value chain, and there are solutions that cut across all sectors.

Extend the life cycle of products; reuse, repair, remanufacture and recondition products; apply ecodesign concepts in the development phase; develop and use recycled, recyclable and renewable materials; create more eco-effective manufacturing processes; be able to measure the impact of circularity on the business; implement new circular business models; implement industrial symbioses; and apply sustainability-oriented digital strategies. These were some of the approaches discussed, along with examples of good practices from successful companies in the bet on circularity, and already in transition to the next phase of implementation.

The transition to the circular economy is based, significantly, on the implementation of technological innovation strategies, for which INEGI acts in several oriented areas that enhance this transition. These different areas can be seen as a complete strategy – creating the ideal «circle» – or individually, in a transitional logic and can be combined to create value in various ways. Let's see:



Circular Strategies

The real transformation towards sustainability starts with the company's DNA, that is, with the adoption of circular business models. Life cycle extension strategies, recycling and waste recovery (and other R approaches), industrial symbiosis, dematerialization, or servitization are among the bets that enhance the value proposition.

Measurement of circularity impacts

The measurement and recording of circularity indicators is essential for the progress of this transition, because optimization is only possible based on data and information that we can measure and analyze. Life cycle assessment (LCA), cost cycle, material flow and carbon footprint are established methodologies that allow one to map and quantify the 'environmental footprint' of products, processes and services. Information that, in turn, opens the way for the identification of opportunities for improvement that generate value and support decision-making.

Production and circular products

The circular economy implies new approaches for the entire value chain. At the product development stage, this means adopting eco-design approaches and starting to think about sustainability right at the design stage. It also means selecting more sustainable raw materials, and even investing in new reusable, recycled, recyclable, biodegradable or renewable base materials

In production, the bet is on reducing the intensive use of energy, more efficient and eco-effective processes, CCS solutions (CO2 capture), and waste reduction and reuse. In distribution, likewise, optimized logistical processes make the difference. In the hands of users and consumers, it is also possible to promote reuse and repair, and close the «circle» with the reintegration and recovery of waste and by-products.

Decarbonization and renewable systems

The development and application of technologies for the direct integration of renewable energies in industrial processes, particularly with regard to thermal processes, directly contributes to the decarbonization of the industry. It is an investment not only in clean energy, but also, in the long term, in considerable savings.


 References

1 Conferência das Nações Unidas sobre as Mudanças Climáticas de 2021

The Circularity Gap Report 2019, Ellen MacArthur Foundation research, WBCSD research, McKinsey research

3 Statista

The Circularity Gap Report 2020, Circle Economy

Growth Within: A circular economy vision for a competitive Europe, Ellen MacArthur Foundation, SUN, McKinsey & Co., 2015



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