SS2: Technological innovation, business and finance

Time: Monday, 12 October 2015 (8:00 – 9:50)

Location: Schwarzhorn

Session Chair: Dr. Franz Georg Simon, BAM Federal Insitut for Materials Research, Germany

Session Chair: Dr. Mathias Schluep, World Resources Forum, Switzerland

 

Presentations

Can a Circular Economy provide a backbone for a more sustainable, fair and social market economy in Europe?

Ludwig Hermann

Outotec GmbH & Co KG, Germany

Most of us would readily subscribe the statement that our planet needs a transition towards a circular economy decoupling raw material use from economic growth. In a circular economy deserving this label, pressure on our earth’s natural resources will definitely be reduced. But – what about the economy? Will political and economic decision makers really manage to return to relevant economic growth rates or will the ecological footprint be reduced because of a constantly stagnating or even contracting economy? If a stagnating economy is the inevitable price for more sustainability, who will pay the salaries and pensions of those who already live in precarious conditions? According to the EU employment statistics, 35.5-53.8% of the population aged 15-24 was jobless in Portugal, Croatia, Italy, Greece and Spain in July 2014.

This paper raises many questions and has no real answer. In the economic areas overseen by the author, technologies for processing minerals, metals and fuels, a symbiosis of economic growth and circular economy is conceivable: mining and processing of natural resources can be replaced by urban mining and processing; fossil energy carriers can be replaced by renewable resources. The market, however, will not be a driver due to mining and processing of renewable resources being currently more expensive than processing ores and consuming fossil fuels. This will not change, as long as the economy is not picking up. Without a strong demand, prices for commodities tend to go down and new approaches may be even less competitive in the foreseeable future than today.

The paper aims at fueling the discussion about the appropriate economic and societal framework and the research needed to come to a realistic and convincing judgment on the potential of the Circular Economy as a pillar for a fair and sustainable social market economy in Europe.

 

Case studies of circular economy business models

Raphael Fasko1, Elisabeth Karrer2

1Rytec AG, Switzerland; 2sanu durabilitas, Switzerland

The contemporary economy is mainly based on linear business models, where the products are sold to the consumer. With such business models producers cannot fully benefit from their design for a circular economy, such as the use of materials in multiple cycles, modular design for refurbishing, longevity, easy disassembly and so forth. As soon as the product is sold, someone further down the value chain will cash in on those qualities. There is no incentive for producers to invest into circular economy design.

Circular economy business models like leasing and service models have the ability to transfer circular qualities of a product into additional earnings. They close the gaps of a segmented value chain. Through that, values that cannot be capitalized in the selling model, reach the producer as additional direct income. The experience of the companies presented in the case studies show that circular economy and circular design can be profitable areas of business.

The stimulation of circular business models (CBM) will in turn stimulate the development of a circular economy. This happens because in leasing and service models, the economic success is directly linked to circular design. In such models the company is very interested in qualities like longevity or that your product is easily serviceable. Through the economic optimization within their business model, companies will naturally invest in circular design and more resource efficient products will be released to the market.

 

Business Plan Calculation Tool for Manual Dismantling Facilities

Markus Spitzbart1, Elisabeth Herbeck2, Mathias Schluep3

1Die Wiener Volkshochschulen GmbH/ Dismantling- and Recyling-Centre Vienna (D.R.Z), Austria; 2United Nations Industrial Development Organization; 3World Resources Forum

Waste Electrical and Electronic Equipment (WEEE), or e-waste, is the fastest growing waste stream and can cause harm to human health and the environment when not treated properly. Especially in developing countries e-waste is often treated under critical health conditions and inadequate technologies are causing negative environmental impacts. Without proper legal framework conditions and control mechanisms specialized formal and informal recyclers are using rudimentary methods focusing mainly on reclaiming valuable recycling fractions, like ferrous and non-ferrous metals, while dumping the hazardous ones. To improve this situation effective e-waste management strategies are required.

The StEP-Business-Plan-Calculation-Tool supports entrepreneurs to set up an economic viable e-waste recycling business in an environmental sound manner. It can be further helpful for policy makers to understand the present economic framework conditions for e-waste recycling in their region. This paper gives an introduction into the design and structure of the calculation tool explaining its features. Further, possible use and benefits are illustrated.

 

Business model innovation as core enabler to accelerate adoption of a circular economy

Markus Zils
Returnity Partners, Germany

The economic value creation potential in a circular economy is rooted in the ability to preserve and create more value by keeping products, components and materials in productive use for longer and at a higher quality than compared to a classical linear take‐make‐dispose economy. In addition improvements in the resource effectiveness during the use period, esp. for consumables, energy carrying matter, etc. can further drive resource productivity over the total usage cycle(s) of products, components and materials. In most instances the potential list of ideas and levers to transform existing linear value chains into circular ones or to set‐up circular ones up from scratch is long and frequently easy to implement from a technical point of view. However most companies and institutions struggle to identify business models, which allow them to capture and redistribute the created value along their partnership network. The reason for this is the observation, that in a market‐ transaction, sales based approach only the value add of the upstream activities (i.e. the assembly of products) is commercialized. However benefits for superior resource productivity during use and for revalorization cannot easily be added into the pricing or extracted at end of use. As a result many companies and institutions are incentivized to forgo implementation of more resource productive solutions and services to comply with their profit (i.e. return on capital employed (ROCE)) maximising mandate. To realign incentives (i.e. value capture and redistribution along the partnership network) towards more resource productive circular economy value chains, it is essential to design the business model innovation (value capture and redistribution) so that it fits with the technical solution (value creation).

 

Creating a Competing Demand for Waste Resources: A Strategy for Waste Minimization in Nigeria

Sridhar K. C. Mynepalli

Universityof Ibadan, Ibadan, Nigeria, Nigeria

Solid waste management in Nigeria is a social and public health concern. Nigerian municipal waste has organic biodegradables 50 to 70%, hard plastics/ plastic film 15 to 20%, metal scrap 10% and others mixed such as glass, ash, batteries, etc. depending on the culture, occupation, and other community activities. The waste generated (0.5 to 0.7 kg/capita), has a density of about 250kg/m3, wet, and often mixed with non-biodegradables and hazardous components. Itinerary waste collectors parade the dumping yards for scavenging recyclable components in the waste which have a value. State and local governments tried various methods of disposal e.g. communal dustbins, house to house collection, curbside collection, private sector participation, open dumping and incineration. None of these methods yielded sustainable results, rather, cities became dirtier.

We introduced waste segregation, buy back and recycling activities in selected communities in Ibadan and Lagos and developed a “Competing Demand Model”. Here, when we add value to a particular component of the waste, that component will reduce or disappear from the waste stream. The generator will take adequate care to segregate such components and keep aside for economic gains. We introduced waste to wealth schemes, e.g. fertilizer from market and abattoir wastes, ferrous and non-ferrous metal recycling, paper, conversion of hard and film plastics and pet bottles into industrial feedstock. Communities started looking at these as a way of earning extra income. For this model to succeed, government, private entrepreneur or an individual may act as drivers and initiate community based small or medium scale entrepreneurship (e.g. recycling industry or collection kiosks) and pay some money in exchange for the resource, waste. This model yielded encouraging results with significant reduction of metals, paper and certain types of plastics from the waste stream with youth employment opportunities.