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Four reasons for quantifying the impact of a circular economy

2 January 2018 • 3 min reading time

A circular economy: surely we all want that? The Dutch government aims to achieve a fully circular economy by 2050, but one large company – PWC – is even more ambitious: it wants to do this before 2030. But why is a circular economy necessary and how do we achieve it? To answer these questions, TNO is helping to quantify the circular economy. Paul van Ruiten, until recently Environment and Sustainability Director at TNO, explains why it is important to make things measurable.

A circular economy is an economic system that maximizes the reusability of products and raw materials and minimizes value destruction. But how can we know whether or not we are on the right track? What signs should we watch for? This is a question that many people struggle with. At just about every meeting on the circular economy I have attended, people inevitably ask “OK, but how?”. The answer is that we must start by quantifying the impact of circularity. There are four reasons why you need to quantify the impact.

1. Decisions, decisions!

You will probably have heard the following discussion at one party or another: “Is it OK to drink from disposable cups at the office, or should you use a proper mug that you can put in the dishwasher?” One option requires more material, the other most likely more energy and detergent. These nuances make it difficult to choose. The best way to effectively assess such issues and to take effective measures, whether major or minor, is to clearly quantify the factors involved. That is the key to making effective comparisons. In general, I can start by saying this. When it comes to material use, there are always two important considerations. The first is the long-term availability of materials, particularly certain metals[1]. The second is the amount of energy needed during a product’s life cycle, plus the CO2 emissions involved.

2. There is more to it than a solid business case

When asked why we are taking a particular course of action, the answer is often “because there is a solid business case”. At TNO, we believe it is important to take the analysis a step further. Take the reuse of concrete, for example. If an entrepreneur builds a bridge from reused granular concrete, he is eligible for a tax break[2]. The ingredients of concrete are lime, sand and soil, which are not scarce materials. So the main reason for using granular concrete – aside from tax breaks for the entrepreneur – is to cut the CO2 emissions associated with the production and use of concrete. And yet, transporting concrete rubble to the site where it is to be reused also generates CO2. My colleagues have calculated that, from an environmental point of view, the tipping point is a transport distance of around 30 km for concrete. Given the tax breaks involved, when building a bridge for example, it makes good financial sense to use granular concrete, even if you have to transport it from Germany. But when you examine the environmental impact involved, it makes more sense to use gravel from the river over which the bridge is being built.

3. Value retention

We have been reusing metal parts for thousands of years. You can, of course, separate out the metal parts from discarded household appliances and melt them down but, due to transport and the amount of energy involved, this is in most cases only marginally better than processing crude ore. The only way to reduce the number of processing steps and to save energy is to make these parts reusable from the moment of production or to extend their service life. This will also cut your production costs. And, of course, you will be helping the environment.

“The only way to reduce the number of processing steps and to save energy is to make these parts reusable from the moment of production or to extend their service life. This will also cut your production costs”

4. Everything as a service

You could sell light rather than lightbulbs, or a comfortably warm home rather than central heating boilers. This is another smart way to manage raw materials. But it will only have a genuine impact if the service provider, who was formerly the producer, has an incentive to use fewer new devices. This would involve the use of better quality devices with a longer service life, lower maintenance costs and components that can be reused in production.

Making the circular economy a reality will provide genuine added value, both for businesses and for the environment. Still not convinced? Then please get in touch with us.

[1] Critical Raw Materials 

[2] Environment Investment Allowance list / Random Depreciation of Environmental Investments, C6311

Author

Paul van Ruiten, Environment and Sustainability Director at TNO

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