Circular Economy – what difference can it make to your business?

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Eoin Bailey, UK Innovation Manager, Celsa Steel 

Circular Economics

A circular economy is simply an economy that is circular by nature. As a designer, engineer, and innovator I personally see the circular economy as a ‘strategically designed solution for restorative economic development, based on full lifecycle understanding!’ Basically, the circular economy is all about developing opportunities for sustainable prosperity and growth that is fit for the future generations. 

Linear Economics

As a species we all live together on this fragile planet. However, as a species we are failing in our responsibly as custodians. We have an addiction to economic structures and systems that are making our planet and our species sick. Our economic systems are based on the extraction of the earth’s raw materials, the making of stuff through manipulation of those materials, shipping them around the world several times, before discarding them when they are no longer useful or when something new and shiny comes along. This system is known as the linear economy and is the reason why we need to change. We need to get to the point where we are looking at a future that is prosperous and equal for all, we need a future that is circular.

Linear Thinking

The linear economy has been in existence since the dawn of humanity, at a time when the extraction of natural resources for the making of tools or hunting weapons did not impact on the earth’s ability to recover and restore. However, this linear mindset has continued to endure throughout the ages. The development of western philosophy, the expansion of religion and the merging of the sciences, particularly during the 15th century, besides developing an inflated sense of human superiority, evolved our disconnection from nature and the destruction of the natural world. Also, during this period, our disconnect to the natural world was exacerbated by a perverse perception of value through the development of property rights. 

John Locke, an English philosopher who came up with the concept of intellectual property, suggested that nature in isolation has no inherent value to humanity – only when labour is added does a resource represent any value. With this perception of value came the concept of property. Therefore, by exchanging or selling the property for its cash value the owner will make profit. As a result, the only perceived value of material resource is at that single point of sale. This singular point-of-sale focus became the foundation of our linear economy. Through the various industrial revolutions, we have become extremely efficient at extraction and exploitation. However, even the most advanced and in theory ‘sustainable’ technologies are today being developed with an ancient linear mindset. Because of our singular focus on sales profit, we tend to work in silos with no interest in where stuff comes from, or what happens when that stuff is no longer of use. We therefore, relinquish our responsibility for the uncertainty, risks, negative impacts, contradictions, unintended consequences and unforeseen cost that this approach brings. How often do we hear, ‘that’s not my job, it’s someone else’s’? This just exasperates the negative impacts of a linear economy.

Full Lifecycle Understanding

The Circular Economy looks to increase value and eliminate the impact of resources throughout their full lifecycle. However, there are misguided opinions about the meaning of ‘full lifecycle’. When we hear ‘cradle to gate’, it refers to the flow of resources within a company’s boundaries to the point that products are loaded and transported out. This often translates into ‘once it leaves here, it’s not my problem’. The phrase ‘cradle to grave’ refers to the flow of resources until a time they are no longer of use and need to be disposed of. Without a robust circular economy strategy in place this generally means that the resource will end up in landfill or at best some will be down-cycled into a form that is a lower quality than the previous. 

Recycling it is Not

At this point it is worth making clear that the circular economy is NOT just about recycling. Recycling in its current form is actually a reaction to the inefficiency and impacts of the linear economy. To really understand circularity we need to reflect on where the philosophy has come from – and that is simply from mimicking nature. In nature there is no waste, just food for new life – the natural ecosystems or a biological metabolism, if you will. By learning from nature we can translate and design our industrial activity and our economic systems into a technical metabolism, while learning from nature and the 6 billion years of R&D. Waste is a major challenge for modern society. However, – if there is an assumption that waste is a product of the current linear industrial, economic and social process, it can be assumed that that waste or inefficiency has been designed into that process. Therefore, you can also assume it can be designed out – meaning ‘Waste is simply Bad Design’.  So, rather than developing ways to reduce waste, we need to eliminate the concept of waste. We only have resources that can be utilised as feedstock for new developments. 

Circular Thinking

A number of principles, methodologies and philosophies are becoming more prominent in government policy, education, academic research and in industry that focus on restorative solutions. However, we need to make sure that these philosophies and how they interlink are properly understood. The discussion and rhetoric needs to move way beyond the idea the circular economy is just about recycling. What is required is a whole new system of thinking (and doing) that encompasses full lifecycle performance, value, impact and interconnectivity. When one starts to see the world through the lens of a circular economy it becomes impossible to un-see and we will struggle to understand why it is not obvious to everyone else! The circular economy is an intuitive way to think, do and deliver solutions in a way that is much more beneficial to the planet, people and to our profits. The journey of circularity for an organisation starts by asking a series of simple questions about the current situation.

Questions like – where do materials come from and what is happening at the original source of that material? Are you efficient with those resources while they are under your control? Is your business producing waste? The answers, combined with the view of circularity will offer a new perspective, resulting in tangible solutions which will start to build circular thinking into your business principles. Engage your people with the concept, it doesn’t necessarily have to be a whole training programme – just be open to discussion and ask their opinions. Equally, engage with your customers – have a conversation with them and find out about their challenges and how potentially your business can offer the solutions. Offer support and develop ideas through collaboration. Consider developing strategic partnerships with suppliers where you can start to look at sharing opportunities, sharing the benefits and ultimately increasing the elements of trust to develop new solutions. Different policies, standards and directives can have an impact on a market – are you aware of what will be changing and the impact this will have on your business? It is always good to understand what is happening from a policy perspective. The answers to these question will provide you with a baseline of knowledge and clarity of the current situation. Addressing some of the challenges discovered with the understanding of a Circular Economy puts your organisation in a much better position to be able move forward.


Circular Transition

Annually, Celsa UK produces a million tons of long steel product for the UK economy. This is achieved by processing 1.2 million tons of scrap each year, making Celsa one of the largest recyclers in the UK. In essence you could consider that Celsa is delivering circularity, and certainly my group talks about being the number one recycler in Europe. I have challenged them on this because recycling suggests a level of quality that stays the same, but actually we are down-cycling. We take scrap metal that is a reaction to a linear economy from different industries – automotive, construction, electronic goods and that material is crushed, shredded and separated. Therefore, the next lifecycle phase is not necessarily the same level of quality. 

In Celsa we want to take what we do and offer it as a Circular Steel Service. So rather than processing scrap and selling a steel commodity, we are looking to provide our low carbon Electrical Arch Furnace as a service to industry and the economy. Using electricity to melt the steel means our carbon footprint is a lot lower. We also have downstream fabrication operations that can deliver finished product to construction sites. By being open to collaboration we are in a position to facilitate the link between demolition (i.e. waste, scope 3 emission) and building (i.e. new material, scope 3 emission). Therefore, helping to decarbonise the construction supply chain.

Adjust Scope & Target

The circularity options we are exploring involves changing very little of our current process or any additional training of our staff. We just have to shift our mindset that subtly adjusts our scope of what we do and how we do it. That in turn allow us to focus a targeted delivery that opens up a dialogue to the supply chain and customers – this develops a collaborative approach that sets the stage for a sustainable prosperous future for all. Collaboration is a key element to circularity. 

Changing the mindset of a business is a massive opportunity. Start by finding the value in circularity and presenting within the context of the linear. Once that value begins to be realised the concept and added benefits will gain momentum. Even providing a circular view to the waste in a factory skips could present a catalyst for change not previously considered. 

Circular economy is not just a nice to have – it’s essential to the sustainable prosperity that is fit for future generations.

Remember:

Waste is just Bad Design

Collaboration is Key

This article is taken from a series of webinars in a three-day industry summit organised by MADE Cymru and University of Wales Trinity Saint David (UWTSD) in June 2021. MADE Cymru is an EU funded (via Welsh Government) initiative that seeks to support and boost manufacturers in Wales via upskilling programmes and R&D. Find out more www.madecymru.co.uk or email one of the team at [email protected]