As organizations will inevitably face multiple financial, ecological and operational questions in the years to come, it will be critical to use the lessons of circularity and industrial symbiosis to better position themselves for a more profitable and sustainable future.
By Vincenzo Giordano and Andre de Fontaine
Since the 1970s, circular resource strategies have been applied in several industries such as manufacturing, agriculture and water treatment. In a circular framework, companies take a fresh look at their waste streams and seek to reuse, share or sell resources that were previously destined for the dump. In a manufacturing or heavy infrastructure context, we often use the term “industrial symbiosis” to describe the mutually beneficial outcomes that can occur when one organization’s waste stream becomes a valuable input into another’s production process. There are many benefits to this circular approach, including reduced pollution, lower costs, new revenue streams and enhanced resilience of overall supply chains.
However, industrial symbiotic practices have not been widely adopted just yet due to a lack of transparency around available resources and technology, inconsistency in measuring and reporting on economic benefits and, ultimately, the status quo. This piece will dive deeper into these barriers to adopting circular resource models and the external factors helping to break down these obstacles.
The Top Barriers to Adopting Circular Resource Strategies
There are multiple financial, cultural and technological barriers to adopting circular resource strategies. One such barrier is traditional mindsets—recasting waste streams as revenue streams requires
organizations to completely rethink what their primary product or service is. This process may be met with resistance and questions from stakeholders, as making waste streams into revenue streams may very likely challenge an organization’s existing business model and growth strategy.
As an example, some wastewater treatment agencies are beginning to imagine a future with no sewer fees. In this scenario, agencies would shift completely to circular business models and collect revenue from the sale of products, such as energy, nutrients, chemicals and clean water recovered from the waste stream. This is a profound shift away from a stable and often regulated revenue source (sewage fees) to a less certain revenue stream that is dependent on sales of products into competitive markets. The risks are clear, but the strategy also presents powerful benefits of improved environmental sustainability, a more satisfied customer base with residents and ®businesses no longer paying monthly sewage fees, and opportunities for greater growth as the agencies enter dynamic markets.
Competition Rather than Collaboration
There are also competitive hurdles in the form of an ongoing culture of competition rather than collaboration, which hinders partnerships from forming that would help to create efficient resource loops. A zero-sum mindset continues to prevail for some in the business community, who hold that success must always come at the expense of competitors. Of course, competition should not be done away with entirely. Companies should compete to offer the best products and services at the lowest prices, but they should also recognize that a pre-competitive space exists in which collaboration can reduce costs and expand growth for everyone. Circular resource sharing falls within that space.
Financial complexity is another barrier to adopting circularity. In a circular economy, economic benefits are often shared among several key players, they take awhile to develop and can be difficult to measure. For instance, consider the value streams associated with growing local economies, or the opportunities in increasing access to raw materials through improved cooperation and collaboration across geopolitical environments. The financial impacts of these risks and opportunities take time to develop and the benefits can be difficult to monetize.
Limited transparency has also been a persistent challenge in implementing circular resource strategies. Specifically, with productive waste streams and co-products, local businesses and leaders are not even aware of the resources available and the needs that they could fulfill. The culture of secrecy and a lack of information sharing driven by the competitive hurdles referred to earlier, particularly within the private sector, only adds to the lack of knowledge. However, initiatives like the Ellen Macarthur Foundation’s CE100 Network, which provides businesses with a forum to share challenges and successes on circular business models, are helping to improve transparency.
Lastly, a lack of technical development is hampering collaboration. For instance, further development of accurate and efficient digital tools that characterize and map available resources within a geographical location would open up much greater opportunities for collaboration.
Breaking Down Barriers to Make Circular Resource Strategies More Accessible
Despite these barriers, there are reasons for optimism that
circular resource strategies will begin to accelerate. The declining costs of clean technology is a major driver pushing circular resource strategies forward. In past years, the cost of distributed renewable energy sources has dropped steeply, and it is estimated that costs will decline even further in the coming decades. For instance, clean technology will eventually be able to produce green hydrogen, thus forming a circular, renewable electricity and fuel system. Other examples include CO2 use or “carbon recycling,” which could be used to lower the environmental footprint of fuels, chemicals and building materials, according to the IEA. We live in a digital world that has allowed industrial businesses to better monitor resource consumption and waste, and this accelerated digitization is another factor helping break down barriers. With this data, digital simulation and optimization tools can evaluate the conditions for feasible business cases and identify complementary flows across industrial sites, while minimizing the overall impact on the environment.
Tighter regulation through progressive policies is also breaking down barriers. Because of the increasing adoption of carbon pricing schemes, the availability of incentives for low-carbon energy production and advanced technologies, the financial case for industrial symbiosis has been significantly enhanced. As one recent example, the U.S. Congress recently created a 30 percent tax credit for waste heat-to-power systems, which could incentivize the reuse of wasted heat for more productive purposes. Local rules can also make a difference. Some municipalities in the U.S. have banned organic waste from being disposed of in landfills. This effectively drives more circular solutions, such as composting and energy recovery strategies (through anaerobic digestion, for example).
Lastly, group determination is helping to break down the barriers. Almost 1,000 companies have committed to aggressive Science-Based Targets and companies like Subaru, Cargill, Miller & Coors, and Procter & Gamble have announced ambitious zero waste goals.
Getting Started with Industrial Symbiosis
The first concrete step that organizations can take to achieve industrial symbiosis is to define a clear vision and roadmap. This can be done by articulating the benefits that a shared resource model will bring to an organization through identifying complementary resource flows, mapping out local resources and quantifying the necessary infrastructure investments.
Next, organizations should think through the financial aspects that will allow resources to be shared among different players in an equitable and predictable manner. They should consider specific contractual arrangements that establish a single entity to manage investments; structure contractual mechanisms that will allow participants to capture long-term value from the investments they make; and define flexible conditions to adapt as needs change over time.
Lastly, organizations should embrace new business models that drive value and reduce the use of resources. They can design a holistic circularity strategy, actively and consistently map local partners, and extend their reach beyond the local community.
As organizations will inevitably face multiple financial, ecological and operational questions in the years to come, it will be critical to use the lessons of circularity and industrial symbiosis to better position themselves for a more profitable and sustainable future. Organizations that work together to create truly symbiotic industrial ecosystems may find that collaboration is the best form of competitive advantage. | WA
Vincenzo Giordano is Director of Sustainability Solutions for Cities and Communities at ENGIE Impact (New York, NY). In the energy field for 15 years, Vincenzo is a strategy consultant for territories (real estate developments, campuses, industrial and logistics clusters) looking to adopt zero carbon strategies. He supports decarbonization transformations by assessing value opportunities at hand and crafting actionable investment pathways across multiple solutions, like energy efficiency, renewables, green gases, e-mobility and circularity. His LinkedIn can be seen at www.linkedin.com/in/vincenzo-giordano-8028a016/?originalSubdomain=be.
Andre de Fontaine is Senior Manager of Sustainability Solutions, at ENGIE Impact. He is a clean energy professional with a special focus on energy efficiency, industrial decarbonization, water security and business sustainability. With more than 12 years of experience advancing clean energy technologies and policies, he has led teams throughout the public, non-profit and private sectors, in the U.S. and internationally. His
LinkedIn can be seen at www.linkedin.com/in/andre-de-fontaine-3293663/?originalSubdomain=be.
ENGIE Impact has worked with a number of European ports (particularly in Belgium and France) leveraging GIS-based digital tools developed by the ENGIE Group to identify complementary material and energy flows between actors in the port community. With these tools, ENGIE is able to recommend optimal configurations of equipment and flows to assess the system’s performance and costs among existing actors and identify possible new actors with a complementary resource footprint that could be attracted to the port ecosystem. For more information, visit www.engieimpact.com/contact.
• www.iea.org/reports/ccus-in-clean-energy-transitions/ccus-technology innovation#abstract