11/25/2024 Refrigeration Expert Insights

The circular economy

Latest topics to discuss: 16/04/2024 - China and German begin a dialogue on the subject of the circular economy and resource efficiency ...in Beijing today, German Federal Environmental Minister Steffi Lemke and Zheng Shanjie, Head of the National Development and Reform Commission (NDRC), signed an action plan for a strategic dialogue on the subject of the circular economy and resource efficiency. Both countries want to use this action plan to deepen their environmental policy cooperation and come up with fresh ideas for specific collaboration projects in the area of environmental protection.

Graphic representation of a circular economy in the colors green and blue

Prehistoric man and the circular economy

Many processes are known to human beings “by nature” in the true sense of the word, without having to dramatize them on an epic scale.

The same goes for recycling. In fact, the drive to recycle used objects, materials, etc., in the sense of circularity goes back to the roots of human experience. In this respect, people in the Stone Age were more advanced than we can imagine in today’s highly technologized world.

This is shown in the dissertation entitled “The Recycling Phenomenon during the Lower Palaeolithic: the Case Study of Qesem Cave (Israel)” by archaeologist Dr. Flavia Venditti, for which the author received an award from Tübingen University. In this paper, she studies the targeted production of small cutting tools from larger tools that had become unusable and the many ways these tools were used 400,000 years ago.

Starting point

The more people live on our planet, the greater the need for resources, along with growing mountains of garbage and rising emissions of greenhouse gases. In the future, it will no longer nearly be enough to just make resource extraction and materials processing more efficient. Humankind can no longer afford to waste resources, for both ecological and economic reasons and given the dire consequences: When resources become scarce, they become expensive and unaffordable.

The circular economy must become the basis of economic activity. The design and production of machinery and equipment are critically important in this context.

Government ministries, standard-setting organizations, industry associations, research institutions, and environmental protection organizations agree on the utmost importance of this topic. “If today’s production and consumption patterns do not change, resource scarcity, environmental pollution, loss of biological diversity, and worsening climate change will inevitably result.” (DIN DKE VDI)

Chronology of relevant laws and regulations

Even back in the 1970s, the EU Council Directive of 1 July 1975 on Waste identified the necessity of restricting the production of waste, re-using waste, and recycling waste.

The German Federal Act to Promote the Circular Economy and Ensure the Environmentally Compatible Disposal of Waste, known as the Circular Economy and Waste Act for short (“KrW/AbfG”; later the Circular Economy Act, “KrWG”), was enacted in September 1994.

This law formulated the principles of the explicitly desired circular economy as follows: “Waste should be avoided primarily, particularly by reducing the quantity and harmfulness of waste; and secondarily, it should be recycled or used to generate energy (energetic utilization).”

Thus, the purpose of the circular economy is to conserve natural resources, but also to protect human beings and the environment (Section 1 KrWG).

In the meantime, the EU Waste Framework Directive has defined the transition to the circular economy as the overriding goal. It makes various explicit demands of the EU member states, including the promotion of sustainable production and consumption models, the long-life design and reparability of electronic devices, measures against food waste and planned obsolescence, and information campaigns.

Furthermore, the emphasis placed on such aspects in the amendments introduced by Directive (EU) 2018/851, which were to be implemented by 5 July 2020, can be seen as the reflection of a political realization that in real life, the trend towards disposable products, short lifecycles, the extremely long transport routes of global material flows, and the throw-away mentality appears to be continuing, despite the lip service to the contrary given by market players.

A road map for a transformation process towards a circular economy

The German Sustainability Strategy and the UN Agenda 2030 for Sustainable Development both present a basic road map for the transformation to the sustainable economic model of a circular economy.

The term “circular economy” as it is used in the EU Action Plan covers all phases of value creation, from product design and manufacturing to consumption, repair, waste management, and the channelling back of secondary raw materials into the economic cycle.

In Germany, the Circular Economy Act provides a legal definition stating how the term “circular economy” is to be understood in the sense of this law: “Circular economy in the sense of this law means the avoidance and recycling of waste” KrWG §3 (19).

Circular economy: raw materials and resources

Circular economy refers to waste management on the one hand and to circular economic activity on the other hand. This latter meaning entails the need to turn away from conventional forms of economic activity, which are often linear by nature, in favour of a more sustainable, resource- efficient, and climate-neutral form of economic activity and way of life.

Circular economy vs. linear economy

A circular economy is a renewable system in which resource use and waste production, emissions and energy waste are minimized by slowing, reducing, and closing energy and material cycles. This goal can be achieved by means of long-life product design, maintenance and repair, re-utilization, reusing, remanufacturing, refurbishing, and recycling.

The opposite of the circular economy is usually understood to be the linear economy (also called the “throw-away economy”). Under such an economic model, most of the raw materials used in production are buried in landfills or incinerated and only a small portion is recycled.

“R” strategies of the circular economy

The goals of the circular economy are to preserve the usefulness and value of products, components, and materials as much as possible and to lengthen lifecycles in order to reduce waste and resource consumption. To achieve these goals, the “R” strategies” must be applied consistently.

Circular economy

The circular economy concept has now become established as an integral part of research and innovation promotion. A key driver at the present time is climate protection: Resource conservation can make an important contribution to this cause as well.

Circular economic activity

The goal of the circular economy is to transform economic value creation from the linear throw-away model to the circular model. Circular economic activity means using raw materials for as along and as frequently as possible and ideally rechannelling resources into economic cycles without consuming new resources. Business models also need to be reconsidered in this light.
Thus, the circular economy approach serves the goal of sustainable development. It has the potential of enabling socially responsible economic activity within ecological limits.

Circular value creation

Circular value creation refers to an economic system that is restorative and renewable. It replaces the end-of-life concept with closed cycles. It avoids and reuses waste by designing materials, products, systems, and business models in a holistic manner. This will make material flows and energy systems sustainable and minimize climate and environmental impacts.

“Circular value creation”: an industrial policy innovation concept

Circular value creation means that product development, production processes, and business models should be designed in such a way that resources are reused within cycles for as long as possible without losses. This approach contributes to resource conservation, sustainable economic activity, and climate protection. There is much room for improvement in this respect, considering that only 8.6% of the global economy is circular today (Circularity Gap Report 2020).

This concept of circular economic activity goes far beyond the conventional recycling of raw materials. It also includes measures to boost resource efficiency. Thus, it has a major impact on product portfolios and business models, especially in the chemical industry, which has been working intensively on circular concepts for the last few years.

A socially and ecologically designed circular economy would play a critical role in achieving the goal of making industrialized nations both climate-neutral and economically competitive, reducing the use of primary raw materials, lessening the adverse impacts of mining on the environment and nature in general, and not least of all, aiding the achievement of national climate targets.

For this reason, the circular economy is destined to become a key part of successful corporate management in the future.

The innovation concept seeks to answer these crucial questions:

How can we decouple economic growth from resource consumption?
How can be transform our formerly linear business models?

And for that reason, innovation is steadily becoming more important from the standpoint of business and politics. It is and is becoming a crucial element of current and future business strategies.
Moreover, it is the core element of the European Union’s Green Deal.

Conclusions: Circular economy and sustainability

The pursuit of a circular economy is a top political priority, for good reason.

The comprehensive closure of material cycles is a crucial instrument of sustainable economic activity and therefore also a key lever for achieving climate targets.

All parties involved know full well that it will take some time before economically viable solutions can be developed on the basis of successful pilot projects, but it will happen eventually.

Forecast based on pragmatically sound optimism

More than 2,500 years ago, Heraclitus of Ephesus (535-475 B.C.) said “There is nothing permanent except change.” How timeless and true!

The necessary goal of making Europe economically competitive while also achieving ecological objectives must be pursued systematically. The coming transformation will only be truly “sustainable” if a careful balance is struck between economic competitiveness, environmental protection, and climate protection, as well as social responsibility, in the implementation of the necessary goals.

Consistently organizing production and consumption in our economic system on the basis of responsible behaviour and ambitious agility is both a tremendous challenge and a wonderful opportunity for Germany, Europe, and the entire world!

Agility describes the ability of individuals, teams, and organizations to act quickly, flexibly, and adaptably in a dynamically changing and uncertain environment.

Also and especially in challenging times like these.

Author: Thomas John

Sources and links to government ministries, trade associations, and research institutions, and further reading:

acatech – National Academy of Science and Engineering

en.acatech.de/project/circular-economy-initiative-deutschland/

BMUV – Bundesministerium für Umwelt, Naturschutz, nukleare Sicherheit und Verbraucherschutz (German Federal Ministry for Environment, Nature Conservation, Nuclear Safety and Consumer Protection)

Circular Futures

www.circularfutures.org/

DIN – Deutsches Institut für Normung e. V. (German Standards Association)

Fraunhofer UMSICHT (Fraunhofer Institute for Environmental, Safety and Energy Technology UMSICHT)

https://circonomy.fraunhofer.de/en.html

VDMA e. V.

www.vdma.org/kreislaufwirtschaft (“Circular Economy: Conserving Resources. The Solution is the Circular Economy”).
www.vdma.org/viewer/-/v2article/render/4084813 - (“Circular Economy – Learning from Material Flows in Nature”) 18/01/2023