Circularity strategies

Throughout the value chain, from raw material extraction to product distribution, companies' operations are based on the consumption of natural resources (water, energy, metals, etc.). Motivated by the reduction of procurement costs or by environmental initiatives and good management practice (e.g. ISO 14001, Lean), many of them have already begun a shift towards reducing resource consumption. The transition to a circular economy may enable them to accelerate this process. For example, they will be able to target the priority resources to be saved (supply risk, scarcity, etc.) more effectively and more easily find outlets for their waste or by-products.

The roadmap Industrie 4.0 may be an interesting vehicle for deploying this strategy by taking advantage of new technologies, in particular:
 

• Information management systems to better manage resource consumption, target losses, and effectively plan distribution logistics.
   
• Additive manufacturing (including 3D printing) also has interesting potential for saving resources. Studies show that the new technologies it brings together would reduce material consumption in the metals sector by 70%. (in French)

The collaborative economy encompasses a wide variety of business strategies and trade models to maximize the use of goods and products in circulation in the market. From citizen initiatives to commercial platforms such as Kangaride and Bizbizshare, the collaborative economy is booming in Quebec and internationally. It is estimated that the collaborative economy will approach $335 billion by 2025, compared to $15 billion in 2014. While some sectors such as housing, mobility and food have already begun this transition, there is no organization and region that is still not likely to be affected by the emergence of collaborative practices. 

Its development generates new and complex issues (responsibility, quality, safety, taxation, etc.) that require the contribution of different people and disciplines to answer them. In Quebec, the collaborative economy working group (in French) made twelve recommendations aimed at collectively reaping the benefits of the collaborative economy and supporting its transformation in an informed, accountable and transparent manner.

The academic community is also the driving force behind this transition, in particular the Responsible consumption observatory and the CERIEC (Center for Intersectoral Studies and Research on the Circular Economy).

With rental, an organization or individual owns something and rents out its use for a fixed period of time. This strategy is well known in some sectors, such as tooling, the automobile industry and real estate. By making it unnecessary for customers to purchase property that they use only occasionally, rental can help to get the most out of them. This business model therefore meets the same objective as the collaborative economy, but is more suitable for customers who do not want to be in contact with other users of the same property. 

With rental, the management of end-of-life products may be less efficient than in functional economy (see strategy 9) where the manufacturer retains ownership and can therefore more easily recover, repair and recondition them and ultimately reinsert them into their production cycle. However, lessors also have a vested interest in ensuring proper maintenance and repair of their assets in order to maximize their return on investment. Under the impetus of circular economy, rental is now expanding into new sectors, such as fashion and textiles.

As the first strategy for extending the life of goods, maintenance and repair can be carried out by the consumer himself, a specialized organization (e.g. shoemaking), the distributor or the manufacturer. Although servicing and repair are already widespread for long-term goods (e.g. aircraft, boats, cars and homes), the opposite trend can be observed for everyday consumer products and small household appliances. 

Today, the cost of repair is often higher than buying a new similar product. This situation is caused by the fact that the environmental and social impacts of the manufacture and distribution of goods are not taken into account in their prices. The attractiveness of new things is also an obstacle to repair and increasingly rapid technological progress means that the products to be repaired are already completely obsolete after only two or three years of use. Fortunately, consumer mentality is changing and several interesting opportunities are now available, including:

• The site iFixit.com, which contains thousands of free repair guides and sells parts online.
• Repair Cafés, which are pop-up repair workshops where people can bring their equipment to be repaired and get help from experts who offer advice and technical support.

Manufacturers must nevertheless take action to design products that are easier to maintain and repair. Fortunately, in Europe, some legislation on product obsolescence is beginning to emerge.

For an overview, watch this short report broadcast on Télé Québec on the program Ça vaut le coup (in French).

Giving away and reselling allow consumers or organizations to put back into circulation products that they no longer need, but which are still in good condition. These strategies are far from recent, but new digital platforms offer unprecedented opportunities to connect those who want to dispose of objects with those who are looking for them. 

The Kijiji 2019 Index (in French) points out that:

• the second-hand economy is steadily expanding and generated approximately $27,3 billion in economic activity in Canada in 2018;
• among the most exchanged goods are baby clothing and accessories; games, toys and video games and clothing, shoes and accessories;
• the primary motivation to acquire second-hand goods is the lower cost but ecological and altruistic motivations are growing. 

However, giving away and reselling may conflict: if it is now easier to resell their used products, will consumers tend to favour this strategy over giving them away? Fortunately, more and more organizations, often from the social economy, are making it easier to collect gifted goods and, increasingly, online services are making it easier to donate to charities.

Reconditioning involves restoring a product or component to a condition as good as new, with a guarantee equivalent or close to that of a new product. The product is collected, transported and disassembled. Each of its components is cleaned and checked, and some of them are changed or reworked. The product is then reassembled, checked and put back on the market. The possibilities for reconditioning depend greatly on the industrial sectors. In the transport sector, reconditioning is applied mainly to heavy or military equipment with very long life cycles (boats, trains, planes and helicopters), but not so frequently for lighter finished products, such as cars. In the energy, infrastructure, mineral processing and building sectors, energy is produced with equipment whose life cycles extend over decades, a favourite area for reconditioning. A component can also be reconditioned when its service life is shorter than that of the host product: reconditioning is part of a maintenance operation and competes with replacing the product with a new one. 

To make this strategy easier to deploy, products must be designed taking into account the requirements of their end-of-life processing. The shift to business models such as the functional economy could change this by encouraging manufacturers to use closed-loop logistics in which they reinsert the components of their second-hand products into their new product manufacturing process.

This new business model does not focus on selling products to consumers and buyers, but rather on selling the use of these same products. Users therefore buy the function and not the product itself. For example, a division of Philips offers its customers a lighting service rather than bulbs, while Michelin offers owners of heavy truck fleets a tire service rather than the tires themselves. The customer is billed per kilometre and does not own the tires. With this strategy, the "Michelin Fleet Solution," Michelin gained 50% of this market share in Europe in 2014. 

By retaining ownership of the product, the manufacturer can adequately manage the end-of- cycle stage. The product can then be repaired, reconditioned or dismantled to generate new components or raw materials. The manufacturer is therefore partly freeing itself from the volatility of raw material prices. 

According to initial studies, the functional economy could be a win-win situation: manufacturers, consumers and workers would all benefit from this new model, which would also significantly reduce the environmental footprint. Considered as a "disruptive organizational innovation," the functional economy significantly modifies customer-supplier relationships, as well as the design and management of the product life cycle.

Industrial ecology is a multidisciplinary approach, including a set of tools such as eco-design, clean technologies and life cycle assessment. It seeks to optimize the use of natural resources in the industrial processes. Seeking inspiration from natural cycles, where material and energy are constantly recycled, industrial ecology applies the same idea to the value chain and its residual wastes.

More specifically, industrial symbiosis is a network of businesses and collectivities who are exchanging materials, byproducts, water, energy and innovative practices. Industrial symbiosis may be autonomous or facilitated by a third-party agent.

In Quebec, the Synergie Québec network brings together over 20 industrial symbiosis initiatives. This community is led by the Industrial ecology technology transfer Centre (Centre de transfert technologique en écologie industrielle - CTTÉI).

Text written by CTTÉI

FIND OUT MORE ABOUT THE CIRCULARITY OF MATERIALS

Recycling

Recycling is the use in a manufacturing process of recovered material to replace virgin material. Circular economy firstly makes it possible to set up the shortest possible recycling loops, thereby favouring local recycling markets over export markets. Secondly, in order to preserve the value of resources, it invites people to focus on recycling in products with high added value (upcycling).

 

Composting

Composting in a circular economy, organic matter returns to the soil to enrich it. In this sense, composting is aerobic (taking place in the presence of oxygen) processing of organic matter, which creates a mature solid product: compost. Compost is a stable product, rich in humus compounds, which is mainly used as a soil-enriching agent.

Text written by Recyc-Québec

Recovery is any operation that does not involve disposal and that aims to obtain useful products or energy from residual materials.

Energy recovery may involve heat treatment processes that will irreparably transform materials such as incineration with energy recovery, combustion in an industrial boiler or cement kiln, pyrolysis and gasification. According to the French environment quality act, the thermal destruction of residual materials counts as energy recovery as long as this processing meets the regulatory standards prescribed by the government, including a positive energy balance and the minimum required energy efficiency, and helps to reduce greenhouse gas emissions. These aspects are important ones to consider from a circular economy standpoint.

Text written by Recyc-Québec