The basic principle that populations and economic output tend to grow in tandem has been the cornerstone of government economic policies for decades. In such a linear economy, only a rising population, combined with increased use of production resources and energy, results in economic growth. It is the nature of a take, make, and dispose linear system in which we currently operate. But as populations rise, and resources dwindle or become depleted altogether, the obvious conclusion is the linear economic system is not sustainable in the long term. What if we applied a different system? What if we created sustainable economic policies that transition conventional thinking to a framework that supports circular economic growth? The circular economy (CE) is not tied to an ever-expanding supply of consumers. CE’s growth comes from within the system, realized through new opportunities. These opportunities include innovation, flexible and expandable business models, and focus on activities that loop materials back into the industrial process at a variety of levels. That certainly means more recycling. However, CE also moves focus up the waste prevention hierarchy to the reuse loop that includes repair, refurbishing, remanufacturing, repurposing, etc. It’s within those latter groups of categories the presents the greatest potential for CE growth. Let’s look at some of the reuse loops within the CE system.
In the business-to-business (B2B) world, circularity is replacing linear models in some unconventional ways. In the linear model, burnt out lightbulbs are replaced by purchasing new bulbs. But in Phillips’ recently applied circular model, they no longer just sell light bulbs. Phillips now sells light in the form of service contracts. Another well known company, Rolls Royce, no longer just sells jet engines. It sells power-by-the-hour jet engine performance contracts. These CE transactions are not buying product. The purchase is a set standard of performance result.
Performance contracts extend beyond B2B to business to consumer (B2C). Do you wants to own a washing machine or do you want clean clothes? By changing the focus of the B2C model users lease a washer to provide so many washing cycles. At the end of those cycles, the machine is removed, rebuilt, and replaced in another consumer’s home. The machine is delivered, maintained, supplied with soaps, picked up at the end of the contract creating jobs in transportation, maintenance, repair, and service contract sales.
Even personal transportation is shifting to a model that reflects access over ownership. In the linear system there are three options for personal transportation: buy, lease, or rent. However, applied CE business models now see companies providing access on demand for personal transportation: in Vancouver, Car-to-Go, Evo, Modo, and Zip Car provide vehicles to users whose needs vary by circumstance.
Massachusetts’ right-to-repair legislation focused on the automotive industry has led to manufacturers making repair manuals openly available rather than go through a similar legislative process in the remaining 49 states. This approach is now being expanded to electronics so independent repair shops or consumer themselves have access to parts and information to effect repairs and extend the useful life of products. This has the potential to breath new life into repair-and-resell sector.
In Vancouver, a deconstruction bylaw incents the recovery of materials from older homes brought down for new construction. Naturally Crafted, a Vancouver-based specialty company, has developed a CE business model to recover the old lumber from these take-down houses and generate new revenues and jobs through stand-alone projects and renovations to existing homes. According to CEO Adam Corneil, there are potentially millions of dollars of wood value in homes slated for take down. All of that potential economic activity is lost in the conventional approach of demolished wood disposed to landfill of used for its energy value.
No doubt the transition to CE business models requires entrepreneurs to adapt to the emerging applications of circularity in all sectors. Those with the creativity to see those opportunities unfold will be the visionary leaders in this evolution to a more sustainable system. At the Recycling Council of British Columbia we promote and support efforts to develop a sustainable CE at every level. The sooner we get there the better.