#CircularEconomy_4: Dealing with complex supply chains and products

Clara Löw and Siddharth Prakash have already presented five contentious hypotheses on the #CircularEconomy, and now numbers 6 and 7 follow. In them, the two researchers raise and discuss questions behind the scenes in their group at the Öko-Institut. Over the course of the year, the blog series will provide insights into the - partly controversial - debates on the circular economy.

Hypothesis 6

Circular Business Models are effective, when they operate in short and well-known supply chains

Logistics and value chain management play an important role in the environmental impact of a product. Thus, for example control of quality and compliance with supply chain agreements and standards is easier with fewer, well-known suppliers. The fewer suppliers, the better you can control them, which is especially important in large, volatile markets.

Let us give some examples of different dimension: Currently, we are supporting several countries in Southeast Asia in their ambition to reduce single-use plastics, for example through design and a strong recycling market. The share of recycled plastic continues to be very low in packaging due to higher costs of recycled material, existing subsidies for virgin plastics and possible contaminants. We repeatedly emphasize that measures such as recycled content targets can only be effective if applied in the context of the domestic recycling market: Ideally, increased demand for recycled plastic would trigger enhanced collecting and sorting practices in the domestic economy. But if the target is only being achieved through well-sorted, imported plastics, the recycled content target isn’t unfolding its potential and this transformation will not be achieved. Thus, no benefits for the local littering problems.

In addition, transportation of goods and waste to and from consumers is often inefficient: Take the example of delivery services in a European context. Packaging material is widely distributed to customers and later collected again by waste collection services. Wouldn’t it be most efficient, if for example food delivery services use reusable packaging and take back food boxes and pizza packaging from yesterday’s meal when driving by? Benefits would include: less transportation needed, less resource consumption. However, more collaboration and information exchange would be needed to implement such a system.

So, if we agreed that Circular Business Models operate in short and well-known value chains, open questions arise in two areas: First, are we heading towards a broad logistics system that requires not only the transmission of goods but also of a bundle of information on compliance, trace substances, origin of materials incl. reverse logistics – much more extensive than today? And we remain with the second area of open questions: How do regional value chains work within existing globalization processes? Do they exist in parallel or do they need to be supported with policies against globalization processes? How would such policies relate to world trade regulations? What problems and opportunities would this bring? Is the solution for each country to make its own circular economy?

Hypothesis 7

Handling increasing complexity of contamination of products in non-toxic material cycles – a Sisyphean task

We have observed two diametral trends: On the one hand side, more and more complex products are brought to the market, containing various additional complex additives to fulfil very detailed functions in a very short time. The more products there are, the more complicated it becomes to separate the material cycles from one another. Today, innovations in the recycling sector are not that fast to keep track with new products and to disentangle the complexity effectively!

. On the other side, from a realistic perspective, circular economy measures must in many cases implicitly lead to a reduction in the complexity in order to achieve the desired longevity, easy separability, reparability and better recyclability. This includes the phase-out of harmful chemicals for recycled materials to be an attractive substitute of primary resources.

An example are certain components in Electrical and Electronic Equipment that contain flame retardants: Today – for higher effectiveness through an interplay of several flame retarding mechanisms – (non-brominated) organic and inorganic flame retardants are mixed (Qian et al. (2014) MatChemPhys 143, 3, 1243ff).

Besides the (unknown) environmental impact that such mixtures have, which manufacturing process would use recycled plastics containing such mixtures including unknown reaction products that were formed during recycling? Potentially contaminated recycled material will therefore only be used in specific applications where certain pollutants and interfering substances "do not matter". There will be a need to better distinguish between different recycled material streams for different applications.

Or, another example: The furnishing style of some people relies on old furniture, for instance from the household clearance of family members. However, lacquers and paints of such furniture may contain heavy metals, such as lead, which was not prohibited in the past, but is today. Heavy metals in indoor air or dust can have serious health effects. Does that actually mean the end of life for old, lacquered furniture, and everyone would have to buy new closets and sideboards? But that would not be in the spirit of the circular economy.

How to steer effectively the circularity trend on the one hand and complexity of products and contamination of recycled materials on the other hand?

Our current presumption: Some sectors, such as packaging, will have to very much simplify and reduce material. Harmful chemicals need a quick phase out. And for other complex products – such as Information and Communications Technologies (ICT) and Electrical and Electronic Equipment – reuse, repair and recycling centres need to be well equipped with financial resources, manpower, time and knowledge. Additionally, these services will need high appreciation and reputation of the society. The organization of all that is unclear and unassigned.

Everyone seems to be talking about the Circular Economy and Circular Business Models. There seems to be a general consensus that they have a very important role to play when it comes to reducing global environmental pressures and achieving environmental goals. In the #CircularEconomy blog series, Oeko-Institut scientists raise a few questions about the current state and potential of Circular Business Models and present their proposals on how the circular economy can really contribute to climate protection.

Read all posts to the #CircularEconomy blog here.

Clara Löw and Siddharth Prakash are experts in the Sustainable Products & Material Flows Division in Freiburg. Their research focuses on sustainable materials, products and consumption.