I heard something on a podcast a week or so ago about the impact of technology on the circular economy. Circular economy? What the heck is that? How does it relate to what we normally call “the economy?” And yeah, how does technology impact it? Well, when I get curious, it’s time to write a blog post about it.
The circular economy is one economic model, just as Keynesian Economics, Austrian Economics, or Supply-side Economics, to name a few, are economics. This model, however, doesn’t seek to simply explain what happens, but to actually encourage action at the level of the players. The circular economy aims to eliminate waste and the continual use of resources. The traditional linear economy follows a model of “take, make, dispose.” In a circular economy, products and materials are used for as long as possible, letting us get the most value from them while we use them, and then recovering or regenerating them at the end of the products’ lives.
The technology angle comes in because technology plays a really huge part in enabling the transition to a circular economy, and even accelerating that change. Innovations in tech can help us use resources more efficiently, enhance recycling processes, and make it possible to create more sustainable products by making use of better design and manufacturing techniques. Technology can also help with the tracking and optimizing the flow of resources, using IoT tools, AI, and blockchain, which can make the processes not only more efficient, but also more transparent. I’m not in favor of “save the earth at all costs,” but I believe we are to be good stewards of our home. In order to do that, we need to be finding ways to reduce waste, lower our environmental impact, and create sustainable solutions that are scalable and effective.
The term “circular economy” began to gain prominence in the late 20th and early 21st centuries. While the concept of recycling and reusing materials has been around for decades, the formal framing of these ideas into the circular economy model was significantly shaped by several thinkers and organizations. The Ellen MacArthur Foundation, established in 2010, has been particularly influential in promoting the term and concept globally. The foundation helped to popularize the term by advocating for a shift from linear to circular economic practices, emphasizing the importance of designing out waste and keeping materials in use. This has helped in moving the concept into mainstream discussions on sustainability and economic policy.
TECHNOLOGY SUPPORTING THE CIRCULAR ECONOMY
Since this is a tech-oriented blog, we want to know where the tech comes in, so here we go! We’re going to explore how the circular economy and technology interact. Specifically, we’re going to focus on Internet of Things (IoT) and Blockchain today. Those two aren’t the only examples, but hopefully when we’re done here, you’ll be seeing other examples on your own.
IoT
IoT technologies enable all of us collectively to monitor products throughout their lifecycle, from production to disposal. By doing that, we can work toward extending the product lifespans where possible due to improved maintenance, repairs, and upgrades, rather than replacement. When we have access to real-time data about the status and use of products, businesses can use their resources more efficiently, which can reduce waste and energy consumption.
IoT devices can also keep track of the composition of products, and their conditions at the end of their life. This can make it easier to sort and recycle materials correctly and efficiently. And, while I’m not a huge fan of this, IoT will facilitate the concept of Product-as-a-Service model, which essentially means leasing or renting rather than owning. While I can understand that some products incur such great costs that it is more practical to lease or rent, I’m not a product renter on a long-term basis. However, it might make ecological sense if businesses are more likely to refurbish or recycle the products than the consumers are. We might consider incentives for both businesses and consumers to encourage recycling or refurbishment.
IoT can also inform consumers in real time about their patterns of consumption of products and the environmental impact of the things they do. Awareness of the behavioral patters can encourage more sustainable choices.
Blockchain
When you hear the term “blockchain,” it’s likely the first thing you think of is cryptocurrency, but the blockchain is so much more than that. A blockchain provides a secure ledger system that cannot be changed after the fact. The records of product origins, the material contents, and the handling processes can’t be tampered with, which will promote accountability and trust in the records. We can record each transaction or movement of goods on a blockchain ledger, and all of the stakeholders in the process will have complete visibility into the supply chain, seeing how the products track from raw materials to their use in the hands of consumers.
Blockchain can simplify the certification process of recycling and recycled materials, as well as compliance with environmental standards and regulations. The records are transparent, easily accessible, and verifiable by regulators. The transparent records can also help minimize the chance that counterfeit goods will enter the supply chain, which adds to the assurance that the materials and products are sourced responsibly and sustainably.
A COUPLE OF OTHER EXAMPLES
AI and Machine Learning will increase the use of preventive maintenance and predictive repairs by sensing wear levels and performance measurements. Better maintenance reduces frequency of replacement, reducing waste, which, by the way, is also facilitated by more accurate measurement of materials and cutting/fabrication techniques. 3D printing will increase localized production, as well as bespoke parts production, reducing transport resources and ensuring accurate parts production.
CHALLENGES IN IMPLEMENTING A CIRCULAR ECONOMY
Nothing in technology or innovation ever happens without resistance or challenges, so let’s take a look at some of those. I do this, because, as excited as I get about tech, and as much as I love ecology, the interplay of innovation and preservation can be a delicate dance. It’s naïve to believe we can move ahead without some unintended consequences.
For one thing, it can be difficult to integrate new technologies into existing infrastructures and systems which have been optimized for linear models. We can’t just shoehorn new tech into the old assembly line. Another significant factor is human resistance to new practices. Changing mindsets can be slow and costly. Additionally, accommodating circular economy principles will require adjusting and reconfiguring supply chains, and that can be complicated and disruptive to established processes.
There’s another fly in the circular ointment, and that’s a need for global standards and certifications. Without universally accepted standards, we’re likely to see confusion and inconsistency in how the practices are implemented and measured. Getting certified, and maintaining that certification, will be costly, and the cost will put it out of reach of many smaller entities. We also see standards lagging behind innovation, as we’ve seen with AI. This means that there will always be a need for frequent updates that may not be put into place in a timely manner, and they may not be universally adopted.
Investors might not be enthusiastic about funding new technologies, because the returns may be a long time coming, and long-term viability of circular economy models is still uncertain. Investing in sustainable technologies have to compete as well with opportunities in linear economy investments, which are proven and familiar. Also, it may be a while before we see financial products that are specifically designed to support the risk profiles and the unique needs of circular economy ventures.
IMPORTANCE OF THE CIRCULAR ECONOMY
I do not worship at the alter of the environment, but I do believe that we should be good stewards of the planet we habituate. We should be working to reduce e-waste, which is proliferating at an astonishing and alarming rate as our use of electronic devices increases. We should at least consider every option we have for conserving resources and lower carbon emissions. In taking care of the earth, we also create new job opportunities, and innovation begets innovation.
YOUR TURN
In my early adult years, we heard “Recycle, Reduce, Reuse.” I think that is still what we’re looking at, but it’s not as simple as it used to be, and, when we take a look at how it worked, we find that the future of a circular economy, with the idea of Recycle, Reduce, and Reuse built into the products we use, might produce the results that the original effort may not have been able to. Have I given you any ideas on where you’ve seen the circular economy in action? Where might it be in place that I’ve missed? Drop a comment below and let’s continue the conversation.
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