One of the main reasons why we are talking about the Circular Economy today is because of material insecurity. This term is connected to the fact that many materials that are used in consumer products and things making up our physical world are critical. Different people have raised this issue over the past years and since 2010, the European Union has specifically identified what are these materials.
For the European Union (2014) a material was defined to be critical taking into account two aspects: supply risk and economic relevance. The first one is defined as the concentration of a material supply in a country with poor governance which could lead to unstable supply. The second element depends on the uses of the specific material and how important these uses are to economic mega sectors.
What are the most critical materials from an European perspective and who are the bigger suppliers?
Many of us are not familiar with these names but almost everybody uses something that has some of these materials inside. For example, according to Namibia Rare Earths Inc company only Rare Earths Elements are used in camera lenses, hydrogen storage, electric motors for hybrid cars, color tv screens, shielding in nuclear reactors or steel production. As it can be seen, uses are very different but very relevant for our today's life style. Other critical materials for Europe, that are not that exotic for the common citizen are natural rubber, pulpwood and swan softwood.
According to the European Union there are three groups whose demand is going to grow very strongly in the coming years: niobium, gallium and Heavy REE. Niobium is used as an input in the aviation and aerospace industries (USGS, 2014). Gallium, on the other hand is used in the electronic industry, especially for smartphones and not so high tech uses such as mirrors (USGS, 2013). Heavy REE are used also in a range of applications that you can find here.
Why is material insecurity driving Circular Economy?
If these materials are not readily available in a raw state then where should businesses look for them, one might ask. The obvious answer would be to look at the products that are made of them. So, if we want to reduce the material insecurity of the European industries that use these materials, a transformation needs to be implemented: reduce supply from external sources and replace them within the economic activity.
The answer to these to tasks is given by the Circular Economy and by a circular approach to innovation. Elements such as reuse, remanufacturing and recycling have to be incorporated in the development path that is to be followed for a future where critical raw materials are not a restriction for value creation within society. These approaches reduce use of materials, replace other materials, creates value from non-material activities and allows an economy to work under sustainability principles.
Many of the new comers to the European Union are still discovering all the options and opportunities there are to bring the Circular Economy to a reality. Here, it seems to be a million ways to overcome some of the barriers for transitioning to a Circular Economy that have been already identified and presented in a previous post. One example of tools that help overcome them is the Horizon 2020 program:
“Horizon 2020 is the biggest EU Research and Innovation programme ever with nearly €80 billion of funding available over 7 years (2014 to 2020) – in addition to the private investment that this money will attract. It promises more breakthroughs, discoveries and world-firsts by taking great ideas from the lab to the market. Horizon 2020 is the financial instrument implementing the Innovation Union, a Europe 2020 flagship initiative aimed at securing Europe's global competitiveness.” (1)
In the own opinion of the European Commission this program is strongly related to Circular Innovation. Here we present what components of a Circular Economy could have more funding opportunities under the Horizon 2020 program and which specific subprograms are more relevant for initiatives towards a Circular Economy.
The top elements of a Circular Economy with more opportunities:
The bottom elements of a Circular Economy with less opportunities
On a more detailed level, if we look at the specific subelements of the different levels of innovations, here are the champions under the Horizon 2020 program in terms of funding opportunities:
While the possible losers would be given the fact that they are not cover by as many programs as the above mentioned :
Under this scenario product/service and process innovations are more relevant than systems innovation which in our opinion is at the heart of the Circular Economy. The first two might yield results faster but if they are not set in a broader changing context, uptake will be slower and transition will take more time to happen. If not under the Horizon 2020, the European Commission needs to find sources for this landscape level changes in order to facilitate the transition to the new model.
Design actions do not have many funding opportunities under the program, neither do logistics activities. Under the Circular Economy, design is considered a key element since at this stage of the value chain is when the enabling principles of sustainability and of circularity are incorporated into the product/service. Logistics is also a key activity since on it depends the ability of the economy to close the loop. Research and innovation are key for this two activities so the question is where does the European Commission think the resources will come from, to develop these new models and ideas.
These arrangement of opportunities for specific components of the Circular Economy could be explained by the subprograms of the Horizon 2020 and their relation to the Circular Economy components. The pillars that group the most opportunities for Circular Economy activities and innovations are:
The pillars less connected with the Circular Economy transition are:
Each of the pillars has subprograms that provide the funds for the projects. The main subprograms to support the innovations and activities needed towards a Circular Economy are:
Transitioning to a Circular Economy might be a dream come true for a lot of sustainability students, professionals, activist and for many people as well. News regarding the negative consequences of the linear economy are everywhere: climate change, deforestation, displacement, conflicts over resources, limited access to water, and so on. The drivers of these problems have been highlighted for a long time and action has not been taken yet. Many people are asking themselves why, for example James Greyson in this post, and answers are the same: is too costly, is too difficult, is too soon. Nonetheless, change is in the air and it looks round.
The Circular Economy is not an invention in itself, it is a clever name given by some savvy people to a specific way of thinking our world and our behavior which basically acknowledges the material limits of our world, the material-lessness of our well being and the complexity of how our world works. This way of thinking started a long time ago, but only until now people seem to be listening.
And a big sign of this, in our opinion is the fact that the European Commission has issued a communication package laying the ground for a transition towards a Circular Economy, to this new way of thinking. It is important to understand that this is only one step and many elements are still not fully developed (as Maxine Perella highlights here), but it is important to point out that one of the big players in the world economy, the European Union, is recognizing the relevance of a transition towards the Circular Economy. In this post we want to address two elements, the European Commission understanding of the Circular Economy and how they are thinking about innovation for the circular economy.
Just to summarize, for the European Commission, the Circular Economy:
Based on these arguments, and having in mind that there are different type of barriers that need to be addressed including technology, financial, information and cultural obstacles, the European Commission calls for Circular Innovation. Despite not using this term, the communication stresses the importance of a circular approach to innovation and provides examples of what it entails:
The Circular Economy is not new, their principles, ideas and proposals have been addressed long before 2014 when the European Commission launched its communication, however the actions that need to be taken are the novelty of this approach. How are we going to overcome the long standing barriers and obstacles that these approaches have faced in the past 40 years, is the key challenge towards a Circular Economy. The key question here is how are we going to manage the multilayered (product/services, processes, business models, systems) innovation process that is described in the communication and that is going to bring us all to a sustainable system; in other words, how are we going to implement Circular Innovation?
Some hints are provided in the section 2 of the communication which aims at setting up an enabling policy framework that will foster research, encourage investments and provide instruments to businesses and consumers for action. Here the actions proposed towards Circular Innovation are:
In the following sections, the communications emphasizes the role of waste and recycling in paving the way towards a Circular Economy but having in mind that this road will lead Europe to a zero-waste state, it is important to keep in mind the measures and incentives should aim to reduce waste to its minimum level. Avoiding perverse incentives should be at the top of the agenda.