Sparks Circular economy

Tips of circular economy for energy industry

 By Robin Wylie
Circular economy

The energy industry is in the midst of a fundamental change in the way it does business. With the need to reduce atmospheric emissions becoming ever more urgent, there are two adjectives on everybody’s lips: renewable and efficient…

But the world of energy is not the only place where this kind of change is taking place. Waste is becoming an increasingly dirty word in many industries, as the old “take, make and dispose” way of doing business (not to mention making energy) gives way to a newer, more sustainable vision for the future.
This new philosophy is widely referred to as the “circular economy”, an umbrella term that refers to a wide range of practices involved in slashing waste, raising efficiency and even redefining economic growth itself by placing an increased value on natural and societal capital, rather than on just fiscal considerations.
The term may be new to many people, but the concept of the circular economy has already shown some impressive, practical results. These examples hint at what the energy industry could stand to gain.

1. The Caterpillar remanufacturing program
The circular economy may have come to prominence relatively recently, but as the manufacturing giant Caterpillar shows, its core concepts are not new. As early as 1973, the company was already repurposing engine parts to cut down on waste, a process that their remanufacturing branch, Cat Reman, continues today.
When Cat customers go to a dealer for a replacement part, they are offered the choice of a remanufactured component (such as an engine, gearbox or set of brakes). These components have the same standard of performance, but are 40 to 70 percent of the price of new parts.
Cat Reman buys used parts back from their customers, then strips them down to their individual components. These are then recycled and, provided the components are of sufficiently high quality, used to construct new parts.
In this way, everything from small replacement parts to entire machines can be repurposed. What’s more, by adopting this circular economic approach, Cat Reman has been able to boost its profit margin while maintaining the highest quality standards.

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Caterpillar's "Cat Reman" is one of the earliest examples of circular economy

2. Walmart
As part of its goal to achieve zero waste, the retail colossus Walmart has also adopted aspects of the circular economy. The company is starting to offer trade-in programs for hard-to-recycle items, such as tablets and smartphones. It’s also aiming to make all of its private-brand packaging recyclable, as part of a pledge to cut its greenhouse gas emissions by 1 gigaton.
What’s more, like Caterpillar, Walmart has also begun to reuse parts from its machinery to further cut down on waste. Now, when one of the company’s in-store refrigerators breaks down, it is disassembled, and the salvageable parts are used to repair refrigerators in other stores. According to the company, this practice has allowed them to replace significantly fewer machines than they otherwise would have.

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Walmart has reuses parts from its machinery to further cut down on waste

3. The city of San Francisco
San Francisco is usually at the forefront of technological developments, so it’s not surprising that the city is also one of the leaders in the development of a circular economy. The West Coast technology hub has set a target of zero waste-to-landfill or incineration by 2020 (as well as a target of 100 percent renewable energy), and has already made big strides toward meeting this goal: San Francisco now diverts 80 percent of discarded materials away from landfills through reuse, recycling, composting and other methods.
This success led the New York Times to dub San Francisco “The Silicon Valley of Recycling“.
Skeptics argue that the resources required to recycle on such a wide scale means that circular economic policies are not the most financially sensible. However, there is plenty of evidence that the concept can work. Cutting-edge recycling plants in places such as San Francisco claim to be cost effective, and the fact that a brand the size of Caterpillar has been employing a circular economic model for more than 40 years suggests that there is plenty of economic promise in the circular economy.
Analysts agree. The World Economic Forum has estimated that if more companies focused on building circular supply chains, more than $1 trillion a year could be generated globally by 2025.

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San Francisco diverts 80 percent of discarded materials away from landfills through reuse, recycling, composting and other methods (King of Hearts, Wikimedia)

What can the energy industry learn?

The same successes in repurposing machine parts achieved by Caterpillar and Walmart could be repeated in the energy industry. The myriad machines that are involved along the energy production chain – from exploration to extraction, generation, supply and end-user usage – could be recycled in a similar way. And as San Francisco is showing with its record-breaking recycling achievements, when there’s enough will behind an idea, huge changes to the status quo can be gained.
Together with a continued push towards lower carbon energy sources, the adoption of circular economy practices could help deliver the much needed advance in efficiency and reduction in waste that the energy industry is pursuing.
As for Eni, the company is increasingly adopting sustainability and other circular economy concepts in its operations.
“We need to adopt a new model of energy conservation based on a circular economy and way of life – not merely reducing waste, but also decreasing the need for raw materials”, Eni CEO Claudio Descalzi recently wrote.
“Having invested in technologies that enable us to recover urban and industrial waste, we are now transforming our refinery and chemicals operations by focusing on organic production and circularity”, he added.
That the energy industry is looking toward this new market philosophy for inspiration is no surprise. A key concept of the circular economy is “maximizing the value of raw materials“, a maxim that is highly relevant to the goals of an energy industry looking to increase efficiency while simultaneously reducing harmful emissions.

READ MORE: Circular economy around the globe by Peter Ward

about the author
Robin Wylie
Freelance earth/space science journalist. Currently finishing off a PhD in volcanology at University College London.