The circular economy
(Not by Ellen MacArthur)

Who are we?

Ellen MacArthur Foundation

07/07/2014

Founded by Ellen MacArthur

Round the world sailor – fastest person to go around the world

Boat fast

Boat light

Take with you what you need

Manage it

Asked is our world any different?

Started investigating

Becomes clear pretty quickly that we live in a linear economy.

Take stuff out of the ground, bash it around, making it into lots of amazing things, use them a bit, but ultimately chuck them away. It’s take, make, dispose, it involves requires significant inputs at every stage and also produces waste at every stage

It was not just practical it was culural, it was Progress! the fashion for looking for the mechanism, the determinants of order in society, the market mechanism in economics, basic drives in the psychological state, education by transmission,. Understand predict and control.

Linear economy with limited feedback, the monetarised mattered. A throughput machine creating wealth and new growth endlessly as resources and sinks for waste were unlimited or assumed

As indeed they appeared to be…

Not just rising prices – spiky prices

Average EU car manufacturer saw a raw materials price increase of 500m Euros in 2011 – operating profit of 1bn Euros – half of profit wiped out by price incrases that they couldn’t control

What about energy? This graph suggests how little we know about where some of our oil will come from in future

Lots of debate about whether we have lots of energy or little energy -

What’s certain is that we’ll be going to great efforts to get hold of it, and the price is high

Here’s another feature of todays economy

Producing more and more stuff

But wages haven’t really increased since the 1970s. People still need to buy the stuff! That’s how our economy works - throughput

We’ve needed cheap credit to bridge

And cheap credit hit a wall in 2008

Linear is fine with cheap materials, energy and credit - Not a very rosy picture – many people are looking for a way out – an alternative to the linear economy.

The circular economy – a recap

And at the Foundation, we think this could be the alternative – a circular economy.

Broadly speaking there’s the linear economy down the middle, it’s take, make, dispose. A circular economy has two cycles, biological on the left and and technical on the right

Biological materials are designed to restore a food and farming system

Technical materials should remain in the economy and cycle through these various loops


Recycling’s part of it – but not a very valuable part. Stripping away value added during the manufacturing process

Better if you can change the BUSINESS MODEL

General picture – many new business models are tied to feedback loops, scale and what IT enables us to do -

Why now?

Ellen MacArthur Foundation

06/07/2014

Tighter regulation

Investment opportunities

Enabling technology

The new consumer

NOT A NEW IDEA

Tighter regulation – one you’re all familiar with, people talk about it all the time

A century of price declines erased in a decade, unprecedented volatility

3 billion new middle class consumer expected to enter the market by 2030

Demand for materials will increase

Other regulations around water use, emissions and so on.

Investment opportunities – we think that businesses that are more resilient to external shocks – price volatility etc could be more appealing to investors – we’re working on a circular economy metric for product and company level now

New consumer – We’re seeing the rise of a new consumer that is more open to the concepts of access over ownership, some argue in response to less disposable income – car sharing schemes, airbnb, collaborative consumption

Enabling tech – We now have the technology to make new business models possible. Tracking and tagging technologies, the internet of things can let us know the status of a product in use, and the growth of the mobile web has made collaborative use easier.

Four value drivers

Ellen MacArthur Foundation

06/07/2014

Inner circle

Circling longer

Cascading materials

Pure material flows

stresses different biz model

Why does this matter – we’ve seen a century of price declines erased in a decade, high level of price volatility, unemployment etc

The two volumes of Towards the Circular Economy outlined a trillion dollar opportunity in moving towards a circular economy – but how?

Power of inner circle - In general, the tighter the circles are, the larger the savings should be in the embedded costs in terms of material, labour, energy, capital

If it’s still working, don’t mess with it!

Power of circling longer - second core value creation potential stems from keeping products, components, and materials in
use longer within the circular economy – refurbish, remanufacture, product life extension

Cascades - opportunity in the cascading of products, components or materials across different product categories - transforming cotton-based clothing into fibrefill for furniture and, later, into insulation material before returning it as a biological nutrient safely into the biosphere

Non-toxics - generate maximum value, each of the above levers requires a certain purity of material and quality of products and components – ease of separation of different materials. Other health and comfort benefits

Four building blocks

Ellen MacArthur Foundation

06/07/2014

Radical design

Innovative business model

Cascades/reverse cycles

System conditions

But what are the practical building blocks? What are the things that companies need to do to increase circularity?

Radical Design – designing for disassembly, design for remanufacture – could involved modularisation, standardised fixings, design for cascade, considered material choice

Innovative business models – New business models that see the consumer as user, offer a performance contract or incentivise take back or sharing

Reverse logistics – Improving collection systems so they’re user-friendly, cost effective and preserve quality of product. Tracking a tagging methods, the processes in place by which a product is cleaned, upgraded etc

System conditions – partnerships, education, government finding meaningful partnerships through events like this, developing industry standards – also improving education around this.

Who are we?

Ellen MacArthur Foundation

07/07/2014

So who are we? We were set up in 2010,

Business – 5 companies – then CE100 – businesses, regional governments, emerging innovators

Education – fellowship programme, worked with schools – all freely available

Insight – trillion dollar opportunity

Renault

Ellen MacArthur Foundation

06/07/2014

Choisy le roi plant – MOST PROFITABLE -

Turnover over 100m Euro

injection pumps (1989), gearboxes (2003), injectors (2010) and turbocompressors (2013)

Employs 325 people – creates local jobs

30-50% less expensive for customer – same guarantee

Designers – end of life

80% less energy

88% less water

92% less chemical products

70% less waster production

Caterpillar – also a great example of automotive/machinery manufacturing – won’t talk about that here as Matt will present later

Maersk

Ellen MacArthur Foundation

06/07/2014

A slightly larger project now – Maersk’s business model relies on two main commodities, steel and oil. They’ve done what they can to increase fuel efficiency.

Taken a new approach to steel. Rather than using less, they’re developing a C2C passport that aims to document all the materials contained in the ship during its 20 year life.

So when it goes to the breakers, the 7 grades of steel are kept separate, and retain their quality when cycled and can therefore command a higher price.

National Physical Laboratory

Ellen MacArthur Foundation

06/07/2014

Project out of the National Physical Laboratory

Traditional processing for printed circuit boards is shredding, very poor material recovery.

When submerged in warm water the components can be removed from this board – improve materials purity

Very simple example here – what’s the potential if this is scaled up?

Active Disassembly

Ellen MacArthur Foundation

06/07/2014

Some great examples of disassembly you’ll hear from – Wear2 and Agency of Design

Since those are taken I’ll mention active disassembly – a number of smart materials or materials made smart. This one is bolts with disappearing threads at a certain temperature

Potential for fast batch disassembly at scale.

Ecovative

Ellen MacArthur Foundation

06/07/2014

Ecovative is a company that has received a lot of press from people like Wired and Fast Company so maybe you’ve heard of it

Mycelium packaging – packaging made from mushrooms, a direct replacement for polystyrene. I believe Dell and Steelcase use this for their products. Ecovative claim to offer this at no extra cost

Not just wine – can also be used in insulation and last I hear they were trying to make a surfboard.

Can be completely biodegraded and restore soil quality.

Splosh

Ellen MacArthur Foundation

06/07/2014

Splosh cleaning products – completely new way of providing this product. The system has been re-thought, which has in turn led the design of the product. The sachets come in a box that is classed as a large letter by Royal Mail – convenience.

Biggest challenge was in finding the chemists who could redesign the formula – not as simple as just removing water from the product. And the film – a film that is used elsewhere but in this case it actually adds viscosity to the liquid and some mild cleaning properties.

Opportunities to increase brand loyalty

Spotify, Netflix

Ellen MacArthur Foundation

06/07/2014

These might not look like new business models but they are - it’s amazing how quickly people have become accustomed to simply accessing media that’s stored in the cloud, rather than owning it.

And now all sorts of products are being provided this way, such as software and…

Le Tote

Ellen MacArthur Foundation

06/07/2014

In the 2013 report we suggested the idea of a netflix for clothing – not the first people to suggest this so not taking credit!

But this company offer unlimited clothing rental for 50 dollars a month. And people say it’s too much or they don’t like the idea over reusing clothing

But it’s part of a massive trend -

Rent the runway, girl meets dress etc.

Caterpillar

Ellen MacArthur Foundation

07/07/2014

Project out of the National Physical Laboratory

Traditional processing for printed circuit boards is shredding, very poor material recovery.

When submerged in warm water the components can be removed from this board – improve materials purity

Very simple example here – what’s the potential if this is scaled up?

Philips

Ellen MacArthur Foundation

06/07/2014

Philips and Turntoo

Architect called Thomas Rau said “I need light for my office. I don’t care how you do it, I don’t want to know, I just want you to take care of it.

Philips developed a system they call ‘pay per lux’ – they sell light by lumens, not light fittings, bulbs etc.

They can offer upgrades, recover resources, increase efficiency etc

Now looking to how they can standardise the process

Disruptive Innovation Festival

SIR KEN ROBINSON

WILLIAM MCDONOUGH

ELLEN MACARTHUR

JANINE BENYUS

DAVE WARD

MARK MIODOWNIK

EBEN BAYER

I am pleased to announce the line up of Headline speakers for the DIF

– these includes Sir Ken Robinson, Jenieve Benyas, William Macdona and Dave Ward amongst others

These leading thinkers have been invited to share their incites on disruptive innovation and the circular economy.

REGISTER at thinkdif.co

FOLLOW @thinkdif_

SHARE the DIF 2014 official launch video

BE PART OF THE CONVERSATION #thinkdif

If you would like to be involved:

Use the Summit app to find out more… or open the DIF e-mail (which each of you should be receiving today) to access our newly launched DIF website at thinkdif.co where registration is now open to attend, engage and contribute.

We look forward to seeing you online at thinkdif.co between the 20th of October and 14th November.

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