The circular economy - an inevitable transformation Young Energy Specialists Development Cooperation (YES-DC) 'The role of materials in the energy transition'

Ronald de Vries Rabobank International IKT

19 november 2013, Utrecht

Time to adjust the economy to the rules of nature instead of vice versa

Our House

Limits to Growth an intermediate 40 yr reality check

1900 1950 2000. 2050 2100

Years

1: 2: 3: 4: 5:

1.30e+10 6.00e+12 4.00e+12

40.00

0.00

2.00e+12

1: population 2: food 3: industrial output 4: pollution index 5: resources …

1

1

1 1

2

2

2

2 3

3

3

3

4 4

4

4

5

5

5

5

Nonrenewable

Resources

Pollution

Food

Population

Industrial Production

(Meadows et al. 1972, 1992, 2005)

We are still on an Exponential growth path

• Three major environmental issues:

• Resource depletion

• Bio-degradation

• Pollution (GHG)

• Resilience under pressure (capacity to recover from the eco-footprint)

• Ecological footprint has to be reduced to 1.0

• Therefore:

• Life time extension of products and goods

• Materials recycling (the exergy of materials)

• More energy efficiency

• From fossil towards sustainable energy sources

Resource scarcity – a key driver to change towards circularity

• “Our planet is a volatile beast”: a threat of climate change (point of no return)

• By 2030 growing demand for:

• Food (+50%)

• Water (+40%)

• Energy (+30%)

• Food shortage crisis ranked as 4th most connected risk in TOP 10

• Extreme volatility in energy & agriculture prices ranked as 7th most connected risk

Sources: Global Risks 2013, World Economic Forum (WEF) IEA, 2013 ; IFRI, 2011; FAO, 2013

Climate change belongs at TOP5 of game-changers

Climate change

Energy

+30%

Water

+40%

Food

+50%

Economic resource scarcity .. the greatest challenge

* Based on existing policy commitments

Source: 2012, IEA, World Energy Outlook

EU: more energy dependency .. an inevitable reason for change

-50

-25

0

25

50

75

100

125

0 20 40 60 80 100 120

Ga

s

2035 forecast*

2010

Oil

Net imports as % of consumption

United States

ASEAN

China

India

European Union

South Korea

Japan

With a major challenge for the Netherlands

< 5%

5-10%

10-20%

20-30%

30-40%

40-50%

>50%

Proportion of renewable energy

EU (%) of energy consumption

For example an energy system to handle flexible supply & demand

Source: 2012, OECD, IEA World Energy Outlook

1. Awareness

• The urgency of dependency and exposure to volatility / increasing economical scarcity and price levels

• From business as usual (linear thinking) to innovation

2. The first easy steps of energy efficiency and recycling

• The outlay must precede returns / costs come before the benefits

• Cooperation to create circular chains of resources and business

3. New markets are developing

• Examples like ‘urban mining’ and renewable energy production

• Waste will not be produced or minimised

4. The circular economy is developed: more independency and autarky

• Circular business will result into an acceptable ecological footprint

• Circular economies will grow from small(er) to large(r)

• Driven by innovation, responsibility and the power of influence

• Towards autarky: the quality of being self-sufficient

Path ways to a circular economy

1. Cooperation

• Optimization of cooperation between companies to close material and economical cycles (reduce material use, energy and pollution)

2. Organisation of product efficiency

• Savings of resources, energy and costs

• Each phase in the product chain is involved: biological and technical nutrients

3. Resource management and optimisation of re-use and recycling

• Product design for life time extension and maximised recycling

• Re-connection of recycling chains to original producers (product stuart ship) via appropriate feedback loops

4. From consumer ownership towards a product service system

• A shift from product ownership to usage or lease concepts

• Take back concepts via deposits

• Supported by service and maintenance contracts

The added value of circularity

• Life time extension of products, components and materials: assumptions of design focussed on modular construction and easy replacement / repair

Methods for re-use and recycling (feed back loops)

• Second life for products by bio-based materials like bio-plastics

• Second or even third life for components and materials

• Recycling or even upcycling, driven by cost savings considering:

• High commodity prices of virgin materials

• Viability to recover materials like (1) regular, precious or even rare earth metals (2) glass (3) wood, cardboard and paper (4) rubble (5) textiles etc.

• Replacement of resources by bio-based materials like bio-plastics

Points of attention for companies in transition

Return on

capital Risk

management

Growth

Product Service

Systems (PSS) & marketing

Sustainable

value chains & networks

Sustainable

operations & feed back loops

Operational risk

management

Reputation

management

Regulatory

management

Composition

of business portfolio

Innovation

and new products

(product desgn)

New

markets

Example of waste management

1. Europe

The outlook of a circular economy for the EU is estimated at:

• EUR 287bn p.a in a transition scenario

• EUR 476bn p.a in an advanced scenario*

2. The Netherlands

Circular economy activities will contribute with:

• EUR 7bn on top of the existing situation

• corresponding with 54.000 fte**

* 2013, “Towards a circular economy’ Alan McArthur Foundation

** 2013, “Kansen voor de circulaire economie in Nederland” TNO, 2013

-10%

0%

10%

20%

30%

0

5

10

15

Collection Treatment, Preparation for Recycling Wholesale in waste and scrap YoY (%) Collection Treatment and Preparation YoY (%) Wholesale in waste and scrap YoY (% Total Turnover

Source: 2013, CBS; Rabobank International IKT

Source: 2013, Agentschap NL; Rabobank International IKT

Waste market(EURb p.a) YoY% 2001 – 2012E

Waste volume (Mton p.a) and recycling (%)

0%

25%

50%

75%

100%

0

20

40

60

80

1990 1995 2000 2005 2006 2007 2008 2009 2010 2011E 2012E

Recovery via net waste export Re-Use & Recycling

Recovery of energy Incineration

Landfill Other

Recycling rate (excl. R1 EfW) Recycling rate (incl. R1 EfW)

“A raw material is labeled "critical" when the risks of supply shortage and their impacts on the economy are higher than for most of the other raw materials”

Most critical elements for companies in the EU

Neodymium-ferro-boron magnets

Applications:

• Motors / generators in

• Wind turbines

• Electrical vehicles

• Hybrid vehicles

• Hard disks

• MRI scanners

• (conventional) automotive

• Mobile phones

• Speakers

• Sensors

• How to recover them?

Permanent magnets .. crucial for an energy transition

Samenstelling van een gemiddelde Nd-magneet

29%

3% 1% 67%

Nd (Pr)

Dy (Tb)

B

Fe

Applications

• Low energy lamps

• LED’s

• Screens and tablets / phones

Composition phospors

• Europium: Red or blue

• Terbium: Green

• Dysprosium: Yellow

• Yttrium: Red

Substitutes

• No cheap alternatives available for used elements in

• Recycling waste electric and electronic equipment (WEEE) is just about to begin

Phosphors for lighting and displays of electronic devices

New business models are emerging….

Never waste a good crisis!

“Voor ons is het niet langer de vraag hoe wij de samenleving

kunnen gebruiken om succesvol te zijn, maar hoe we kunnen

geven om succesvol te zijn. Dus is het onze opdracht om te

zorgen dat de samenleving beter wordt” , Trouw, nov. 2011

“Wij zijn een commercieel bedrijf, maar het is leuker om

winst te maken met goede producten en de wereld goed

achter te laten voor onze kinderen”, Duurzaam ondernemen, nov

2007

New business models driven by:

Resource Scarcity Environmental Legislation Consumer Values

Thank you for paying attention

Any Questions?

Background slides per scenario:

• Are available

• In case of detailed questions!

A Common Future towards more sustainability