Going far beyond traditional recycling, the circular economy is, according to the Ellen MacArthur Foundation, based on three fundamental principles: designing out waste and pollution, keeping products and materials in use and regenerating natural systems. “Only recycling is not a long-term solution. We need to completely modify business models and value chains,” says Christian Tock, Director Sustainable Technologies at the Ministry of the Economy. “It is all about innovation on the product and business model levels to address the inherent flaws of the linear economy.”
National governments and international organisations are well aware that the circular economy is crucial for reaching climate targets and accomplishing the UN’s sustainable development goals, and the topic is integrated in main strategy documents. The consciousness and interest of the business sector is also growing across the world. Slovenia, Norway and Taiwan, for example, are home to privately run clusters consisting of companies that have taken the initiative to join forces in their efforts to become circular.
Circular economy hot topics
A Luxembourg delegation with participants from the Ministry of the Economy, the Chamber of Commerce, Luxinnovation and private companies visited two major international events in October, the World Circular Economy Forum in Japan and Circular Economy Hotspot Scotland. Luxembourg hosted the 2017 edition of the latter. The delegation’s aim was to explore the latest trends in the field and detect new opportunities for Luxembourg companies.
“Putting design at the very beginning of the production process to ensure that products can be reused or remodelled is a main topic,” explains Georges Schaaf, Head of Sector Development – CleanTech & Manufacturing Industry at Luxinnovation. He also mentions the need for education, both for young people and for company staff that can detect opportunities to optimise industrial production processes. Sustainable construction and green finance are two key areas where Luxembourg is already well ahead. “We also discussed the influence of consumers if they are willing to change their behaviour,” he continues. “They can have a huge impact on developing circular food systems that considerably reduce today’s huge level of foodstuffs waste, for instance, or contribute to decreasing the use of plastics.”
The corporate world is central, however, to make the circular economy become reality. Delegates at the World Circular Economy Forum looked into circular business models such as circular supply chains, sharing platforms for the collaborative use of or ownership of equipment, and “products as services”. This is a model where the retailer sells product performance rather than the product itself, while retaining the ownership and the ability to use it elsewhere, when it is no longer needed by the first client. Product life extension though repair, maintenance, upgrading, resale and remanufacturing is yet another sustainable model.
The circular approach makes economic sense: it strengthens our competitiveness and allows us to develop new skills and services.
“The circular approach makes economic sense: it strengthens our competitiveness and allows us to develop new skills and services,” says Dr Tock. “Luxembourg has come a long way and is among the best in class in Europe, but we still need to ramp up our efforts if we really want to make a difference.”
What is then the role of the public sector? “Authorities can define a long-term vision as well as a strategic and legal framework that will give companies the security they need to invest in circular models,” says Mr Schaaf. “They can also provide opportunities for innovating and developing new products and services by integrating circular aspects into public procurements, something that is already done in Luxembourg.” In addition, he points to the ongoing circular pilot testbed in Wiltz, which allows putting new methods and business models into practice.
The ministry and Luxinnovation both support the Luxembourg EcoInnovation Cluster that encourages collaboration between companies and research centres with a focus on sustainable living and clean technologies. With support from the ministry, Luxinnovation has also launched the Fit 4 Circularity programme that facilitates and accelerates companies’ transition to the circular economy and helps them capitalise on business opportunities in this field. “Our strong background in business-related services like accounting, finance, insurance and so on is a solid basis for developing new services for the circular economy,” says Dr Tock. “There is still a long way to go, but we need to get there.”