· Circular Economy and Digital Technologies ·
Digital technologies have allowed the formulation of multiple innovations with considerable economic, environmental and societal benefits. If we look more specifically at the Circular Economy, digital technologies are powerful enablers but also present risks.
Positive effects of technology
At the heart of the Circular Economy many iterations, is the notion of usage over ownership. That is articulated eloquently by Walter Stahel under the Performance Economy concept: the idea is not to produce, sell and consume the product but the service(s) provided by the product. Framed at the business model level, that is the Product Service System proposition (PSS).
Case in point with Rolls-Royce that sells engine hours to aircraft operators instead of selling the engine itself. Rolls-Royce remains the owner of the engine, or the asset. So the incentive for Rolls-Royce is quite obviously to maintain the asset in good working order, to prevent, anticipate tear and wear, to replace components before they break. To do so, they need an almost real-time monitoring of the conditions, performance of the engine and components. This can only be done by deploying sensors embedded in the assets and implementing a digital ecosystem to capture, interpret and analyze thousands of data points. The automation of these processes are essential to implement this performance economy approach.
Rolls-Royce’s example leads us to the very popular IoT acronym. The IoT, for Internet of Things, is a system of linked internet-connected objects able to automatically and instantly collect and transfer data over wireless networks.
IoT allows the mapping, modelisation of large-scale technological ecosystems from an aircraft engine, to a building and to whole urban areas.
Why is this important for a Circular Economy?
Let’s take some examples.
Peer to peer platforms, being for profit or non-profit, allows the circulation of idle assets, optimizing the usage ratios of existing products. Take the Mobility as a service example (MaaS). A truly disruptive system-level innovation to the current car ownership model that promises multi modal, on-demand access to the services of ground transportation. A MaaS system can only work if enabled by IoT and real-time information on the availability, location, status of various modes of transport from trains, to taxis, free-floating scooters/bicycles, etc.
Logistics and supply chains are undergoing a rapid transformation, accelerated by the substantial uptake of subscription services. Let alone the requirements to deploy ever faster last-mile delivery services, the Circular Economy and the demand for reverse logistics is requesting ever more accurate traceability on goods and services’ locations and status. Here again IoT plays a crucial enabling role.
Digital twins are the modelisation of an asset, a car, a piece of machinery, a building in digital format. It is a digital mirror to a material product. Digital twins allow the modelisation of different setup and the simulation of scenarios and their consequences. Say, you want to stress-test an existing building’s resistance to decay, the digital twin allows you to create scenarios and prepare potential remediation solutions in advance and select which solution to actually deploy. Sensors attached to the building and the data they generate need to be captured and analyzed, again IoT plays a central role in this process.
Product passport. As pioneered by the cradle to cradle approach, product passporting is the notion that to design a product (and the services around it) we need to know exactly what material a product is made of at the molecular level. Having this information available to all is essential to allow innovative approaches in material science and in business ecosystems. If we are to scale re-use, repair, remanufacturing activities, access to accurate, safe data on product and materials components is essential. Again IoT and distributed ledger technologies (blockchains and all) are essential digital technologies to enable Circular Economy innovation and business models to scale.
The Digiprime and Digiplace projects are very good illustrations of how these technologies can truly help scaling the Circular Economy in the European continent. By making products and materials content available to all stakeholders, in a secured, reliable way we can foster innovation in the value chains and enable the cycling of materials within and across industries.
Smart Cities: by 2050, about 70% of the world population will be living in urban centers. The urban infrastructure will need to cope with humans’ economic and social activities and their outputs flows (i.e.: technological and biological waste streams) plus the impacts of the climate crisis. So, cities urgently need to become more resilient, more efficient in the use of natural resources and self-sustainable in energy use. The whole concept of smart cities relies on the collection, aggregation, analysis of huge amounts of data about the flows of goods, services, human activities, and natural systems that are located in urban centers. Smart cities aim at optimizing the urban ecosystem from smart transportation (i.e: MaaS), to Smartbuilding (i.e: digital twn), optimizing the delivery of public administrative, health services as well as enabling novel, more participatory decision-making processes by citizens.
Could digital technologies help scale the Circular Economy?The deployment at scale of digital technologies is not without challenges.
The Circular Economy promises a way out of our current predicament, with the potential to deploy economic models respectful of ecosystemic limits. At least in theory.
The Circular Economy is not a new concept nor is it a fixed, well defined idea. It is a heuristic approach that evolves regularly and is subject to a local socio-economic context.
The current iteration of a Circular Economy, promoted in business and policy-making circles in the European Union, takes a strong resource or material angle. We can term it as “A circular economy allows resource circularity to decouple resource use and GHG emissions from economic growth”. This interpretation of the concept implies a technological bias and suggests that Circular Economy-inspired technological innovations will enable this decoupling to take place.
One has to be careful and critical about the role of digital technologies in allowing the scaling of the Circular Economy. The Hickel / Kallis and Parrique publications serve as reminders that the net decoupling of resource use is far from being empirically proven with current technologies. Given the fact that we have 10 years to radically change course and avoid a 3 to 4 degrees warmer world, relying only on technological innovations is a rather risky bet for humanity.
A practical approach looks like what we need. Digital technology should be considered as a means to an end. Switching personal cars to electric propulsion will not change the nature of the car pollution problem as we are moving from tailpipe emissions issues, to rare earth extraction challenges and pollution. Digital technologies have a crucial role to play in the scale up of Circular Economy, but this enabling role shall be seen within the wider system and should account for the full impacts of digital technologies. There is no such thing as a truly ‘digital tech or digital economy’. Think about it, the cloud services IoT relies on are actually submarine cables under the oceans and server farms both made of real, tangible materials…. These cables and servers use electricity, a lot of it, and it comes from somewhere… A coal station, a gas station, a nuclear plant, a windmills farm, a solar farm…
So, to conclude, does digital technology play a role in enabling the Circular Economy?
Yes, and a crucial one.
Should we only rely on these technologies to rethink, re design our economic models? No, definitely not.
We should consider these tools wisely and always ask ourselves what these technologies are really for.
- What are the full lifecycle impacts?
- Is there a low-tech, low-impact alternative to this energy-hungry digital solution?
- Does this technology contribute to the regeneration of the natural capital
The above are some of the screening questions entrepreneurs, decision makers, policy makers should ask themselves before using, deploying and scaling digital technologies.
Fabrice Sorin, Circulab Academy Manager