CE100 USA

TODAY’S LINEAR ‘TAKE-MAKE-DISPOSE” ECONOMY IS CHANGING

New products = New raw materials

Material, Asset, Product waste is chronically high

Our linear “take, make, dispose” economy is changing. The growing world population (9bn by 2050) and new middle class consumers (+3bn by 2030) put significant pressure on economic growth that is dependent on finite resources. This is especially challenging when all new products are made of new raw materials and the structural waste in the economic system is chronically high.

Farming/collection1

Biochemical feedstock

Regeneration

Extraction of biochemical feedstock2

Cascades

Collection

Parts manufacturer

Product manufacturer

Service provider

Collection

User

Biosphere Recycle

Refurbish/remanufacture

Reuse/redistribute

Maintain/prolong

6 2803 0006 9

Consumer

MINIMISE SYSTEMIC LEAKAGE AND NEGATIVE EXTERNALITIES

FINITE MATERIALSRENEWABLES

Biogas

Renewables flow management Stock management

Share

Regenerate Substitute materials Virtualise Restore

THE CIRCULAR ECONOMY – KEY PRINCIPLES

Preserve and enhance natural capital by controlling finite stocks and balancing renewable resource flows

Optimise resource yields by circulating products, components and materials in use at the highest utility at all times in both technical and biological cycles

Foster system effectiveness by revealing and designing out negative externalities

PRINCIPLE 3

PRINCIPLE 2

PRINCIPLE 1

SOURCE: Growth Within (2015) - Ellen MacArthur Foundation; Stiftungsfonds für Umweltökonomie und Nachhaltigkeit (SUN); McKinsey Center for Business and Environment; Drawing from Braungart & McDonough Cradle to Cradle (C2C)

THE CIRCULAR ECONOMY – RESTORATIVE AND REGENERATIVE BY DESIGN

Restorative by design

…keeping products, components and materials at their highest utility and value, at all times …eliminating waste, with materials re-entering the economy at end of use as defined, valuable technical or biological nutrients

63 98

121

154

270

Fresh Food

Beverages

Apparel

Packaged food

Others

706 ROUGH ESTIMATES

Net material cost savings1

USD billions per year

Others Furniture Other transport Electrical machinery

Machinery and equipment

Motor vehicles

112 40 54 91

135

198

630

Medium-lived complex goods

(EU-27)

Fast-moving consumer

goods (global) Sector

1 Advanced scenario SOURCE: Ellen MacArthur Foundation – Towards a Circular Economy Vol. 1&2; Eurostat Input/Output tables 2007 for EU-27 economies; Euromonitor 2011

THE ECONOMIC CASE IS COMPELLINGGlobal analyses reveals a circular economy enables significant material cost savings opportunities while at the same time setting up for growth and innovation. "

WHAT BUSINESSES CAN DO The ReSOLVE framework helps business explore circular opportunities

▪  Remanufacture products or components ▪  Recycle materials ▪  Anaerobic digestion ▪  Extract biochemicals from organic waste

▪  Increase performance/efficiency of product ▪  Remove waste in production and supply chain ▪  Leverage big data, automation, remote sensing and steering

▪  Deliver utility virtually

▪  Replace old with advanced non-renewable materials ▪  Apply new technologies ▪  Choose new product/service

▪  Shift to renewable energy and materials ▪  Reclaim, retain, and restore health of ecosystems ▪  Return recovered biological resources to the biosphere ▪  Share assets ▪  Reuse/secondhand ▪  Prolong life through maintenance, durability, upgradability

SOURCE: Ellen MacArthur Foundation, SUN, McKinsey Center for Business and Environment - Growth Within: a circular economy vision for Europe

REgenerate

Share

Optimise

Loop

Virtualise

Exchange

Information & awareness

Business support systems Collaboration platforms

Public procurement & infrastructure

Fiscal frameworks Regulatory frameworks

Sect

or-s

peci

fic in

stru

men

ts

Economy-wide instruments •  Clear direction •  Realigned incentives •  Education and knowledge building

SOURCE: “Delivering the circular economy – a toolkit for policymakers”: Ellen MacArthur Foundation; McKinsey Center for Business and Environment; NERA Economic Consulting

WHAT POLICYMAKERS CAN DO No silver bullet, it requires a sector-by-sector approach, using a wide range of instruments

WITH U.S. BUSINESS, GOVERNMENT AND EDUCATION

EMPOWERING ORGANISATIONS IN THE UNITED STATESAccelerating the transition towards a circular economy requires a multi-stakeholder approach

•  Business with a strong focus on the U.S. market keen to learn and develop CE opportunities.

•  U.S. Gov. & Cities who wish to create an effective environment for the growth of the circular economy.

•  U.S. Universities providing insight and capacity through relevant CE teaching and/or research programs.

•  Emerging Innovators (EI) such as Start-ups and SME’s with a unique technology, service or solution that disrupt status quo and accelerate the transition.

•  CE100 international members of the international CE100 program keen to develop opportunities and engage with U.S. like minded organizations.

The CE100 USA is a United States centric, pre-competitive collaboration and innovation program, bringing together key stakeholders:

CE100 USA Empowering organizations to reach their circular economy goals faster

Over the course of 3 years, the program delivers value on every step of the journey, enabling organizations to capture cost savings, innovative and build new circular economy opportunities:

COLLABORATION Tailored activities to stimulate cross-company, cross-sector, pre-competitive collaboration

CAPACITY BUILDING Develop understanding of the circular economy as an innovation framework and build organizational capacity

NETWORK Network of circular economy experts, businesses and public bodies, across sectors / industries

INSIGHTS & ANALYSIS The latest circular economy analyses, intelligence, tools and templates

CE100 USAInspired by the international CE100, the CE100 USA is developed with tailored program elements that fit ambitious organizations operating in the U.S."

CE100 USA Members

•  2x 1-day Workshop ▪  Collaborative Projects

▪  CE100 U.S. directory ▪  CE100 U.S. member book

▪  10 E-learning places ▪  Educational video’s,

templates, and tools

CAPACITY BUILDING

NETWORK

COLLABO-RATION

Benefits & Program Elements

Excellent opportunities to connect with like minded US organizations, suppliers, and customers through Events, Member Directory and Member Book.

Tools and templates for building CE capacity in organizations needed to accelerate implementation of new projects.

Action-oriented programs and projects such as 1-day Acceleration Workshop each six months to convene all the U.S members to focus on cross-sector, cross-industry collaboration initiatives

▪  Online library ▪  US centric research ▪  Local case studies

INSIGHT & ANALYSIS

Research and case studies developed by the Foundations and local members addressing new opportunities and insights to overcoming barriers to implementation.

Ellen MacArthur Foundation in the USA

Upcoming:

•  CE100 USA Launch Event – Circular economy in the US and key pillars of the program

31 March 2016 San Francisco CA

•  CE100 USA 1st Acceleration Workshop for program members

September 2016 NYC

If your organisation is interested in participating in the programme, please contact: CE100USA@EllenMacArthurFoundation.org

•  USCCF 2016 Sustainability Forum – Keynote by Andrew Morlet (CEO) and workshops by the Foundation team

16, 17 May 2016 Washington DC

Date:

FEEDBACK FROM CE100 MEMBERS

“Even if you do not believe in a sustainability agenda, the efficiency gains of managing (circular) material flows should convince you to go after this potential.” NATIONAL GRID “We’re proud to be a founding partner of the Ellen MacArthur Foundation, because we believe that the circular economy offers a solid concept on which we can base our thinking for our potential future business model.” KINGFISHER “While not every product is appropriate for refurbishment, it seems highly likely that nearly all companies will have parts of their product portfolio where circular business practices will prove profitable.” CISCO

“Nothing is impossible,

particularly if it is inevitable.”

HERMAN MULDER

CHAIRMAN OF THE GLOBAL REPORTING INITIATIVE

CE100 USA

THE ELLEN MACARTHUR FOUNDATION The Ellen MacArthur Foundation works across four areas, with the aim of accelerating the transition towards a circular economy:

INSIGHT & ANALYSIS

EDUCATION & TRAINING

Catalysing circular activities across the global economy

Inspiring learners to re-think the future through the circular economy framework

Providing robust evidence about the benefits of the circular economy transition

BUSINESS & POLICY

COMMUNICA-TIONS & PUBLISHING

KEN WEBSTER

THECIRCULARECONOMYA WEALTH OF FLOWS

Developing the conceptual framework and celebrating best practice

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Form public private partnerships to finance the deployment of mature bio-refining technologies

Reduce VAT on high value chemicals derived from waste feedstock

Stimulate the development of advanced, high-value bio-refining technologies by funding cross-institutional R&D clusters

Require municipalities to collect organic waste separately

Propose a minimum proportion of 2nd generation biofuels in the EU biofuel target

Provide a business advice service

Identify and communicate necessary changes to EU policy (or its national implementation) to address unintended consequence

Incorporate bio-refining into the government’s long-term strategic plans

Provide low-cost loans or loan guarantees for the deployment of mature bio-refining technologies

IMPA

CT

LOW

HIG

H

HIGH COST LOW

Require municipalities to send organic waste for one round of processing to extract high value compounds before it could be incinerated / used as fertiliser

Figure 22: Prioritisation of opportunities

SOURCE: Ellen MacArthur Foundation circular economy team; NERA Economic Consulting

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POLICYMAKERS HAVE AN IMPORTANT ROLE TO PLAY IN ENABLING THE TRANSITION

100 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS

BARRIERS

Value capture in cascading bio-refineries

Reduction of avoidable food waste

Industrialised production and 3D printing of building modules

Reuse and high value recycling of components and materials

Sharing and multi-purposing of buildings

Remanufac-turing and new business models

Increased recycling of plastic packaging

Bio-based packaging where beneficial

Performance models in procurement

Waste reduction and recycling in hospitals

Not profitable for businesses1 even if other barriers are overcome

Capital intensive and/or uncertain payback times

Technology not yet fully available at scale

Externalities (true costs) not fully refletcted in market prices

Insufficient public goods / infrastructure2 provided by the market or the state

Insufficient competition / markets leading to lower quantity and higher prices than is socially desirable

Imperfect information that negatively affects market decisions, such as asymmetric information

Split incentives (agency problem) when two parties to a transaction have different goals

Transaction costs such as the costs of finding and bargaining with customers or suppliers

Inadequately defined legal frameworks that govern areas such as the use of new technologies

Poorly defined targets and objectives which provide either insufficient or skewed direction to industry

Implementation and enforcement failures leading to the effects of regulations being diluted or altered

Unintended consequences of existing regulations that hamper circular practices

Capabilities and skills lacking either in-house or in the market at reasonable cost

Custom and habit: ingrained patterns of behaviour by consumers and businesses

1 At market prices excluding the full pricing of externalities such as greenhouse gas emissions, ecosystem degradation and resource depletion 2 Infrastructure defined as fundamental physical and organisational structures and facilities, such as transportation, communication, water and energy supplies and waste treatment

Figure 28: Barrier matrix for the ten prioritised opportunities in Denmark

Critical barrier (‘make or break’)

Very important barrier (to scale-up / acceleration of lever)

Important barrier (to scale-up / acceleration of lever)

Limited or no barrier

CIRCULAR ECONOMY OPPORTUNITIES

ECO

NO

MIC

SM

AR

KET FA

ILUR

ESR

EGU

LATO

RY

FA

ILUR

ESSO

CIA

L FA

CTO

RS

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60 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS

Figure 14: Schematic overview of sector-specific impact quantification

Circular scenario adoption rate, %

Business as usual scenario adoption rate, %

Net value created in sector

EUR million

Net value created in deep-dive sub-sector

EUR million

Scale up factor to full sector

%

Size of sector vs. deep-dive sub-sector

%

Scalability factor

(between 0 and 1)

Additional costs per activity

EUR per unit

Additional revenues and cost savings per activity

EUR per unit

Adoption rate%

Number of units in deep-dive sub-sector

Net value created per unit in deep-dive sub-sector

EUR per unit

SOURCE: Ellen MacArthur Foundation circular economy team

Additional sales

Price / value increase

Material / labour savings

Labour

Services

Materials / components

Energy

CapitalSector size

Deep-dive sub-sector size

A

B

2.2.4 Identify barriers

Objective: Understand the barriers standing in the way of the identified circular economy opportunities, in order to render policy options (Section 2.2.5) more targeted.

End product: Importance and description of barriers for each opportunity, structured by 15 types of barriers in four categories (economic, market failures, regulatory failures, social factors).

Once the circular economy opportunities have been prioritised, it is time to look at the barriers that stand in their way. The toolkit provides a framework to categorise these barriers and analyse their severity. Careful analysis of barriers forms the basis for the next step of arriving at targeted policy options.

The approach in this toolkit is to combine a standard analysis of market failures and regulatory failures with social factors and the economic concerns of business. The methodology refers to 15 types of barrier in four categories. It starts with the economic concerns of businesses that are assessing these opportunities: profitability, capital and technology. It includes the two ‘classic’ barrier categories from economic theory, market failures and regulatory failures, split into ten types, drawing heavily on the EU Impact

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• Use of biological elements in architecture (e.g. ‘living roofs’ that purify water) • Return of organic construction material to biosphere

• Sharing of floor space reducing demand for new buildings • Shared residential floor space (e.g. Airbnb, Couchsurfing, Hoffice)• Shared office space (e.g. Liquidspace) and increase of desk sharing policies

• Increased use of under-utilised buildings• Multi-purposing of offices and public buildings for better utilisation• Re-purposing of building interiors to increase lifetime of existing buildings

• Coordination of all stakeholders along value chain to reduce structural waste• Energy use optimisation through low-energy houses and smart homes

• Increased reuse and high-value recycling of building components and materials, enabled by • Designing buildings for disassembly• New business models (e.g. other owner of materials than property owner)• Building passports/signatures and reverse logistics ecosystems

Increased teleworking to reduce need for office floor space

Modular production off-site for rapid assembly on-site3D printing of building components

Figure 13: Qualitative assessment of potential of opportunities for the Construction & Real Estate sector in the Denmark pilot

SOURCE: Ellen MacArthur Foundation circular economy team

QUALITATIVE ASSESSMENT OF POTENTIAL

Low potential

High potential

Prioritised for further assessment

Indirectly included as enabler of key sector opportunities

XCHANGE

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52 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS

Figure 11: Results of sector prioritisation in Denmark pilot

NOTE: Only producing sectors (24% of national GVA) and hospitals (3.5% of national GVA) considered SOURCE: Statistics Denmark (2011 data); Danish Business Authority; Danish Environmental Protection Agency; Ellen MacArthur Foundation circular economy team

Producing sectors

Non-producing sector

Prioritised sectors

Size = Gross value added

Food and beverages

Construction

Machinery

Hospitals

Basic metals andfabricated products

Electronic products

Water supply, sewerage

Rubber and plastic products

Electricity, gas

Agriculture, forestry and fishing Pharmaceuticals

Mining and quarrying

ROLE IN NATIONAL ECONOMY

CIR

CU

LAR

ITY

PO

TEN

TIA

L

Packaging(not sized)

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The Toolkit for policymakers has been developed to support national and regional governments who wish to embark on an a circular economy transition The toolkit is… •  a three-step, end-to-end methodology to set

ambition and focus, assess specific opportunities, and analyse economy-wide implications

•  a set of 11 tools to identify and quantify circular economy opportunities, identify barriers, map and prioritise policy options

•  It also entails a comprehensive case study on Denmark

Full report and more information here: www.ellenmacarthurfoundation.org/programmes/government/toolkit-for-policymakers

toolkit@ellenmacarthurfoundation.org