Organizations seeking to integrate sustainability into their operations—and do so profitably—should take a cue from Mother Nature. Rainforests, for instance, stabilize the world’s climate, produce food, and maintain the water cycle. Plants and animals share resources and repurpose waste, thereby streamlining nature’s supply chains. As a result, they preserve ecosystems from one generation to the next.
Symbiosis—where one’s refuse becomes another’s nourishment—is a word we use to link resource-optimizing practices observed in nature to those that can benefit industry.
When an organization practices industrial symbiosis—or circularity—they maximize the efficiency of their resource consumption, then identify and catalyze the economic value of their waste and byproducts.
Circular resource strategies have been established practice in several industries since at least the 1970s. For example, manufacturing plants recirculate output heat to preheat input materials, municipal sewage plants treat wastewater that is then reused to irrigate crops, and energy plants convert CO2 emissions into gasoline to power motor vehicles. By implementing these practices, organizations reduce pollution and costs, generate new revenue streams and enhance the resilience of their supply chain.
But while these practices are not new, their full potential will be limited as long as organizations lack the capital, technology, partners, and regulatory incentives needed to evolve. On the bright side, new external drivers—including rising stakeholder pressure, regulatory evolutions and technology advancements—are tearing down the barriers to industrial symbiosis while increasing the value that circular models generate.
By understanding these benefits, obstacles and drivers, organizations are better positioned to establish their foothold in the circular economy.
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At first glance, Kalundborg, Denmark—a city of 16,000 people 110 kilometers west of Copenhagen—seems indistinct from any other quaint, European coastal town, but it holds the distinction for having achieved the world’s first circular economy.
The strategic economic zone—named the Kalundborg Eco-Industrial Park—was born in the 1960s as a solution to manage the water supply more holistically. Within a few decades, the industrial park grew organically, with 12 industrial actors across multiple domains (renewable and fossil-based energy, biotech/biology, pharmacy, glass) sharing more than 25 different resource streams.
These energy, water, and materials streams encompass steam, bioethanol, wastewater, spent cooling water, gypsum, fly ash, and sludge, among others. The electric company gives excess heat to factories, the organic waste of a biology plant yields biogas for the refinery, pharmaceutical sludge is sent to farmers to fertilize crops, and so on. What was once waste becomes revenue. The steam that was initially a byproduct for the electric utility, for instance, is now its main product and income driver.
Every year, organizations in the eco-industrial park achieve combined bottom-line savings of €24 million thanks to the valorization of their waste and access to cheaper resources. The local environment benefits from yearly savings of 635,000 tons of CO2, 3.6 million m3 of water, 100 GWh of energy, and 87,000 tons of solid materials.
The Kalundborg Eco-Industrial Park demonstrates how resource sharing among industrial actors clustered within the same locality can be beneficial from both an ecological and financial standpoint. For today’s organizations, applying circular models can yield enormous benefits in several business-critical areas.
A growing number of organizations have set Scope 3 greenhouse gas emissions targets. Utilizing locally sourced goods produced from waste byproducts—which result in fewer lifecycle emissions—is a first step in achieving that goal.
Similarly, using more secondary materials in production processes dramatically lowers CO2 emissions, especially in hard-to-abate industrial sectors. The Energy Transition Commission (ETC) has estimated that more material circulation could cut emissions in the aluminum, steel, plastics, and cement sectors by 40%. A can made from recycled aluminum, for example, slashes the energy needed to make a can from raw materials by 95%.
Methods like carbon capture and reuse will be especially critical in sectors like cement where alternative measures to mitigate process emissions are currently lacking. While the technology is still developing, a pilot plant in Belgium is deploying a new process to capture pure streams of CO2 from cement production and use it in carbonated drinks, nearby greenhouses, and as an input back to cement production.
Because shared resource models reduce the generation of many of the same waste streams that are typically targeted by regulators for treatment, minimization, and elimination, they help organizations comply with environmental rules (and do so at a lower cost). For example, businesses currently pay on the order of $30 billion a year in worldwide carbon levies; a cost likely to go up over time as global ambitions grow to control greenhouse gas emissions.
At a plant in Ghent, Belgium, for example, ArcelorMittal is converting blast furnace gas to produce enough bioethanol to fuel half a million cars. The project will cut SOx, NOx, and CO2 emissions and limit their exposure to air pollution regulations, both current and future.
Sourcing locally also shortens supply chains, which allows organizations to lessen the impact of disruptions. Thus, natural disasters, global health crises, and policy-driven trade restrictions are less likely to cause delivery delays and cost spikes for critical intermediate parts and materials.
Resilient supply chains draw in new businesses attracted by the availability of low-cost resources. With these lower operating costs and new revenue streams comes more local economic activity, which grows the tax base for local governments and increases job opportunities for residents.
The Port of Rotterdam, as an example, established an ambition to become the premier international “waste-to-value port,” emerging as a leader in resource productivity through low-carbon, circular production. The port takes CO2 from power production and supplies it to local greenhouses. District heating networks were established that allow companies to exchange steam and heat, reducing resource costs, strengthening local partnerships, and reducing emissions.
Environmental innovation can also lower pollution levels, improving the overall quality of life and public health for residents. Pittsburgh, for example, was once one of the most polluted cities in America, but with the introduction of a robust green building program that features Net Zero energy and water designations, enhanced restoration of streams and rivers, and the retooling of existing manufacturing capabilities to produce sustainable materials and building technologies, they built a green economy and now rank among the most “Livable Cities” in the country.
Resource sharing cuts procurement and disposal costs and creates new revenue streams. As one example, the Blue Plains Advanced Wastewater Treatment Plant in Washington, D.C. converts wastewater to energy, then processes the remaining byproducts into a soil amendment to sell to local farmers. The energy production saves the public agency about $10 million a year in avoided electricity costs and sale of the soil amendment saves $10 million a year in trucking costs and creates a new revenue stream.
That there was no term used to describe what eventually bloomed in Kalundborg until 1989 (the year industrial symbiosis was defined) may explain its success. According to the initial participants, it was simply smart business to work together and share resources. Critical to its growth and functionality was coordination between private actors to serve their collective interests, as well as open dialogue and policy incentives from public bodies.
Similar circular economies have since seen success in several ports and industrial clusters, such as the Port of Ghent, the East Bay Municipal Utility District, and the City of Toronto. According to the World Bank, there are about 250 eco-industrial parks operating or under development worldwide today, up from less than 50 twenty years ago. However, while the benefits are clear, barriers to designing and implementing more circular resource strategies remain. Some of these are technical, but above all, setting up the right conditions to make sustainable industrial ecosystems happen requires complex coordination between organizational and market barriers.
Recasting waste streams as revenue streams may challenge an organization’s existing business model and growth strategy. It requires them to fundamentally rethink what their primary product or service is—a process that may encounter resistance from internal and external stakeholders.
For example, a growing number of wastewater treatment plants are recasting their central function from “liquid dumps” to “resource recovery facilities,” with future revenue streams more reliant on the sale of energy, nutrients, and clean water than sewerage fees.
Economic benefits are often shared among several actors. While some value streams, such as growing local economies, take time to develop, others—such as reducing business risk—can be difficult to monetize. At the same time, while some circular technologies are already cost-effective, others like carbon capture and green hydrogen production still carry high upfront costs for an organization.
Local players are often not aware of the resources available nearby and the needs they could fulfill, such as in the case of productive waste streams and co-products. Further hampering the lack of knowledge is a strong culture of secrecy—especially within the private sector—that prevents information sharing. More broadly, industry is more accustomed to competition than collaboration, which impedes the formation of the creative partnerships needed to create efficient resource loops.
Governments and corporations alike have set increasingly ambitious goals in recent years. Nearly 1,000 companies have now committed to aggressive Science-Based Targets and corporations like Subaru, Cargill, Miller & Coors, and Procter & Gamble have announced ambitious zero waste goals. As leaders seek new ways to achieve these goals, competition barriers fall and collaborative mindsets take hold.
Globally, the Paris Climate Accord has spurred governments to institute new regulations, incentives and funding to accelerate decarbonization. The increasing adoption of carbon pricing schemes and availability of incentives for low-carbon energy production and technologies have dramatically enhanced the financial case for industrial symbiosis. Furthermore, the COVID-19 crisis has shifted policymaker attention towards increasing the resilience of supply chains—driving investments in circular economies as a key lever in the European Commission’s coronavirus recovery fund.
The cost of distributed renewable energy sources has dropped precipitously in recent years, with estimates projecting even further declines in the decades to come. As these technologies become increasingly cost-competitive with centralized thermal power generation, they can be used to produce green hydrogen, forming a circular, renewable electricity and fuel system, a concept being explored in the North Sea to generate green hydrogen for a cluster of nearby industrial customers.
Digital platforms and tools, such as low-cost sensors and enhanced visualization, now allow industrial actors to better monitor resource consumption and waste. This abundance of data is now feeding digital simulation and optimization tools, which can identify complementary flows across industrial sites and assess the conditions for viable business cases while minimizing the overall environmental impacts.
The process of aligning stakeholders, business interests, and resource streams in the pursuit of a circular economy is a complex endeavor, but the returns can be significant when well-executed. The three-step process shown is designed to empower organizations to take advantage of the new drivers, overcome barriers and capture the full value of circular resource strategies.
Having a clear roadmap acts as an eye-opener about the potential for symbiotic resource sharing and creates the conditions for joint action. An organization should develop this initial strategy piece with the engagement of all relevant industrial actors possibly involving a third-party facilitator (e.g. the port authority in a port environment).
This setup ensures that the complexity of symbiosis coordination is taken by a single entity with industrial actors facing a clear price signal for the long-term remuneration of the resources they share and consume (e.g. CO2, heat, green H2, etc.). Concrete steps include:
Industrial symbiosis is just one chapter of the sustainability transformation story of an organization. A full sustainability strategy should also focus on reduced use of resources in the first place, like making industrial processes more efficient, adopting eco-design practices, or promoting more efficient use of goods. This is a continuous process that can begin with small steps to reduce and reuse waste before progressing to more fundamental business model shifts, for example moving from manufacturing and ownership-based models to those built around access and services. As an example, Philips has successfully developed a B2B business to sell lighting services rather than light bulbs. This business model incentivizes Philips to produce longer-lived bulbs serviced over time, instead of the more resource-intensive model of replacing and throwing out old bulbs every few years.
Explore the following to further integrate circularity in your business model:
Organizations will be faced with numerous ecological, operational, and financial questions in the coming years. They will have to decide how they fit into an ever-changing business and regulatory landscape. Using the lessons of circularity and industrial symbiosis, organizations can better position themselves to capitalize on a more sustainable and profitable future. And while industry will never be able to match the beauty, complexity, and self-sustaining genius of nature, circular resource strategies are poised to bring us closer to that ideal.
The authors would like to thank Perrine Sechehaye for her contribution to this article.
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