Circularity in Practice: Applying the Lessons of Industrial Symbiosis

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Ben Moens Managing Director, Sustainability Solutions - EMEA
Vincenzo Giordano Director, Sustainability Solutions - EMEA
Andre De Fontaine Director, Sustainability Solutions - Americas
Industrial Symbiosis
Circular Economy
Sustainability Transformation

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.

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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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Kalundborg: An Industrial Symbiosis Case Study

Before it had a name, Industrial Symbiosis transformed the economy of a small Danish city.

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.

Industrial Symbiosis produces a host of near-term and long-term ecological and economic benefits for participants.

Industrial Symbiosis

The Value of Circular Models

How Circular Resource Strategies Add Value to Organizations

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.

Achieving Decarbonization

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.

Reduce Risks

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.

Strengthen Local Economies

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.

Bolster Financial Performance

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.

Barriers To Successful Implementation

Why Circular Models Face Barriers to Widescale Adoption

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.

Industrial Symbiosis Challenges Long-Held Beliefs

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.

Traditional Financial Models Fail To Capture Economic Benefits of Circularity

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.

Shared Resource Models Require Transparency

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.

Evolving Markets, New Opportunities

An emerging set of environmental, political, technological and digital drivers promise lower barriers to achieving circular resource models

Rising, Collective Ambition

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.

Progressive Policies

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.

Declining Costs of Clean Technology

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.

The Growth of Big Data, IoT and Artificial Intelligence

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.

Properly addressing known barriers unlocks the tremendous potential of industrial symbiosis

Addressing known barriers unlocks potential of industrial symbiosis

A Stepwise Approach To Designing Circularity

Transparent, structured engagements can unlock the benefits of industrial symbiosis

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.

Set the conditions for success with models that align resource streams, stakeholders and business models

Conditions for success

1. The Roadmap: Define a quantified vision of the value shared resource models will bring to an organization

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).

  • Map local resources. Carry out a GIS-based mapping of available resources within the direct industrial cluster, other potential off-takers in the nearby area, or new actors with complementary profiles. Resources to consider might include industrial products, waste or byproducts, but should also include renewable potential or available infrastructure. A clear mapping of available resources will raise awareness and clearly define the resources available to fill local needs.
  • Spot the synergies. Identify complementary resource flows and assess the most relevant industrial symbiosis scenarios. Understanding how resource flows can be reused among stakeholders is a prerequisite to rethinking business models to capture value from previously discarded waste streams.
  • Quantify the impact. Quantify the necessary infrastructure investments and define possible financing options and value-sharing arrangements across actors. A clear vision for how value can be shared among key stakeholders can turn what were once competitors into collaborators.

2. The Contract: Design specific contractual arrangements with an entity in charge of investing and managing resource-sharing infrastructure

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:

  • Centralize investment decisions. Analyze regulatory and legal conditions in the specific local context and explore different mechanisms (e.g. Special Purpose Vehicles) to channel investments under a single entity. Establishing a single entity capable of managing investments across multiple parties relieves competitive pressures among participants within the industrial ecosystem.
  • Set the terms. Define contractual mechanisms for participating actors to remunerate investments, possibly linked to outcomes, performance and length of engagement. Innovative contractual arrangements will allow an organization and fellow participants to capture long-term value from the investments they make.
  • Manage the community. Define mechanisms to manage the community of actors participating in the industrial symbiosis program, including opt-out conditions and rules for integration of new members. This will allow the industrial cluster to grow and adapt over time as needs change, technologies evolve, and new industries develop.

3. The Business Model: Embrace new models that drive value while reducing resource use.

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:

  • Design a holistic circularity strategy. Your current business model may meet the needs of the moment, but as pressure builds for companies and territories to cut carbon emissions, water and waste, more radical changes will be required. Anchor your strategy firmly around industrial symbiosis, but do not lose sight of the foundational elements to minimize your overall resource footprint and drive operational efficiency across your value chain.
  • Regularly revisit local partners. Using the GIS-based mapping listed in Step One, actively explore opportunities to attract actors with complementary resource flows. Recently co-located businesses or new waste streams can unlock circular opportunities and new revenue streams not previously available.
  • Extend your reach. Look beyond your local community to engage companies across your value chain. Jointly frame your resource efficiency efforts as a vehicle to co-develop new, circular value-creation models (e.g. as-a-Service, shared savings, etc.) that span the value chain.

For Organizations, Circularity Begins Today

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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