Closing the Loop: The New Syndustrial Revolution

Closing the Loop: The New Syndustrial Revolution

Article by Wayne Visser

First published on Huffington Post

The Industrial Revolution – a term popularised by English economic historian Arnold Toynbee – signalled the seismic shift from a predominantly agrarian, subsistence-based economy to an increasingly mechanised, market-based economy, following the invention of the steam engine. The Information Revolution of the 20th century marked another fundamental shift, driven by computers and the internet.

Now, once again, our industrial society is transforming though what I call the Syndustrial Revolution (or Integration Revolution), which is the confluence of innovation driven by smart, sharing and renewable technologies. We see this disruptive change occurring along intersecting fault-lines, namely the shifts from an atomised to a networked economy, from a surfeit to a sharing economy and from a linear to a circular economy.

The Syndustrial Revolution – and in particular the shift from a linear to a circular economy – is the subject of a feature-length documentary called Closing the Loop, which I am currently filming together with Emmy Award winning director, Graham Sheldon. For the past 8 months, we have been visiting pioneers and prophets of the Syndustrial Revolution from around the world to record their stories and predictions. In this Closing the Loop article series, I will be sharing the insights we have gained from these practitioners and thought-leaders.

More specifically, I will be unpacking what the Syndustrial Revolution really means, i.e. the business models behind the smart, sharing and circular economies. And I will be showing how companies and governments around the world are already taking steps to tap into this market opportunity, which Accenture analysis in Waste to Wealth by Jakob Rutqvist and Peter Lacy suggests could be worth at least $4.5 trillion by 2030.

Seeding the Next Industrial Revolution

To get us started, it is worth paying tribute to some of the intellectual progenitors of the Syndustrial Revolution. For example, British economist Kenneth Boulding introduced the concept of a ‘spaceship economy’ in 1966:

“… in which the earth has become a single spaceship, without unlimited reservoirs of anything, either for extraction or for pollution, and in which, therefore, man must find his place in a cyclical ecological system which is capable of continuous reproduction of material form even though it cannot escape having inputs of energy.”

Fast-forwarding through the decades, we then saw the practice of life cycle analysis emerging in the 1970s (promoted by the US Environmental Protection Agency), industrial ecology in the 1980s (popularised by Robert Frosch and Nicholas E. Gallopoulos), cleaner production in the 1990s (promoted by the UN Environment Programme), cradle to cradle in the 2000s (conceived by William McDonough and Michael Braungart) and now, the closed-loop, or circular economy (being championed variously by the Ellen MacArthur Foundation, World Economic Forum and UN Global Compact’s Breakthrough Project).

The sharing economy – a term popularised by Harvard law professors Yochai Benkler and Lawrence Lessig around 2004-2008 – also has deep roots, stretching back to concepts of the civil economy, co-operative movement and social economy (all coming into usage in the 1700s), and more recently, ideas around collaborative consumption in the 1970s (introduced by Marcus Felson and Joe L. Spaeth), the love economy (Hazel Henderson) and local exchange trading systems (Michael Linton) in the 1980s and transition towns (Louise Rooney and Catherine Dunne) and wikinomics (Don Tapscott and Anthony D. Williams) in the 2000s.

So what is this Syndustrial Revolution really? Is it smart cities and autonomous networked cars? Is recycling, or upcycling or zero-waste initiatives? Is it ride-sharing services like Uber and Lyft? Is it the shift from buying products to leasing services? Is it moving from a take-make-waste linear economy to a circular economy? In fact, it is all these things and more, which is what makes it so confusing, not to mention jargon-laden.

In Search of a New Industrial Paradigm

So I’d like to propose a simple model, which I will use to frame our discussion in this series. I call it the New Syndustrial Model, because it is really a new economic paradigm and set of business models to create better synergies in our industrial society. A high-synergy society does not build economic capital by destroying natural capital, eroding social capital and exploiting human capital in the way that our current win-lose-lose-lose capitalist system does.

In the Old Industrial Model (see Figure 1), we take, make, use and waste:

  • We Take – by depleting non-renewable resources and over-using renewable resources (Extract) and by striving for limitless economic growth (Expand);
  • We Make – by producing any products and services that the market demands (Produce) and persuading customers to buy and consume more (Promote);
  • We Use – by buying more than needed, leading to overconsumption (Consume) and by individually owning what could be shared (Collect); and
  • We Waste – by turning consumed products into trash and pollution (Dump) and by creating toxins and impacts that harm people and nature (Damage)
Old Linear Industrial Model

In the New Syndustrial Model (see Figure 2), we borrow, create, benefit and return:

  • We Borrow – by conserving all natural resources (Reduce) and increasing renewable resource use (Renew);
  • We Create – by designing and making products with no negative impact (Refine) and innovating products with positive impact (Restore);
  • We Benefit – by extending product life through repairing and reusing (Reuse) and by improving product use through leasing and sharing (Redistribute); and
  • We Return – by using end-of-first-life (EOFL) materials to recreate the same products (Recycle) and to create new products (Reinvent).

Over the coming weeks and months, I will use this model to share what we have discovered during our filming of Closing the Loop. To be sure, many companies and economies are still stuck in the Old Industrial Model and we have a long way to go before we reach the New Syndustrial Model, but our explorations have showed that not only is it possible and preferrable, but that this new industrial revolution is already happening.

 

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[button size=”small” color=”blue” new_window=”false” link=”http://sustainablefrontiers.net/”]Link[/button] Sustainable Frontiers (book)

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Visser, W. (2016) Closing the Loop: The New Syndustrial Revolution, Huffington Post, 17 Oct.

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Closing the loop on steel: what we can learn from a manufacturer in Ecuador

Closing the loop on steel: what we can learn from a manufacturer in Ecuador

Article by Wayne Visser

Part of the Sustainable Innovation & Technology series for The Guardian.

Despite a strong business case for recycling scrap steel, uptake has been low. One company in Ecuador is blazing a trail for steel and the circular economy in Latin America.

In the next few decades, as resource scarcity starts to bite, and resource prices steadily climb, mining and metals companies will be forced to shape-shift from primary extractors to secondary recyclers. Necessity, rather than an unexpected attack of conscience, will be the driving force behind this transition to a circular economy. So let’s look at some lessons from the sector most ripe for revolution, namely the steel industry.

In 2013, world crude steel production totalled 1.6bn tonnes and employed 50 million people, either directly or indirectly. The industry is vocal in its support for sustainable development, claiming that – despite massive growth in demand – the amount of energy required to produce a tonne of steel has been reduced by 50% in the past 30 years.

A far stronger virtue in its pursuit of sustainability is that steel is 100% recyclable and backed by an impressive business case: more than 1,400kg of iron ore, 740kg of coal, and 120kg of limestone are saved for every tonne of steel scrap made into new steel (because these products are required if steel is produced as raw material). It is puzzling, therefore, that usage of scrap steel in 2013 was still only around 580m tonnes. Why is closing the loop on steel so difficult?

Lessons can be learned from Adelca, an Ecuadorian steel manufacturer that is trying to blaze a trail for the circular economy in Latin America. Ecuador is still a relatively small player, making up about 1% of the Latin American crude steel market, which is dominated by Brazil at 53% and Mexico at 27% (ranked nine and 13 respectively in the world market).

Adelca supplies Ecuador, Venezuela, Colombia, Peru and Chile with a variety of rolled and stretched steel products. Before 2008, Adelca was importing billets (a narrow, generally square, bar of steel) from China and elsewhere, but after analysing the economic and environmental benefits, the company decided to invest in an electric arc furnace (EAF) and start recycling metal scrap in order to make products for the construction sector.

The first part of Adelca’s sustainable technology solution was to install the EAF, thus allowing it to make its own steel billets from recycled scrap steel. According to Isabel Meza, head of integrated management at Adelca, by importing fewer billets, they are saving $12m (£7.6m) on the 20,000 tonnes of steel they produce every month. Apart from using fewer mineral resources, each tonne of recycled steel uses 40% less water, 75% less energy and generates 1.28 tonnes less solid waste than steel from raw materials. There is also an 86% reduction in air emissions and a 76% reduction in water pollution.

The second part of Adelca’s sustainable technology solution was to help to stimulate and organise the metals recycling sector in Ecuador, since it does not have enough supply of scrap metal to meet its own steel production demand. Today, Adelca’s Recyclers Network generates about 4,000 jobs (direct and indirect), with income exceeding $1m (£637,000) a month. Also, the steelworks, scrap iron preparation process, transportation system and complementary services generate more than 1,500 direct jobs for 50 small companies. Although Adelca still imports $80m (£51m) a year in raw materials, it estimates it contributes $120m (£76.5m) a year to the national economy just from the avoided imports.

The third part of Adelca’s sustainable technology solution was to install a bio-digester that turns the company’s organic waste into methane gas for community use, as well as to generate fertiliser for local crops. Although the financial savings are not big at about $35 (£22) a day in energy savings for the community and $100 (£63) in waste disposal costs for the company, there is a significant payoff in terms of “social license to operate”, ie improved community relations.

Lessons learned

1. Financial returns

The EAF technology was bought from the US and funded by taking a substantial mortgage from the bank. Commercially, the scale of the investment represented a significant risk, but the expected financial returns from the technology allowed the company to take this risk. Environmental benefits alone would not have sufficed.

2. Community education

Adelca lost eight months in delayed production due to community resistance to the EAF. The community feared that the heat, power and radiation from the furnace would endanger the health of the community, and that its heavy electricity demands would negatively affect the community’s own supply. Despite being unfounded, these fears required a substantial and expensive education effort to gain a social license to operate.

3. Supplier relations

Since Adelca’s demand for scrap metals is greater than the supply – and recycled scrap costs less than imported billets – the company has invested in building up its network of recyclers, including donating metal cutting equipment, offering loans, providing and paying for training and promising the best price for the scrap metals provided.

4. Marketing benefits

By investing in sustainable technologies, Adelca has differentiated itself in the market. In its public corporate mission, it is able to claim to be “leaders on recycling for the steel production, with excellence in… environmental protection and social responsibility”. This commitment helped it to become the first Ecuadorian company to achieve the Latin American S2M certification for corporate responsibility and sustainability.

The Adelca case shows us why the resource revolution is worthwhile, yet still so slow in happening. The positive impacts on manufacturing and natural capital are clear, but challenges remain in getting access to financial capital and ensuring the human and social capital benefits are effectively communicated.

 

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Related websites

[button size=”small” color=”blue” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” new_window=”false” link=”http://www.kaleidoscopefutures.com”]Link[/button] Kaleidoscope Futures (website)

[button size=”small” color=”blue” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

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Visser, W. (2014) Closing the loop on steel: what we can learn from a manufacturer in Ecuador. The Guardian, 20 November 2014.

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Why metals should be recycled, not mined

Why metals should be recycled, not mined

Article by Wayne Visser

Part of the Sustainable Innovation & Technology series for The Guardian.

Extractive companies need to recast themselves as resource stewards and embrace the circular economy by investing in recycling, not mining.

There is no denying that the sustainability impacts of the extractive sector are serious – sometimes even tragic and catastrophic. But they are not without solutions. Technology, which is the source of so much destruction in the mining and metals industry, can also be its saviour.

The most obvious opportunity for the sector is to embrace the circular economy. Many metals can be recycled – and in some cases, actual recycling rates are already high. For example, 67% of scrap steel, more than 60% of aluminium and 35% of copper (45-50% in the EU) is already recycled. Apart from resource savings, there is often also a net energy benefit. Energy accounts for 30% of primary aluminium production costs, but recycling of aluminium scrap uses only 5% of the energy of primary production.

Recyclability of metals is as important as recycling rates. We need more companies that grow the markets for recycled materials, like Novelis, which announced the commercial availability of the industry’s first independently certified, high-recycled content aluminium (90% minimum) designed specifically for the beverage can market.

The opportunity to increase recycling rates is significant. Today, less than one third of 60 metals analysed have an end-of-life recycling rate above 50% and 34 elements are below 1%. The irony is that recycling is often far more efficient than mining. For example, a post-consumer automotive catalyst has a concentration of platinum group metals (like platinum, palladium and rhodium) more than 100 times higher than in natural ores. Already, special refining plants are achieving recovery rates of more than 90% from this ‘waste’.

This sustainability business case logic has not gone unnoticed. Given the importance of rare earth metals in electronics and renewable technologies, Japan has set aside ¥42bn (£231m) for the development of rare earth recycling, while Veolia Environmental Services says it plans to extract precious metals such as palladium from road dust in London.

Some recycling technologies are hi-tech. For example, the Saturn project in Germany uses sensor-based technologies for sorting and recovery of nonferrous metals. Similarly, Twincletoes is a technology collaboration between the UK, Italy and France that recovers steel fibres from end-of-life tyres and uses them as a reinforcing agent in concrete.

By contrast, E-Parisaraa, which is India’s first government authorised electronic waste recycler, is much more low-tech, using manual dismantling and segregation by hand before shredding and density separation occur. This is a good reminder that the best available sustainable technology is not always the most applicable, especially in developing countries.

Recycling is not the only way for technology to reduce the impact of metals. If we look at energy consumption, each phase of the steel-making process presents opportunities. For example, direct energy use can be reduced by 50% in the manufacture of coke and sinter through plant heat recovery, and the use of waste fuel and coal moisture control. In the rolling process, hot charging, recuperative burners and controlled oxygen levels can reduce the energy by 88% and electricity consumption by 5%.

Other technologies, like using pulverised coal injection, top pressure recovery turbines and blast furnace control systems, can reduce direct energy use by 10% and electricity by 35%. In Electric Arc Furnace steelmaking, improved process control, oxy fuel burners and scrap preheating can cut electricity consumption by 76%. In fact, applying these kinds of energy saving technologies could result in energy efficiency improvements in the steel sector of between 0.7% and 1.4% every year from 2010 to 2030.

Water is another critical issue, but with significant opportunities. For example, BHP-Billiton’s Olympic Dam in South Australia achieved industrial water efficiency improvements of 15%, from 1.27 kilolitres to 1.07 kilolitres per tonne of material milled. That may not sound like a lot, but when scaled across the operations of the world’s fourth largest copper and gold source and the largest uranium source, it makes a huge difference.

Sometimes the technologies are fairly simple. In the metal finishing sector, improving rinsing efficiency represents the greatest water reduction option. For example, C & R Hard Chrome & Electrolysis Nickel Service switched its single-rinse tanks to a system of multiple counter-flow rinse tanks, and installed restrictive flow nozzles on water inlets. As a result, the process line has reduced water consumption by 87%.

We can see, therefore, that technology can help to rescue the high-impact extractives sector from its siege by the forces of sustainability. However, it requires some critical shifts. Extractives companies need to recast themselves as resource stewardship companies – experts at circular production and post-consumer ‘mining’. And customers and governments need to give up their compulsive throw-away habits and embrace the take-back economy.

 

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[button size=”small” color=”blue” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2015/05/article_sustech9_wvisser.pdf”]Pdf[/button] Why metals should be recycled, not mined (article)

Related websites

[button size=”small” color=”blue” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” new_window=”false” link=”http://www.kaleidoscopefutures.com”]Link[/button] Kaleidoscope Futures (website)

[button size=”small” color=”blue” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this article

Visser, W. (2014) Why metals should be recycled, not mined. The Guardian, 5 November 2014.

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