Perspective view of new trends and challenges of the circular economy2020/03/25

Facing the painful consequences of gradually exhausted global resources, environmental pollution, and regular climate change, some major economies have started forming a consensus on replacing the traditional linear economy with the circular economy. It is hoped that the circular economy will improve the efficiency of applying natural resources, and increase employment opportunities due to automatic mass production, maintain economic growth as appropriate, and take sustainable environment into consideration.

The EU further proposes measuring economic development via “resource productivity,” calculated by the ratio of GDP to material consumed. The higher the resource productivity, the more efficient the use of resources, and coherence among resources, products, services and environment. The growth speed of resource productivity can be used to review the degree to which a country is heading toward sustainable development.

The EU has committed to promoting circular economy in recent years. According to the circular economy evaluation report jointly introduced by the Danish government and the Ellen MacArthur Foundation [see note 1], GDP growth will be 0.8~1.4%, carbon reduction 3~7%, and 7,000~13,000 jobs created before 2035 via the development of the circular economy.

After several years of discussions, the European Parliament passed the Circular Economy Package (CEP) in July 2018 [see note 2]. EU member countries will establish domestic laws and promulgate for implementation based on the CEP within 24 months. The goal is to recycle 55% of city waste in 2025, 60% in 2030 and 65% in 2035. 65% of package waste is to be collected in 2025 and 70% in 2030.

The introduction of the circular economy almost has national consensus in the Netherlands due to the shortage of resources and water. The Dutch government actually announced in its “A Circular Economy in the Netherlands by 2050”[see note 3] that it will achieve a circular economy with zero waste in 2050. All materials will be used and recycled efficiently without emission of any substances harmful to the environment. It is expected to reduce 25% of material importation and increase job opportunities by more than 50,000.

France published the France CE roadmap [see note 4], which covers 50 measures to promote the circular economy via a maintenance, reuse and recycling reward system. Landfill volume is expected to be reduced by one half and 100% of plastic recycling in 2025. In 2030, 30% of resources consumption will be reduced and 300,000 job opportunities will be created.

Finland proposed the first national road map to a circular economy from 2016–2025 worldwide [see note 5], aiming for a sustainable food system, closed-loop forestry, a closed-loop technology industry, transportation and logistics system, and united actions in such five major fields, allowing Finland to become one of the leading global circular economy countries in 2025.

The Japanese government has also defined its priority goal of circular economy development [see note 6] to reinforce the competitiveness of the resource recycling industry, including expanding the volume of resource recycling, improving productivity by reducing intermediate handling costs and assisting with overseas market development of the resource recycling industry, participating in international resources circulation and emerging industry development.

The invention of plastics brought much convenience to human life, however, the downside is managing plastic waste plastic and associated issues. According to statistics, packaging is the biggest application of global plastic product manufacturing. 95% of plastic packaging materials lose most of their original value after a single use. In addition, improper waste disposal causes more and more severe problems to human health and the environment, including climate change, ocean pollution, biological diversification and chemical pollution. All these problems demand aggressive actions.

（1）The commitment of large, international companies to contribute to plastic reduction

Seeing the damage to the environment caused by plastic waste, the Ellen MacArthur Foundation and United Nations Environment Programme cooperatively initiated the action “A LINE IN THE SAND” in October 2018. The main purpose is to keep plastic pollution from its origin as low as possible. Around 250 institutions worldwide, including packaging manufactures, brands, retailers, recycling companies, and governmental and non-governmental organization (NGO) have signed “The New Plastics Economy Global Commitment.” The goal is to create a “new normal state” for plastic packaging and strive to reduce plastic pollution through three major goals:

• Eliminate problem or unnecessary plastic packaging and turn single-use packaging into reusable packaging.
• Ensure that 100% of plastic packaging can be reused, recycled for reuse or composted easily and safely via innovation in 2025.
• Fulfill plastic recycling goals through a large increase in repeated plastic use or recycling and production for new packages or products.

They have also established an evaluation schedule of the abovementioned goals, that is, to review all of them every 18 months. In addition, all enterprises that sign the commitment must publish their conditions of reduced plastic consumption every year to fulfill these goals.

 

（2）Several governments have also introduced policies and actions corresponding with plastic waste

Many governments have also emphasized problems caused by plastic waste. Since China has prohibited all countries from exporting garbage to China in 2018, the Malaysian government has emphasized the seriousness of plastic waste and has actively taken various measures and regulations to capture the growth of plastic waste.

According to statistics from the Institute of Scrap Recycling Industries, the biggest waste plastic export country was US, which exported 178,000 kilograms of plastic waste to Malaysia from January to July 2018. Meanwhile, UK transported one fourth of its waste to Malaysia. Malaysia has become a major export destination of plastic waste from US, UK and other countries. To avoid being inundated by international plastic waste, the Malaysian government has announced “ Malaysia's Roadmap to Zero Single-Use Plastic in 2018”[see note 7] . Among them, one action plan is to gradually prohibit the importation of all kinds of plastic waste over the next three years, including washed plastic waste.

In addition, according to statistics from the United Nations Environment Programme, more than 100 countries have taken control action toward single-use plastic bag consumption, through bans, tax collection, etc., in 2018 to reduce consumption. China prohibits all countries from exporting their waste to China, while the EU opts to use biodegradable plastics originating from biomass as an alternative to single-use plastic products. Furthermore, tax exemptions or rewards are provided aiming at biodegradable plastics. With such trends, it is expected that more and more countries will join this action in the future.

▲Statistics showing types of single-use plastic polices worldwide [see note 8, p. 25]

To promote and develop the idea of the global circular economy, many international big brand companies are voluntarily committing to new business models and new products.

From a food perspective, Coca-Cola is specifically regulating its goal of using plastic bottles made from bio-based materials and recycled plastics. Coca-Cola plastic bottle material suppliers such as Far Eastern New Century is now developing relevant biomass plastic materials like biomass PET or PEF plastic materials, and is measuring its PET plastic recycling plan against these goals. In addition to driving suppliers to conduct technological innovation for the circular economy, Coca-Cola has also set the goal of contributing resources to help new start-up entrepreneurship with the development of circular economy technologies. By the end of 2018, Coca-Cola purchased shares of start-up company loniqa Technologies in the Netherlands with an innovative PET chemical recycling patent to show its termination to develop the circular economy through physical action.

In respect to clothing, jerseys provided by big sport brand companies in global football tournaments are produced using environmentally-friendly textiles made of recycled PET bottles. Meanwhile, chemical fiber enterprises in Taiwan like Far Eastern New Century, Formosa Taffeta and Shinkong Synthetic Fibers provide environmental fibers and clothing made of recycled PET to sport brands. In addition, to carry out product innovation of the circular economy, Nike proposed the “Nike Circular Innovation Challenge” plan in 2018 to fulfill the idea of the circular economy when making shoes. In the meantime, UNIQLO, representing fast fashion, placed a used clothes recycling box at all business locations and aims to recycle old clothes so they can be further used.

As for home life, big furniture company IKEA spares no effort in its promotion of the circular economy. In addition to the same goals of using biomass materials and recycled materials as Coca-Cola, it has also introduced the idea of recycling to establish its own recycling infrastructure and logistics system. It is hoped that all furniture sold by the company in the future can be reborn in its recycling system after it is no longer in use. Meanwhile, domestic Horng En Group, which produces reclaimed plastic products, has also become a supplier of IKEA plastic furniture and plays an important role for Taiwanese companies in the international supply chain.

In the transportation arena, US car plant the Ford Motor Company has set the direction of using biomass or recycled materials for cars and parts the same as other end-product manufacturers. In addition, with the support of the Michigan government project, Ford Motor and recycling enterprise Plastics Industry Associations, PET plastic chemical recycling innovation patent technology developer Resinate Material, and PU company - the Woodbridge Group, organized a recycling material alliance in 2017. Plastics Industry Associations is responsible for recycling PET plastic parts found inside scrap Ford cars and delivers it to Resinate Material to convert the scrap PET materials into polyhydric alcohols composing PU form. The Woodbridge Group then uses polyhydric alcohols to compose various PU form products for various automobiles, such as seat filling or sound insulation, materials before delivering to Ford for new car production.

As for audio-visual entertainment, big consumer electronic product company Apple has also joined the CE100 members of the Ellen MacArthur Foundation. It is devoted to introducing the circular economy business model into its current products. The electronics industry is the industrial lifeline in Taiwan. Electronic industries in Taiwan provide Apple with various parts as required, playing an indispensable role in the supply chain. As the time when Apple determines to take part in the circular economy, suppliers in Taiwan should also consider introducing the circular economy concept in production and sales services by using relevant materials and technologies. They should also develop maintenance or lease such emerging business models to play a new role in the wave of global circular economy innovations.

Taiwan is a country with extremely shortage of natural resources, relying on importation, and easily affected by external environments like international energy events and prices. Being a big ICT country, the key materials are almost all imported. For example, semiconductor ICT products require 1,000 tons of rare-earth elements every year, which are completely dependent upon from importations from China and Japan. A small change to the trade policy of exporting country could result in dramatic impact to the ICT industry in Taiwan. To maintain stable development of high technology industry exports, it must control important resources through the circular economy.

Industries in Taiwan are more desperate to replace “short-term opportunities” with “long-term benefits.” People usually consider it to be impossible for “green” businesses to earn big money. However, according to a survey from the Ellen MacArthur Foundation, Europe will have circular economy investment opportunities amounting to as much as 320 billion euro through appropriate adjustments and cooperation between industrial circles and governments before 2025.

The McKinsey research also indicates that the circular economy will generate a net increase of 900~2,500 job opportunities worldwide. Meanwhile, the decreased demand of new products and job opportunities reduced in certain economies by closed features of the circular economy may indirectly decrease the demand of new products and have certain effects on our export-oriented economy. Therefore, in addition to new materials and green consumption, innovative circular economy projects have also been suggested to reinforce re-manufacturing development strategies as well as consider the creation of technical job opportunities to correspond with regional circulation demand, consolidating relevant infrastructure at the same time.

ITRI IEK Consulting has also proposed 7R key elements to fulfill the circular economy value in 2017: Re-Thinking, Re-Environmenting, Re-Servicing, Re-Innovating, Re-Manufacturing, Re-Cycling, and Re-Generating. Among them, only re-thinking talents can create the highest value in the circular economy; suppliers should provide products or services by the right people, at the right time, in the right place, with the right objects, at the right quantities, of the right nature and at the right price to develop best interests, satisfying the needs of customers with minimum waste and external costs.

Being an export-oriented economy, the ability to seize opportunities that come with international trends and align interests earlier is important for economic development. The promotion of plastic recycling in Taiwan over recent years has laid a relatively solid foundation. Various functional fabrics made of recycled PET have received international recognition. Since the use of biodegradable plastics for single-use food packaging is an international trend, our country has developed partial core technology but needs to strengthen its contributions to seize this business opportunity.

The circular economy requires cross-discipline cooperation and will even redistribute benefits inside the ecological system. For example, the whole petrochemical industry providing upstream materials, utility suppliers and downstream customers need to think of how to use transaction platforms to share information and resources and even use emerging technology (e.g. AIoT) and innovative cooperation models (e.g. 4P: Public-Private-People Partnership) to increase the positive effects.

Another subject in the circular economy trend worth paying attention to is the creation of employment opportunities. The maintenance, remanufacturing and recycling of various resources collected from scrap products not only may decrease energy consumption and reduce the environmental impact, but countries are also declaring that these circular economy business models will create many job opportunities. This is also an opportunity to capture the benefits of important social development as well as fulfilling environmental protection and business opportunity goals.