Hugh Jones, Director, Business Advice, on the need for a renewed focus on maximising resource efficiencies within the linear economy.
The challenge of creating a circular economy is, quite rightly, the focus for a lot of the current thinking at the cutting edge of sustainability. From large incumbents to small start-ups, remarkable changes are starting to take place.
We are seeing innovative business models where yesterday’s waste becomes the revenue streams of today and tomorrow, and where products are redesigned for recycling, downcycling, repair or reuse. But while the pioneers are blazing a trail for how we can reconfigure the way we do business in the coming decades, the vast majority of the world’s economy currently follows a linear path.
Making things, selling things and throwing things away aren’t the hallmarks of an elegantly designed economy. This will become increasingly problematic in a world experiencing the impacts of man-made climate change, coupled with the strain on resources from a growing global consumer base. But this is the dominant economic model we have at present and this is the structure we are working within.
Whether we like it or not, over the coming decade the vast majority of businesses will focus on making incremental improvements to this linear path, while aiming to be part of step change progress in the long term.
The straight line economy may indeed curve its way into a circular form, but given the urgency required in taking action on climate change and resource use, there is a need to put renewed focus onto maximising resource efficiencies within our linear economy. This mirrors the transition taking place in energy policy, where it has been acknowledged that increasing the supply of clean energy needs to dovetail with demand-side energy efficiency improvements.
The automotive industry provides a perfect example of where the pace of transformation to a circular economy has been sluggish, but where incremental improvements have occurred at remarkable speed.
Road transport currently accounts for around 10 per cent of global emissions, and cars make up the majority of this. Car numbers are also set to double in the next 15 years. But there has been a step change in terms of reducing per-vehicle environmental impacts without fundamentally changing the shape of the industry.
The fossil fuel-burning internal combustion engine remains the dominant technology in the overwhelming majority of cars and commercial vehicles sold around the world today. This is despite rapid advances in the alternative technologies for propulsion, such as batteries or hydrogen fuel cells, which nevertheless accounted for under 3 per cent of new cars sold in Europe last year.
The emissions produced by all these new cars continues to plummet, thanks to robust and challenging tailpipe emission regulations. According to the European Environmental Agency the average car sold in Europe in 2013 was 10 per cent more efficient than in 2010. Scaled up, this linear improvement makes a major contribution along the pathway to a low carbon future.
Another industry with significant emissions and the potential for accelerated linear improvement is the utility sector. Here we are seeing the potential for widespread change happening without fundamentally changing the traditional model of energy provision.
The change comes from a move towards intelligent energy use. This includes the implementation of smart metering (for water and gas as well as electricity - already an £8 billion market), coupled with smart grid technology which will ultimately enable the ‘internet of things’ to become more fully realised. While full smart interconnectedness will eventually bring radical changes to the way we manage buildings and maintain or replace products, the 800 million smart meters predicted to be installed by 2020 will also provide ample short-term opportunity to realise benefits from better energy monitoring and management.
As well as working with the pioneers of the circular economy, at the Carbon Trust we continue to work with businesses across a number of sectors, and in an increasing number of countries, whose sustainability efforts focus primarily on driving bold and important linear improvements. These are often companies in a less advanced position, often supply chain partners in areas where the sustainability pathway is less well trodden.
We find that designing, executing and communicating measurable resource and environmental improvements in the linear economy can inspire customers and employees alike, as well as delivering bottom line benefits. It makes cumulative difference. The impact of the Carbon Trust since 2001 has been an estimated carbon saving of 53 million tonnes of CO2 and cost saving of £5 billion.
Improvements to the linear economy may be criticised by some as papering over the cracks, but across the economy as a whole these can combine to make a material short-term dent in our overall environmental footprint. These linear improvements also serve to engage multiple businesses and employees in facing up to long-term problems facing their sectors.
Given the need to have a broad and demand-driven approach to help control resource and environmental impacts, a focus on the linear economy remains a vital part of the solution. Until new transformational models can be put in place at scale, we must continue to make business as usual, better than usual.
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