The effect of consumption and production policies on circular economy business models: A machine learning approach

The circular economy (CE) is attracting increasing interest, as it can bring environmental, social, and economic benefits. However, policymakers and scholars appear to concentrate more on the production side of CE, while consumption, and particularly policies that affect consumption have received less attention and their effect is ambiguous. This paper investigates the effect of CE consumption policies on circular economy business models (CEBMs) in firms, but also examines the interplay this type of policies have with CE production policies to have a broader picture of the circular economy policy framework and the relevance of each type of policy on firms. While previous studies assume rational and passive consumer behavior, this paper borrows from a natural resource-based view and stakeholder theory, arguing that consumers have a proactive attitude toward the consumption of environmentally friendly products. Moreover, we use institutional theory as an analytical framework for modeling the effects of a particular policy framework on the CEBM. Our analysis combines classical econometric methods with machine learning approaches, employing data from the EU. The results show that CE policies aimed at promoting consumption have a direct and positive effect on CEBMs. This paper also confirms that a wide portfolio of CE policies on production and consumption has a greater effect on the development of CEBMs, due to the complementarity of CE consumption and production policies. Moreover, we show that in interaction with CE production policies, CE policies on consumption have an even greater effect on CEBMs in firms than would have been anticipated.     

Measuring Progress towards a Circular Economy: A Monitoring Framework for Economy‐wide Material Loop Closing in the EU28

The concept of a circular economy (CE) is gaining increasing attention from policy makers, industry, and academia. There is a rapidly evolving debate on definitions, limitations, the contribution to a wider sustainability agenda, and a need for indicators to assess the effectiveness of circular economy measures at larger scales. Herein, we present a framework for a comprehensive and economy‐wide biophysical assessment of a CE, utilizing and systematically linking official statistics on resource extraction and use and waste flows in a mass‐balanced approach. This framework builds on the widely applied framework of economy‐wide material flow accounting and expands it by integrating waste flows, recycling, and downcycled materials. We propose a comprehensive set of indicators that measure the scale and circularity of total material and waste flows and their socioeconomic and ecological loop closing. We applied this framework in the context of monitoring efforts for a CE in the European Union (EU28) for the year 2014. We found that 7.4 gigatons (Gt) of materials were processed in the EU and only 0.71 Gt of them were secondary materials. The derived input socioeconomic cycling rate of materials was therefore 9.6%. Further, of the 4.8 Gt of interim output flows, 14.8% were recycled or downcycled. Based on these findings and our first efforts in assessing sensitivity of the framework, a number of improvements are deemed necessary: improved reporting of wastes, explicit modeling of societal in‐use stocks, introduction of criteria for ecological cycling, and disaggregated mass‐based indicators to evaluate environmental impacts of different materials and circularity initiatives. This article met the requirements for a gold – gold JIE data openness badge described at http://jie.click/badges .     

From Legal Transplants to Sustainable Transition

Extended producer responsibility (EPR), which assigns significant responsibility to producers to take back their end‐of‐life products to create incentives for redesign of products with lower life cycle environmental impacts, has come to a crossroad facing a trade‐off between the original innovation‐oriented regime design and the cost‐efficiency challenges in practice. This is particularly true in its implementation in non‐Organization for Economic Co‐operation and Development (OECD) countries as they are trying to transplant the “best practices” from OECD countries, for there is increasing skepticism as to whether EPR is suitable for developing countries at all. As an important producer of electronic products and destination of electronic waste (e‐waste) flows in the world, China has been expected to play a vital role in the evolution of global governance based on the idea of EPR, either to create new ways for producers to perform their end‐of‐life strategies, or to reshape the mode of production and consumption with its fast‐growing market. However, the establishment of EPR in China has been long and full of difficulties. This article reviews the status and trends in the establishment of an EPR system for waste electrical and electronic equipment (WEEE) management in China. We use the framework of a multilevel perspective of transition theory in our analysis to characterize the complex interactions among various agents in the evolution of the Chinese system from initial innovation‐oriented design to the current efficiency‐oriented version. An ongoing research framework for evaluation of the EPR program in China is outlined as the research agenda in coming years.     

Towards a Circular Economy in Australian Agri‐food Industry: An Application of Input‐Output Oriented Approaches for Analyzing Resource Efficiency and Competitiveness Potential

The food industry in Australia (agriculture and manufacturing) plays a fundamental role in contributing to socioeconomic sectors nationally. However, alongside the benefits, the industry also produces environmental burdens associated with the production of food. Sectorally, agriculture is the largest consumer of water. Additionally, land degradation, greenhouse gas emissions, energy consumption, and waste generation are considered the main environmental impacts caused by the industry. The research project aims to evaluate the eco‐efficiency performance of various subsectors in the Australian agri‐food systems through the use of input‐output–oriented approaches of data envelopment analysis and material flow analysis. This helps in establishing environmental and economic indicators for the industry. The results have shown inefficiencies during the life cycle of food production in Australia. Following the principles of industrial ecology, the study recommends the implementation of sustainable processes to increase efficiency, diminish undesirable outputs, and decrease the use of nonrenewable inputs within the production cycle. Broadly, the research outcomes are useful to inform decision makers about the advantages of moving from a traditional linear system to a circular production system, where a sustainable and efficient circular economy could be created in the Australian food industry.     

Unraveling the Nexus: Exploring the Pathways to Combined Resource Use

In response to the unprecedented decline in global natural resource endowments, the so‐called nexus framework is gaining increasing influence on resource management practices. In this research, we approach the resource nexus through the concept of nexus pathways. Nexus pathways are configurations that resource flows follow along supply chains leading to the combined use of two or more resources. Three general types of pathways are identified: direct (on‐site use), dependent (one‐way supply chains), and interdependent (supply‐chain feedbacks). We quantify and compare each pathway by means of multiregional input‐output analysis and structural path analysis, and apply this approach to a comparative case study on the water‐energy nexus (WEN) in the United States and China. Interdependencies or feedbacks are generally thought to be relevant for the WEN, especially between water and energy sectors. Our economy‐wide analysis for both countries indicates, however, that feedbacks neither play an important role in the WEN nor substantially take place between water and energy sectors. The most important feedbacks contribute to less than 1% of total resource use, and these take place mostly between manufacturing sectors. Overall, the studied WEN is mostly driven by dependent pathways and, to a lesser degree, direct resource use. Comparative differences between the two countries are largely explained by differences in economic structure, technology, and resource endowments. Our findings call into question current research and policy focus and suggest greater attention to less complex, but more determining, pathways leading to absolute resource use.     

Enabling Future Sustainability Transitions

This synthesis article presents an overview of an urban metabolism (UM) approach using mixed methods and multiple sources of data for Los Angeles, California. We examine electric energy use in buildings and greenhouse gas emissions from electricity, and calculate embedded infrastructure life cycle effects, water use and solid waste streams in an attempt to better understand the urban flows and sinks in the Los Angeles region (city and county). This quantification is being conducted to help policy‐makers better target energy conservation and efficiency programs, pinpoint best locations for distributed solar generation, and support the development of policies for greater environmental sustainability. It provides a framework to which many more UM flows can be added to create greater understanding of the study area's resource dependencies. Going forward, together with policy analysis, UM can help untangle the complex intertwined resource dependencies that cities must address as they attempt to increase their environmental sustainability.     

基于生态效率的辽宁省循环经济分析

生态效率与循环经济相辅相成。基于区域生态效率评价是考量区域循环经济的重要内容,又基于目前对于循环经济与生态效率结合的实证研究相对较少,因此,以生态效率理论为基础,对我国最早开展循环经济的试点省份——辽宁省的循环经济发展作以综合衡量。通过生态效率度量模型与循环经济度量模型,以辽宁省1990～2008年数据为基础,运用基于熵权的TOPSIS方法,分别计算了19a间辽宁省各年的资源效率、环境效率、生态效率,进而综合评价了辽宁省循环经济发展轨迹。研究表明：在19a间,辽宁省生态效率总体呈现波动上升态势,经历了传统经济发展模式——末端治理模式——循环经济模式的转变;19a间,辽宁省循环经济发展状态总体上处于循环性不断增强的状态,即经济发展的同时,环境压力不断减小。研究证明了辽宁省2002年实行循环经济以来取得了明显成效,对全国尤其是东北地区发展循环经济,走新型工业化道路具有重要的示范意义。     

Resource Use in Small Island States

Iceland and Trinidad and Tobago are small open, high‐income island economies with very specific resource‐use patterns. This article presents a material flow analysis (MFA) for the two countries covering a time period of nearly five decades. Both countries have a narrow domestic resource base, their economy being largely based on the exploitation of one or two key resources for export production. In the case of Trinidad and Tobago, the physical economy is dominated by oil and natural gas extraction and petrochemical industries, whereas Iceland's economy for centuries has been based on fisheries. More recently, abundant hydropower and geothermal heat were the basis for the establishment of large export‐oriented metal processing industries, which fully depend on imported raw materials and make use of domestic renewable electricity. Both countries are highly dependent on these natural resources and vulnerable to overexploitation and price developments. We show how the export‐oriented industries lead to high and growing levels of per capita material and energy use and carbon dioxide emissions resulting from large amounts of processing wastes and energy consumption in production processes. The example of small open economies with an industrial production system focused on few, but abundant, key resources and of comparatively low complexity provides interesting insights of how resource endowment paired with availability or absence of infrastructure and specific institutional arrangements drives domestic resource‐use patterns. This also contributes to a better understanding and interpretation of MFA indicators, such as domestic material consumption.     

Insights on the Use of Hybrid Life Cycle Assessment for Environmental Footprinting

Establishing a comprehensive environmental footprint that indicates resource use and environmental release hotspots in both direct and indirect operations can help companies formulate impact reduction strategies as part of overall sustainability efforts. Life cycle assessment (LCA) is a useful approach for achieving these objectives. For most companies, financial data are more readily available than material and energy quantities, which suggests a hybrid LCA approach that emphasizes use of economic input‐output (EIO) LCA and process‐based energy and material flow models to frame and develop life cycle emission inventories resulting from company activities. We apply a hybrid LCA framework to an inland marine transportation company that transports bulk commodities within the United States. The analysis focuses on global warming potential, acidification, particulate matter emissions, eutrophication, ozone depletion, and water use. The results show that emissions of greenhouse gases, sulfur, and particulate matter are mainly from direct activities but that supply chain impacts are also significant, particularly in terms of water use. Hotspots were identified in the production, distribution, and use of fuel; the manufacturing, maintenance, and repair of boats and barges; food production; personnel air transport; and solid waste disposal. Results from the case study demonstrate that the aforementioned footprinting framework can provide a sufficiently reliable and comprehensive baseline for a company to formulate, measure, and monitor its efforts to reduce environmental impacts from internal and supply chain operations.     

Product/Service‐Systems for a Circular Economy: The Route to Decoupling Economic Growth from Resource Consumption?

Product/service‐systems (PSS) that focus on selling service and performance instead of products are often mentioned as means to realize a circular economy (CE), in which economic growth is decoupled from resource consumption. However, a PSS is no implicit guarantee for a CE, and CE strategies do not necessarily lead to decoupling economic growth from resource consumption in absolute terms. Absolute resource decoupling only occurs when the resource use declines, irrespective of the growth rate of the economic driver. In this forum paper, we propose a two‐step framework that aims to support analyses of PSS and their potential to lead to absolute resource decoupling. In the first step, we present four PSS enablers of relative resource reduction that qualify as CE strategies. In the second step, three subsequent requirements need to be met, in order to successfully achieve absolute resource decoupling. Conditions and limitations for this accomplishment are discussed. Danish textile cases are used to exemplify the framework elements and its application. We expect that the framework will challenge the debate on the necessary conditions for CE strategies to ensure absolute resource decoupling.     

A Hybrid‐Unit Energy Input‐Output Model to Evaluate Embodied Energy and Life Cycle Emissions for China's Economy

We develop a hybrid‐unit energy input‐output (I/O) model with a disaggregated electricity sector for China. The model replaces primary energy rows in monetary value, namely, coal, gas, crude oil, and renewable energy, with physical flow units in order to overcome errors associated with the proportionality assumption in environmental I/O analysis models. Model development and data use are explained and compared with other approaches in the field of environmental life cycle assessment. The model is applied to evaluate the primary energy embodied in economic output to meet Chinese final consumption for the year 2007. Direct and indirect carbon dioxide emissions intensities are determined. We find that different final demand categories pose distinctive requirements on the primary energy mix. Also, a considerable amount of energy is embodied in the supply chain of secondary industries. Embodied energy and emissions are crucial to consider for policy development in China based on consumption, rather than production. Consumption‐based policies will likely play a more important role in China when per capita income levels have reached those of western countries.     

Exploring the Global Journey of Nickel with Markov Chain Models

Markov chain (MC) modeling is a versatile tool in policy analysis and has been applied in several forms to analyze resource flows. This article builds on previous discussions of the relationship among absorbing Markov chains (AMCs), material flow analysis (MFA), and input‐output (IO) analysis, and presents a full‐scale application of MC modeling for a particular globally relevant, nonrenewable resource, namely nickel. The MC model presented here is built on comprehensive, recently compiled nickel flow data for 52 geographic regions. Considering all possible cycles of recycling and reuse, nickel extracted in 2005 is estimated to have a technological lifetime of 73 ± 7 years. During its global journey, nickel enters use, for some application somewhere in the world, an average of three times, the largest share of which occurs in China. Nickel entering fabrication in 2005 is estimated to enter use approximately four times. Over time, nickel is lost to the environment and as a tramp element in carbon steel; the final distribution of nickel among these absorbing states is 78% and 22%, respectively. Of all the nickel in ore extracted in 2005, fully 28% will eventually end up in the tailings, slag, and landfills of China. MC results are also combined with geographically specific life cycle inventory data to determine the overall energy invested in nickel during its many cycles of use. MCs provide a powerful tool for tracking resources through the network of global production, use, and waste management, and opportunities for further integration with other modeling efforts are also discussed.     

Accounting for Emissions and Sinks from the Biogeochemical Cycle of Carbon in the U.S. Economic Input‐Output Model

Biogeochemical cycles are essential ecosystem services that continue to degrade as a result of human activities, but are not fully considered in efforts toward sustainable engineering. This article develops a model that integrates the carbon cycle with economic activities in the 2002 U.S. economy. Data about the carbon cycle, including emissions and sequestration flows, is obtained from the greenhouse gas inventory of the U.S. Environmental Protection Agency. Economic activities are captured by the economic input‐output model available from the Bureau of Economic Analysis. The resulting model is more comprehensive in its accounting for the carbon cycle than existing methods for carbon footprint (CF) calculations. Examples of unique flows in this model include the effect of land‐use and land‐cover change on carbon dioxide flow within the U.S. national boundary, carbon sequestration in urban trees, and emissions resulting from liming. This model is used to gain unique insight into the carbon profile of U.S. economic sectors by providing the life cycle emissions and sequestration in each sector. Such insight may be used to support policies, manage supply chains, and be used for more comprehensive CF calculations.     

Exploiting the Potential of Public Procurement: Opportunities for Circular Economy

The objective of a circular economy (CE) is to maintain the value of products, materials, and resources in the economy by closing material loops and minimizing waste generation. In recent years, the role of public procurement has been recognized as an important, but as yet not fully exploited, opportunity by cities and municipalities in their transition toward circular societies. This study analyzed public procurement opportunities to promote CE. Different approaches and examples of circular public procurement were identified using case studies. In addition, opportunities to promote CE through sustainable and green public procurement policy were identified analyzing predefined sustainable or green public procurement criteria. The study concludes that public procurement can promote CE and related business models by setting criteria and requirements for the extension of product life spans, efficiency and/or intensity of use, and efficient cycling of biological or technical materials, as well as for the securing of clean and nonrisky cycles. Circular procurement can occur through the procurement of better‐quality products in circular terms, the procurement of new circular products, the use of business concepts that support the CE, and investments in circular ecosystems. Several sectors and product groups were identified as having potential for circular procurement, such as construction, waste, and wastewater management, transportation, food, and catering, furniture, and textiles. The study also suggests that the use of certain tools, such as performance‐based procurement, life cycle approach, and life cycle costing, as well as criteria concerning reuse and recycling of materials, could promote circular procurement. Market dialogue and cooperation between procurers and actors in the supply chains are important for the future development of circular procurement.     

Regional material flow accounts for China: Examining China's natural resource use at the provincial and national level

Over the last three decades, China has experienced the most dynamic economic development lifting living standards and resulting in fast‐growing use of natural resources. In the past, the focus has been on national MFA accounts which do not do justice to the second largest economy, home to 19% of the world population and having 30% of global material use. In this research, we calculate material extraction for China at the regional level during 1995–2015 using the most recent available statistical data and applying the most up‐to‐date international calculation methods. In particular, we combine a bottom‐up and top‐down approach for constructing the dataset of China's economically used Domestic Extraction (DEU) in an integrated way. This approach also improves the Chinese national material flow accounts and allows us to present a reliable database of DE of materials for China to date. Our new dataset provides the basis for calculating material footprints and environmental impacts of China's regions. The dataset enables us to evaluate regional resource efficiency trends in China. We find that during the past two decades, China's material use has grown strongly from 11.7 billion tonnes in 1995 to 35.4 billion tonnes in 2015. Material use has accelerated between 2000 and 2010 but slowed down between 2010 and 2015 reflecting the economic contraction caused by the Global Financial Crisis which reduced the global demand for China's manufacturing and a reorientation of China's economic policy settings toward quality of growth. Unsurprisingly, different regions play different roles in the supply chain of materials, achieving different economic performances resulting in very diverse material efficiency outcomes. This information is important to allow for a targeted policy approach to increase resource efficiency, reduce environmental impacts of resource use, and grow wellbeing in China with large positive implications for global sustainability. This study provides the basis for the development of relevant resource management policies for different regions in the future.     

Global Life Cycle Paper Flows,Recycling Metrics,and Material Efficiency

Despite major improvements in recycling over the last decades, the pulp and paper sector is a significant contributor to global greenhouse gas emissions and other environmental pressures. Further reduction of virgin material requirements and environmental impacts requires a detailed understanding of the global material flows in paper production and consumption. This study constructs a Sankey diagram of global material flows in the paper life cycle, from primary inputs to end‐of‐life waste treatment, based on a review of publicly available data. It then analyzes potential improvements in material flows and discusses recycling and material efficiency metrics. The article argues that the use of the collection rate as a recycling metric does not directly stimulate avoidance of virgin inputs and associated impacts. An alternative metric compares paper for recycling (recovered paper) with total fibrous inputs and indicates that the current rate is at just over half of the technical potential. Material efficiency metrics are found to be more useful if they relate to the reuse potential of wastes. The material balance developed in this research provides a solid basis for further study of global sustainable production and consumption of paper. The conclusions on recycling and efficiency should be considered for improving environmental assessment and stimulating a shift toward resource efficiency and the circular economy.     

Modeling the circular economy in environmentally extended input–output: A web application

Global environmental and resource problems ask for new ways of managing the production and consumption of resources. The implementation of new paradigms, such as the circular economy, requires decision‐makers at multiple levels to make complex decisions. For this, clear analyses and modeling of scenarios are of utmost importance. Meanwhile, as the sophistication of databases and models increases so does the need for user‐friendly tools to use them. The RaMa‐Scene web platform reduces these barriers by allowing users to visualize easily diverse impacts of implementing circular‐economy interventions. This online web platform makes use of the multi‐regional environmentally extended input–output database EXIOBASE version 3 in monetary units, which has been modified to show explicit transactions of raw materials from recycling activities.     

Coupling Input‐Output Tables with Macro‐Life Cycle Assessment to Assess Worldwide Impacts of Biofuels Transport Policies

Many countries see biofuels as a replacement to fossil fuels to mitigate climate change. Nevertheless, some concerns remain about the overall benefits of biofuels policies. More comprehensive tools seem required to evaluate indirect effects of biofuel policies. This article proposes a method to evaluate large‐scale biofuel policies that is based on life cycle assessment (LCA), environmental extensions of input‐output (I‐O) tables, and a general equilibrium model. The method enables the assessment of indirect environmental effects of biofuels policies, including land‐use changes (LUCs), in the context of economic and demographic growth. The method is illustrated with a case study involving two scenarios. The first one describes the evolution of the world economy from 2006 to 2020 under business as usual (BAU) conditions (including demographic and dietary preferences changes), and the second integrates biofuel policies in the United States and the European Union (EU). Results show that the biofuel scenario, originally designed to mitigate climate change, results in more greenhouse gas emissions when compared to the BAU scenario. This is mainly due to emissions associated with global LUCs. The case study shows that the method enables a broader consideration for environmental effects of biofuel policies than usual LCA: Global economic variations calculated by a general equilibrium economic model and LUC emissions can be evaluated. More work is needed, however, to include new biofuel production technologies and reduce the uncertainty of the method.     

Water Footprint of Cereals and Vegetables for the Beijing Market

Beijing is situated in water‐scarce northern China, where there is a history of policies aimed at constraining local agricultural water use to meet the increasing urban water demand. This has led to a change in local crop production and subsequent effects in terms of the importation of cereals and vegetables grown in other parts of China. The dilemma is that local policies designed to improve Beijing's water resources situation may have the unintended consequence of increasing water stress in other regions. In this article, life cycle assessment approaches were used to model both consumptive and degradative water use for the major cereals and vegetables consumed in Beijing, enabling comparison of local and imported supplies. In the Beijing region, cropping cereals rather than intensive vegetables in greenhouses could reduce local blue water consumption by 7,216 cubic meters per hectare per year (m³ ha^?1 yr^?1) and nitrogen pollution by 45 kg ha^?1 yr^?1. However, depending on how the local food shortfall is balanced by imported food, shifts in cropping pattern in Beijing have the potential to cause either an improvement or exacerbation of the nationwide water stress situation (e.g., ?42% to 4% for water scarcity footprint). As such, local policy making regarding agricultural land and water use needs to consider the wider food production context. This situation in Beijing is likely to be representative of the challenge facing many of the world's large and mega‐sized cities, where a sustainable means of increasing food supply must be found.