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Introduction to Circular Economy EKA University of Applied Science Tatjana Tambovceva, Jelena Titko INTRODUCTION TO CIRCULAR ECONOMY EKA UNIVERSITY OF APPLIED SCIENCE Tatjana Tambovceva, Jelena Titko INTRODUCTION TO CIRCULAR ECONOMY Publisher: Ekonomikas un kulturas augstskola Reviewers: Dzintra Atstāja, Petra Škerl ISBN 978-9984-24-231-6 / e-ISBN 978-9984-24-230-9 UDK 33(07) The book is developed within the project ''Online Master Programme for Circular Economy'' [CIRCECO]. CIRCECO is financed and supported by the European Commission, Erasmus + Programme, Key Action 2 – Strategic Partnership (grant agreement No. 2017-1-MK01-KA203-035392). 2 3 PREFACE This book is developed within the framework of the International project „Online Master Programme for Circular Economy (CIRCECO)”. Project coordinator – European University – Skopje (R. of Macedonia), project partners – Zelena Infrastruktura, Green Infrastructure Ltd. (Croatia), Fakulteta za komercialne in poslovne vede (Slovenia) YES Foundation (Macedonia) and The University of Economics and Culture (Latvia). Project period – December 2017 – January 2020. CIRCECO is financed and supported by the European Commission, Erasmus + Programme, Key Action 2 – Strategic Partnership (grant agreement No. 2017-1- MK01-KA203-035392). CIRCECO project’s specific goals are as follows: Circular Economy joint research – conducted in collaboration with participants from the business sector, researchers, experts, professionals and students in order to analyse economic indicators and potential benefits and risks of transitioning from linear to circular economy. Support and implement models for effective and practical learning through raising awareness and inspiring students to rethink the economic future from the viewpoint of circular economy; establish innovative educational practices and training platforms so as to speed up the transition from linear to circular economy; provide the latest information, insights, and views implemented in the Master Study Program for circular economy needed to accelerate the transition; foster innovation, creativity and entrepreneurial skills. The support and development of innovative business models focused on a renewable and self-sustainable economy, and employ innovations resulting from the circular economy and the cooperation with the business sector; implementation of a comprehensive business initiative for circular economy and support throughout the implementation stage; strengthening the knowledge-transfer infrastructure. Creating an Online platform, enabling the setting up and implementation of an on-line study programme, allowing students and staff to log in, upload and download learning materials, forum discussions, as well as providing an option for live consultations and lectures. Promoting the benefits of the innovative Online Master Study Programme for Circular Economy and raising awareness through relevant electronic and press media, in order to inform about the latest findings, reports and achievements in the field of circular economy and exchanging views of all interested parties. Increased awareness in the importance of circular economy, not only among the business sector, but for the wider audience as well. 4 The main goal of this book is to increase students’ awareness about the significance of circular economy. The learning book is designed to provide a comprehensive overview about the global issues our society is facing nowadays, solutions suggested by world, European and national organizations, and specifically emphasizes the role of the circular economy to deal with environmental, economic and social problems. This book will help students to be acquainted with the new terminology, to understand the relationships between various associated concepts and models, and to generate ideas about their own research in the field of circular economy. The book “Introduction to Circular Economy” consists of 11 chapters. Its structure was used as a basis for developing an online course “Introduction to Circular Economy” within the framework of the project. The questions for individual studies at the end of each chapter will help students to systematize knowledge and to fulfil the tasks within the course. ABOUT THE AUTHORS Tatjana TAMBOVCEVA (Dr.oec.) is a Professor at the Riga Technical University (Latvia). She has more than 25 years’ experience in lecturing both at the undergraduate and graduate levels. Her research interests focus on circular economy, green production and consumption; change of consumer behavior; corporate social and environmental responsibility; sustainable building, real estate management, project management and use of ICT in many areas. She has published more than 150 articles in national and international academic journals. She is an author to a number of specialized books and reports on Management, Sustainable development and Project Management. She is a member and an expert in a number of international Societies, Councils and Foundations. She is the Managing Editor of the Scientific Journal “Economics and Business” and Head deputy of the Department of Civil Construction and Real Estate Economics and Management at the Riga Technical University in Latvia. Jelena TITKO (Dr.oec.) is an Associate Professor at the EKA University of applied Sciences (Latvia); she also holds an administrative position of a Vice-Rector for Science and International Cooperation. She is an expert in the fields of Education and Economics and Entrepreneurship of the Latvian Council of Science; an author of more than 60 scientific papers in the field of economics, business, management and education; an expert representing Latvia in the Eurydice study “Digital Education at School in Europe”. She is an Editor-in-Chief of the journal “Economics and Culture” and a member of a scientific board of the journal “Business, Management and Education”. 5 CONTENTS 1. CIRCULAR ECONOMY AS A RESPONSE TO GLOBAL ISSUES ........... 10 2. CONCEPTUAL FRAMEWORK FOR CIRCULAR ECONOMY ................ 15 2.1. Emergence of the concept and current definitions ................................... 15 2.2. Circular economy and the related concepts ............................................. 20 3. CIRCULAR ECONOMY ACTIVITIES......................................................... 29 3.1. Global initiatives towards circular economy............................................ 29 3.2. European initiatives ................................................................................. 31 4. PRINCIPLES AND BUILDING BLOCKS OF THE CIRCULAR ECONOMY 34 4.1. Principles of the circular economy ........................................................... 34 4.2. Circular economy building blocks ........................................................... 42 5. ACTION AREAS OF THE CIRCULAR ECONOMY .................................. 48 5.1. Key action areas of the circular economy ................................................ 48 5.2. Priority areas of circular economy ........................................................... 52 5.3. Assessment of the circular economy ........................................................ 56 6. CONCEPT OF LIFE CYCLE AND INTRODUCTION TO LIFE CYCLE ASSESSMENT ........................................................................................................ 60 6.1. Concept of life cycle ................................................................................ 60 6.2. Life cycle thinking ................................................................................... 63 6.3. Life Cycle Assessment ............................................................................. 64 6.4. LCA Methodology ................................................................................... 65 7. INTRODUCTION TO ECO-DESIGN ........................................................... 71 8. SUPPLY CHAIN ............................................................................................ 84 9. OVERVIEW OF CIRCULAR ECONOMY BUSINESS MODELS .............. 89 10. INDUSTRIAL SYMBIOSIS ....................................................................... 99 11. BARRIERS TO CIRCULAR ECONOMY ............................................... 105 REFERENCES ...................................................................................................... 112 6 INTRODUCTION Modern economic realities require a fundamentally new approach to the implementation of economic activity, since commodity producers are currently experiencing serious restrictions, caused by a shortage of natural resources and unprecedented degradation of ecosystems. In order to ensure sustainable development, which presupposes economic progress, environmental safety and improvement of the quality of life of the population, today a different development paradigm is needed. In the world, at the moment, the traditional model and the economy are gradually being revised, and a new development paradigm, based on the concept of a green economy, is gaining more and more resonance. The Organisation for Economic Co- operation and Development (OECD) officially adopted an economic policy of “green” growth as a strategic direction for the development of all its members in 2009. It was adopted for the long-term period, i.e. up to 2030, as well as up to and beyond 2050. The main advantage of a circular (green) economy is that it not only saves nature, but also ensures further economic growth without increasing consumption (and landfill growth), as well as increases the number of jobs. Since the main task of this economy is to ensure
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