Eduardo Rodríguez Fernández-Arroyo
Manager of the Sustainable Industry and Building Department EnergyLab

Dr. Pedro Villanueva Rey
Research Technician in the Sustainable Building and Industry Department EnergyLab

The development of an economy based on circular business models involves the transition from what is known as a Linear Economy, an economic model in which the material flows follow a linear sequence –extraction, production, consumption and disposal-, to production systems in which both the consumption of raw materials and the generation of waste and emissions are reduced, at the same time as the use of recycled materials and renewable energy sources increases (Reichel et al., 2016). As such, a Circular Economy (CE) is one that is restorative and that aims to keep products, components and materials at their highest utility, therefore enabling them to retain their value within the supply chain (The Ellen MacArthur Foundation, 2015).

However, it is important that society and in particular industry do not reduce the CE to a mere environmentalist attitude, and rather that they see it as a new economic vision in which economic growth cannot be linked to environmental pressures, therefore maintaining the resilience of the ecosystems and preventing the impact on our wellbeing.

In order to facilitate this transition, considerable changes must be made to different areas of the current socioeconomic system. Nonetheless, there is a series of factors, which are known as “facilitators”, which permit and steer these processes of change (Reichel et al., 2016):

  • Ecodesign: managing a product’s life cycle and prolonging its useful life.
  • Reparation and reuse: prioritising the reuse and remanufacturing of products.
  • Recycling: increasing the recycling index, high quality recycling, the cascading of materials and the promotion of the secondary raw material market.
  • Financing and financial incentives: changes in tax rates and criteria based on environmental and contamination criteria.
  • Business models: collaborative economy, industrial symbiosis and product-as-a-service.
  • Governance and knowledge: changes in consumption patterns and public awareness campaigns.

However, the main driving force behind the change towards a CE is the price volatility of raw materials and the shortage of resources.

We are currently witnessing a 4th industrial revolution –also known as Industry 4.0 (I4.0)- which is being driven predominantly by digitalisation and data generation. However, unlike previous industrial revolutions, this time it is not accompanied by an increase in the levels of emissions or in the generation of waste. In fact, the I4.0 has great potential to eliminate waste and actively support the development of business models that are based on the circular economy (van den Beukel, J.W., 2017). Therefore we can affirm that there is a clear connection between the CE and the I4.0, and this is just another way in which digitalisation technologies are leading to the implementation of changes in the current business models (Rosa et al., 2020) (Figure 1).

Diagrama conceptual de la integración de la Economía Circular y la Industria 4.0

Figure 1. Conceptual diagram of the integration of the Circular Economy and Industry 4.0. Adapted from: Rosa et al., 2020.

In this context, the new technologies that fall under the umbrella term, “Industry 4.0” are playing their part as clear circular economy facilitators. We have included a few examples below:

  • Internet of things (IoT) and massive data analysis: IoT technology allows for the digital interconnection and cooperation between people, devices, objects and things by using wireless networks, sensors, actuators, etc., therefore making it possible for large amounts of information to be generated, which are subsequently managed and stored. The potential uses for this technology range from bringing about improvements in the urban solid waste management –and therefore the development of smart cities- to improving material flows, by implementing smart industrial environments that facilitate both the reduced consumption of raw materials and a reduction in waste, therefore improving the supply chain, remanufacturing processes and the development collaborative networks through industrial symbiosis.
  • Additive manufacturing: the introduction of new additive manufacturing or 3D printing processes have not only led to changes in the methods used when manufacturing products and components, but these processes have also resulted in the use of new materials –recycled- and or biomaterials as raw materials. These systems have managed to significantly reduce energy consumption and waste generation in comparison with those produced by traditional productive systems. Furthermore, these systems are proving highly effective in the management of the products’ lifecycles and ecodesign, as well as in improving the capacity for manufacturing pieces/components of different geometries (from simple to complex), therefore facilitating reparation and remanufacturing processes.
  • Simulation: Through simulation processes, and more specifically, the bridging of the physical and virtual world, which is known as digital twin, DT, it is possible to perform a thorough analysis of the information, which allows for the stringent control of systems, and by anticipating errors and improving decision-making processes, it is possible to prevent problems. As such, simulation can be used for developing remanufacturing process, for improving efficiency in the exploitation of natural resources, and for developing closed-loop manufacturing processes within the supply chain.

Finally, the digitalisation of the industry should be seen as a clear CE facilitator, in the same way as is not possible for the I4.0 to advance if progress towards circular business models has not been made. Therefore it is fundamental for both concepts to interconnect, as in doing so it will be possible for them to attain a common goal: sustainability.