As the concept of the circular economy (CE) has evolved and been implemented, a multitude of circular economy indicators has emerged—likely more than most individuals can easily process or comprehend. Hence, the need for classifying frameworks becomes crucial to help people identify the most relevant indicators.
Moraga et al. (2019) introduces a framework that presents a novel approach to categorizing indicators, emphasizing the inherent nature of the CE as an overarching concept. Within this framework, indicators are classified into five preservation groups. In terms of function, the focus is on preserving the functionality of products or services provided by circular business models, such as sharing platforms and schemes that promote both product redundancy and multifunctionality. In the context of the CE and sustainability, “product redundancy” typically refers to the intentional design or implementation of products with features or components that exceed basic functional requirements. This redundancy can serve various purposes, such as enhancing product durability, facilitating repair or refurbishment, or accommodating diverse user needs. Product preservation involves extending the lifespan of the product itself through strategies encompassing durability, reuse, restoration, refurbishment, and remanufacturing. Within the Components category, the emphasis is on preserving the components of a product through reuse, recovery, and repurposing. Materials preservation centers around maintaining the value of materials through recycling and downcycling processes. The preservation of embodied energy involves strategies such as energy recovery at incineration sites and landfills. Additionally, the framework includes a group designed to assess the linear economy, serving as a benchmark scenario for comparison.
Another valuable reference is the Circular Transition Indicators (CTI), a framework developed by the World Business Council for Sustainable Development (WBCSD), providing sets of indicators to assess a company’s circularity across various aspects of its operations. The framework is shaped by 30 WBCSD member companies, representing a diverse range of industries, including chemicals, consumer goods, energy, and finance.
The CTI framework categorizes circularity indicators into ‘Closing the Loop,’ ‘Optimizing the Loop,’ and ‘Value the Loop,’ providing businesses with a structured approach to evaluate and enhance their circular performance. ‘Closing the Loop’ assesses material and water circularity, as well as the utilization of renewable energy within company operations. Various indicators, such as the percentage of non-virgin and renewable content in the material inflow, are encompassed within this category. ‘Optimizing the Loop’ focuses on material criticality, resource-use efficiency, and the recovery and recirculation of outflow (materials, products, by-products, and waste streams leaving the company’s operations). ‘Value the Loop’ explores circular material productivity and CTI revenue, revealing the link between circular material flows and business performance.
Overall, these classifications highlight the comprehensive nature of the CTI framework, encompassing various aspects of circularity within a business’s operations and performance. The framework offers a holistic approach to measure and improve circular performance across different dimensions of business operations.
Techno-Economic Analysis
Techno-economic analysis (TEA) is a methodological approach used to evaluate the economic feasibility and performance of a technology or a process. It combines both technical and economic aspects to assess the viability and potential profitability of implementing a particular technology or process.
In a Techno-Economic Analysis, the technical aspects involve understanding the engineering and scientific principles behind the technology, such as efficiency, reliability, and performance. The economic aspects include assessing the costs, potential revenue generation, and overall value creation associated with implementing the technology or process.
Farahmandpour et al. (2022) provides an example of assessing the economic feasibility of a circular economy practice in the textile and apparel industry. Specifically, it explores the production of bioethanol from waste textiles in five different scenarios, each involving pretreatment of waste textiles with a different solvent. The pretreated cellulose undergoes hydrolysis and fermentation processes. The output streams from these processes are separated into two streams. The first stream contains carbon dioxide, ethanol, and biomass, while the second stream, which contains polyester and water, is used for polyester recycling. In a chemical process, polyester is broken down into its monomers, ethylene glycol, and dimethyl terephthalate, which are then used as raw materials in the manufacturing of polyester.
The profitability assessment in this study was conducted by analyzing the profitability parameters for each scenario, including the profitability index, payout period, and net return rate. Interested readers are encouraged to consult the original article for detailed findings.
In summary, the various indicators employed in assessing circular practices play a crucial role in shaping our understanding of progress toward circularity. However, it is important that we remain vigilant in our efforts to integrate diverse metrics, adapt our methodologies, and foster a holistic understanding of the circular economy. The journey towards a circular economy is not a static destination but an ongoing evolution, requiring our enduring commitment to innovation, transparency, and collaborative efforts across disciplines.
References:
Farahmandpour, R., Karimi, K., Denayer, J. F. M., & Shafiei, M. (2022). Innovative biorefineries for cleaner waste textile management towards circular economy: Techno-economic analysis. Journal of Cleaner Production, 378, N.PAG
Moraga, G., Huysveld, S., Mathieux, F., Blengini, G. A., Alaerts, L., Van Acker, K., de Meester, S., & Dewulf, J. (2019). Circular economy indicators: What do they measure? Resources, Conservation and Recycling, 146, 452-461. https://doi.org/10.1016/j.resconrec.2019.03.045.
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