Growth Drivers & the Need for a Circular Economy
The shift towards a circular economy is gaining momentum, driven by both environmental and economic imperatives. At its core, a circular economy is about creating a regenerative system where waste is minimized, and products and resources are reused, remanufactured, and recycled [1]. As global concerns over resource depletion, environmental degradation, and sustainability intensify, understanding the growth drivers behind this transition becomes essential.
1. Closing the Supply Chain Loop on Critical Rare Metals:
Current Situation with Critical Metals:
The proliferation of modern technologies, especially electronic devices and electric vehicles (EVs), has led to a surge in demand for critical rare metals such as lithium, cobalt, and nickel [2]. While these metals are essential for manufacturing batteries, there’s a notable challenge – their limited supply.
The extraction of these metals, especially when considering the current mining practices, presents substantial environmental concerns. For instance, over 60% of the world’s cobalt, a crucial element in lithium-ion batteries, comes from the Democratic Republic of Congo, where mining has led to ecological degradation and significant human rights concerns [3].
Abundance in Disposed Batteries:
Interestingly, a vast amount of these critical metals already exists within our economy. For example, it is estimated that by 2030, 11 million tons of spent lithium-ion batteries will be discarded [4]. These disposed batteries can serve as rich mines for critical metals.
The Opportunity for Entrepreneurs:
This scenario paves the way for businesses to develop technologies and systems to extract and refine these metals from discarded batteries, turning potential e-waste into a resource. This not only alleviates the strain on natural reserves but also reduces the environmental and societal impact linked with traditional mining.
2. Anticipating the Solar Cells and EV Batteries Surge:
Impending Glut:
Solar energy and EVs represent two of the most significant shifts in our move towards a more sustainable future. However, with the average life span of solar panels being about 25 years and EV batteries lasting 10-15 years [5], a considerable volume of these products will soon reach the end of their useful lives.
By 2050, it’s expected that there will be 78 million tons of raw materials locked in used photovoltaic panels [6]. The sheer magnitude underscores the need for efficient recycling processes.
The Entrepreneurial Perspective:
For entrepreneurs, this represents a dual challenge and opportunity. Businesses that develop effective methods to either extend the life of these products or recycle them efficiently will find a vast and growing market waiting.
3. Cost Implications of Recycling vs. Building New:
Economics of Recycling:
Historically, recycling, especially of complex products, has been seen as more expensive than producing from virgin materials. However, this perspective is rapidly evolving. A study found that recycling metals from used products requires up to 85% less energy than mining and refining metals from ores [7]. As energy prices continue to rise, the economic advantage of recycling becomes even more pronounced.
Furthermore, as technology advances and the scale of recycling operations increases, the cost-per-unit of recycling decreases, making the process even more economically viable [8].
An Appeal to Entrepreneurs:
Innovative businesses that can further reduce the costs of recycling, or develop value-added products from recycled materials, will have a competitive advantage in the marketplace.
4. Pre-empting Regulation Surrounding Recycling:
Changing Regulatory Landscape:
As the impacts of climate change and environmental degradation become more evident, governments are implementing stricter regulations surrounding waste disposal and product lifecycle management. The European Union’s Waste Electrical and Electronic Equipment (WEEE) Directive, for instance, imposes responsibility on producers for the collection and recycling of electronic waste [9].
Proactive Measures:
Entrepreneurs who anticipate these changes and embed circular principles into their operations stand to benefit in multiple ways: reduced compliance risks, improved brand reputation, and potential cost savings.
Conclusion:
The circular economy is not a fleeting trend but an essential transition, backed by both environmental necessity and economic logic. Entrepreneurs have a golden opportunity to lead this change. By developing technologies and business models that support a circular paradigm, they can not only ensure the sustainable use of our planet’s resources but also tap into a burgeoning market that promises growth and profitability.
References:
[1] Ellen MacArthur Foundation. (2017). What is a circular economy?
[2] U.S. Geological Survey. (2019). Critical Mineral Resources of the United States.
[3] Amnesty International. (2016). This is what we die for: Human rights abuses in the Democratic Republic of the Congo power the global trade in cobalt.
[4] Harper, G., Sommerville, R., Kendrick, E., Driscoll, L., Slater, P., Stolkin, R., … & Walton, A. (2019). Recycling lithium-ion batteries from electric vehicles. Nature, 575(7781), 75-86.
[5] Field, M. R., & Dunn, B. (2020). Life and death of a single photovoltaic cell. Chemical Reviews, 120(16), 7790-7822.
[6] IRENA. (2016). End-of-life management: Solar photovoltaic panels.
[7] Graedel, T. E., Allwood, J., Birat, J. P., Reck, B. K., Sibley, S. F., Sonnemann, G., … & Buchert, M. (2011). What do we know about metal recycling rates?. Journal of Industrial Ecology, 15(3), 355-366.
[8] Söderholm, P. (2015). The economics of metal recycling: A few remarks. Resources Policy, 45, 33-38.
[9] European Parliament. (2012). Directive 2012/19/EU on waste electrical and electronic equipment (WEEE).
George Payne 