What is the Circular Economy, and How Does it Relate to the Energy Transition?

These days, one increasingly hears the term “circular economy” to describe an efficient and sustainable economic system that could endure for centuries without harming people or the planet. Before homo sapiens came along, the only economy on this planet was a circular and regenerative one, where everything was re-used and incarnated into something else. Thus, the dead tree - the root, trunk, branches, and leaves - became food for insects and animals that in turn died and fertilized the next tree. Developing a human circular economy sounds attractive, and simple enough in theory, but what does that actually mean? And how would a circular economy actually work in practice?

To kick off our discussion of the circular economy, let’s turn to the Environmental Protection Agency (EPA) for a definition of the term. The EPA defines a circular economy as one “that uses a systems-focused approach and involves industrial processes and economic activities that are restorative or regenerative by design, enable resources used in such processes and activities to maintain their highest value for as long as possible, and aim for the elimination of waste through the superior design of materials, products, and systems…A circular economy reduces material use, redesigns materials to be less resource-intensive, and recaptures “waste” as a resource to manufacture new materials and products.” 

Put in simpler terms, a circular economy does away with the current system that is designed to exploit things - whether they be minerals, trees, or fish – that we deplete without thought to the future, and price things without regard to what it may cost to replace them. 

(By the way, in what world does it make sense to include in our national Gross Domestic Product (GDP) the value of millions of board feet cut down in a denuded forest, but not account for the losses of habitat, oxygen produced by the trees, fish that thrived in now too-hot streams, and recreational space? That’s currently how we calculate GDP, but don’t get us started…) 

The three key principles of a circular economy

There are generally three accepted mainstays of such a sustainable economic model. These are as follows: 

1) Eliminating waste and pollution - The first principle is to dispense with waste and pollution. Today’s economy relies on the extraction of the Earth’s raw materials, processing them into products we use (some not for very long at all – fast fashion is another foolish fad, but don’t get us started here, either…), and that we then dispose of as waste in landfills or incinerators. Long-term, since the resources on our planet, are finite, this approach not viable.  

2) Maintaining products and materials at the highest value, and then reusing components - The second principle is to maintain both products and materials at their highest value. This means one uses the product in its initial form as long as one can. Then when that cannot be used anymore, it may find a second life (used clothing being a good example). After that, its components or basic raw materials are extracted, refined if necessary, and utilized again. Nothing is wasted. 

Envisioning circularity

https://ellenmacarthurfoundation.org 

3) Regenerating nature – The third concept involves a migration away from the linear throw-away economy to a circular approach that underscores natural processes and allows nature to thrive. A prime example is regenerative agriculture which eliminates fertilizers and pesticides (as well as unsustainable aquifer water extraction and irrigation), replacing it with farming approaches that rebuild soils and promote biodiversity. 

Big picture, that’s the definition of a circular economy. 

Principle 2 as it relates to sustainable energy

Since we in our energy and microgrid community work with products and materials that generate or consume energy in a more sustainable fashion, we’ll zero in on the second principle. Let’s discuss how we might optimize the utilization of various products in our energy economy, and how we might support the re-utilization of some technologies. And of course, we need to ensure the recycling of the key materials at the end of the lifecycle. 

Batteries: Perhaps one of the best examples of this approach is now emerging with electric vehicle lithium-ion batteries. Today’s batteries typically offer enough cycles so that manufacturers generally offer warranties for about 150,000 miles or eight years. The first step with the second principle would be to make a better battery with a longer cycle life. In fact, that’s already happening. Some companies are now talking about offering batteries that can offer eight times that current lifespan, so that they would potentially outlast the first vehicle in which placed. 

If they can be made to last that long, what might we do with them? Well, they could in theory be moved from the first vehicle to a second (or third one). They could also be used to interact more frequently with the grid, with additional battery cycles (in addition to those dedicated to driving) used to offer services to the grid - such as short-term balancing to maintain desired frequencies and voltage. 

After that, the batteries can then be removed from the vehicle and integrated with thousands of other EV batteries to assemble massive second-life battery projects to support the power grid. That’s already happening with today’s batteries in multiple applications around the globe. These include one project backing up a soccer stadium in Amsterdam that uses 250 used Nissan Leaf battery packs and another helping create a more sustainable economy on a small Portuguese island off the coast of Morocco. 

OK, but those batteries will eventually wear out in these second-life applications. What then? This brings us to the next critical element of the second principle. Once the highest use of the product is no longer viable, one re-uses the constituent elements. In the case of the lithium-ion battery, it’s the raw materials – the cobalt, nickel, lithium, and aluminum that all had to be mined for the initial battery at a distinct cost to our environment. These elements can be separated out and recycled, eventually finding their way into a new battery, so that the cycle repeats itself. A key focus is to recycle as much as possible, to minimize what gets destined for the landfill. Material recovery rates have improved greatly in recent years, with some companies now claiming the ability to reclaim as much as 95% of the original materials. 

The optimal lithium battery lifecycle 

https://www.anl.gov/article/doe-launches-its-first-lithiumion-battery 

Lithium-ion batteries have a distinct advantage because the value of the incorporated elements in the battery is relatively high, making it economical to reclaim them. 

Wind turbines: Unfortunately, some other sustainable energy technologies aren’t quite there yet. For example, wind blades – which currently use a combination of epoxy resins and composite glass fibers that can withstand enormous stresses – are of far lesser value. In the past, some had been pulverized and used in such applications as wallboard. One company in the U.S. shreds blades for use as both silica and fuel in the cement-making process, while a large Spanish energy company just announced plans to establish a blade recycling facility to reuse materials in various sectors such as automotive, energy, chemicals, construction, and textiles. Some blades have even been used as components for nearly indestructible bridges. 

It takes ingenuity to bridge the sustainability gap

https://www.anmet.com.pl/architecture-made-from-wind-blades 

However, a truly recyclable blade that could be melted down and re-created is something new, and the first large (62-meter) prototypes have just been created by GE subsidiary LM Wind. For its part, wind blade manufacturer Vestas has specifically created a “Circularity Road Map,” articulating a goal of creating a blade that “can be 100% recycled, while avoiding downcycling of the blade materials as much possible (writer’s note – “avoiding downcycling” is another way to refer to that highest value concept), so that they will be valuable to recover use in the creation of new wind turbines or similar objects.” 

Solar panels: Solar technologies have their own challenges. The typical silicon solar panel is largely constructed of glass, plastic, and aluminum – all things we already know how to recycle at scale. However, only about 10% of panels reaching the functional end of life are currently recycled today. That’s partly because the Feds don’t regulate it (some states like Washington do, requiring manufacturers or importers to finance the takeback and recycling system at no cost to the owner of the module) and also because it’s currently less expensive to toss them into landfills than to recycle them. 

However, as volumes of aging panels grow, that outcome is likely to change. It’s estimated that materials in retired solar arrays could be worth up to $2 billion by 2050, when 80 million (!) tons of decommissioned panels may be looking for a home other than the landfill. Indeed, some start-ups are already getting into the game, with a focus on reclaiming the small amounts of integrated silver to improve recycling economics, but there’s a long way to go to create a circular economy around panels. 

Creating a global circular economy is a huge challenge and it will take many years. It will also require huge amounts of carbon-free energy to transform all of the materials that we use and recycle. So it’s important critically important for our industry to take a more proactive role in developing a circular economy, leading the way, and setting the example for others to follow. 

Action items:  

1.     Evaluate the key technologies and materials you use and determine where they fit into the concept of a circular economy

2.     Identify waste in your organization and identify strategies to minimize inefficient use of materials

3.     Check with your suppliers to see where they are in developing circularity plans or roadmaps 

Yours in circularity,   

Matt Ward and Joyce Bone – Founders, SolMicroGrid