Three circular economies: the good, the bad and the ugly.

by Federico Savini

The most intriguing aspect of the circular economy is that it aims to create value out of materials, objects, stuff, that lost its original use, and thus their social and economic reason to exist. At its core, circularity means the repurposing, reuse, reassembling, remaking of things out of parts, materials, objects that have lost their original purpose. This can be water that is now in the sewage, heat that is now evaporated in the air, food that is not eatable, clothes that are broken.

As such, the idea is economically revolutionary. If we organize the economy of a particular city, country, or region in a circular way, we can generate many new jobs, activities, and transactions. Think about an underused laptop. The laptop loses its function because it is old. In a linear economy, that laptop would be thrown away, then shipped in Ghana to be disassembled. Only the company shipping the laptop would earn money, as well as the poor workers disassembling it (this part of earnings would be most likely be informal and minimal, and thus not budgeted anywhere).

If that same laptop gets reused circularly, it will be disassembled locally, some of its parts reused to make other 3 or 4 different objects, its plastic melted to make a new 3D printed object, and its hard disk will be reformatted and reused to repair, for example, another broken laptop. This process would benefit at least 3 new companies, the designers using the plastic, the engineers programming the software for printing or making an inventory of the different parts, and the many workers disassembling and separating the pieces. All that economic ‘value’ would moreover remain locally, closer to where the laptop was thrown away. This is the true potential of the circular economy: the multiplication of economic activities out of something that has lost value. It is a great project of economic renaissance. It stimulates the economy, while at the same time reuses scarce materials.

This is the theory. In practice, there are two problems.

Free food waste composting image, public domain environmentally friendly CC0 photo.

The extent to which circular economy will deliver sustainable development depends on if it is combined with reduction of consumption. If the reuse of the above mentioned laptop produces other 3 objects, to which we must add new laptop purchasers, then the environmental result of the reuse is basically none. The economic value of circularity would be also curtailed by its increased environmental damages. Reuse does not equal reduction of course, as I argued here. This problem could be solved by incentivizing reuse and disincentivizing consumption of course.

Second, the economic theory of the circular economy is often, indeed, too theoretical. It does hardly consider that when we talk about value, we are talking about real stuff and people. Things, waste, object, materials, parts, and of course workers. The former are objects that need to be owned, processed, taken, and stored in order to be valorized into new productions and new consumption. Workers as well, are people that instead of working on spare parts could be employed in, for example, activities oriented to well-being (education and care for example). In sum, the circular economy is a playing field. It generates a market that has also competition within itself. If one company owns the rights to take the laptop, and its parts, those same materials will not be given to other companies or actors that would want them for their activities. As any other economy, the circular economy create scarcity. And in this case, scarcity is the appropriated amount of obsolete things to be repurposed and reused.

This may seem a paradox, but it is a real problem of circularity. It shows that the circular economy is not good or bad per se, but it all depends on the way the new flows of resources are being regulated. It depends on how stuff is owned, sold, and bought and reprocessed. And it depends on the economic interests and business strategies of the actors that play in this marketplace (what we can call ‘circular marketplace’). These actors will be in competition with each other because they will compete to own the stuff (or the right to use) that is available and waiting for its repurposing.

Of course, one way to resolve this paradox would be to ensure that there is an increasing supply of objects to be circularly reused. Yet, this would mean increase in consumption and import of new materials. If this is the case, the circular economy would become just a parallel circuit of production, coexisting with a linear economy that remains untouched. And as such, it will always loose against the efficiency, low labor costs, and geographical reach of the linear economy.  

If we want to address this problem seriously we really need to observe (and contest) the concrete ways in which the circular economy is being realized in real life. This means to stop with endless definitions of the term (on which we generally tend to agree) and question the actors that benefit and loose from the circular economy. This means to look at the conflicts for these scarce new materials, the secondary materials, and to study the way some actors’ strategies create path dependencies and lock in situations for others’ actors.

This is what I did in this chapter. Titled ‘the circular economy of cities: the good, the bad and the ugly’. The chapter is part of a book titled Turning up the heat: Urban political ecology for a climate emergency. In this chapter, I use the metaphor of Sergio Leone’s masterpiece to explain how the playing field of the circular economy is unfolding, particularly in Amsterdam and The Netherlands. 

Sergio Leone’s movie The Good, the Bad, and the Ugly tells the story of three bandits that unwillingly cooperate to find buried gold during the American civil war. Each of them has a piece of information about the gold’s location. Despite being fully aware that they are silently competing, the bandits work together in pursuit of the treasure.

In 2012, right at the onset of the circular economy discussions, the Amsterdam’s former alderman for economic affairs stated that ‘our waste-to- energy plant is a money- making machine. So, I always say garbage is gold’ (Financial Times, 2012). This gold is the obsolete objects (what we used still to call ‘waste’), and the three bandits of the movie represent three different circular economic clusters. As clusters, they are made of actors, companies, businesses, organizations, and infrastructures. They are in competition with each other, but they hardly admit it until is the time to get the gold.

In this analogy, the good represents the emerging urban economy of waste recovery, including its start-up culture, circular neighbourhoods, climate neutral estates, and second hand products. These practices prefig­ure an alternative lifestyle in which ecologically minded consumers and pro­ducers are concerned about the legacy of secondary materials. Advocates present such ventures as steppingstones toward a more social use of waste stuff. Waste becomes the vehicle of an ideal ecological innovation, where people learn to buy second hand, to repair and to live with ecological consciousness. That said, these practices are yet to demonstrate their capacity to reduce waste. Instead, now they seem to add yet another circuit of consumption.

In Leone’s movie, the ugly relates to the most ambiguous character. This reminds us that dealing with unfolding global waste and resource crises is more urgent than ever before. The established waste processing industry boasts about how its infrastructural, geographical, and financial clout can cope with secondary materials of lower marginal value than primary mate­rials. It has become increasingly global and multi- sectoral, incorporating waste, logistic, electricity, and water utilities. On the one hand, the industry portrays itself as essential in the transition towards a circular economy. On the other, it merely entails increasing waste reuse, not reducing waste production. Main examples are the industrial hubs for biomass and waste in the Harbour of Amsterdam, the intercontinental companies such as RENEWI or SUEZ. These are companies that are dealing with huge waste streams that can produce secondary materials for houses, industry, and roads. It is ugly because it is largely necessary to deal with huge streams of wasted stuff, but it does hardly contemplate a reduction of waste itself. Their survival depends on the fact that their waste function is coupled with other utilities (most often water and energy).

Finally, the bad in Leone’s movie recalls the role of incineration industry in contemporary circular economy discourses. In theory, circular economics posits incineration as the least desirable way of processing waste; as such, it is waste recovery’s undesirable competitor. Yet incineration stations (and waste- to- energy facilities more generally) are key to realizing circular ser­vices. Two examples in The Netherlands are the Westpoort Warmte project in Amsterdam and the WartmelinQ project in Rotterdam. Both have turned incinerators into the unmissable providers of ‘green heat’, necessary to quit natural gas. Yet, they do import biomass from abroad to fuel their ovens! Policymakers see them as crucial sources of energy and heat for the built environment. Incineration therefore follows the good and the ugly in the pursuit of waste valorization. Urban waste- to-energy plants capitalize on their position as providers for the urban infrastructure, able to combine waste recovery with the imperative to develop forms of ‘post- fossil’ heating and energy production.

Start- ups of waste reuse, multinationals of waste recovery and the incin­eration industry each depend on each other in collecting, processing, stor­ing, separating, and distributing waste. Yet they also compete with one another for this valuable material. Yet, just as the three characters of the movie, all of them are not virtuous, they still follow waste as a resource, and are thus hardly motivated to reduce it (it is not in their business nature). This competition can be organized and maintained only by avoiding a clear politics of waste reduction, and exclud­ing wasteful consumerism (and productions) as a central problem for the political arena. Today, the danger of the circular economy lies in its focus on producing a more efficient and capillary system of waste valorization. We are currently seeing the con­struction of an unstable economic infrastructure that requires steady flows of waste for its survival.

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