Renewable Matter #19 by Edizioni Ambiente

RENEWABLE MATTER INTERNATIONAL MAGAZINE ON THE BIOECONOMY AND THE CIRCULAR ECONOMY 19 | December 2017-January 2018 Bimonthly Publication Edizioni Ambiente

Interview with Mark Palahí: Following the call of the forest

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•• The flirt between finance and circular economy •• If you LOOK, you will find

Dossier Bioeconomy/Belgium: From coal to biomass •• Interaction is the key •• #waterevolution •• That’s the way to recycle nappies

Focus on Finance: If the wolves of Wall Street turn into lambs •• Subscribe to quality •• Assets move in circles •• How to switch from products to services •• It all started in Helsinki

Environmental disasters broadcasted in prime time •• 3D printing and the animal world •• EU engagement, USA disengagement

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Events

Editorial

Finance and the Circular Economy Flirting by Antonio Cianciullo

The relationship between finance and the circular economy resembles that between the credit world and renewable energy sources at the end of last century. It’s a flirt, not a marriage. Advances without organic agreements. But there is the basis for a sound cooperation and Italy could play an important role in this match. Especially because this trend is consolidating. Last February, Eric Solheim, the Executive Director of the United Nations Environment Programme whom I interviewed for Repubblica, outlined a rather positive picture of the current state of affairs. “As for revenues deriving from companies involved in the green economy, the Italian Stock Exchange ranks tenth at global level. At the end of 2015, assets managed with sustainable and responsible investment criteria amounted to €616 billion. Over 22% of the Italian insurance market is made up of companies that have signed the United Nations’ sustainable insurance principles.” But he also specified that in Italy the green market is the realm of operators, and not of small investors, while for instance in Luxemburg they have Lux Flag, a microfinance brand guaranteed by the bank association to ensure wide distribution of financial products relating to companies operating in the environmental sector. This is a critical issue that must be overcome: moving from expert to widespread knowledge. The conditions are right because the various economic, energy, resource, social crisis periodically popping up highlight, even in the last end-of-year surveys, an increasing awareness about environmental issues. Even the international agenda is becoming clearer. This is shown by the green economy turn taken at the One Planet Summit, the meeting organized by French President Macron to reiterate the commitment on climate protection during the Paris Conference two years ago, and the increasing role of green financing particularly supported by China and France (in 2015 green bonds were worth $40 billion, in 2016 they doubled exceeding $80 billion and in 2017 they registered a similar leap). What we currently need is a connection between this awareness and concrete opportunities

of production reconversion heading towards easing social tensions exasperated by crisis build-up. A link, as demonstrated by articles published in this issue of Renewable Matter, is starting to arise. In Europe, the Bio-Based Industries Joint Undertaking, founded in 2014 to manage and run a €3.7 billion public-private partnership amongst Bio-Based Industries, has funded 65 projects in 3 years (and Italy is the second country for the number of approved projects). We are talking about demonstration projects but also about important projects such as that coordinated by Novamont for the creation in Sardinia of an extremely innovative biorefinery using low-input oleaginous crops such as thistle grown in marginal areas to obtain biomonomers and esters for the production of lubricants, cosmetics and bioplastics. The European effort, also supported by the circular economy package and by the first forum on the circular economy that took place in Finland last June, has highlighted the opportunities offered to the credit world by the circular economy. And, as we write on the pages of this issue, Jamie Butterworth, former CEO of the Ellen Mac Arthur Foundation, capitalized on this to create Circularity Capital, a company set up with the very aim of making investors aware of the opportunities deriving from companies involved in the circular economy and ready to leap forward. The trail has been blazed, let’s hit it! PS. By applying the principle of circularity of functions, after this issue I will leave the editorship of Renewable Matter. I would love to thank all our readers who have followed and supported us over the last three years and I wish the magazine all the best.

R M

19|December 2017-January 2018 Contents

RENEWABLE MATTER

www.renewablematter.eu ISSN 2385-2240 Reg. Tribunale di Milano n. 351 del 31/10/2014 Editor-in-chief Antonio Cianciullo Editorial Director Marco Moro

Think Tank

INTERNATIONAL MAGAZINE ON THE BIOECONOMY AND THE CIRCULAR ECONOMY

Contributors Elisa Achterberg, Emanuele Bompan, Mario Bonaccorso, Rudi Bressa, Irene Bruschi, Matteo Cavalitto, Luca Dâ&#x20AC;&#x2122;Ammando, Aglaia Fischer, Roberto Giovannini, Fabio Iraldo, Emanuele Isonio, Francesca Maccagnan, Francesco Petrucci, Barbara Pollini, Antonella Ilaria Totaro, Lambert Van Nistelrooij Acknowledgments Andrea Di Stefano, Jasper Havermans Managing Editor Maria Pia Terrosi Editorial Coordinator Paola Cristina Fraschini

Antonio Cianciullo

Finance and the Circular Economy Flirting

Emanuele Bompan

A Forest Interview with Marc PalahĂ

Mario Bonaccorso

Dossier Belgium From Coal to Biomass

Lambert van Nistelrooij

Biobased in the Spotlights

Emanuele Isonio

Focus on Finance If the Wolves of Wall Street Become Lambs

Emanuele Isonio

Matteo Cavallito

Antonella Ilaria Totaro

Aglaia Fischer, Elisa Achterberg

Editing Paola Cristina Fraschini, Diego Tavazzi

Layout & Infographics Michela Lazzaroni Translations Erminio Cella, Laura Coppo, Franco Lombini, Mario Tadiello

Policy

Design & Art Direction Mauro Panzeri

Focus on Finance An Opportunity to Rethink the Role of Foundations Interview with Sonia Cantoni

Focus on Finance Sustainability is Worth More

Focus on Finance Circulating Capital Interview with Jamie Butterworth

Focus on Finance Bottom-up Funding

Focus on Finance The 4 Vital Elements of a Viable Circular Service Model

Executive Coordinator Anna Re

Mario Bonaccorso

Focus on Finance A Winning Agreement

External Relations Manager (International) Federico Manca

Columns

Case Studies

External Relations Manager (Italy) Anna Re

Emanuele Bompan

Focus on Finance It all Started in Helsinki

Rudi Bressa

This is How We Recycle Nappies

Barbara Pollini, Francesca Maccagnan

Thinking with Our Hands

Luca D’Ammando

Blackwater, Black Gold

Irene Bruschi, Fabio Iraldo

Seek and you Shall Find

Roberto Giovannini

The Media Circle Environmental Disasters Broadcasted in Prime Time

Francesco Petrucci

Circular by Law EU Engagement, USA Disengagement

Federico Pedrocchi

Innovation Pills 3D Printing and the Animal World

Press and Media Relations press@renewablematter.eu Contact redazione@materiarinnovabile.it Edizioni Ambiente Via Natale Battaglia 10 20127 Milano, Italia t. +39 02 45487277 f. +39 02 45487333 Advertising marketing@materiarinnovabile.it Annual subscription, 6 paper issues Subscribe on-line at www.materiarinnovabile.it/moduloabbonamento This magazine is made in Dejavu Pro by Ko Sliggers Published and printed in Italy at GECA S.r.l., San Giuliano Milanese (Mi) Copyright ©Edizioni Ambiente 2018 All rights reserved

Cover Space debris. Hundreds of space debris are orbiting around our planet at a speed of 28,000 km/h, threatening satellites and space stations. This computer-made image represents the objects orbiting around the Earth that are currently monitored. ©NASA

©Giadaionnestari

A Forest

Interview with Marc Palahí

In addition to providing energy, forests have always played a crucial role in biodiversity conservation and in preserving the equilibrium of ecosystems. Nowadays, wood can also be used to manufacture biomaterials that can substitute products of fossil origin in many sectors, like construction, chemistry and textile. by Emanuele Bompan

The expression “sustainability” is strictly correlated with forests. The word came into use in 1713 when the chief mining official Hans Carl von Carlowitz, from Freiberg, Saxony, published the forestry treatise Sylvicultura oeconomica, in which the principle of “continuously enduring and sustainable use” was discussed for the first time. Von Carlowitz coined the term at a time when many parts Marc Palahí is the Director of the European Forest Institute and responsible for leading the organisation towards an acknowledged panEuropean science-policy platform. Marc Palahí has a PhD in forestry and is an expert in forests and global change. He has written influential articles about the transformational role of forests in fighting climate change and developing a European bioeconomy.

of Europe were in need of vast quantities of wood for mining and ore-smelting. Gradually the environs of many mining towns were becoming deforested. Wood shortages were an imminent threat. In his Sylvicultura oeconomica he called for the forests to be conserved and people should only harvest as much wood as could regrow. Today forest are becoming a key element in the bioeconomy sector: they provide material (wood and non-wood), bioenergy and a wealth of other regulating and cultural ecosystem services, carbon sink as the most important. An array of innovation in sustainable management and chemical processes is making forest worldwide more and more relevant as a resource. We have discussed future development of the forest-based sector with Marc Palahí, director of the European Forest Institute, an international organization established by 28 European States, which goal is to conduct research and provide policy support on issues related to the lungs of the Earth. Mr Palahí, which role will forests play in the future economy in terms of products and in terms of services? “Forests are the most important biological infrastructure that we have on the planet: they are the largest carbon sink, the main house for land biodiversity and the main terrestrial source of oxygen and water precipitation. They are crucial to enhance the resilience of rural and urban communities,

Think Tank

European Forest Institute, www.efi.int/portal

sector can be fully decarbonised. The transition to clean energy has started and is moving very fast. I think the key role of the forest for economy in the future will be in the substitution of materials.” Construction is a key sector where woods can become a tier-one material. “Nowadays wood construction only represents 10% of the total market in Europe, but of course technology is developing very fast. Today you can build large buildings, as tall as steel ones. Building with wood is very positive for the climate because you capture CO2 from the atmosphere and store it for a long period of time. You can reduce substantially the carbon footprint of a building by 50% using wood instead of concrete and steel. The challenge is legislation: still in many countries it’s not allowed to build wood buildings more than 2/3 stories.”

Does technology allow to use all the parts of a tree? “In countries like Finland and Sweden advanced technologies are able to use all the parts of a tree, and its component, cellulose and lignin. While cellulose has been transformed for many years in several different products, today you can use lignin as basis for carbon fibre (LCFs). So in the near future we will be able to have cars and planes made of carbon fibres coming from wood.”

Forest stewardship is the key to preserve forests, also for economic use. What can the perfect global management be for forestry management? “At the European level we have a successful story. In the last 30 years the forest surface has increased as an equivalent of three times the size of Switzerland, with increasing growing stock and stronger biodiversity. However in the Tropics and other regions, forest trees have not been as competitive as agriculture or other land uses. That is why deforestation is happening: farmers make more money with soya or farming. With good investment we can reverse it. And if the bioeconomy wants to be successful we need to invest in biodiversity, because that ensures the resilience of the biological resource in the long term. To do so we need strong policy and investment to promote forestry.”

Wood is also used for energy. In your opinion, would be better to use it to produce materials? “Forest’s bioenergy is now playing an important role at the European level and it will play a crucial role in the near future.” So, is it a transitional fuel? “I think it’s a transitional source of energy. But I believe that in the long run the energy

Which role can international organisations play? “We need them to stop deforestation, and to promote re-forestation plans. Over one billion hectares can be recovered thanks to forest bioeconomy. This will be a solid solution to tackle climate change while promoting biobased products. When a value-chain is built, you can distribute wealth and jobs. We need one clear goal: to put a price on carbon emissions, a very clear policy to stimulate the market, while stopping subsidising fossil products.”

©Giadaionnestari

Emanuele Bompan, an urban geographer and environmental journalist since 2008. Together with Ilaria Brambilla he authored the book Che cos’è l’economia circolare (“What’s the circular economy”), Edizioni Ambiente, Milan 2016.

because they have a positive effect on water, soil and biodiversity, which are the key resources to sustain life on our planet. The second fundamental role, related to our economy, is that they are the main source of non-food renewable biological resources. Such resources can be transformed into materials as soft as cotton or as resistant as steel. You can produce base products that can replace environmentally-out-performed fossil-based products from industrial sector like construction, textile, plastic or chemicals. So forest based products are crucial for a circular economy within planet’s boundaries.”

Dossier

BELGIUM A strong chemical industry, a good availability of biomass and a solid integrated logistic network, as well as excellent public and private research. These are the strenghts of Belgiumâ&#x20AC;&#x2122;s bioeconomy, which is actually led by the Flemish region. But also Vallonia is not sitting back, and has decided to focus mostly on green chemistry.

Policy

From Coal to BIOMASS

Driven by the Flemish Region, in Belgium the bioeconomy has great ambitions. It already boasts a few flagship achievements: for instance in the field of biofuel production, biotechnologies and research. by Mario Bonaccorso

Vision 2050. A longtermstrategy for Flanders, www.vlaanderen.be/int/ europese-unie/en/news/ vision-2050-long-termstrategy-flanders

Mario Bonaccorso is a journalist and creator of the Bioeconomista blog. He works for Assobiotec, the Italian association for the development of biotechnologies.

The strong presence of the chemical industry (the sixth European country by turnover, according to CEFIC, the European Chemical Industry Council, and first in the world on a per capita basis), with large fermentation plants such as AlcoBiofuel and Biowanze, good availability of biomass, an integrated logistic network in one of the most developed areas in the continent, where the ports of Ghent and Antwerp play a strategic role. And there are also excellent public and private research, dedicated clusters and pilot plants enabling industrial scale-up of technologies. These are the main characteristics of Belgium’s bioeconomy, where the Flemish Region plays a pivotal role. Set aside the coal-based era, today Belgium has identified the use of renewable sources as the flywheel for a new sustainable economic development, although a national strategy for this meta-sector is still lacking. Flanders drive the Belgian bioeconomy Belgium’s bioeconomy policies reflect the federal character of the country, but above all the different levels of technological and industrial development peculiar to the two main regions. While in Wallonia the bioeconomy is considered within the wider context of the green economy and a correlated strategy is still lacking, over the last few years, Flanders have taken various initiatives supporting this sector, with a first draft of a dedicated strategy (Bioeconomy in Flanders), presented in 2014 thanks to an interdepartmental work group made up of various ministries and governmental agencies such as VITO (Flemish Institute for Technological Research) and OVAM (Public Waste Agency of Flanders), which collaborated with research institutions, industrial associations and civil society. The document pinpoints five priority areas to promote the Flemish bioeconomy. The first is about the removal of all regulatory obstacles and about coordination of major legislative

measures in the sector. The second underlines the presence of infrastructure, research and innovation as fundamental elements to encourage the development of the bioeconomy. This means also strong focus on training of experts and enhancement of the outcome of research, while avoiding a conflict in the allocation of resources for food, materials and energy. The third is about the efficient use of biomass, with the development of criteria of sustainability and territoriality. The fourth introduces the creation of a market and awareness amongst the public. Lastly, the fifth is interregional and international cooperation to promote technological and knowledge transfer. All this should lead the Region, in the government’s view, to become by 2030 one of the most competitive in Europe as far as the bioeconomy is concerned and amongst the leading ones with regard to research and innovation. The themes of the circular economy, energy and Industry 4.0 fall within the seven priorities of transition pinpointed by the Flemish government in the Vision 2050. A long-term strategy for Flanders strategic plan. The development of a competitive bioeconomy producing biomass in a sustainable manner and (re-) using waste and residues for food and feeds, materials, products and energy is explicitly included in the Circular Flanders document approved last 24th February. The starting point is very encouraging, because even today the bioeconomy is a remarkably developed phenomenon in the Flanders. The Region generates 58% of the total Belgian GDP (2013 data: €229.9 billion over a total of 395.3) and 61% of global expenditure on Research and Development (2013 data: €5.8 billion over a total of 9.6 billion). In 2015, the turnover of the chemical sector, plastics and life sciences reached €42 billion, with 59,500 direct jobs and over 100,000 indirect ones, €1.6 billion for Research and Development and 11 billions of gross added value (30% of the total of the industry). The turnover of the agro-food industry is €60 billion, with 145,500 jobs and contributing €8.2 billion to the Flemish gross added value.

renewablematter 19. 2017-2018 Bio Base Europe Pilot Plant, www.bbeu.org Biorizon, www.biorizon.eu

The Flanders Biobased Cluster The Flemish ambition of being one the leading centres for the European bioeconomy dates back to at least 2005, when Ghent Bio-Energy Valley was created in order to meet the government’s needs to produce biofuels in Belgium. Then the Rodenhuize biorefinery cluster in the port of Ghent was also created. It hosts the plant for the production of bioethanol of AlcoBiofuel and is currently one of the leading European sites for the production of bioenergy. The Ghent Region is responsible for 90% of total production of Flemish biofuels. After starting the production of biofuels, Ghent Bio-Energy Valley extended its field of activity to all domains of the bioeconomy. A change that also led to a transformation of the name first, in 2013, to Ghent Bioeconomy Valley and later, in 2016, to Flanders Bioeconomy Valley. The latter is a hub in biobased innovation in its own right with the University of Ghent, the port, the city itself and the Development Agency East Flanders as partners, bringing together research centres, investors, SMEs and large enterprises. The objective is to promote biobased technological innovation, enabling clustering of the various sectors of the bioeconomy, supplying specific services to its own members and promoting correct information on the new economy using biological sources as raw materials. Flanders Bioeconomy Valley’s pride and joy is Bio Base Europe, joined by Bio Base Europe Pilot Plant and Bio Base Europe Training Center, a training, exhibition and network centre promoting the development of a sustainable bioeconomy by offering companies specific training and close connections with market demand. Bio Base Europe Pilot Plant Located in the Port of Ghent, for the construction of the Bio Base Europe Pilot Plant an existing building has been renovated. It is an open pilot platform, able to host under the same roof the whole value chain, from renewable resources to products. Equipped with machinery for pre-treatment of biomass, fermentation,

biocatalysis, green chemistry and downstream processes, the structure consists of three large areas, with laboratories and a space for maintenance. The first pilot area is dedicated to pre-treatment and biocatalysis: here there are several reactors measuring up to 8 cubic metres; the second sector is devoted to industrial biotechnology, with fermentation stations up to 15 cubic metres; the third area contains chemical reactors and extraction machinery up to 5 cubic metres. The various models are extremely flexible and can be connected to make several direct production lines. The plant’s aim is ambitious: to become a reference centre in support of businesses to test made in EU bioproducts. Today, the Bio Base Europe Pilot Plant, operational since 2011, is considered a cutting-edge facility for industrial biotechnology, thanks also to the official acknowledgement by the European Commission. Over the years, thanks to financial support by the Port of Ghent, East Flanders, the Flemish government, the Netherlands and the European Union, €25 million have been invested in the Bio Base Europe pilot plant. Biotechnological Research Flanders are also one of Europe’s main markets for biotechnologies. In 2015, the Belgian biotech market capitalised €17 billion, 15% of the European total. 1% of the world’s patents for industrial biotech belongs to Belgium, while biobased economy soared by 28% from 2008 to 2014. VIB, Institute for Biotechnology employing 1,470 scientists from 60 different nationalities and VITO, the Institute for Technological Research, employing over 750 scientists from 20 different nationalities are excellent cases in point of Flemish research. Also, there are pilot plants to transform research into new products to be marketed: besides the already mentioned BBEPP, in Melle, ILVO built the Food Pilot, Institute for Agricultural and Fisheries Research and Flander’s Food, the platform for the innovation of the food industry, 80% of which is funded by the Flemish government. It is an analysis, application and demonstration centre converting biomass – including new dedicated plants – into food and non-food products. Biorizon is the result of a collaboration with the Netherlands in the field of research. Such structure is a shared research centre focussing on technological development for the production of bulk aromatic biobased (BTX) and biobased aromatics for high-performance products, chemicals and coatings. Biorizon, using the open innovation methodology, aims at pre-empting the growing lack of aromatics by the petrochemical industry and cherishes the ambition to make the Belgian chemical industry greener. VITO, Dutch research centres TNO and ECN (Energy Research Center of the

Policy Netherlands) and the incubator Green Chemistry Campus located in the Belgian site for innovative plastics of Sabic, the chemical colossus with its headquarters in Riyadh, Saudi Arabia, founded Biorizon. The Big-Cluster Transnational collaboration is at the core of the Flemish activity with regard to the bioeconomy. After all, Flanders, Holland and Rhineland represent Europe’s major chemical clusters. This is why some of the bioeconomy players of the Netherlands, of the Flanders and the Region of North Rhine-Westphalia founded in 2014 BIG-Cluster, a mega-cluster aiming at directing the initiatives on the current and future bioeconomy with three leaders: FISCH (Flanders Innovation Hub for Sustainable Chemistry) for Flanders, Clib2021, the Cluster for industrial biotechnologies for North Rhine-Westphalia and the foundation BE-Basic for the Netherlands. Thanks to its excellent position in the four pillars of competitiveness – institutions, infrastructure, macroeconomy and education – the megacluster, also known as Antwerp, Rotterdam-RhineRuhr (ARRR) has been an authority in the field of industrial innovation in the sector of chemistry for decades and is currently aiming at maintaining the levels of economic and employment growth thanks to a reconversion based on the use of renewable sources. Companies The Solvay group confirms the huge interest and commitment of Belgian chemistry in the field of the bioeconomy. Indeed, it is currently one of the most important players in the field of chemistry from renewable raw materials. The company has reported a net income of €10.9 billion since 2016 and is currently aiming for a sustainable chemical model to tackle global environmental challenges. It is already boasting a portfolio featuring several biobased products, in the form of polymers and materials, surfactants, solvents, monomers and aroma chemicals. “We are innovating in order to create ecoefficient products and processes thanks to our experience in organic chemistry, in catalysis and biotechnologies,” declared Sergio Mastroianni, Initiative Leader of Solvay Research and Innovation, last April during the event Plant Based Summit held in Lille (France). “Our researchers all over the world – he claimed – concentrate on the development of products with unprecedented functionalities from renewable raw materials, plants in particular.” “We strive to exploit specific characteristics of bioresources, from which we create new uses for our customers with best cost-effectiveness, while reducing environmental footprint of their products,” highlighted François Monnet (Solvay’s renewable Chemistry director) during the same event.

Next to huge Solvay there are also smaller companies such as Synvina, the result of a joint venture between Dutch Avantium and German chemical group BASF. The new company, with its headquarter in Amsterdam, will base in Antwerp, in a former BASF plant, its plant for the production of 50 thousand tonnes per year of furandicarboxylic acid (FDCA) from renewable sources. FDCA is an essential chemical intermediate for the production of polyethylene furanoate (PEF) and therefore bioplastics. Wallonia is not sitting on the sidelines While Flanders lead Belgian bioeconomy, Wallonia is not sitting on the sidelines. In the southernmost region of Belgium, in Wenze, is the most important national plant for the production of bioethanol owned by BioWanze, a Crop Energies AG subsidiary, which in turn belongs to German Südzucker. In 2013, CoqVert initiative was launched, a public-private partnership between cluster Green-Win, the company for attracting investments in Wallonia AWEX-Foreign Investment and Val Biom, the association for the promotion of non-food biomass in collaboration with ESSENSCIA Wallonia, chemical industry and life sciences federation. With this project, partners intended to give a good push to the development of a strong and competitive bioeconomy in Wallonia, by promoting new projects in a sector considered vital such as that of green chemistry. Specifically, the CoqVert initiative aims at promoting the use of biomass from non-food resources, such as by-products, residues and waste. This is why second-hand biorefineries are at the core of a development plan in the sector in the long term. Not only that: amongst the various measures taken there is also support to research and investment and training projects. “The bioeconomy – CoqVert partners claim – must be part and parcel of Wallonia’s industrial policy, given the large availability of non-food biomass, internationally-relevant scientific competences in the field of agriculture, forestry, chemistry (green) and materials.” The potential to launch innovative and ambitious research projects supporting the bioeconomy exists within the broader supporting framework of the green economy. In 2015, the Walloon Government launched Plan Marshall 4.0, a five-year plan with a €2.9 billion budget pinpointing five priority development areas including Research and Innovation and Energy and the Circular Economy. “A ‘green’ strategy – complain Wallonia’s supporters of the bioeconomy – is underway in the neighbouring regions: Flanders, the Netherlands and France adopted a centralised strategy supporting the bioeconomy.” Wallonia does not intend to lag behind.

renewablematter 19. 2017-2018 Interview

by M. B.

The interaction between sectors needs to be improved Ludo Diels, Project Leader at VITO

“Flanders has the chemical industry. Wallonia has a biomass potential and also some interesting end-users. So, in fact there is a good fit.” Ludo Diels, project leader at VITO, a leading European independent research and technology organisation in the areas of cleantech and sustainable development headquartered in Mol (Antwerp), talks to Renewable Matter. Mr Diels, what are the strengths and weaknesses of the Belgian bioeconomy? “The major strength is the link with the chemical industry. Belgium is together with the Netherlands and Germany the biggest chemical cluster of Europe and among the four biggest clusters in the world. Chemical industry is the largest industry for Flanders and makes it a strong economy. The second industry is food industry (less turnover, more jobs) and has in this also a strong link to bio-economy. Further, Belgium has a strong network of logistics supporting this ARRR region (Antwerp-Rotterdam-Rhine-Ruhr) and a strong innovation climate based on universities, RTOs, pilot plants incubators etc. Flanders was also the cradle of plant biotechnology and is the only place in Europe where still industrial plant biotechnology activities take place (most moved to the US). It is the centre of circular economy and waste management and has several companies working on biomass avant la lettre mostly devoted to high added value chemicals (such as OmnichemAjinomoto, Oleon, TFC, Lawter). The major weakness is that Belgium is limited in biomass, although at the moment several side streams are looked at and will have potential. Belgium has not very much real full biorefineries. A real biorefinery is Biowanze. Belgium has also some small bioethanol and biodiesel plants.”

vito.be/en

Could you explain to us what role VITO plays in the Belgian bioeconomy? “Belgium has all the big chemical companies (Covestro, BASF, Evonik, Ineos, Borealis, Lanxess etc.) dealing in one or another way with bioeconomy and Belgium has also the specific companies that I mentioned before. The country has also many high added value chemicals companies (EOC-group, Kaneka, Sumitomo, Allnex). Further, many companies at the end user side of the value chain, such as Derbigum, Beaulieu, Unilin.” Could you explain us what’s the role of VITO in the Belgian bioeconomy? “VITO plays first a role in bringing academic research to application for the industry (general approach). It focuses on sustainable chemistry

by moving to renewable feedstock (biomass and CO2) and implementing process intensification. VITO brakes a lance for the fact that introducing bioeconomy needs more efficient technologies to get a breakthrough. The answer to this is Process Intensification (especially by integrating conversion and separation technologies). We play a strategic role in setting up and managing a sustainable chemistry in Flanders (strong role in the network Catalisti) and, by doing so, VITO forces the breakthrough of bioeconomy. We are active in interregional activities (Biorizon, BIG-Cluster, Vanguard) and European (active role in PPPs BBI and SPIRE) as well as world strategies (Bioeconomy strategy between Europe and India).” Belgium has not yet a national strategy. Wallonia also does not have its own strategy, while Flanders have a strategy and, above all, important players in the industry. How important would it be to have a national strategy and how is the Belgian bioeconomy influenced by the gap between Flanders and Wallonia? “Flanders has the chemical industry. Wallonia has a biomass potential and also some interesting end-users. So, in fact there is a good fit. This is already mentioned in the Flanders strategy and also Wallonia recognizes this win-win situation. Maybe we do not need a Belgian strategy, but at least an integrated approach. Can be done once Wallonia has its strategy. Only when two official strategies exist, the link between the two can be made as well in an official way.” How important is the relation with the Netherlands for the Belgian bioeconomy? “Flanders has a strong collaboration with the Netherlands via ARRR and moving to a smart specialisation in bioeconomy. Nice example is Biorizon, the shared research centre on biobased aromatics. Also the BioBase Europe Pilot Plant (Gent) linked to the Training Centre (Terneuzen).” And what is the perception of the bioeconomy by Belgian public opinion? “I believe that the perception is not very different from other countries. The public opinion is not very well aware of the potential for their economy and welfare. In many cases chemical industry is still seen as dirty and economic benefits are underestimated, also by the political world. Further, discussions as ‘food versus fuel,’ ‘genetic manipulation,’ land use etc. need a review and a new public and political debate. The fear for

Policy small disadvantages forces the public opinion to the business as usual petro-based economy.” What measures are present in Belgium to support the development of the bioeconomy? And what do you think it should be implemented in the short term? “In Flanders the Bioeconomy is now part of the circular economy strategy. Further, Sustainable chemistry is one of the five spearhead clusters

of the Flemish government for the development of future industrial activities. In order to fully exploit this, the interaction between sectors needs to be improved (chemistry and materials, chemistry and food). It’s the same regarding the interaction at the national (collaboration with Wallonia) and international level (collaboration with the Netherlands and Germany and further several other regions) and this all in function of a smart specialisation.”

Interview

by M. B.

Bioproducts need a level playing field Monika Sormann, Department of Economy, Science and Innovation (EWI) of the Flemish Government

“First of all we cannot speak of a Belgian bioeconomy. In Belgium the different authorities – federal, regional and community governments – have a high degree of autonomy, which is in most cases exclusive for either of them. For example the competency for innovation policy, for agriculture, for research is quite exclusive for the regions or communities.” To say it – in this exclusive interview with Renewable Matter – is Monika Sormann, policy advisor for the bioeconomy in the department Economy, Science and Innovation (EWI) of the Flemish Government. With her we talk about bioeconomy in Belgium and Europe. “There is certainly a need – she states – for a regulatory framework to promote the use of renewable feedstocks in materials and the promotion of biobased products following on from this.”

www.ewi-vlaanderen.be/en

In your opinion, what are the strengths of the Belgian bioeconomy? “First of all we cannot speak of a Belgian bioeconomy. In Belgium the different authorities – federal, regional and community governments – have a high degree of autonomy, which is in most cases exclusive for either of them. For example the competency for innovation policy, for agriculture, for research is almost exclusive for the regions or communities. The Flanders’ government is responsible for both the regional and the community competencies. When a Belgian point of view is required at European and international level, Belgian authorities make use of a well-developed deliberation system for consensus. Main strengths for the bioeconomy in Flanders have been determined in the KETs Industrial Biotechnology Study and a study commissioned by the Flemish government in 2012 and 2016 about the biobased industry in Flanders. Main strengths are the excellent research in biobased economy sectors at universities and research institutes such as VIB with a plant biotech and yeast group, VITO in energy and materials research. In addition there are dedicated research centers for the textiles and plastics sector, important users of biobased bulk polymers and fine chemicals. Flanders can count on strong industry

sectors such as chemistry, agri-food, textiles, pulp & paper; the logistics through three sea ports, a dense network of roads, railways and inland water ways, and good networking: Flanders is located centrally between France, the Netherlands and Germany, three regions strong in the biobased economy; the availability of resources through a very efficient agri-food sector, a high level of selective waste collection and use; the Bio-Base Europe Pilot Plant, the Flanders Biobased Valley, the platform CINBIOS (for industrial biotechnology and biobased economy, editor’s note), and a cluster for Sustainable Chemistry. A new Cluster Policy to strengthen Smart Specialisation in Flanders resulted in spearhead clusters such as bioeconomy related CATALISTI (sustainable chemistry) and Flanders’ Food. We have also a horizontal policy working group on bioeconomy, a bioeconomy strategy and action plan for Flanders (2013); a circular economy strategy in 2016 includes circular deals in public procurement actions to raise consumer awareness and to develop new value chains using waste as resource in view of reducing CO2 footprint.” And the weaknesses? “The main weaknesses are the low political visibility of the bioeconomy in Flanders, the fact that R&I funding is mainly generic and open for all sectors; and that the available financing to valorise research outcomes through pilot or demonstration activities (for the higher TRL’s) is not sufficient to boost this emerging market. Furthermore, there is a need for a level playing field for biofuels vs materials and chemicals, and for biofuels vs oil-based fuels, at regional and European level.” What’s the role of the Biobase Europe Pilot Plant (BBEPP) in the Belgian bioeconomy? “The BBEPP has been established with the aim to bridge the gap between research and commercialization of biobased products. Main assets are its independence and open access status. It has established partnerships with many leading companies

renewablematter 19. 2017-2018 and research institutes in Flanders and the whole of Europe. Economically, the Pilot Plant realizes an annual turnover of about €5 million and counts around 50 employees. BBEPP creates indirect employment and extra turnover through its activities. Started with ERDF funding in 2009 it has used the public investment as a leverage to trigger activity and gain revenues from private investment and EU funded projects. It successfully supported development of commercialisation of new biobased processes.” In particular could you tell us what role the pilot plant plays in boosting the bioeconomy and attracting foreign investments? “Implementation of biobased innovations is disruptive for current value chains, with high technological, operational and market risks. Open access pilot facilities like BBEPP help to reduce substantially the technological risks for the innovator, increasing the technology readiness levels without the innovator having to spend millions of euros. The work done at pilot facilities contributes to build the dataset needed to convince management, investors or funding agencies to enable next steps. BBEPP helps innovators to find the right partners to complete their value chain or assists to identify experts to support the entrepreneurs with non-technological issues like regulation, IPR, LCA, business plan development, etc.” The port of Ghent and the port of Antwerp are two of the most relevant players of the Belgian bioeconomy. How strategic is the logistics system to favour the development of the biobased economy? “Both harbours play an important role in their own way. Access to shipping of goods via water both from the sea and further to Europe via canals and rivers and a well-developed road and train traffic infrastructure are crucial. The port of Antwerp houses one of the largest petrochemicals clusters in the world. The chemical industry is one of the most important economic sectors in Flanders and Belgium and plays an important role in many biobased value chains. Moreover, the sector is eager to use more renewable feedstock or intermediates in their processes. Antwerp has an enormous capacity for containers and about 300 km of pipelines, some of which can also be used for biobased products. The chemical industry is aiming to become more sustainable and international collaboration with the Netherlands and North Rhine Westphalia plays an important role (Big-Cluster, Vanguard initiative etc). Recently a joint venture between BASF and Avantium was set up for the production and marketing of the biobased polymer

FDCA. The BBEPP is located in the harbour of Ghent as well as one of the largest integrated biofuel production sites in Europe, the Rodenhuizedok biorefinery cluster, established as a public-private partnership in 2005. Ghent has chosen to dedicate a large areal for companies that want to invest in the bioeconomy. Biomass is delivered and stored in large quantities for sugar based developments. A couple of month ago, Arcelor Mittal committed itself to invest in the conversion of C1 gases to biofuels and maybe other chemical products together with LanzaTech.” How important would it be to have a national strategy and how is the Belgian bioeconomy influenced by the gap between Flanders and Wallonia? “In Wallonia Greenwin (the Walloon Innovation Cluster, editor’s note) plays an important role for establishing the bioeconomy. The fact that there is no national strategy is not necessarily a barrier for collaboration between the regions. Because there are no Belgian policy measures for research and innovation projects where collaboration of partners from Flanders and Wallonia is obliged, researchers are used to collaborate in projects via European funding programs.” What measures are present in Belgium to support the development of the bioeconomy? And what do you think should be implemented in the short term? Both in Belgium and in the European Union. “Policy measures in Flanders are the new cluster policy, two spearhead clusters related to the bioeconomy are Catalisti (sustainable chemistry) and Flanders’ Food, and the circular economy based on previous material managements program now also focused on biomass, water and energy. Most R&I support and financing measures are generic, but there is support for cooperation in EU programs e.g. INTERREG, ERAnet, JPI, Vanguard Initiative with a pilot program on bioeconomy. Many measures such as or sustainable energy are designed at EU level and implicated in the member states and regions. In EU policy there should be closer synergies between bioeconomy (and its strategy) and other EU policies such as waste regulation, CAP, circular economy. We need more effective EU funding for investment in infrastructure at higher TRL’s to bridge the innovation gap and cross country support for projects in pilot plants should be supported. There is certainly a need for a regulatory framework to promote the use of renewable feedstocks in materials and the promotion of biobased products following on from this. In this way biobased products could be supported just like bioenergy, for example, on the basis of their greenhouse gas emission benefits, or could be included in a ‘sustainable public procurement’ program, complementary equity and debt financing in bio-innovation and pilot investments would trigger market opportunities.”

Policy

Biobased in the

SPOTLIGHTS

Every year the EU funds hundreds of biobased projects but often it loses track of the results achieved. This is why an efficient communication strategy is needed. Some initiatives such as RegioStars Awards, LandArt Diessen and BioCannDO are moving in this direction.

by Lambert van Nistelrooij

Lambert van Nistelrooij has been a Member of the European Parliament since 2004 and he has been focusing on regional policy, research and innovation, energy, and the digital agenda. Lambert has been working on the European Structural and Investment Funds, and the European Fund for Strategic Investments, the Structural Reform Support Programme and the Biobased Industry Initiative as rapporteur.

RegioStars Awards, www.regiostars.eu Bio Base NWE, www.biobasenwe.org/en/ home LandArt Diessen, www.landartdiessen.nl

The biobased economy is growing at a steady pace. It represents a large share of the overall European GDP, with €2 trillion in annual turnover, employing over 22 million people. While the growth rates are steady, they remain slow. One of the things that is lacking is a convincing communication strategy; one that highlights the benefit and sustainable advantages of the biobased projects. The European Union annually finances hundreds of projects in the biobased sector. However you will not hear much about the outcome of these projects afterwards. Europe needs a modern communication strategy that puts the effects and outcomes of these projects in the spotlight. It is in the interests of the citizen as well as of all persons involved in the sector that these projects and developments receive attention and acknowledgement. Although recycling and sustainability have become household names over the past decades, the advantages of biobased consumer products remain largely unknown to consumers and producers alike. We need to improve the public perception and awareness of the biobased economy. An integrated approach for all stakeholders of the biobased economy is needed. The world is ever more connected; the communication approach for producers strengthens both portions. Showcase examples could be used to convince stakeholders and future developers/producers of the (local) added value of the biobased economy. The EU can and should contribute more to this process of awareness raising. Luckily there are a few EU-initiatives that try to do just that: take for instance the annual RegioStars Awards, awarded this October in Brussels. These Awards highlight original and innovative projects,

supported by European Structural Funds, which are attractive and inspiring for other European regions. There were more than 100 projects, 24 of which were nominated for this prestigious award. The finalists from 20 EU Member States and their neighboring countries were judged on the basis of four criteria: how innovative the project is, what impact it has in the region and for citizens, how sustainable and what partnerships it builds. In the category “Smart Specialization for SME Innovation,” the Bio Base NWE consortium was awarded the RegioStars Award. This consortium, supported by the European Regional Development Fund (ERDF) 2007-2013 / Interreg North West Europe, brings together biobased economy experts from eight organizations in five different countries. It covers the Netherlands, Germany, UK, Ireland and Belgium. Together they have provided networking and technological solutions for more than 755 small and medium-sized businesses. These campaigns received business support on how to bring their products and ideas from the lab to the market. In addition, financing opportunities have been provided for in the form of so-called innovation coupons. However, more should be done to better involve the citizens. The first steps have been taken: in the Netherlands we organized a biobased art exhibition, LandArt Diessen, with the European Commissioner for Regional Development, Ms. Corina Cretu. In collaboration with the Dutch BioCannDo project, we collected about one hundred so-called biobased products which were showcased for the public. The EU-funded BioCannDo project focuses on the promotion of biobased products among the general public.

renewablematter 19. 2017-2018 Lambert van Nistelrooij MEP and Commissioner for Regional Development Corina Cretu together with one of the winners of the RegioStars Awards 2017, Bio Base NWE (source: flickr)

www.cda.nl/nistelrooij/letthe-stars-shine

For example, by indicating where to buy these products and what the added advantages are. This approach will be rolled out throughout Europe in the coming years. Brussels will help entrepreneurs by taking over some of the business risk. My local exhibition was also the kick-off of the “Let the Stars Shine” initiative. In the coming months, eight colleagues and I will select projects funded by European funds and look at their innovative ways of communication used to involve citizens, cities and regions in the project. We want to highlight these projects to communicate their narratives. In 2018 we will bring together innovative projects in an exhibition in Brussels. Of course innovative biobased projects should be included on this list. In the booklet “Let the Stars Shine” you can read more about this initiative.

BUYING INTO BIOBASED Source: EuropaBio.

PLANT-BASED AND RECYCLABLE PLASTIC BOTTLES ARE NOW BEING INTRODUCED BY CONSUMER BRANDS

€3.7 BILLION INVESTED

LESS FOSSIL CARBON USED TO MAKE BIOPLASTICS THAN TRADITIONAL PLASTICS

OVER 7 YEARS (2014-2020) IN RESEARCH AND INNOVATION FOR THE BIOBASED INDUSTRIES THROUGH THE BBI JU

OVER 1 MILLION LESS ELECTRICITY USED IN LAUNDRY BY GETTING CLOTHES CLEAN AT 30 °C INSTEAD OF 40 °C

OF EUROPE’S WORKFORCE ALREADY EMPLOYED WITHIN THE BIOECONOMY

JOBS WILL BE CREATED THROUGH THE BIOTECH INDUSTRY BETWEEN 2010 AND 2030 MAINLY IN RURAL AREAS

2 MILLION

ADDITIONAL JOBS CREATED THROUGH MEASURES TO INCREASE RESOURCE PRODUCTIVITY

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FINANCE in partnership with

www.valori.it

renewablematter 19. 2017-2018

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Karen Arnold/www.publicdomainpictures.net

If the WOLVES of Wall Street Become LAMBS Reliance on raw materials, volatile prices, effects of climate change, increasingly restrictive environmental laws and augmented attention to impacts are some of the aspects linked to the linear economy making the transition towards the circular one “good business.” But adequate resources are required in order to fund such passage and uncertainties must also be taken into consideration.

by Emanuele Isonio

Emanuele Isonio is Editor-in-Chief of Valori, a monthly magazine on ethical economy and finance. A journalist since 2006, specialised in reports on health, finance, ecological transition, renewable energies and agriculture. In 2012 he was awarded the “Young Journalist” prize by the EU’s Directorate-General for Agriculture and Rural Development.

Turning the “wolves of Wall Street” – oblivious to any good cause – into lambs at the “planet’s sickbed:” a strenuous, nearly contrived, undertaking. And yet there is nothing that attracts investors quite like money. Especially where industrial and energy policies of various countries decidedly point to moving away from fossil fuels and raw material-devouring production systems in favour of clean energies and models based on circular economy’s principles. The latest confirmation came from the conclusions of the One Planet Summit, a world’s rendez vous on the environment attended by 50 heads of State and Prime Ministers, held in December in Paris. Part of it was a showcase promoted by French Emmanuel Macron to strengthen the image of France as a climate champion and also an opportunity to reiterate a concept that, at least on paper, should be almost self-evident: no revolution (much less a green one) can be started without money. Many French analysts noted that bankers and financiers, rather than politicians, have been the most affected by the speech given by Macron and Nicolas Hulot, his Minister for the Environment. On the other hand, France, with its sixty nuclear plants to be decommissioned or to be remodelled at a huge cost, can become the ideal territory for those prepared to grant a loan to energy magnates

committed to transitioning from atoms to renewables. EDF (Elecriticité de France) approved the issuance of a mega-green €25 billion bond to fund its 30 gigawatt “Plan Solaire” and 30,000 hectares of PVT fields. What happens in the energy world is not that different from what occurs in other industrial sectors concentrated on finding a way to reduce the use of natural resources, to rethink production systems, to develop reuse and recycle systems. Many actions combined in the principles of the circular economy that can bring about vast effects, providing there are adequate resources able to fund the transition. Exactly one year ago, a report presented at the 2017 World Economic Forum by Systemiq, a venture capital company, together with the Ellen MacArthur Foundation (“Growth within: a circular economy vision for a competitive Europe”) determined that €320 billion fund were necessary to change the development model from then until 2025. By supporting with the appropriate resources the changes in mobility, food and the construction sector (the three macro-areas explored in the report) because they were responsible for 60% of the expenditure of European households and 80% of the use of resources, the European Union would increase its annual GDP by 7%,

Policy Figure 1 | Investments needed in order to make circular economy beneficial 320

Total investments identiﬁed in the EU circular economy until 2025 (£ billion)

875

Beneﬁts of circular economy based on “Achieving Growth Within” Indexed values, 2012 = 1001

70 135

210

130 120 110 100 90 80 70 60 50 40 30 20 10 0

FOOD

115

555

260

140

MOBILITY

125 405 290

CURRENT DEVELOPMENTS

CIRCULAR ECONOMY, NEXT WAVE

BUILT ENVIRONMENT

TOTAL

GDP

2030 SCENARIO

+7%

-10% -17%

PRIMARY RESOURCE COST CO2 EMISSIONS

2012

CURRENT DEVELOPMENTS

Source: “Achieving Growth Within.”

CIRCULAR ECONOMY, NEXT WAVE

2050

2030

Figure 2 | Funding Sources CONCEPT

START

GROWTH

MATURITY

Institutions (pension funds)

Public capital

VALUE

Impact investors Debt: banks New entrants Venture / seed capital

Grants / subsidies

Crowd funding

TIME

while reducing the use of raw materials and CO2 by 10% and 17% respectively. Finding funds for the transition is a primary necessity for the Old Continent, given that between 1900 and 2009, industrialization led to a tenfold increase in the use of raw materials

Source: FinanCE, “Money makes the world go round.”

and national energy use has soared seven times. Moreover, EU is the first resource importer (€760 billion a year, 50% more than the US). 60% of fossil fuels and metals come from non-EU Countries. And 40-60% of costs incurred by continental manufacturers are imported: a clear disadvantage for their global

renewablematter 19. 2017-2018 Table 1 | Summary of circular and linear risks

CIRCULAR RISK

LINEAR RISK

Shift of mindset needed to see (used) products as valuable sets of modules and/or materials instead of waste

Dependency on virgin resources (risk of supply chain disruption)

Required initial investment can cause deterioration in short-term margins

Exposure to resource price volatility

Balance of short-term margin versus long-term stability

Increasing environmental legislation

Market demand for the offered products: customers and companies are currently used to owning products

Growing population and increasing financial wealth

Dependency on supply chain collaboration

Effects of climate change

Unknown residual value of many products, due to small market of circular output companies (i.e. companies that upcycle, re-use, remanufacture or refurbish)

Demand for environmentally sound products

Supply chain lock-in risk

Businesses/products that become obsolete by holding onto old linear business practices (stranded assets)

competitiveness, linked to price volatility and reliance from abroad (20 raw materials have already been deemed as critical by the European Union in relation to the risk of getting them). True, but who should we turn to when it comes to financiers? It actually depends on the type of business to finance. “There are many different kinds of financial products necessary to fully exploit circular business models” as explained in the report “Money makes the world go round” drawn up by the work group FinanCE, joined by banks (including Intesa San Paolo),

Figure 3 | Loans to circular economy 2012-2016: €2.38 billions

Water management EUR 640m

15% 29%

Industry and services EUR 680m Agriculture and bioeconomy EUR 530m Waste management EUR 360m

22% 27%

Product-to-service EUR 170m

Source: EIB in the Circular Economy.

Source: FinanCE, “Money makes the world go round.”

universities and European institutions (EIB and EBRD). “For instance, in the transition phase where a business moves from a linear to a circular business model, the risk profile may be more suited for higher risk capital, through an injection of equity or internal capital. Once the transition is complete, a move to lower risk capital, through specialist asset lending and generic debt facilities may be more appropriate.” The core is always the risk profile of any given company or entity, which can be suited for some forms of funding but not for others and is often connected to business maturity (see figure 2). “The level of risk will be reflected in a risk premium” highlight FinanCE’s analysts. “When it is high, the prize must be high, because the financier must be rewarded for the risk taken.” Actually, even the circular production world has its own unknowns that every potential investor invariably assesses (see table 1). Nevertheless, it is precisely the increasingly obvious risks of the linear approach to make funds for transition “une bonne affaire” as written on the front page of Le Figaro during the days of the Paris summit: reliance on raw materials, exposure to price volatility, effects of climate change, increasingly restrictive environmental laws and augmented awareness of consumers towards low impact products. Thus, the proliferation of stances in favour of clean energies and circular economy situations by small and large investors is no coincidence. Starting from a number of Europe and world pension funds, which

Policy are disinvesting hundreds of billions of dollars (the Norway’s sovereign fund alone announced 35 in November), worried that investments in fossils and other examples of the old linear economy turn into stranded assets, which translate into losses for savers and shareholders. There is some movement also at Community level, where the EU’s Commission in May created, together with the European Investment Bank, a platform for financial back up to the circular economy, bringing together national banks, institutional investors, the European Fund for Strategic Investments and InnovFin initiative within the 2020 Horizon programme. A way to close the gap created by poor specific funds for the circular economy which, for the two-year period just gone, reached a mere €650 million. “As world’s leading financier of the multilateral climatic action – with over €19 billion of funds last year alone – we deem the

circular economy a key factor to reverse the climate change course, and we intend to use in a more sustainable manner the dwindling resources of our planet, thus contributing to Europe’s growth” explained Jonathan Taylor, EIB’s deputy chairman. “To speed up such transition we shall keep on providing consultancy and investing more and more in innovative models of circular economy and in new technologies, as well as in more traditional projects of resource efficiency.” Over the last five-year period, EIB shelled out 2.38 billion in loans to European small and medium enterprises committed to the circular transition (see figure 3). But the same European bank reminds us that future outcomes will depend on how much Europe will be able to multiply resources: “Full implementation of current solid waste directives alone – EIB points out – will require investments of more than €40 billion by 2020.”

The Green Bond is Booming and not just in Europe “Such figures – underline the authors of the report – highlight the persistent trend of exponential growth that has characterised the market for some time now.” The labelled green bond sector (bonds meant to fund environmental projects or pertaining to climate change which have been labelled as “green” by the issuer, editor’s note), and that of certified bonds according to CBI’s Climate Bonds Standards, the issuances registered at the end of 2017 should reach $130 billion compared to 81.6 of 2016 (see diagram).

Boom of green bonds wordwide (certified and labelled bonds)

13 .6

81 41 .8 37 .5

2009

2008

9 0.

2007

4 0.

8 0.

A quantitative estimate of this phenomenon can vary considerably according to the definition adopted, but one thing is certain: in the world of responsible finance, few product categories managed to capture the attention of mainstream analysts and media as green bonds did, the fixed income stocks thought to fund projects, enterprises and initiatives aimed at, in one way or another, to protect the environment and fight climate change. Anyhow, their value, in Europe alone, is not lower than €178 billion. Calculations, carried out on the basis of data supplied by the London-based NGO Climate Bond Initiative, are included within the 1st Report on Ethical and Sustainable Finance, presented by the Ethical Foundation Finance last November to the House of Commons. The European one is only a fraction of the world movement exploded mainly thanks to the interest shown by the sector by private investors, starting from 2013-2014. Worldwide, according to the most recent estimates by CBI, green bonds in circulation amount to $895 billion. Registered bonds are 3,493, issuers are 1,128. The most involved sectors include transport with low CO2 emissions (554 billion equalling 61% of the total) and the segment of clean energies (173 billion, 19%). Throughout 2016 the total number of green bonds soared by $201 billion thanks to 138 billion of new emissions by already operating placement agents and 144 billion from firsttime operators, minus 81 billion bonds that ended their cycle by reaching maturity.

2010

2011

2012

2013

2014

2015

2016

2017*

Source: Climate Bond Initiative (www.climatebonds.net), July 2015, April 2017 and last access on October 21st. Data in US$ billion. *Estimates.

renewablematter 19. 2017-2018

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An OPPORTUNITY to Rethink the Role of Foundations Interview with Sonia Cantoni

Today the banking foundation system is an important player for Italy’s sustainable development but projects to be funded have to be carefully selected and the modus operandi should not be overlooked. by Emanuele Isonio

Fondazione Cariplo, www.fondazionecariplo.it/ en/index.html

“The circular economy can become an opportunity to systematise and restore meaning to many actions that the former banking foundation system in Italy carries out to catalyse and re-circulate resources (ideas, passions, voluntary work, trust, solidarity) in our society,” claims Sonia Cantoni, Fondazione Cariplo’s board member in charge of environmental issues. The foundation system is an important player for Italy’s sustainable development: in 2016 – according to ACRI data (“Associazione fondazioni e casse di risparmio Spa,” “association of Italian savings banks and foundations”) – has allocated the non-profit world (public administration and third sector associations) €101 million for local development, €14 million for the environmental protection and quality, €27 million to cooperatives and social enterprises, €97 million for education, vocational and formation programmes, with an extra €120 million from the Fund to fight underage educational poverty and €124 million for research and development. In addition to non-repayable funding there are assets investments linked to the mission: €4.4 billion in 2015 equalling about 11% of total assets.

Were banking foundations able to secure a role for themselves in the transition towards a circular economy? “The circular economy is a kind of economy designed to regenerate itself, promoting process and product innovations. We, at Fondazione Cariplo, find it interesting to look at the bigger picture taking into consideration both objective (meeting not only material needs but more generally individual and community wellbeing), modes (promoting also non-monetary trading systems) and impacts (promoting social, life style and consumption innovations). In other words, also a model to rethink the use of non-material resources, for instance social ones.” From your vantage point, have those who potentially could collaborate to develop projects within the circular economy got adequate knowledge of what the actual role of foundations would be? “We are noticing that the way we are perceived is changing: organizations, institutions and people understand that we are no longer banks,

dimitrisvetsikas1969_pixabay_CC0

Policy but modern philanthropists. Foundations are increasingly committed to communication; as a result, we are involved in situations that up to some time ago were unknown or far removed from us, such as collaborations with companies. The famous virtuous triangle, desired by Chairman Guzzetti – public-private-social-private – is more and more real, in various forms all over Italy.” Are professionals able to access foundations’ funds still missing? “In Italy, the non-profit sector is still somewhat unprepared to react effectively to old and new society’s ills, with innovative solutions that for instance redefine and upgrade demand itself rather than just responding to it (think about the mobility demand in large cities), in order to prevent rather than repair. Not to mention the fact that faced with accomplished or future disasters (the effects of climate change for instance), we need to be more and more resilient. Many public administrations seem to be overwhelmed by an on-going and growing demand for intervention and this is not supported by resources; but also by political instability producing frequent strategy and intervention changes. And many precious intelligence, trust and voluntary work resources present in our civil society are thus wasted.”

Sonia Cantoni, Fondazione Cariplo’s board member.

Is it also the third sector’s responsibility? “In the third sector, too many organizations only fight their daily battles for survival, without achieving a genuine step change, working in an integrated way by activating synergies, reorganizing, to embrace new routes and languages. We trust in the new innovating potential the recent reform set in motion. The third sector is already substituting the government, but this is neither enough nor fair: it can hopefully play the role of third pillar of Italy’s economy, of a new economy activating and recircling scattered resources of active and responsible citizens, alongside the public and private sector. But it also needs a step forward that can be taken only thanks to adequate economic support and education. There is a need for ideas, courage and above all a shared vision. Foundations can act as catalysts and support such change. A cross-sectorial programme launched by Fondazione Cariplo in 2016 on an initiative

by service-to-the person Area and the newborn Fondazione Giordano dell’Amore Social Venture (collecting and reactivating in synergy the experience and the resources of two more historic foundations with a social purpose), with assets totalling €20 million is doing just this: for the first time in Italy a training programme of the third sector (managed with cutting-edge technologies), a public competition for the organizational improvements of institutions, a series of workshops on ad hoc themes and a platform to promote and fund social enterprises will be activated.” How are the projects to be funded selected? “Neither randomly nor self-referentially. Within our foundation, there is a well-established practice of dialogue, prior to the announcement of the competition, with recipients. In the selection of applications (mostly comparative) the consistence with the multi-annual planning tools of the foundation is evaluated. Offices suggest selection criteria and take into consideration internal as well as external competent organs. They are communicated in a transparent manner. For instance, did you know that every year Fondazione Cariplo announces new competitions on line and in streaming? And there are over 5,000 people attending meetings.” How can any association pinpoint the most appropriate foundation for their project? “It must study very carefully the working rules of that foundation: the area covered, its strategic objectives, the intervention criteria, deadlines throughout the year, unless that organization does not operate by spreading ‘random’ resources, but rather through transparent and participatory processes of the strategic objectives, measures and actions. We, at Fondazione Cariplo, are very conscious of this aspect and we are aware we have to manage assets originally derived from public welfare in order to offer jobs to the poor and supply the most pressing material needs and therefore a ‘common good.’” What are the strengths that make a request for funds interesting? “Perhaps when the application comes from a network of players (private and public of the third sector, maybe with the involvement of profit entities in their capacity as supporters or co-funders) representing a certain community in any given territory; when it guarantees a certain initiative over time thanks to the participation of all players involved (or those representing them, if scattered throughout Italy) and because it guarantees the use of resources from alternative and complimentary to the foundation resources. Also, when it explores innovative solutions

renewablematter 19. 2017-2018 or it suggests ways to adapt successfully-tested solutions by other communities or in other areas.” What mistakes should be avoided? “Applications for financial aid supporting life rather than the vitality of an organization, for ordinary management, rather than for innovation projects. Self-referential activities should also be avoided. They are not generally perceived as a need, as a risk, as an opportunity for a community, by the various players in their approach and implementation of a solution.”

Did you know that every year Fondazione Cariplo announces new competitions on line and in streaming? And there are over 5,000 people attending meetings.

What initiatives and tools has Fondazione Cariplo implemented to promote the transition from the circular economy in the areas where it operates? “If we look at the activity of our foundation (assets at a market price of €7.7 billion at the end of 2016, over 1,000 projects supported on average every year, the equivalent of over €150 million), the initiatives supported by Area Ambiente (‘environmental area’) as well as projects funded with the competitions ‘Costruire comunità sostenibili’ (‘Building sustainable communities’) and ‘Comunità resilienti’ (‘Resilient communities’), the projects funded to save energy in the public administration and to replace fossil sources with renewable ones, the promotion of a ‘Dedicated national centre for the circular economy’ in the Brescia province, the organization of a cycle of public meetings between last March and June (‘Theory and Practice of the Circular Economy:’ all proceedings are available on the foundation website) fall indeed within the circular economy realm. Then there are projects supported by the Research Area via the competition ‘Integrated research in industrial biotechnologies and the bioeconomy.’ We can also associate other initiatives to the circular economy such as those conceived to revamp marginal areas of Lombardy and Piedmont, in particular mountainous areas at risk of depopulation (see ‘AttivAree,’ a crosssectorial project), or peripheral urban areas (such as cross-sectorial project ‘La città intorno’ (‘The city around’). Indeed, they leverage the demand of a new economy, of self-organisation, of culture by local areas and the widespread supply by social players. And also the ‘sharing’ initiatives as well as the massive social housing programme, conceived by the foundation and that has been supported since 1999, which is developing not only as a social recovery opportunity but also as urban regeneration.” What has been achieved so far? “Monitoring and evaluation of the form of disbursement and the single projects are carried out on a regular basis by the foundation to account for all operations carried out and pondering in a critical manner over the effectiveness of the supported activities. Such information, besides being accessible on the website, is included both in the mission

statement and annual report. In 25 years the foundation has supported 29,683 project for a total of €2,800 million (€145 million for 1,800 projects supported by Area Ambiente alone, €2 million allocated to 2012 and 2013 editions of the ‘Building sustainable communities’ bid and 30 funded projects, €5.2 million allocated to the 2014-2017 four editions of ‘Resilient communities’ competition and 54 supported projects), over €11 million made available since 2014 in the various edition of the ‘Integrated Research in industrial biotechnology and the bioeconomy,’ which funded 41 projects and €1 million towards the opening of ‘Dedicated national centre for the circular economy’ in the Brescia province. “But one of the greatest challenges we are facing is to be able to estimate in a systematic way the impact the foundation can generate on society. Only when such challenge will be overcome will we be able to answer a question like this. A commitment that could prove useful to many organizations of the third sector.” What is the outlook for the future? “In 2018, more competitions will be announced – in a broader and more social framework of a circular economy – and the foundation’s allocative departments will be committed to ‘re-circulating the community’s widespread resources.’ For instance, the call for interest of ‘Virtuous territories’ – a project supporting the upgrade of buildings and lighting of public organisations and third sector entities through FTT (third-party financing arrangements) with the help of Energy Service Company, ESCo, will be reintroduced. “With reference to more well-established and characteristic themes of the circular economy, the Research Area will focus the allocated resources to environmental issues and to the competition announcement on industrial biotechnologies on a more effective and sustainable use of natural resources and valorisation of production waste, thus offering employment opportunities for young people and promoting across the board the innovation of the production system of Italy within the Circular Economy. Thanks to the activities promoted by Cariplo Factory, a strategic alliance with Gruppo Intesa San Paolo is being established. The Group has been interested in such themes for some time and since 2015 it has become Ellen MacArthur Foundation’s global financial partner.”

Policy

Focus on Finance

by Matteo Cavallito

Matteo Cavallito is a journalist, he’s been writing for many years for the magazine Valori, conducting enquiries on economic, social and financial issues. Since 2016 he’s been a member of the Steering Committee for the degree in Historical Sciences at the University of Genova. He’s co-author of the first report “La finanza etica e sostenibile in Europa” (“Ethic and sustainable finance in Europe”), 2017, for the Fondazione Finanza Etica.

1. Global Sustainable Investment Alliance (GSIA), “Global Sustainable Investment Review 2016” (www.gsi-alliance.org/wpcontent/uploads/2017/03/ GSIR_Review2016.F.pdf), March 2017. 2. Namely EUROSIF (Europe), RIAA (Australia), UKSIF (United Kingdom), USSIF (USA) and VBDO (The Netherlands). 3. US SIF Foundation, “Report on US Sustainable, Responsible and Impact Investing Trends 2016” (www.ussif. org/files/SIF_Trends_16_ Executive_Summary(1). pdf), May 10, 2016.

in partnership with

Sustainability

IS WORTH MORE According to the last Global Sustainable Investment Alliance report, at the end of 2016 responsible investments had reached $23 trillion value worldwide. One of the reasons for this growth is their brilliant financial performance. $22.890.000.000.000. Almost $23 trillion’s worth of banknotes. That’s the value of sustainable investments, as it’s been recorded at the end of 2016, the latest year for which we have definitive data. These were published last March in the most recent edition of the biennial survey of the Global Sustainable Investment Alliance (GSIA),1 a network of five different associations working in the field of responsible investments.2 The survey pointed out that in two years the value of ESG bank transactions (Environment, Social, Governance) has grown by 25%: these represent the assets selected by investors across the Planet according to one or more sustainability criteria (including environmental, social and responsible management aspects). This trend confirms a long-term growth that by now has got deep roots. The growth of this sector in the United States is emblematic: the last USSIF3 study reveals that investment funds that integrate ESG criteria in the selection process of their portfolio assets have grown from 55 to 1.002. At the same time the value of their responsible investments has grown from $12 billion to $2,6 trillion. The GSIA analysis shows that today ESG assets available on the American market sum up to a total amount of 8,700 billion, with a 33% increase compared to 2014. The market leader is Europe, with 12,000 billion assets under management and a lower but important growth rate of approximately 12% on a two-yearly basis. The Canadian market is undergoing a very significant 49% growth, and Australia is recording a dramatic 248% growth in the same period.

The most astonishing result belongs to Japan that contrary to the rest of Asia, shows an unprecedented growth: in 2014 the value of ESG investment in Tokyo and the surrounding area amounted to a poor $7 billion: now it has reached $474 billion dollars, with a 6,700% increase. What are the key-factors behind this growth? In other words, what pushes investors to adopt with increasing frequency ESG criteria when defining their strategies? Global political choices in the environmental field, which culminated with the signature of the climate agreement, surely represent part of the answer, and so does the development of the green economy and the growing attention for circular economy strategies. But it seems there’s something more: a specific element, a resource can make these strategies more attractive, “quantitatively” speaking. The strongest hypothesis is that this integration of the ESG factors brings not only to a positive impact in terms of sustainability, but that it also offers better financial performance. This hypotheses is supported by Savita Subramanian, director of the U.S. Equity and Quantitative Strategy of Bank of America Merrill Lynch Global Research sector. In a report published at the end of 2016 he pointed out how 80% of the funds managers he interviewed and who applied sustainability criteria in their investment management, motivated their choice with the higher returns. Specifically, of the companies that were quoted in the S&P Common Stock index, those with the highest ESG ratings had 5% higher returns compared to those with a lower rating. Subramanian highlighted that

renewablematter 19. 2017-2018 Figure 1 | ESG funds in the United States: 1995-2016 0 1, 02

3,000

Number of funds

2,500

2,000

0 72

1,500

1,000

3 49

Managed assets (billions of $)

4 89

Managed assets

Source: US SIF Foundation, “Report on US Sustainable, Responsible and Impact Investing Trends 2016” (www.ussif.org/files/SIF_ Trends_16_Executive_ Summary(1).pdf), May 10, 2016.

1 20

0 20

1 18

4 14

8 16

0 26

500 55

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Figure 2 | ESG investments in the world

25,000 2014

15,000

+1 +3

10,000

Managed assets (billions of $)

2016 20,000

Source: Global Sustainable Investment Alliance (GSIA), “Global Sustainable Investment Review 2016” (www.gsi-alliance.org/wpcontent/uploads/2017/03/ GSIR_Review2016.F.pdf), march 2017. Data in US billion dollars.

5,000 +6

Asia (Japan not included)

the spin-offs were also evident in risk management: “An investor who purchased only stocks with above-average ESG ratings would have avoided 90% of the bankruptcies we’ve seen since 2008.”4 The advantages in terms of risk management emerge strongly even in the circular economy: already in June 2015 in particular, an enquiry run by the British thinktank Green Alliance had pointed out that higher investments in the field of materials recycling and energetic efficiency could create a higher resilience compared to the price volatility of the raw materials market. This is a phenomenon that has become evident in the first post-crisis years.5

Australia and New Zeland

Canada

8 ,6

USA

7% 5.

Europe

Japan

TOTAL

At the current stage, the connection sustainability/performance find the strongest confirmation in the environmental field. “From a theoretical point of view it’s been demonstrated that funds that select their portfolio according to environmental sustainability criteria do not have lower yields than conventional funds, provided that the investment universe is wide enough” explains to Renewable Matter Leonardo Becchetti, professor of Political Economy at the University of Rome Tor Vergata. “Moreover, empirical studies6 have highlighted top results achieved by investors that were able to anticipate

4. BofA Merrill Lynch Global Research, “ESG: good companies can make good stocks,” December 18, 2016, quoted in Merrill Lynch, “Capitalism and the Rise of Responsible Growth” (www.ml.com/ articles/capitalism-andthe-rise-of-responsiblegrowth.html), access to December 2017. 5. Green Alliance, “Managing resources for a resilient economy: lessons from the financial sector” (www.green-alliance. org.uk/resources/ Managing%20 resources%20for%20 a%20resilient%20 economy.pdf), June 30, 2015.

Policy 6. Nofsinger J., A. Varma, “Socially Responsible Funds and Market Crises,” December 24, 2012 (www.geneva-summiton-sustainable-finance. ch/wp-content/ uploads/2013/03/ nofsinger.pdf); Becchetti L., R. Ciciretti, A. Dalò, S. Herzel, “Socially Responsible and Conventional Investment Funds: Performance Comparison and the Global Financial Crisis,” CEIS Working Paper, No. 310, February 18, 2014 (papers.ssrn.com/sol3/ papers.cfm?abstract_ id=2397939).

the environmental policies implemented in the last years, and focused on companies that were able to perform better, compared to their counterparts in the fossil compartment.” And what about the future? “The big challenge for the years to come – explains Becchetti – consists of making social sustainability and fiscal responsibility economically viable as well.” The mechanism should be the same that has already been experimented in the field of environmental sustainability, that is a mixture of bottom-up pressure from the investors and at the same time, a top-down regulatory pressure. In September 2014 for example, more than 120 investors with managed assets worth more than $10 trillion have signed the so called Montréal Carbon Pledge, a document supported by the Principles for Responsible Investment

(PRI) and by the United Nations Environment Programme Finance Initiative (UNEP FI) where investors aim at measuring, making public and reducing the environmental impact of their portfolio. “At the same time – reminds Becchetti – the announcement of the Chinese, Indian and Dutch governments has raised expectations for a more severe regulation of private transport, for the benefit of the development of electric cars. The great financial performance of a company like Tesla proves that the market has already started rewarding the revenues expected from the company in the coming years. As for the circular economy, he adds “since it’s part of the principle of environmental sustainability it’s likely that it will prove to be a winning choice: institutions can do much in this direction, creating effective incentives, for example in the field of taxation.”

Selection strategies

15 23

2014 2016

12 69

8, 52

7, 7

91 5,

6, 9

38 4, 0 03 1, 0 89 1

Exclusion

Integration

Engagement

Norms-based screening

Best-in-class

Sustainability themed investments

Impact investing

7. Investments based on more than one criteria are counted only once. For this reason, the total value of the single strategies is higher that the total value of ESG investments in the world ($22.89 trillion).

Investment growth according to the selection criteria ($ mld)

According to analysts, investors use seven strategies to evaluate the sustainability of portfolio assets. The most common is the Exclusion of holdings from investment universe, that implies the choice of not investing in a sector or in a company whose business is inconsistent with ESG criteria or with international regulatory standards. According to the last GSIA survey, the value of portfolios of investment that exclude one or more categories of “problematic” securities (weapons, tobacco, nuclear etc.) amounts to $15 trillion, 3,000 billions more than 2014 data.7 On the other steps of the podium are the so called ESG Integration (10,400 billions), that is the explicit and systematic integration of ESG factors in the traditional financial analysis, and the Engagement and voting on sustainability matters (8,400 billions), that implies the operators’ commitment to promote ethical social and environmental concerns in the companies they invest in. The list of strategies also involves Norms-based screening (the companies’ compatibility assessment through the minimum standards of business practice based on international regulation), the Best-in-Class investment selection (investments with the highest ESG scores in their sector), the Sustainability themed investments (in energy efficiency, renewable energy and so on), and Impact Investing, which involves investments with a positive impact in terms of social or environmental development.

Source: Global Sustainable Investment Alliance (GSIA), “Global Sustainable Investment Review 2016,” march 2017. Data in US billion dollars.

renewablematter 19. 2017-2018

Focus on Finance

in partnership with

Circulating Capital Interview with Jamie Butterworth

by Antonella Ilaria Totaro Jamie Butterworth is one of the founding partners of Circularity Capital and the former CEO of the Ellen MacArthur Foundation, a global hub for circular economy innovation. Butterworth is a fellow of Oxford University’s Smith School and has contributed to a number of forums on the circular economy including the World Economic Forum and the European Commission Resource Efficiency Platform.

Circularity Capital, www.circularitycapital.com

Does the circular economy have financial value? What are the financial benefits and opportunities deriving from investing in the circular economy? And what are the risks in investing in finite resources? These are the questions that for over a decade Jamie Butterworth has tried to answer. The former Ellen MacArthur Foundation CEO has become one of the founders and partners of Circularity Capital, a private equity company specialized in the circular economy created to make investors more aware of the opportunities deriving from companies involved in the circular economy and to support innovation and growth of SMEs in this sector. Besides Jamie Butterworth, the other partners of Circularity Capital include Ian Nolan, David Mowat and Andrew Shannon, all with a background in finance and private equity investment. By increasingly challenging linear models of production and consumption, Circular Capital

targets companies that, by using circular models, can outperform their linear competitors on the market. Founded in 2015, Circularity Capital aims at £1-5 million investments in profitable and fast growing European SMEs. Circularity Capital’s investors include financial institutions, companies, family offices and impact investors. After the first close in March 2017, in October 2017 Circularity Capital lead a $7.4 million investment round in Winnow Solutions, a company with its headquarters in London and offices in Dubai, Shanghai and Singapore and present in 29 countries, which has developed a technology to design out food waste in commercial catering facilities. Winnow’s solution has been used, just to name a few, by IKEA and AccorHotels. Circularity Capital’s investment will help Winnow Solutions to scale up its operations at global level. How did the idea of creating Circularity Capital come about? “I was one of the members of a team that in 2010 setup the Ellen MacArthur Foundation. We became very interested in how the circular economy can act as a framework for a restorative economy and alternative to today’s predominantly linear ‘take-make-dispose’ model of production and consumption. One of the first things that we did was to carry out an analysis with McKinsey to understand how the circular economy created financial value. We wanted to determine whether the circular economy model could be as profitable, if not more so, than linear model of value creation. We examined a subset of the European economy and published a report (‘Towards the Circular Economy’) which we presented at the World Economic Forum (WEF) in 2011. The report findings demonstrated when and how circular business models can

Policy

1. The product-as-aservice model focuses on the idea of selling services rather than products, which belong to the company manufacturing or providing the service. For further details, read “Stop Death (of Objects),” interview with Walter R. Stahel by Emanuele Bompan, Renewable Matter, issue 16 / May-June 2017.

The Circular Economy 100, www.ellenmacarthur foundation.org/ce100

outperform their linear counterparts. This work roused significant interest in a number of the companies attending WEF. As a result of this we created the Circular Economy 100 (CE100), a global pre-competitive innovation programme established to enable organisations to develop new opportunities and realise their circular economy ambitions faster. “During the following four years we came into contact with an increasing number of businesses operating in the circular economy. This included not only a growing number of global corporates but also a myriad of SMEs and supply chain partners – often the first to innovate new business models and capture the commercial opportunities in this transition. It also became increasingly evident that these businesses did not always have access to the capital, specialist support and network they needed to unlock their full potential. This was the start of a three year journey to develop Circularity Capital. “The aim was to create an investment firm that would demonstrate how the circular economy can deliver attractive market rate returns in parallel to positive measurable non-financial impact. “In 2015 I stepped down as CEO of EMF to focus full time on establishing Circularity Capital. It was very clear that we needed to combine two core capabilities – expertise & insight in the circular economy and institutional quality investment management expertise. This began a process of building the Circularity Capital team – including Ian Nolan (former CIO of 3i Group and the Green Investment Bank), David Mowat (part of the founding team of Caird Capital) and Andrew Shannon (formerly a VC investor at Foresight Group). “This was a fascinating period for me and I soon realised I had a lot to learn. I had a rather top-down macro-economic vision of the circular economy, whilst Andrew, David and Ian as investors were able to see the same challenge through a bottom up company-level investment lens. By combining these two spheres of expertise, we studied the European SME ecosystem to understand which kind of companies existed, what were their capital requirements, how and in which sector they operated and how they were driving value. The work allowed us to build a deep understand the market and how we would ultimately start to invest capital and build a portfolio of circular businesses.” Investing in circular companies is not very easy. Nevertheless, you managed to create an investment firm. What were the challenges in setting up Circularity Capital? “The first challenge was to build the right team of specialized investors in this sector who could really understand this market, identify appropriate opportunities and support investee businesses deliver their full potential; the second was to raise capital from an aligned group of investors. This all comes back to the

point that to accelerate the circular economy, capital must circulate – i.e. for capital to flow towards circular companies investors must be convinced of an appropriate risk adjusted financial returns.” How difficult is it to talk about the circular economy with investors and convince them of its economic return? “We try to use clear terminology easily understood by investors. Then we go into details with some examples. We very rarely find an investor who struggles to understand how the circular economy creates value. It is really fascinating to see the speed with which our investors get used to this concept and start to talk about models and challenges of the circular economy and how difficult it is to fund, for instance, the product-as-a-service model.1” What kind of companies are you interested in? “We invest £1m-£5m in European Growth stage SMEs operating in the circular economy and look for businesses that have strong circular economy value creation potential, excellent management teams and are operating in sectors with good growth fundamentals.” Are there specific sectors of the circular economy that you concentrate on? “We have identified five types of companies we are interested in within the SMEs panorama. First, waste-to-product companies including those that collect the waste flow and transform it into something with higher value. Second, product-to-product companies, namely businesses with a solution or a process that extends the life of products such as regeneration and repairing. The third group includes circular model businesses, this often means product as a service where companies remain the owners of the resource and so it is in their best interest to extend the life of products. Finally yet importantly, the last two include circular design and enabling data solutions. Circular design relates to innovation through materials, packaging and creative solutions. While enabling data solutions include solutions where the use of data allows us to create more value to speed up circular cycles while reducing waste. We examine these five areas. We examine the sectors that we deem more interesting and then, very proactively, we approach companies which more often than not do not know they are operating within the circular economy, they probably do not know what we are talking about despite generating huge value.” Are there enough investment opportunities?

renewablematter 19. 2017-2018 “Yes, we are seeing a large number of interesting investment opportunities. We reckon we need to examine about 100 companies to get the right fit and quality for each investment allocated. We are planning to invest in around 10-12 companies during the investment vehicle’s life.” Where are Circularity Capital’s investors from? “Our investors include Institutional players, corporates and family offices primarily from Europe and the USA.”

Antonella Ilaria Totaro is a circular economy and sustainability expert operating in Italy and the Netherlands. She is involved in startups and new business models, renewable energy, mobility and sustainable food systems. She plants trees with the Land Life Company, which she oversees in Italy.

What is the role of banks in the circular economy? “My background is not in banking, so maybe I am not the best person to answer this question. Nevertheless, I think that one of the roles of banks is that of really understanding the financing requirements of businesses operating in the circular economy – one example would be in how businesses moving to a ‘Product As a Service Model’ (PaaS) can finance assets on their balance sheet. When we consider some investment opportunities, as a matter of fact we often work with banks to identify the right financing packages suited to the growth model of the company we are dealing with. There are companies specialized in this – for instance De Lage Landen (DLL) which provides loans – they are very experienced in financing product-as-a-service businesses. We look for people with this kind of experience when we invest. This is just one practical opportunity for banks to engage in the circular economy.” Is there a missing actor or element in the current transition towards the circular economy? “We have noticed that if we take into consideration the understanding of the circular economy, its framework and opportunities, in some geographical areas the concept is clear to most people, for instance in Holland. Nevertheless, opportunities are everywhere, not just in more aware areas. We have noticed that there is a significant opportunity to make more institutional investors and asset owners aware of the circular economy framework and how it can create value. In the past, talking with a big American corporate bank or pension fund, we probably devoted the first part of our meeting to explaining what the circular economy was and why it could generate more value when compared to a linear business model. If you talk to large corporate businesses – e.g. consumer product or health services companies – they are often already aware of this opportunity thanks in part to actors like the Ellen MacArthur Foundation,

the World Economic Forum and McKinsey and Accenture’s work on this topic. The world of finance is slightly separated from the corporate business world, so we must work to make people acquainted with this concept before being able to distribute capital in the best possible way. In this regard, there is a lack of awareness of the opportunities in the global finance.” Do you think this is due to a gap in education? “Finance and MBA courses are slowly evolving. There is a series of programmes that are trying to include the circular economy, but many people we interact with attended their MBAs, ten, fifteen or twenty years ago. So, it is rather normal to have this gap. But some actors are trying to fill it. The World Economic Forum for example has played a role in exposing a wide number of players to this opportunity.” You worked for the Ellen MacArthur Foundation and now with Circularity Capital you meet and examine SMEs. But there are also big companies trying to move from a linear to a circular model. For them though it is not so easy. What can big companies do to start their transition towards a circular model without being destabilized? “I like the way a corporate manager recently answered the same question to me, telling me that besides all the incremental things that her business was already doing in this field (in terms of product design, returns management and redeployment), they could use the circular economy as a holistic framework to take a systems level view and optimise the whole business system. This provides a huge opportunity for corporate businesses to identify opportunities to capture more value and differentiate themselves from competitors. “For SMEs it is often easier to change business model because they have smaller teams that meet regularly, they are not siloed in the same way and can agree on, pilot and an execute in a shorter time. Big companies, on the other hand, have different issues concerning also how to manage legacy and many existing linear activities. It is not sufficient to focus on one single activity like remanufacturing, the real value is created when the remanufacturing division talks with design and to optimize a product and this is all done in the context of how the product is marketed and sold – potentially through a new business model. Many of these activities are already taking place, but a holistic approach is needed in order to combine everything and make it work. This is just the beginning, then after the first step, companies can become more ambitious and go further.”

Policy

Focus on Finance

in partnership with

BOTTOM-UP Funding

€500,000 raised in only three campaigns. A Dutch company’s choice focusing on crowdfunding to fund its circular business model and to show its financial soundness to future shareholders. by Antonella Ilaria Totaro

Bundles, www.bundles.nl/en One Planet Crowd, www.oneplanetcrowd.com

1. See also “Stop Death (of Objects)” interview with Walter R. Stahel by Emanuele Bompan – Renewable Matter issue n. 16 / May-June (www.renewablematter. eu/art/315/Stop_Death_ of_Objects).

Funding the circular economy is not easy. Funding a start-up in the circular economy is complicated. Funding a start-up with a circular business model (product-as-aservice) becomes almost prohibitive. And yet, Dutch Bundles is successfully exploiting crowdfunding while waiting for top-down investors. Washing cycle after washing cycle, the “product-as-a-service era” comes into households establishing itself in the world of appliances. “Wij houden van de toekomst,” “We love the future.” Bundles, the Dutch company offering subscriptions for high-quality appliances, chose this slogan, a series of T-shirts and white baby rompers hung out in the sun to dry to introduce itself to the public. It all started in 2003 with a partnership with Miele, a German company producing household appliances and with

a high-end product that is home-delivered following a monthly subscription. Within a minimum of three to a maximum of five days, the chosen washing machine, dryer or dishwasher is delivered and installed in the user’s home, while still being owned by Bundles. The customer, benefitting from a service while not owning the appliance, pays according to the washing cycles and to the package selected on subscription. Keeping ownership of the appliances means that Bundles is in charge of delivering, installing and maintaining the product while also offering additional services such as automatic restocking of detergents. Leaving ownership and liability of appliances coming into people’s homes to Bundles means that the products supplied must be of a high quality and innovative in order to offer the best possible experience to users while also using less energy, water and detergents. So far, in Holland, Bundles has collected 1,100 subscriptions of which 800 for washing machines, 250 for dryers and 50 for dishwashers. There are 870 active customers. So there is a network effect for customers: after trying an appliance as a service, they choose a second and perhaps a third one. In Holland alone, over one million washing machines, dryers and dishwashers are thrown away every year. Focusing on the Performance Economy1 and on efficiency means that only the best appliances are used and reused. On paper, it is a worthwhile method. People do not pay for the cost of a home appliance that usually stops working after a few years of programmed obsolescence, but they only pay a monthly instalment for a product that, while it is not owned, offers a number of performances and very few headaches.

renewablematter 19. 2017-2018 Indeed, thanks to the installed software connected to the appliance, Bundles knows when the product is not working and sends home technical assistance. Of course, together with such product-asa-service model there are also some critical issues regarding ownership and home appliance liability (so far both belonging to Bundles) and the credit risk in a circular business model which is repaid on a monthly basis by its users and not by upfront payments as with traditional purchases. Financing is certainly a crucial element for Bundles and for all companies dealing with circular business models. So, while waiting to reach new investors and scaling up, over the last few years, 2003-born Bundles opted for bottom-up funding. Besides capital invested by its founder Marcel Peters, former innovation

manager for an energy service company and co-founder Wouter Buijze, Bundles organized three crowdfunding campaigns – all successful – raising a total of €500,000. The 2017 March, June and September campaigns have been hosted by the Dutch One Planet Crowd platform, where the general public can lend their capital starting from €250 to the company and/or campaign they wish to support. The crowdfunding model has no doubt its limits in funding the “product-as-a-service business model” because instead of considering new investments, the whole revenue is used to buy new home appliances and repay loans. On the contrary, the €600,000 collected by Bundles from investors taking part in the first equity round, closed by the company in early December, will be used to expand Bundles’ services to new IoT applications, to develop new services and an improved software platform to manage subscriptions.

Interview

by A. I. T.

Subscribing to quality Marcel Peters, Bundles’ founder and CEO

Why did you choose crowdfunding to fund the product-as-a-service model? “Because it is simple. The return on an investment in crowdfunding is clear. In the One Planet Crowd campaigns investors receive a guaranteed 6% return in the following 10 years. The equity capital in the case of Bundles is far more complicated because the return is unknown. It largely depends on Bundles’ profitability in the future. We opted for crowdfunding because we can also show we can be even more profitable. We would like to repay 6% of debt and show that we can improve the return on investments of these subscriptions. Crowdfunding is also instrumental in showing the financial soundness of our business model and in showing our future shareholders that Bundles has played and will play a significant role in the performance economy and that its stocks will be valuable in the future.” What is the main obstacle for those who want to invest in circular companies such as Bundles? “The uncertainty of how much value Bundles is able to gather in such product-as-a-service model is crucial. Today, those investing in a product-asa-service model are not so much interested in how big the impact of their investment will be but rather in having a positive impact in the transition to the circular economy, by being active in the sector and by making their activity visible to customers. They see it almost as a non-commercial investment.

Commercial investors have a vague idea of the speed with which a circular model scales up investments compared to the speed with which it uses money to operate the model. The transition towards the circular economy needs time. Until when a real transition takes place, the difficult step will be to estimate the potential value that companies such as Bundles can create for the future.” What is the main risk for Bundles in the future? “The risk is that large companies such as Electrolux or Miele may decide to go solo, after learning how it works, leaving Bundles out. Potentially, all companies with financial, marketing or information technology capacities can think of joining the subscription economy by doing away with Bundles. Over the next years, we have to show that the combination of our ability and the ‘network’ effect in offering various subscriptions and products through only one channel makes for a better and different experience for customers. The fact that customers do not need to take out ten different subscriptions with ten different suppliers is ultimately what makes Bundles so precious. Today, branding home appliances we deliver to people’s homes make us popular and sets us apart. This is a key element in order to gain an advantage in the future.” What is the next step for Bundles? “Once the problem of scalability is solved and once

Policy we have gained people’s trust in offering a good service, then real competition will start. Once a way of working the model is found, many people, perhaps already having a link or a partnership with Bundles, will try to conquer the market. However, if the market becomes large enough, that won’t be a problem because there will be room for everyone. In the future, I don’t want to sell washing cycles with Bundles, but I want to sell software, I want to sell a product-as-a-service brand. By selling software and scaling up we will be able to build something unique. By software licencing at international level, other people will be able to create a better company, suited to the needs of local areas and cultures and a win-win situation will be created.” Are banks interested in the circular model? “They certainly are, but banks are not private investors, they have very strict criteria in terms of risks they can take. If the repayment of a loan depends on the company’s stability, they can’t accept the risk of a company with a high cash flow. With crowdfunding and investors it’s different,

they want and can give entrepreneurs the opportunity to show they can succeed. “At the moment, ING and Intesa San Paolo are probably the most practical banks because they know everything with regard to payments and credit management. However, I believe they can’t take themselves alone on a journey towards the economy of subscription because if they can fund home appliances and build the software to collect money correctly, these two things alone are not enough to join the performance economy. “Banks could take part of the risk in exchange for an agreed interest. In this way, Bundles would spread the risk with banks, or the same thing could happen with a transport or detergent company. “But, ultimately, manufacturers or banks do not want users’ liability when subscription is cancelled or when customers have technical questions on appliances. Today, customers refer to Bundles for any doubts, they don’t contact their bank to know what button to push to wash a red dress. “In the future, a joint venture between Bundles and some partners such as Electrolux could be created. Once contracts amongst partners and risks are well structured, I believe scaling up will be easy enough and the model will grow in other countries as well.” So, how can banks help fund the circular business model and contribute to a transition towards the product-as-a-service model? “Banks could not think as banks. They should be the guardians of cash flow and a company’s liquidity risks. Banks are good at estimating and structuring risks, while in the product-as-a-service model it is not very clear who takes the risks. Entrepreneurs and investors like to take risks, but they don’t like not knowing the scale of the risk. Here banks can be of help. They can structure risks in a way that it is clear for everyone how much the maximum loss and maximum gain would be, what criticalities would be. This is a role banks can play. “The issue, though, is to understand how much money to pay banks for such service. So far, I have never seen a bank help, without supplying capital, companies structure risk in a way that capital costs for Bundles and for other companies with a subscription model diminish. A separate company from the bank could be created, a company with a different board, hiring experts from the banks as consultants. They do not have to analyse credit requests by customers, but they have to put themselves in the shoes of a company with a product-as-a-service company, helping to structure the risk and to understand what risks are and how they can be mitigated. Then the company could approach banks and offer them a financeable product with a structured risk. So, banks can decide if investing in savings of their own customers in companies with a subscription model where risks are defined and move their money towards the circular economy. All this, at the moment, is not possible because the risks in the circular economy are neither structured nor clear.”

renewablematter 19. 2017-2018

Focus on Finance

in partnership with

THE 4 VITAL ELEMENTS of

a Viable Circular Service Model Developing business models that are feasible for circular economy is an essential step to attract funds, and as a consequence itâ&#x20AC;&#x2122;s fundamental for its success. A clear example is the experience of the Community of Practice, an â&#x20AC;&#x153;openâ&#x20AC;? learning community based on the synergy between many different skills. by Aglaia Fischer and Elisa Achterberg

Aglaia Fischer and Elisa Achterberg, Project Managers Circle Finance Programme, Circle Economy.

While the circular economy is gaining momentum all across the world, the urgency to develop and implement viable circular business models is crucial to its success. One business model that is very promising for the circular economy emphasizes use rather than ownership of a product by providing a service rather than a product. Companies that apply such a Product-as-aService model retain ownership of their products, and are incentivized to create high-quality, durable products and to collaborate with their supply chain partners, while customers enjoy the performance of a product without the hassle. Businesses striving to implement Product-as-aService models, however, have trouble attracting funding due to shifting value, ownership and governance needed to secure funding. Plus, it has proven to be very complex to create a financial model for Product-as-a-Service models, especially when the product involved has components that can be cycled infinitely. Businesses often lack the expertise to provide

financiers with the financial impact of their circular business model, leaving them unable to convince financiers of its soundness. This lack of a proof leaves financiers guesstimating the risks and hesitant to take the plunge. Additionally, the current financing, legal and accounting standards are not equipped to fairly interpret circular risks and opportunities. But if nobody jumps into the deep end and finances one of these innovative business models, a benchmark will never be created. This is where Sustainable Finance Lab, Circle Economy and Fairphone saw the urgent need to bridge the gap between financiers and circular entrepreneurs. In a Community of Practice all elements and tools needed for Product-as-aService models to flourish were co-created: an open and diverse community, a durable circular product, a financial model, and a sound contract. This way, the community has proven that the gap between the businesses and financiers is much smaller than initially thought. All learnings in the form of a white paper, the Circular Service

Policy

Sustainable Financial Lab, sustainablefinancelab.nl/en Circle Economy, www.circle-economy.com Fairphone, www.fairphone.com/en

Contract template and a guide to developing a financial cash flow tool are provided open source. An open (source) learning community Overcoming barriers to circular business models requires open collaboration and transparency to create synergies between different fields of expertise (business, legal, operational, financial). This led to the joining of forces to create a unique interdisciplinary Community of Practice with Sustainable Finance Lab, Circle Economy, Fairphone, PGGM, ING, ABN AMRO, NBA, Allen & Overy, and Circularise. Made possible by Nederland Circulair! who invested in the Community of practice, and all other CoP-partner organisations that co-invested in the learning experience. Connecting partners who are motivated to share their expertise and collaborate is key for overcoming the barriers and taking the next steps in creating Product-as-a-Service business models. The business model was explored in much more detail than has been done before by zooming in on questions such as: What exactly should the value proposition be? How can this be captured in a contract? What are the financial implications thereof? And what financing structure suits the Circular Fairphone Service best? These questions could not be answered in isolation; for instance, framing the value proposition, setting the contract length and monthly fee remained unclear until the very end of the project. Only after extensive multidisciplinary discussions â&#x20AC;&#x201C; thanks to the expertise of the CoP partners â&#x20AC;&#x201C; the answers emerged and the pieces of the puzzle fell in place. Hence, it is important to stress an open learning process to connect

the dots on the content side and enable crossdisciplinary synergies. Fairphone: a durable and modular product In business models that provide a service rather than a product, service providers retain ownership of products, and revenues are based on the performance of the product. This incentivises the offering of high-quality, durable products that can be easily upgraded, repaired, and taken back at the end of their useful life. The Fairphone, well-known for its ethically sourced materials and designed for modularity, optimises value creation based on the lifespan of its individual modules rather than the entire device. A substantial cost saving can be made because individual modules can be taken out for maintenance, repairs and recycling. This way, the lifetime of modules can be extended by leaving functioning modules in while only replacing the module that needs maintenance or repair. The modular design of the Fairphone proved very well suited to implement the Circular Fairphone Service proposition. In order to fully unlock circular value, however, new operational processes must be implemented. State-of-the-art hardware management is critical to optimise the use of individual modules, ensure high quality services and maximise circular value. Additionally, the access to and use of user data is critical, for example to enable Fairphone to conduct preventive maintenance, yet has to be carefully balanced with privacy considerations. A robust but flexible circular service contract Product-as-a-Service radically transforms customer relationships from a one-off

renewablematter 19. 2017-2018 Guide to developing a cash flow tool for product-as-a-service

2 ESTIMATE PERIODIC FEE PER PRODUCT

Estimate asset handling costs per component*

3 SKETCH CYCLING SCENARIO(S)

PROJECT FUTURE CASH FLOWS

Chose future horizon (e.g. 5 years)

Revenue = + periodic fee per client scenario + [contract incentives] per client scenario + recycling benefits

Estimate finance & insurance costs Estimate service & operational costs per component

Chose event interval (e.g. monthly)

DEFINE FINANCING STRUCTURE

Funding needs (e.g. negative cash flow)

Should you accept your assumptions?

Costs = - [handling/repair/ logistics/replacement costs] per component scenario

Add profit margin Define repair possibilities per component Who is responsible for what costs?

RESULT Model cash flow

Define component scenario: lifetime, breakage and repair expectations

Develop corresponding contract

Define client scenario: expected growth and exits of clients

RESULT Periodic fee per product

RESULT Future scenario(s)

Should you adopt the fee?

What securities can be offered: Client portfolio (size, diversity, credit rating, etc.); asset quality (collateral); contract robustness (incentives to continue the contract) Calculate value at risk on the product

Choose finance structure (equity investment, internal finance or loan)

*A circular product is assumed to be able to be dis- and re-assembled into components or materials.

RESULT Financing structure & costs

transaction to an ongoing service engagement. Service specifications must be clearly delineated, risks need to be fairly allocated to parties best able to handle them and translated into a contractual agreement that reflects needs for flexibility and continuity. For Fairphone, it is key to offer an appropriate level of technology while taking into account circular economy considerations. The level of technology offered in the service and strategies to cover for the risk of termination of this contract were discussed in-depth. Promising to provide the latest technology could reduce circularity, on the other hand to keep engaging clients the value proposition should be attractive and up-to-date. Scoping the service in terms of â&#x20AC;&#x153;generally accepted technologyâ&#x20AC;? seemed to provide a good middle ground. This way, Fairphone has the right and responsibility

to consider both functionality and sustainability aspects. The power of numbers Developing a financial cash flow model is essential to gain insight into the effects of a Product-as-a-Service business model on financial ratios and financial statements: balance sheet, profit- and loss statement and cash flows. However, modelling financial statements on module level is difficult. The financial cash flow tool that was made for the Circular Fairphone Service helped to get out of a deadlock of businesses lacking the numbers behind their PaaS models and financiers being reluctant to invest. Modelling complex PaaS models is specifically difficult because modules can be cycled many times. This requires future expectations about returning and re-using cycles and lifetimes of modules. It also requires a sound

Policy

the remaining value at risk on the asset in the event of liquidation of a contract. For FaaS a termination fee may not be needed, since Fairphone 2 devices have a high value on second-hand and refurbished markets.

6 PROJECT PROFIT & LOSS STATEMENT

PROJECT BALANCE SHEET

Calculate depreciation scheme

Estimate bookvalue of refurbished modules

Calculate repair provision

Project bookvalue modules & depreciation

RESULT Projected profit & loss statement

Calculate debt & equity

Calculate financiale ratio’s (e.g. solvency/debt-equity ratio) RESULT Projected balance sheets

estimation of the monthly fee based on expected costs from providing the service, handling of modules, insurance, finance and other operations. The monthly fee combined with expectations on returning and re-using modules provided a basis to project cash flows, profits and the balance sheet into the future. Given the assumptions, cumulative cash flows became positive over time, and the investment need for the Circular Fairphone Service proved to be relatively limited.

Report “The circular phone,” www.circle-economy. com/the-circular-phone

From modelling the balance sheet on module level, it became clear that it is imperative to have a data management infrastructure in place to track and trace modules to be able to monitor and value them. Without this, it is impossible to activate the different modules on the balance sheet during their cycles, based on different lifetime expectations. What specific accounting regulation is needed for circular business models such as the Circular Fairphone Service are (yet) unclear and what effects “circular depreciation” has on fiscal benefits from “fast depreciation” will need to be explored. Provided the results of the cash flow projections, the solution for financing the Circular Fairphone Service lies in combining the flexibility of a current account credit with a more predictable financial relationship of lease structures, while underwriting these with key strengths, such as client quality (diverse and predictable portfolio), asset quality (good quality phone with modularity) and the cash flows (a portfolio of contracts). The potential lack of a resilient portfolio of clients in the start-up phase can be compensated with a termination fee (decreasing over time) that covers

The financial CoP partners expressed dedication to tweak existing structures to find a final structure for this pilot. The approach taken for Fairphone can easily be adapted and replicated for other businesses. The flowchart details the steps needed to develop a cash flow tool for a circular Product-as-a-Service model. Dare to envision new business models to truly transform our economic rationale This journey enabled to overcome several barriers that Product-as-a-Service poses. Insights were provided into the characteristics of a modular product, the corresponding financial effects, and the strength of a flexible yet robust Circular Service Contract. These outcomes are relevant for both the business community that seeks to continue its journey towards circular business models and financiers that want to understand the changing risks and opportunities of these business models. Although Product-as-a-Service business models are cornerstone to a changing economic rationale and very promising for a transition towards a circular economy, they may not work for all product types or market segments. Please feel invited to have a fresh look at your own business, and challenge yourself to rethinking economic incentives for circularity in your own market. Dare to envision new business models and organisational structures to truly transform our economic rationale. A blueprint of a viable business model for the Circular Fairphone Service was co-created by the Community of Practice. Following the open source ethos, all learnings in the form of a white paper, the Circular Service Contract template and a guide to developing a financial cash flow tool are provided open source and can be downloaded online. Fairphone is currently exploring opportunities to start a pilot project to offer the world’s first Circular Fairphone Service for Companies. If you are interested to participate in a pilot as an expert or to transform your own business into a circular one, please contact Circle Economy. If you are interested in providing your employees with the most circular phone in the world, please contact Fairphone. By publishing the learnings and results of our journey we aim to provide the necessary tools and inspiration to create sound Productas-a-Service business models. The knowledge we gained is for sharing, modifying and experimenting. Enjoy!

renewablematter 19. 2017-2018

Focus on Finance

in partnership with

A Winning

AGREEMENT BBI JU is a public-private partnership between the EU and the Bio-Based Industries Consortium. It has funded as much as 65 projects in the past 3 years, playing therefore a fundamental role in enhancing the development of European bioeconomy. BBI JU supports not only research and innovation projects, but it also creates pilot and demonstrating plants that are useful to test sustainability and competitiveness. by Mario Bonaccorso

BBI JU is a public-private partnership between the EU and the Bio-Based Industries Consortium. It has funded as much as 65 projects in the past 3 years, playing therefore a fundamental role in enhancing the development of European bioeconomy. BBI JU supports not only research and innovation projects, but it also creates pilot and demonstrating plants that are useful to test sustainability and competitiveness.

Bio-Based Industries, www.bbi-europe.eu

Horizon 2020, Bio-Based Industries Joint Undertaking, European Investment Bank, European Structural Funds, European Fund for Strategic Investments (EFSI), private banks and the so called Junker investment plan. There’s certainly no lack of ways of funding bioeconomy in Europe. If in the past there were not many ad-hoc dedicated funds, nowadays whoever is involved in bioeconomy innovation can choose from different sources. The other side of the coin is that the panorama is maybe too fragmented and the access process to funds is often long and complex. “Innovation needs funds, without which any vision becomes equivalent to a hallucination,” is a famous joke by some NASA scientists, useful to understand how the access to funds is crucial to any of the actors that are starting new plants, developing new bioproducts, building new production chains. From universities to small businesses up to big companies, everybody is looking for effective and reliable funds to bring their projects forward.

Horizon 2020, ec.europa. eu/programmes/ horizon2020

First2Run, www.first2run.eu

Bio-Based Industries Joint Undertaking (BBI JU) is a legal entity funded in 2014 to manage the €3.7 billion public-private partnership on biobased industries, that in these years has played a fundamental role in funding important bioeconomy projects.

The European Commission and the multisector industrial group gathered under the Bio-Based Industry Consortium have joint forces to support an emerging sector and develop bioeconomy through yearly Calls for new proposals, pursuing research and innovation projects and including experimental projects and “pilot” production plants. This represents a relatively new tool at the European level, that is now regarded as a model by sector leader countries like Canada. As a whole from 2014 to 2016 BBI JU funded 65 projects, with 729 recipients in total (including multiple shareholdings). The countries with the highest number of financed projects in 2016 were Spain, Italy, France, Germany and Belgium. Till not long ago most of research and development funded by Europe was located in other parts of the world. A real major disappointment for our old continent was the Bio-Amber case, when this French-American joint-venture decided to locate its commercial plant in Sarnia, Ontario. European Framework programs, and especially the new program Horizon 2020 (2014-2020), have somehow tried to reverse this trend by focusing on innovation. Their plan is to avoid limiting projects to the research or the pilot phase, developing instead demonstrative projects and creating small scale production plants that will then be used to test sustainability and competitiveness. Even the so called “flag projects,” that get specific funds for pilot production plants in Europe, are now integrated. This kind of funds are available for the innovative aspects of these plants, and not for the whole infrastructure. The shared objective at the European level consists of getting rid of the risks in an emerging sector and create the structural

Icon: AlfredoCreates.com, Anniken & Andreas/the Noun Project

Policy conditions to use available renewable resources, technologies and industrial know-how to their own advantage.

Bioskoh, bioskoh.eu

Grace, www.bbi-europe. eu/projects/grace

Urbiofin, www.urbiofin.eu

Embraced, www.embraced.eu

Biomotive, biomotive.info

One of the best known “flag projects” is the First2Run in Sardinia, coordinated by Novamont and funded with €17 millions, whose objective is showing the technical, economic and environmental sustainability of a highly innovative biorefinery with an integrated production chain. This plant uses low input oleaginous crops (for example thistle) cultivated on dry or marginal land to extract vegetal oils that through chemical processes are converted in biomonomers (mainly pelargonic and azelaic acid) and in esters, to create bioproducts like biolubricants, cosmetics, plasticizers and bioplastic. The co-products of this process are upgraded for the production of animal feed and other value-added chemicals and energy in order to improve the sustainability of the value chain. Standardization, certification and dissemination are an integral part of the project, as well as the study of the social impacts of products coming from renewable sources. The project supports the developments of plants that are the first of their kind anywhere in the world, that have already been built and have received more than €300 million grants from private partners as initial investment. Bioskoh is a pilot project coordinated by Biochemtex, and financed with €21 million. It has the ambition to initiate the first of a series of new biorefineries for the production of second generation bioethanol, using lignocellulosic biomass. The project will make use of a decommissioned petrochemical site in Slovakia to create an energy self-sufficient biorefinery in order to demonstrate that second generation bioethanol can be produced at a lower and more convenient cost, with good potential for further reducing costs in the current market conditions. Talking about demo projects, one of the last projects financed by Bio-Based Industries Joint Undertaking is GRACE, coordinated by Hohenheim University (Germany). This project, whose name is an acronym for “GRowing Advanced industrial Crops on marginal lands for biorEfineries,” aims at exploring the potential of non-food industrial crops (miscanthus and hemp), as a biomass source for bioeconomy. Both miscanthus and hemp are relatively underexploited, but they offer an interesting business opportunity for farmers and industry. If they are cultivated on marginal, contaminated, unused or abandoned land, the impact on food safety can be minimised, and the potential of introducing pollutants in the food chain can be prevented. Some of the partners of project GRACE are big companies like Novamont and Indena, the British Terravesta and the green chemistry Italian Cluster Spring.

Other new demo projects that started on last 1st of June are Urbiofin, Embraced e Biomotive. The first is coordinated by the business company Industrias Mecanicas Alcudia, and it aims at developing an integrated innovative biorefinery for processing urban solid waste (MSW) into new bioproducts. BBI JU website states that “Each person in Europe generates an average of 500 kilograms of solid waste a year. Almost 50% of this is organic waste consisting of carbohydrates, proteins and lipids, that can be used as raw materials to create precious products. Moreover, its conversion will reduce polluting effects and will contribute to a real transition to the circular economy.” Project Urbofin aims at demonstrating the tecno-economic profitability of converting the organic fraction of solid waste on a semi-industrial scale. It will allow developing chemical constituents, biopolymers or additives through urban biorefining. The second project, Embraced, is coordinated by the Italian company Fater. It proposes the launch of a multi-function biorefinery to recycle the organic content of absorbent hygiene products. These are nappies, adult incontinence products, feminine hygiene products and wet wipes, that are now considered a non-recyclable fraction of solid urban waste, and every year in Europe 8.5 million tonnes of it are incinerated or landfilled. In an important industrial environment, Embraced will represent a model of integrated and replicable biorefinery, economically and ecologically sustainable, based on the upgrading of the cellulosic fraction of waste in order to produce chemical intermediates, polymers and fertilizers of organic origin. This is therefore a real circular bioeconomy project. The third project, Biomotive, is coordinated by the Polish Selena Labs Spolka Z Ograniczona Odpowiedzialnoscia, and aims at developing biobased advanced fibres and polyurethane for the car industry. In a stage when car manufacturers are under increasing pressure to reduce fuel consumption, car weight has become very relevant. It has been estimated than a 10% reduction of a vehicle’s weight brings to a 5-7% reduction in fuel consumption. Therefore producers’ investments for the development of new materials are on the increase: 20% of a car is now made of plastic, and this percentage is bound to increase thanks to the sound and vibrations absorption characteristic of polymers. Project Biomotive financed by BBI JU aims at demonstrating the production of innovative and advanced biobased materials (thermoplastic polyurethanes, 2k thermosetting polyurethane foams and regenerated natural fibres) in their own industrial environments, specifically for the automotive industry.

renewablematter 19. 2017-2018

Focus on Finance

It all Started in HELSINKI

A few months ago, 1,500 people coming from 100 different countries met in Finland for the first World Circular Economy Forum. Here’s the story of what happened, and what will be the next step. by Emanuele Bompan, from Helsinki

World Circular Economy Forum WCEF, www.sitra.fi/en/projects/ world-circular-economyforum-2017

It might well have been the largest circular economy gathering to this day. We are talking about the first ever World Circular Economy Forum (WCEF), that took place in Helsinki, Finland, on 5-7 June 2017. More than 1,600 key people from almost 100 countries shared ideas and best practices in the Finnish capital, trying to find the world’s best circular economy solutions and gather together the most recognized experts and

decision makers in the field. Renewable Matter was there reporting. Why this tiny, smart, pro-European country? After Holland, Scotland and Italy, Finland has decided to go circular and be at the forefront of rethinking its economy. “A circular economy could bring estimated net savings of €600bn (£523bn) to European companies. In Finland alone circular solutions could provide €2bn-3bn (£1.7bn-2.6bn)

Policy

Resq-club, www.resq-club.com/en

added value annually” explains the Minister of Environment, Kimmo Tiilikainen, during a press-briefing. “To seize these benefits and more, two years ago the Finnish government set a strategic target to become a forerunner in the circular economy” continues Tiilikainen. “We involved the highest possible level in our government, since this could be key to promote circular economy and make a visible change in the Finnish economy. Then last year we adopted a national circular economy road-map. The process was very interesting, because there were a couple of ministers took up a moderating role and more than a thousand people were involved in that process, representing businesses, NGOs, municipalities and so on.” The outcome is a solid plan with an ambitious vision, concrete projects and clear responsibilities. That roadmap included the realization of a world forum on circular economy, open to the largest number of stakeholders from all over the planet. “This was something that was really needed: to gather people to make a jump forward in the circular economy,” says Ernesto Hartikainen, a manager of the sovereign Finnish fund, Sitra, responsible for organizing WCEF. The 2017 circular economy event was organized by Sitra, the Finnish Innovation Fund, with the support of the Nordic Council of Ministers, the Ellen MacArthur Foundation, and the Finnish Ministries of Environment, Foreign Affairs, and Economic Affairs and Employment. Altogether there was 12 organizations partnering with Sitra. Hailed by the media, the event was a defining moment in the long road to develop a circular economy. Around the venue, during WCEF 2017, one could meet an entrepreneur from Vietnam, a start-upper from the US, a city

manager from Amsterdam and an enterprise from Russia. Key players of the sustainability world, like the environmentalist Ashok Khosla or the ex-director of UNEP Achim Steiner, were available for chat and meeting in the Finland Hall in Helsinki, the Expo & Convention Expo Centre in Helsinki. A whirlwind of conferences and showcases highlighted the dynamic world of the circular economy. WCEF 2017 featured 17 plenary and parallel sessions showcasing circular economy solutions for business, cities and finance. A wide variety of topics were addressed, including: integrating the circular economy into the 2030 Agenda; innovation challenges for the circular economy; circular cities; economic research on the circular economy; and financing the circular economy. All 17 sessions were live streamed and recordings can be seen at www.wcef2017.com. Among the keynote speakers, Janez Potočnik, co-chair of the UN Environment International Resources Panel, gave an overview of global use of natural resources. Noting the projected growth in world population as well as per capita consumption, he said the latter is a stronger driver of increasing natural resources use than the former. Underlining that the richest countries consume ten times more materials than the poorest, Potočnik said that developing countries cannot follow the same development trajectories as developed countries because of a lack of available natural resources. He noted significant potential for increasing resource efficiency, but felt that since markets will not achieve efficiency by themselves, public policy and political will are needed, as well as leadership and improved governance at a global scale. Noting that “financial capital is overvalued, human capital is undervalued, and natural

Humans are supposed to be intelligent and it is high time to prove it.

capital often is not valued at all,” Potočnik called for a transition to a new economic model that decouples economic growth from resource use and uses resources more responsibly. “Humans are supposed to be intelligent and it is high time to prove it,” he said. Many participants were from Tokyo. Tadahiko Ito, State Minister of Environment of Japan, was present at the event and described one of the “oddest” plans to use urban mining of materials from discarded mobile phones and electronic goods. Japan will use this material to manufacture 5,000 gold, silver and bronze medals for the 2020 Olympics, to be held in Tokyo, Japan. “Japan is one of the leading nation in the circular economy,” explained Teppo Turkki, Leading Specialist for Sitra in Japan. “They are on islands with extremely limited resources so they have been developing such solutions since the 1970s and 1980s, especially in consumer electronic. There is no one better.” He points out that the recycling industry alone employs 650,000 people and makes up 7% of Japan’s GDP. Some 80% of car parts and 98% of all metals are recycled in Japan. Renewable Matter couldn’t verify those numbers. But Japan is famous for many ideas to close the loop in many sectors. Like the Aigamo Method, a distinctly low-tech

approach to rice farming created by farmer Takao Furuno. It uses ducks and fish that eat insects so less insecticides are needed, while paddy weed provides nitrogen so less fertilizer is used. Yields in these rice fields are 20-50% higher than industrial farming methods. One of the most interesting keynote was the one of Anirban Ghosh, of Mahindra Group, elaborated on how the circular economy can add to customer value and build the brand, using case studies from India. He described the relative importance of the various components of consumer value, including functional and rational benefits. He explained that no matter how cool or sustainable a product is, if the “lower levels of the pyramid” – functionality and rationality – are neglected, a product will not sell. With over 1,600 participants to meet and network with and numerous side events, it was hard to follow all the panels. However WCEF 2017 has proven Finland’s strategy to be right. Next year’s forum is planned to be held in Japan at the end of October (which explains the high number of Japanese in Helsinki). “This has been our Finnish gift to the world,” said Matti Vanhanen, Member of the Finnish Parliament and Chair of Sitra’s Board of Directors. “Because sharing knowledge is one of the pillars of circular economy.” But before WCEF 2018, Sitra organised a seminar in Brussels titled “Beyond WCEF – Are European policymakers ready for a global circular economy?” with the aim of emphasizing the importance of EU policymakers to view the circular economy from a global perspective and not only from a European perspective. The International Resource Panel co-chair Janez Potočnik was joined by the Vice-President of the European Commission Jyrki Katainen as well as the Vice-President of the European Parliament Heidi Hautala. The discussion of European decision-makers raised issues such as: crisis management, integration of SDGs and circularity into trade agreements, promotion of circular economy in the least developed countries, long term planning. The Sitra Fund Of course WCEF 2017 was also a world stage to showcase the Finnish way to the circular economy. The core element of the circular transition in the country of Linus Torval (the inventor of Linux) is a sovereign fund, called Sitra, funded in 1967, exactly fifty years ago, with financial support of the Bank of Finland. This entity that responds directly to the parliament manage an average of 30 million euro of funds each year. “Sitra’s goal is to

Policy bring systemic change across society,” explains Ernesto Hartikainen, Sitra manager for WCEF. “This will be also achieved through a circular economy roadmap that has the goal to make Finland a global leader in the circular economy by 2025. We are involving many ministers, the public and private sector and we are expected to challenge the status quo in the country and with evidence. We are not a think tank, we are a ‘think and do tank.’” Sitra in fact works both on policy recommendations and on research and development in very concrete projects. The fund estimates that the roadmap would bring at least three billion euros in added value to the national economy while it contributes to decoupling perceived well-being and economic growth from greenhouse gas emissions and increasing natural resource consumption. If the number of ministers and politician present at WCEF was a metric of success, the circular economy will easily be a new cornerstone for the Finnish economy. “The roadmap has identified sixty different kind of projects, with cities or companies, divided in four focus areas: one is related to sustainable food system, the second is related to forestry, third is circular buildings and constructions, technology and industry’s supply chain, fourth is transport and logistic,” explains the environmental minister Kimmo Tiilikainen. To maximise the results Sitra have first worked to remove legislative and regulation bottlenecks. Then pilot projects have been implemented. The list includes companies such as Valtavalo, which sells lighting solutions as opposed to light fixtures; EkoRent, which provides a shared electric vehicle solution for housing communities and companies; and Eko-Expert, which offers a recycling method for surplus building insulation. Finnish-owned Swap.com facilitates the recycling of goods from the United States on its online consignment and thrift store, and tractor manufacturer Valtra offers factory remanufactured gearboxes as an alternative to entirely new ones. The project selection was based on four evaluation criteria: how interesting the examples are, quality of business models, the scalability of the solution and effectiveness. Some projects are done at very large scale. Such as the Kera District, in the city of Espoo, a project that will regenerate a 22 hectare former industrial park in Espoo transforming it into a residential neighbourhood based on circular economy solutions. Measures include boosting resource efficiency, creating closed loop systems and enabling local residents. Other are simpler yet effective. Like the Ravintola Loop Restaurant that does its part by picking up surplus food from supermarkets and planning the day’s menu based on available ingredients. At lunch time the place is packed. On the menu? Carrot curry, mixed meat and greens. Tasty, cheap and circular.

Asking customers if they are not worrying about the facts that are eating leftovers, they are quite amazed by the question. “I always bring my kids here, it’s educational,” says Aamy, a young designer, that is having a mix of rice and veggies. “This is a great place: food is great and you are doing the right thing.” The Restaurant is part of Resq-club. com, application for both consumers who want cheap good meals, and restaurants which want to sell food at cheap prices, that would otherwise be dumped as waste at the end of the day. The Resq-club has won the Circular Economy Award from the city of Helsinki in 2017. The Resq-club claims that more than 200,000 meals were saved from over 1,000 restaurants since January 2016, or 40,000 kilograms of food, equivalent to carbon dioxide emissions of 5 million kilolitres. Not far from Ravintola it is possible to drink a nice IPA or a Pils beer at Bryggeri, a restaurant and brewery which partnered with Gasum, a Finnish company specialized in natural gas, to generate biogas as a by-product of its beer brewing. The waste from its beer production is now reused to power its brewery, kitchen cookers and patio heaters. And the beer is astonishing! “We believe this road map can change the mindset of people. And to do so we have to focus on the design of products, services and business models. It’s not just a strategy to become more resource efficient, is really re-designing your value chain from the circular economy point of view. Many parts of the circular economy would not be possible without new technologies, especially mobile or machine learning,” continues the minister. To assess the implementation of the road map Sitra has established clear goals. By end of 2018 they have to implement 30% of the projects. By mid 2019 the whole projects should be implemented. “These milestones are very important,” explains Ernesto Hartikainen. “We are making very clear to the stakeholders that we are running this project for three years. We try to get the partners on board so that we can hand it over to them. It’s very important that everybody understands that Sitra is not there forever. We are helping them to get on board and then they have to take the responsibility. So we Sitra can address another challenge.”

This is How We Recycle Nappies In Treviso, at the Contarina centre of valorisation and recycling of materials – there is the world’s first plant able to recycle up to 10,000 tonnes of nappies per year. The all-Italian technology developed by Fater SPA – the result of almost 10 years of research and development – has now achieved industrial scale. by Rudi Bressa

It is the first technology able to 100% recycle materials making up nappies and absorbent products. A plant built from scratch in Lovadina di Spresiano (Treviso), which transforms otherwise landfilled waste into new secondary raw materials: plastic,

Contarina SPA, European excellence An entirely publicly-owned company, operational since 1989, carrying out the service of waste collection in 50 municipalities in the Treviso province, belonging to the Priula Council Catchment: it serves about 554,000 inhabitants over a surface of 1,300 square kilometres. The company reached over 85% of separate waste collection with a tariff well below national average with an aim to achieve 96.7% by 2022. Thanks to €60 million invested in raising awareness, education, research and development projects, Contarina SPA upgraded its structures, industrial composting and selection plants of recyclable waste. It is also shifting its own vehicle fleet towards a low-impact haulage system and gas, hybrid and electric engines.

cellulose and a super absorbing polymer, ready to get back into the production cycle. The system has been developed by Fater SPA, an Italian company born out of a joint venture between Procter & Gamble and Gruppo Angelini and implemented within the Contarina SPA production site, a company dealing with waste collection in the 50 municipalities belonging to the Priula Catchment, in the Treviso province. “Thanks to the partnership established with Fater, we took part in the experimentation of what is the world’s first plant for recycling used absorbent products,” stated Franco Zanata, Contarina SPA’s chairman. “From this collaboration, a new technology was born, representing a fundamental step forward in the challenge we took to recycle the non recyclable, turning what was waste into a resource.” The currently operational plant is the result of 10 years of research and development, starting from the first trial in 2008.

Case Studies Rudi Bressa is a freelance journalist and naturalist who writes about the environment, science, renewable energy and the circular economy for various national newspapers.

Info www.contarina.it/en fatergroup.com/uk

The technology is based on the use of steam and pressure to sterilize and mechanically separate nappiesâ&#x20AC;&#x2122; components, following a series of steps. After the initial prototype, in 2015 Fater developed the first pilot plant to understand the feasibility of the project on an industrial scale with the Lovadina plant that the Lovadina plant that at full capacity will be able to treat 10,000 tonnes of nappies and absorbent products per year (during the test phase the machinery processed about 1,500 kg of waste per year). According to Faterâ&#x20AC;&#x2122;s estimates, from 1 tonne of separate waste, 300 kg of dry materials can be obtained which, once treated, are transformed into 150 kg of cellulose, 75 kg of plastic and 75 kg of super absorbing polymer. In turn, these materials can find new applications: out of cellulose, new absorbing materials for pets can be manufactured, recycled paper and, in the not too distant future, packaging. Plastic, instead, can be used in various processing cycles, with a bonus: pastel colours characterizing

SCHOOL DESKS

CHILDREN PLAYGROUND

PLASTIC

Steam and pressure Used nappies collection work within the already tried and tested door-to-door method managed by Contarina SPA. Private homes as well as public structures such as hospitals, nurseries, kindergartens and elderly homes can apply for a dedicated container. It is a catchment area made up of 220,000 users, equalling 500,000 people. Waste thus collected reaches the Contarina SPA-managed plant where it is processed to be reused. Here, the main phase is represented by waste sanitisation, via steam and mechanical movement within an autoclave. This is the core process, a phase lasting about 45 minutes, during which the organic component of nappies is eliminated. Then, during three additional distinct steps, secondary raw materials are further separated: thanks to infrared processing, polymers are separated from cellulose and then divided into plastic and absorbing polymers. The whole procedure takes place without chemical processes or combustion. According to data offered within the RECALL European project, every year, in Italy, over 900,000 tonnes of nappies and absorbent products are landfilled or incinerated, 8.5 million in Europe and up to 30 million tonnes worldwide. Millions of tonnes of secondary raw materials that hopefully in the near future will be recovered, in keeping with the circular economy.

CLOTHESPINS

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GADGETS

nappies; as for the polymer, it can be reused to make new absorbent products. In environmental terms, the plant will avoid landfilling 13 cubic metres of waste, thus reducing 3,000 tonnes of CO2 emissions per year.

DETERGENT BOTTLE CAPS

SPECIALTY PAPERS

GARDENING

SUPER ABSORBENT POLYMER

ANTI-FLOODING BARRIERS

BIOFUELS

CELLULOSE VISCOSE

ANTI-FLOODING AGENTS

CAT LITTER

SUBSTRATE FOR GARDENING

renewablematter 19. 2017-2018 Interview

by R. B.

“A biorefinery will be our next step forward” Marcello Somma, AHP-Recycling BU’s Associate Director

Fater AHP-Recycling BU’s Associate Director, Marcello Somma is the inventor of the process; a chemical engineer, he worked in Research & Development in Denmark and then for Procter & Gamble in Germany and Switzerland. In 2009 he went back to Italy to follow the recycling project promoted by the company.

Does a plant of this kind make sense in the case of advanced separate waste collection? Can such technology provide the required impetus to further improve collection percentages? “Absolutely. The stronger separate waste collection is, the greater significance for the nappy recycling plants. Where percentages of separate waste collection are higher than 70-80%, absorbent products (nappies and incontinence pads) represent up to 20-25% of mixed waste residue that is then disposed of. In such contexts, precisely to improve strong separate waste collection, frequencies of waste collection are reduced to no less than once a week and at the moment there are many instances with lower frequencies, up to only once a month. Many municipalities (over 700 in Italy, for a whole population of 11 million inhabitants), even if waste cannot be recycled, are already introducing dedicated separate waste collection facilities for this specific type of waste in order to offer citizens a service for something they would struggle to keep in the home for long periods. The introduction of a recycling plant for nappies in such contexts promotes not only an improvement of separate waste collection percentages, but first and foremost better recycling rates and valorisation of precious materials contained in post-consumer nappies and incontinence pads.” With such a project, is it possible to accommodate citizens’ needs and reduce tariffs?

“Thanks to the recovery of high-quality secondary raw materials, recycling post-consumer nappies and incontinence pads can lead to a reduction of the treatment cost up to 35% compared to the cost of landfilling or incinerating waste residue. This translates into a saving for municipalities on the overall cost of managing urban waste and therefore potential reduction of waste tariffs for citizens. Moreover, nappies and incontinence pad separate waste collection takes away volume and total weight from the residual fractions of single families on which citizens pay tax to municipalities with a regular tariff system.” A circular economy implies using recovered materials. Is there already a market? Are they economically sustainable? “Of course. Please note that from a tonne of recycled used nappies, almost 75 kg of plastics, over 150 kg of cellulosic-organic matter and 75 kg of super absorbing polymer are obtained. Of the three materials recovered in the recycling process, two (cellulose and plastic) are sent to already existing markets and can be used in several applications with already many customers. As for the super absorbing polymer, even though currently there is no post-consumer market, we pinpointed some potential industrial applications that currently use virgin polymers. In any event, our secondary raw materials are generally of a better quality compared to the equivalent recycled materials. That justifies a valorisation in the making of higher added value products and strengthens economic sustainability of the project as a whole.” What are the developments of such technology? “The recycling technology of nappies and incontinence pads has already reached industrial scale and our research activities are now focused on pinpointing high-added value applications for secondary raw materials obtained from the recycling process. Particular attention is being paid to the valorisation of the cellulosic-organic fraction, by setting up biorefining processes for its transformation into biopolymers and fertilizers. Here, we were supported by the European Commission and BBI (Bio-Based Industries public-private partnership) which funded an important innovation project called EMBRACED (H2020-BBI-JTI-2016 – Grant Agreement n. 745746), which we lead, and that is developing this research activity with the creation of a first demonstration biorefinery plant in Amsterdam.”

THINKING with Our

HANDS by Barbara Pollini and Francesca Maccagnan

A few Italian and European universities teach their students to experiment with innovative materials in their projects and to assess the impact these will have on their whole life cycle. A new design that often starts with the material and ends with the object.

Barbara Pollini is an ecodesigner and professor at NABA University in Milan. She teaches “Materials and New Technologies for Project Innovation.” Co-founder in 2010 of Nuup Sustainable Creativity network.

Terms such as “biobased, sustainable, circular materials” are at long last starting to be part of the layman’s vocabulary. Indeed, characterizing an object by its material is a leverage attracting more and more consumers. After all, dealing with materials making up objects we use on a daily basis and being able to describe them in the most appropriate way is key both as a business opportunity and to manage raw materials in a more sustainable manner. Materials determine durability, likeability and performance of products; once their use is over, the matter they are made of is the only thing left behind. The choice and knowledge of the material are essential to establish an object’s environmental impact already in the design phase, which is why more and more designers are attracted to this issue.

Francesca Maccagnan is an ecodesigner, co-founder in 2010 of Nuup Sustainable Creativity network. She currently deals with sustainable product designing.

Material Tinkering: a first approach in University laboratories

Top image: DIY bioplastics

In several Italian and European universities of Product Design the experimental approach is becoming an increasingly popular methodology in the teaching of materials. While in the past teaching was mainly focused on the knowledge of existing materials, today a few professors started to deal with the theme with an experiential approach, guiding

students in the creation of a new material through a method leading to “get one’s hands dirty.” Students, with a scientific and technical approach, are encouraged to ponder over the environmental consequences of their choices during the design phase, over sensoriality and the emotional meaning some objects may take up with various materials. Carlo Santulli, professor of Science and Technology of Materials at the School of Architecture and Design at UNICAM University in Camerino, sums up in his courses two ways with which students related to the theme of materials: in the course “Performance and conforming characteristics of materials” students are guided in the selection of the material for the production of a design product, while in the course “Experimentation of Innovative Materials for Design,” students are spurred to explore matter in search of new viable solutions. The latter is characterized by a workshop approach focused on the creation of bioplastics and other materials through the use of waste materials (possibly locally sourced) and recognizable by students thanks to their working or personal experience. The enthusiasm and familiarity with the material help students build its “personality,” by conceiving a path and tests enabling them to obtain expressive and technical characteristics and eventually perhaps product application. “In order to include them in

renewablematter 19. 2017-2018 Right: RC+L, material obtained using coffee dregs and made by students Matteo Brasili, Elisa Castelletta, Giovanni Dipilato, Gaia Ravera, Martina Sacco, Dario Javier Sosio during the course “Materials and new technologies for design innovation” at NABA

Top: Bacterial cellulose

Right: Nithikul Nimkulrat, The black&white striped armchair, 2014. Photo credit: Nithikul Nimkulrat (www.inicreation.com)

a credible project narrative – states Santulli – I elicit help from other teachers and professional designers who, thanks to their experience, can better envisage possible use destinations, thus avoiding easy solutions and enhancing aesthetic qualities or used organic materials from the beginning.” In addition, connected to the creation of DIY materials, the “Designing Materials Experiences” course led by Valentina Rognoli, Stefano Parisi and Camilo Ayala Garcia at the Milan Polytechnic, Design School, aims at developing a matter concept, a material self-produced through a low-tech approach. Students carry out Material Tinkering,1 thinking through the senses, building a thorough know-how ranging from technical-physical knowledge of the material to a sensoryexpressive and experiential dimension.2 The method also includes studies on users and the ability to envisage application scenarios. According to Valentina Rognoli, a change of paradigm is taking place whereby designers self-produce proposals “already incorporating users’ desires and needs; often these are innovative from the point of view of properties, sustainability, resources and processes” and can in turn inspire the development of further materials. At NABA, the New Academy of Fine Arts

in Milan, the course “Materials and New Technologies for the Innovation of Projects,” follows the same multi-cultural context of the Milan Polytechnic. Students are encouraged to research new materials starting from organic substances, preferably discarded ones or from self-generating substances such as mushrooms, algae or bacteria. The course focuses from the very start on an approach of environmental sustainability and reduction of impacts and identifies, in the very concept of sustainability, a key factor for innovation. At the end of the course, students must give a final presentation during which professionals linked to the world of materials and design are invited. Students present and discuss their achievements: an exchange enriching everyone that goes beyond individual education. Besides six-month courses, a few universities offer training solutions highly specialized on the theme of materials. “Design through New Materials” is a case in point, led by Elisava Barcelona School of Design and Engineering. According to the course director Laura Clèries “it is important to be able to think through manual skills. Besides being a creative resource, the attention towards materials take up a protagonist role in the design process; in the case of our Master’s, a scientific and

1. Parisi S., V. Rognoli, M. Sonneveld, “Material Tinkering. An inspirational approach for experiential learning and envisioning in product design education,” 2017. 2. Rognoli V., “A Broad Survey on Expressive-Sensorial Characterization of Materials for Design Education,” METU Journal of the Faculty of Architecture 27(2), 2010.

Case Studies

Right: StoneCycling. Photo credit: Dim Balsem (www.stonecycling.com)

creative approach is linked to a multidisciplinary, social, anthropological, technological and aesthetic approach.” The programme supports practical workshops, visits to industries and important innovation centres of materials. The master’s deals carefully with issues linked to intellectual property and marketing, a key theme when marketing a product, or to recognize the potential of new business models associated with materials. From prototype products to mass production The students’ enthusiasm in experimenting with DIY materials deserves more than one explanation: deep-seated historical reasons represented by changes that people brought to their territories and times and more recent cultures such as the maker movement and the democratization of scientific knowledge have an influence. Even though today we are surrounded by mainly industrial objects, the pleasure of the artisan know-how still answers, in the oldest part of our brains, the need of improving our status, highlighting an aspect of emotional design, in the designers in the first place. For material tinkering activities, hands, tactility are key tools together with other senses. Thai artist Nithikul Nimkulrat, teacher at

the Estonian Academy of Art, Faculty of Design (Tallin) confirms this by saying that craftsmanship is not just a way to produce things, but also a means to think through hands manipulating material.3 This is the fundamental concept underpinning experimentation of DIY materials. But it is also necessary to apply both a scientific methodology for the quality of materials to achieve and applications, such as the Material Driven Design.4 In such designing project materials are not chosen at the end, but it coincides with the designing input, reversing the question from “with which material can I achieve my project?” to “what project can I achieve given the characteristics of the material I obtained?” This is mainly the new viewpoint that can improve the quality of matching between material and project, leading to innovative solutions. A big push to the trends of DIY projects was also given by the open source movement, where a complex science such as that of materials, needing expensive laboratories and machinery, reached makers’ garages opening up to the use of low tech resources and technologies, enabling the emergence of unexpected but equally effective solutions which often stem from unpreparedness of those experimenting and the ensuing unconventional perspective.

3. Nimkulrat N., “Handson Intellect: Integrating craft practice into design research,” International Journal of Design, 6 (3), 1-14, 2012. 4. Material Driven Design (MDD) supports the design of meaningful material applications with the material as a point of departure. Designers qualify the material not only for what it is, but also for what it does, what it expresses to us, what it elicits from us, and what it makes us do. In such approach designers are called upon to assess, besides technical characteristics, also expressive and emotional aspects of materials in order to gain a deeper understanding of it. Karana E., B. Barati, V. Rognoli, A. Zeeuw van der Laan, Material Driven Design (MDD): A Method to Design for Material Experiences.

renewablematter 19. 2017-2018

Info www.nuup.it

Bottom: Tom van Soest and Ward Massa of StoneCycling. Photo credit: Dim Balsem (www.stonecycling.com)

After all, in this context, as well as in the scientific discipline, mistakes are not seen in their negative aspect, but rather as a knowledge factor within an ever-changing knowledge process. Regardless of the fact that students or designers may experiment, the outcomes of research will produce two possible results: the former – mainly aimed at the research process, coincides with the unique piece, the prototype object that intends demonstrating the material’s potential through the first prototypes and samples, the result of an art that very few alchemists know, but whose production process is already deducible. Then, if the obtained results are promising, a new scenario, that of industrial reproducibility, can open up, where mass production is standardized. Some experimentations on material go beyond the pleasure of DIY and have characteristics of innovation and sustainability for which it is worth standardizing production. This is what happened with Tom va Soest with his dissertation project, presented to the Design Academy in Eindhoven in 2011 which focused on a matter experimentation aimed at upcycling construction materials. His objective was the recovery of materials in demolitions: once in possession of the scrap materials he crushed and processed them for two years in a garage, obtaining new and better bricks, while collaborating with a few companies in the sector. In 2013, Tom van Soest together with Ward Massa founded a start-up, naming it after the project: StoneCycling. Today, the company offers several brick collections “Waste

Based Bricks” each one characterized by unique hues and textures thanks to the initial material mixes. Then in 2016, the first building constructed with such bricks was erected. But when we ask Ward Massa if, now that they created a company, research is still the main part of their activity, he replies: “Of course, we are a small organization, which compels us to think about future materials: we can exist only if we continue to innovate.” The StoneCycling is not an isolated example, because the DIY material’s trend is growing and present designers with a new opportunity: designing the very material. Since considerable innovative and sustainable research is being carried out in this direction, it seems correct to mention them in schools and, why not, to adopt material research as a teaching method for a better emotional involvement of students in the choice of materials and in understanding their potential. This topic is becoming particularly important when we think that the choice of material needs, with a view to designing for the circular economy, an extra oomph, since often the pre-production phase (i.e. extraction and processing of raw materials) and that of processing (i.e. manufacturing of products) generate most environmental impact mainly for those products, furniture for instance, that do not need to use resources for their functioning. Carlo Proserpio confirms this. He works in the laboratory of Design for the Environmental sustainability of the Department of Design of the Milan Polytechnic, an expert of Life Cycle Assessment and Life Cycle Design, who highlights how all choices made during the design phase are fundamental for the emission that the product will generate during the whole of its life cycle and how the selection of materials is one such choice albeit not the only one. In particular, Proserpio recommends choosing materials not in relative terms (by pinpointing in a range of materials the most sustainable one), but considering all the characteristics that the material can bestow on the product’s whole life cycle, consulting an LCA on the product and from there defining Life Cycle Design priority strategies to adopt. The experiential aspect linked to conceiving and manipulating new materials has now more opportunities: analysis software of life cycles, ecodesign strategies, involvement of more people in the experimentation and information exchange are effective teaching tools to create low-impact environmental impacts, while guaranteeing a sustainable use of resources.

Faucet: Monica Stromann/the Noun Project

Case Studies

Blackwater,

BLACK GOLD by Luca D’Ammando

Fertilizers, biopolymers, electricity and biomethane can be extracted from wastewater. This is what Gruppo CAP is carrying out with #waterevolution project. “Nothing grows out of diamonds. Out of dung, flowers do grow,” used to sing Fabrizio De André in 1967. Asking the poet’s for forgiveness, fifty years on we can go a step further and state that out of sludge, fuel can grow. We are talking about biomethane obtained from wastewater, i.e. the so-called sewage sludge, black water’s waste products. This is Biometanow’s objective, the project of circular economy and recovery of resources developed by Gruppo CAP, the public company managing the integrated water service in 134 municipalities of the Milan metropolitan area and an additional 64 in the Monza, Brianza and Pavia provinces, totalling 6,483 kilometres of water network, 782 wells and 294 water treatment

plants. Overall, every year, the structure provides about 200 million cubic metres of water to over 2 million people. Before going into the details of such experimentation, it is good to take a step back to better understand the #waterevolution of Gruppo CAP, an innovative framework including several projects and development activities of the processes within a circular economy. In particular, with regard to water treatment, the Milan-based company is committed to developing a wide and complex recovery policy of nutrients that, through synergies with the separate waste collection cycle, will enable the recovery of resources and materials from sludge, organic matter and in general from the water

renewablematter 19. 2017-2018

Luca D’Ammando, a journalist, collaborated with the daily Il Foglio and now with Metro. He also wrote for Vanity Fair and Sette.

cycle, preparing itself to transform the main water treatment plants into as many biorefineries which could produce not only biomethane, but also fertilizers, electricity, biopolymers and nutrients, besides, of course, treated water. Indeed, re-using wastewater can contribute to meeting several water needs both in environmental terms and in some production sectors, agriculture or horticulture, to irrigate orchards and pastures and for water

crops. But also for industrial uses, such as concrete production and dust control. Despite some red tape slowdown, Gruppo CAP is already prepared to experiment the possibility to reuse waters deriving from the treatment of wastewater in the Assago plant, thanks to which it could, for instance, heat or cool Assago’s Mediolanum Forum (450,000 cubic metres of volume, a built area of over 40,000 square metres, a central arena with a capacity to accommodate up to 12,700 viewers). Or it could provide mechanical sweepers cleaning up city streets (8,400 litres a week), irrigate parks or gardens or supply car washes with over 13,000 cubic metres of water a year. But the widest and most advanced front is the sewage sludge: the waste par excellence containing many nutrients, with enormous potential for energy, biogas and biofuel production. Gruppo CAP, in its four treatment plants (Robecco sul Naviglio, Peschiera Borromeo, Bresso-Niguarda and Sesto San Giovanni) already produces electricity through cogeneration of biogas obtained from anaerobic digestion processes. In two other structures (Pero and Truccazzano) it is carrying out the necessary measures to activate production. While in the Bresso-Niguarda plant it also recovers heat from treated water to heat offices and other work premises linked to the structure. Setting aside the out-dated logic of waste and focussing on the valorisation of waste characteristics, high-quality sludge treatment produces fertilizers both for agriculture and flower and plant farming. In the two plants of Cassano d’Adda and Settala, Gruppo CAP has already completed the experimentation activity achieving industrial scale of the process in Peschiera Borromeo started in August 2017 with a yearly production estimated at around 12,000 tonnes of fertilizers per year. Since January 2017, the production of fertilizers started in Rozzano too: about 2,000 tonnes of mixed composted soil improver a year. While in the Sesto San Giovanni plant fermentation of treatment sludge for the production of volatile fatty acids is underway. Initially, they will be used to replace chemical reagents used in the treatment process, but on which – at a later stage – new trials will be carried out aimed at the production of bioplastics, in collaboration with the Smart Plant project, funded by the European Community within the Horizon 2020 financial plan. But the most interesting initiative is undoubtedly that of the Bresso-Niguarda treatment plant, where the first filling

Case Studies Microalgae and Treatment Plant It is through minor projects, the small pieces of a mosaic, that a bigger project is achieved leading to sustainability and efficiency. This is clearly proven by the experiment of introducing microalgae into the treatment process in the Bresso-Niguarda treatment plant managed by Gruppo CAP. Objective: To improve the plant’s performance both from an environmental and energy point of view in line with the circular economy. Thanks to a €300,000 loan by Fondazione Cariplo and the collaboration of Milano-Bicocca University and the Polytechnic of Milan, a pilot plant for the cultivation of microalgae was started, it will remain operational for the next two year to test the system. Indeed, microalgae can improve the quality of sewage naturally reducing the content of micropollutants. Moreover, they can multiply just thanks to the nutrients (nitrogen and phosphorous) contained in wastewater thus reducing their concentration. In addition, their metabolism requires CO2 that can be obtained from exhaust emissions produced by the very plant. And finally, algae in excess can be used in the anaerobic biodigester, thus increasing the production of biogas and biomethane.

Info www.gruppocap.it/en

#waterevolution, www.gruppocap.it/ilgruppo/waterevolution/ il-progetto

station with methane obtained from sewage was created. Thus, the treatment plant of Milan’s metropolitan area has turned into a biorefinery and filling station. This project was made possible by the collaboration of actors with both the technical and scientific expertise: Gruppo FCA, the CNR-LIA Institute and the engineering company Ecospray. The Bresso-Niguarda treatment plant collects house, industrial sewage and rain from the municipalities of Paderno Dugnano, Cormano, Cusano Milanino and Cinisello Balsamo, an area with 300,000 inhabitants. The normal treatment process causes – inside digesters – the formation of biogas containing about 65% methane, while the second main component is carbon dioxide. Since natural fossil gas contains normally between 85 to 98% methane, biogas can achieve similar quality only after undergoing upgrading. This process basically consists of three steps: biogas cleaning to remove impurities, followed by upgrading to remove CO2. And finally post-treatments to remove from off gas methane so that it is not

released into the environment. It is in this transformation process that zeolite filtration technology developed by Ecospray comes into play. Once processed in this way, methane reaches nearly 99% purity, and after compression it is ready to be used in cars. At full capacity, the Bresso plant alone will be able to produce over 340,000 kg of biomethane, enough to power 416 vehicles each driving 20,000 km. Last November, at EcoMondo, one of the leading novelties was Fiat Panda Natural Power #BiometaNow, powered with biomethane produced by the Bresso-Niguarda plant. Tests carried out on the first 10,000 km run by the vehicle showed a 97% emission reduction compared to the same petrolpowered model. Unfortunately, the recurring problem in this field, as in any application of the circular economy, is the fact that laws lag behind and do not offer clear and determined support. A symptom of the lack of a wideranging vision. The positive impact that the nationwide adoption of this process in treatment plants would have on the environment is very clear. Gruppo CAP’s long term objective is to create about 50 biorefineries in Lombardy able to transform sewage into fuel thus supplying biomethane to a network of about 1,000 filling stations scattered all over Italy. A virtuous idea combining economics and ethics, as highlighted by Alessandro Russo, Chairman and CEO of Gruppo CAP. “Every year, we process about 70,000 tonnes of sewage sludge whose disposal costs currently amount to €100 per tonne. This is a rather hefty charge that is added to your bill. This is why we decided to invest in circular economy projects aiming to create value from what is currently waste.”

SEEK and you Shall Find

A project by Assolombarda and GEO-IEFE Bocconi showing how the circular economy can be a competitive resource for businesses. by Irene Bruschi and Fabio Iraldo

1. The project document with a full-length description of all case studies will be available on the websites of GEO (www.geo.unibocconi.it) and Assolombarda (www.assolombarda.it/ servizi/ambiente).

The circular economy concept is becoming increasingly widespread, but it is not easy to apply to the operational and everyday run of businesses. Indeed, by definition, the circular economy requires careful redesigning of a product life cycle. Its application has to overcome great barriers, especially in smaller companies due, on the one hand to partial awareness and knowledge of all different opportunities of saving, reusing, recovering and recycling of resources and materials; on the other, due to the difficulties in identifying and involving in this chain partners able to support the company in actions aimed at “closing” the loops, thus optimizing the use of resources while minimizing waste. In this framework, the European Commission has intensified its commitment in this field, in particular with COM (2015) 614/2 allocating huge financial resources to this topic: European funds to support the necessary investments promoting a turnabout from a linear to a circular model. This framework has offered Assolombarda the great opportunity, thanks to the technical support of GEO-IEFE Bocconi, to start a project to help partner companies acquiring awareness of the different possibilities offered by the circular economy. This is how the CERCA (Circular Economy – Una Risorsa Competitiva per le Aziende) project was created, with the aim of turning Circular Economy into a Competitive Resource for Companies (the meaning of acronym “CERCA” in Italian, editor’s note), ready to get involved and reconsider their processes and activities with a new critical approach. The project has a threefold objective: helping companies identify opportunities through a check-up process and the ensuing definition of action plans and operational solutions at company level and within a specific value chain; promoting best practices; identifying barriers and obstacles to support their policies. This has meant forefront commitment of companies that have identified trial projects as well as

opportunities and barriers due both to a specific case, to the sector and sometimes to the economic system in general. Business case studies, together with a more academic analysis of literature, have been explored adopting an approach devoted to identifying and promoting certain business models, namely those deemed more efficient in adopting and managing circular economy strategies at company level. Following this logic, specific business models applying the circular economy to the operational run of companies were identified, sharing one or more common points with companies taking part in the CERCA project and presented below.1 The Main Business Models Amongst those characterizing many companies’ experience taking part in the CERCA project, four main business models emerge: dematerialization, remanufacturing, upcycling and durability, representing the different facets of implementing the circular economy at practical level (figure 1). All these strategies – starting concept reassessment and product redesigning through all stages – explore innovative ways of managing the life cycle, from raw material mining to recovery and reusing methods. Carlsberg Italia represents the dematerialization model having revolutionized its beer tapping technique through the introduction of the DraughtMasterTM system, a radical innovation replacing the traditional steel cask with a recyclable PET one and allowing Carlsberg to do away with CO2 as a propellant for tapping. The aim of dematerialization is to use less material resources and/or in a better way and materials as production input and product components (“doing more with less”) and is based on innovation and rethinking of a product or

Case Studies Fabio Iraldo is Professor of Management at Sant’Anna School in Pisa (Management Institute) and Head of Research at Bocconi University’s IEFE, since 2014 Fabio Iraldo has coordinated the Green Economy Observatory at the same university. Irene Bruschi is Advisor for ERGO SRL and researcher at Bocconi University’s IEFE. She has carried out professional advice and research on environmental management, management systems and the circular economy. Since 2014, she has been a member of Bocconi University’s Tavolo di Management dell’Osservatorio sulla Green Economy (“Management Table of the Green Economy Observatory”).

its packaging, production and consumption cycles. The revolution of Carlsberg Italia’s tapping system, even before representing a dematerialization model, implements an inclusive strategic vision going beyond the simplistic approach where the circular economy is seen as a mere question of managing waste and end-of-life. Design innovation has an important impact on all upstream stages – it pays particular attention to supplying, process and product input and packaging – promoting environmental and economic sustainability, while downstream it influences logistic and modes of consumption. NitrolChimica represents an application model of remanufacturing, based on the logic of transforming “waste” into resource. The production of solvents is carried out through the regeneration of processing waste from different sectors where solvents are raw materials (pharmaceutical, chemical, cosmetics and automotive). The recovery of solvents manages to drastically reduce CO2 emissions compared to the production of the same substances from fossil sources while achieving excellent quality performances.

Remanufacturing involves disassembling the used product and recovery in order to keep the same specifications of the original product: performances are at least equal or can be even better compared to those of the original use and for consumers the product thus manufactured not only conforms to technical and safety standards, but it is as good as a new product. Closing the loop can be achieved also by another business model, upcycling. 3M is a good case in point. Its DyneonGmbh branch has open the first plant for the recycling of fully fluorinated polymers: PTFE present in waste is reduced to its original polymer and used to produce new PTFE, thus eliminating the need for new virgin raw material and avoiding the landfilling of EOL (End of Life) products containing this polymer. Replacing the traditional process with upcycling neutralizes the dependence on virgin raw materials, even critical ones, and reduces CO2eq. emissions and energy consumption up to 76%. Closing the loop means moving from a recycling model, that can cause a reduction in the quality and uses of a product, to an

Figure 1 | Business models applying the circular economy

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renewablematter 19. 2017-2018 2. Life Cycle Assessment, carried out in accordance with ISO 14040 – 14044 and the international methodology system EPD® (Environmental Product Declaration) for assessing the environmental impact of life cycle.

up-cycling model restoring the material to its initial and purer state, ready to be polymerized and re-introduced into the manufacturing process, with no use and performance limitations. The last approach is durability, adopted in its trial by Vivisol, one the leading European groups operating in the field of home care, in particular with respiratory problems. Through an LCA2 study on the invasive mechanical ventilation kit, aimed at investigating the extension of the product’s durability to avoid value reduction, a comparison between the current scenario and a hypothetical circular economy scenario where unused components of the kit are returned and redistributed after safety and quality checks was carried out. According to the results, the winner is undoubtedly the circular scenario compared

to the current one. By extending the life not only disposal and the ensuing replacement with a new product are delayed, but the value of the very products is perpetuated. The CERCA project has offered a lot of food for thought and case studies have highlighted some important data on drivers, results, leverage and barriers. The path followed by companies taking part in this project presents some common elements that have become the drivers of “circular” strategic choices. First, in all cases there has been an increase in process efficiency that in turn has become an important advantage, namely cost reduction. In the medium and long term, the payoff of this process of internal redesign and check-up translates also in a significant and lasting economic return capable of providing a stimulus for continuous improvement. The base of this return can be savings generated by cheaper supplies (upcycling and remanufacturing), more efficient processes (dematerialization) or extension of the life cycle and value exploitation (durability). Moreover, the return is not just economic, but it also affects image and competitiveness: the first companies to get involved, thus anticipating the market, can enjoy an advantage, not only from a competiveness point of view compared to competing firms as first movers, but also from an image perspective with customers, users and consumers. This can include customer retention both in B2C relationships and above all in B2B, for instance in the cases of 3M (upcycling) and NitrolChimica (remanufacturing) that have established a virtuous circle of supplying with quality second raw materials to their customers who have also taken up the role of suppliers.

Table 1 | Reduction of impacts obtained by Calsberg Italia thanks to Draught Master M20 Technology Source: Carlsberg Italia.

Savings generated by M20 Draught Master kegs compared to: Steel kegs

Glass bottles

Aluminium cans

Water consumption (litres)

-27.99%

-21.83%

-27.32%

Energy consumption (MJ)

-19.86%

-41.02%

-33.17%

Global warming potential (kg CO2eq)

-28.58%

-49.11%

-25.84%

Acidification (kg SO2eq)

-11.53%

-31.68%

-7.75%

Total waste (kg)

-18.92%

-85.66%

-86.97%

Total dangerous waste (kg)

-45.99%

-43.51%

-36.36%

Figure 2 | Comparison of CO2 emissions between virgin and regenerated solvents Recycled solvent (ESRG average)

6,000

Virgin solvent

4,000

04 0

05 0

3,000

47 0

2,000

Mixed solvent

Source: Carbon Footprints of Recycled Solvents – Study for the European Solvent Recycler Group.

70 5

65 0

1,000

Carbon footprint (kg CO2eq/t)

5,000

Acetone

THF

MEK

TEA

PERC

Case Studies Figure 3 | Savings in terms of emissions and energy consumption of the traditional TFE production process (1 tonne) vs. 3M upcycling 12

CO2 Energy

Energy (MWh) and CO2eq(t)

10 8

-6

2 0

4.2

-7

2.8

3.4

1.2

0.8

Source: 3M. Up-Cycling yield 90%

Up-Cycling yield 60%

R22 Route

Table 2 | Potential savings of impacts deriving from SOL by adopting the circular scenario Impact category (indicator)

% difference (Circular Economy vs. As is)

Greenhouse potential (kg CO2eq)

-30.76%

Acidification potential (kg SO2eq)

-31.34%

Photochemical oxidant potential (C2H4eq)

-30.55%

Eutrophication potential (kg PO4-3 eq)

-30.46%

Source: Authors’ elaboration.

Info www.geo.unibocconi.it www.assolombarda.it/ servizi/ambiente

One of the main drivers is still legislative pressure, despite not having set binding or mandatory standards, both at national or international level. The same legislative pressure can turn into a twofold opportunity: on the one hand, preparing and anticipating future legal requirements, on the other hand raising awareness amongst institutions and stakeholders in general thus becoming a promoter of change. Results achieved by companies offer plenty of food for thought, characterized by an important common factor: in every single case data clearly point to lower impacts leading to ensuing environmental benefits. Two main elements stand out amongst the leverage factors promoting these paths. First, the network has proved to be of crucial support with multiple roles: optimizing logistic, initially a week link of business circularity that has turned into a strength (NitrolChimica); making durability feasible and real by using something that can still have great value (Vivisol); setting up a direct collection system of their own “exhausted” products (3M).

Second, recognized scientific tools, such as LCA (Life Cycle Assessment) and LCC (Life Cycle Costing) proved their validity in providing efficient and stimulating support in preliminary assessment of the potential efficiency of circularity in one’s business. Carrying out an environmental impact analysis can highlight unknown inefficiencies and impacts thus managing more effectively activities aimed at fully adopting the circular economy strategy. Nevertheless, closing the loop and the redesigning process can inevitably run into obstacles. First of all, the return linked to a positive image might not be obvious and consumers’ lack of knowledge and awareness can slow down innovation. Suitable countermeasures are needed, communicating innovation and reduced environmental impacts so that consumers can make rewarding purchasing choices. It goes without saying that communication must be effective and institutions must take up the role of raising awareness. Moreover, in the current panorama, institutions must eliminate technical and legal-bureaucratic obstacles hindering the full transition towards a new circular model by reducing ongoing difficulties in reusing residues or waste from other productions by promoting better homogeneity in second raw materials considered input and output, thus supporting an active and competitive market and finally, by tackling the logistic management of waste primarily by rethinking and reformulating the concept of waste, first important step towards the elimination of current legislative barriers. This last consideration can be seen as one of those elements causing difficulties in involving supply chains, in particular those different from one’s own with which to establish synergies to discover possibilities and opportunities deriving from the creation of industrial symbiosis. At the same time, it is not always simple and straightforward to actively involve B2B suppliers and customers to optimize the life cycle of a product to make it “circular.” This commitment must be shared by all the actors and their interest must go beyond the mere economic advantage/disadvantage in the short term. And this leads us to our last point, inevitable scale and economic barriers that can slow down or prevent investments in innovation processes requiring a clear institutional stance promoting economic and/or tax incentives, or can become transition costs to activate the needed network or implementation costs to support the very innovation process.

renewablematter 19. 2017-2018

Columns The Media Circle

Environmental Disasters Broadcasted in Prime Time Roberto Giovannini, journalist, writes about economy, society, energy, environment, green economy and technology.

Just like the cinema world did a while ago, television has now started realizing that we already have and will increasingly face serious problems with climate emergencies management. Nowadays TV news and newspapers tell us stories of floods, drought, tornadoes and flash floods, but it’s highly likely that in the future these dramatic events will be even more frequent, damaging and widespread. And since time immemorial, “disaster narrative” is a perfect recipe to draw the audience’s attention, even better if it deals with real stories of common people that the audience can identify with. Even more so if there’s an actual risk that sooner or later the emotions we live through the TV screen could become real life experiences. So here’s the two TV series we have chosen to introduce this time. One is still under preparation, and we know quite little about it. The other instead has been already broadcasted, with remarkable success. The first is an American series, an NBC channel project. It’s called American Disaster, a title that says it all. It’s written by Michael McGrale (CSI: Miami), and directed by Deran Sarafian (the director of House and The Strain). It’s focused on the efforts of a small village in the Midwest that gets hit by a disastrous tornado, and whose citizens will have to learn to cooperate in order to recover. The idea is to develop an anthological series, where each season will introduce a different natural disaster, and people’s reactions to it. What’s relevant in this series is that it will focus mostly on what happens after the disaster, when journalists and cameras leave, leaving citizens to deal with devastation, but most of all with the need to rebuild both material things and relations. The other series instead describes disaster in real time. Als de dijkenbreken (“when dams will collapse”) it’s a joint Dutch-Flamish production that in November 2016 shocked the public in the Netherlands and in the Flanders. The story follows the personal tribulations of five different people (Holland Prime Minister and other common citizens), and describes what happens when, due to a chain of underestimations and inadequate institutional answers, a superstorm pushes the sea against the Project Delta dams, that have been completed in 1986 to protect the coastal area of the rivers Rhine, Mosa and Schelds delta. The dams collapse under the force of the sea, and this causes a disastrous flooding of the area called Ranstadt, the conurbation including the four main Dutch cities

of Amsterdam, Rotterdam, Utrecht and Den Haag. While the Belgian Prime Minister Verbeke decides to evacuate Ostenda and the whole area under threat as soon as the situation starts looking dangerous, his Dutch colleague Krueger fears the economic and politic consequences of a mass evacuation, and issues a warning without taking any other measure. The result of this is panic and destruction. The catastrophe is overwhelming: whilst in the Civil Protection crisis room politicians and technicians can’t do anything else but watching, the sea wipes away Rotterdam, burying the city under meters of water and sweeping away all the cars that are stuck in a massive traffic jam, causing the death of 25,000 people. Another 100,000 go missing. At a certain point the crisis room itself has to be evacuated and the unlucky (and reckless) Prime Minister is forced to fly away by helicopter, and face the sight of the most prosperous part of the country under sea water. During his visit to an emergency centre, he is chased away by angry refugees. Als de dijkenbreken was broadcasted between November 2016 and January 2017, reaching a 26% share in Holland and a 45% share in Belgium. It deals in fact with a very salient issue in these countries: the last flood in 1953 caused the death of 1,835 people, and 70,000 had to be evacuated. For this reason the Rijkswaterstaat, the Dutch state water board, felt the need to have its experts explaining the state of the art to the public after each episode. And so Harold van Waveren, head of the national coordination body on floods, explained that the series shows a “very extreme” scenario, and contains some misrepresentations, but also that two of the places where the dams collapse in the TV fiction, Nordwijk e Katwijk, are in effect particularly vulnerable, and are therefore constantly reinforced. And van Werven’s conclusion was that “a country like our is particularly vulnerable to climate change, and this series is useful, because it raises awareness and sense of urgency.”

Columns

Circular by Law

EU Engagement, USA Disengagement Francesco Petrucci,* environmental legal expert and a member of Edizioni Ambiente’s legal editorial staff.

*In collaboration with “Rifiuti – Bollettino di informazione normativa” magazine and Osservatorio di normativa ambientale, www.reteambiente.it

During the 23rd UN Climate Change Conference (known as COP23), held in Bonn from 6 to 17 November 2017, participants continued working on “technical” aspects with the objective of fully implementing the December 2015 Paris Agreement on Climate, and having to deal with the issue of USA “disengagement.” Whilst the 195 participants’ work led to small steps forward, a group of countries achieved an important outcome with the approval of the “Powering Past Coal,” committing countries to reach carbon neutrality before 2030 (the European countries who signed are Austria, Belgium, France, Italy, Denmark, the Netherlands and the United Kingdom). The next meeting will be held in Katowice, Poland from 3 to 14 December 2018, when hopefully Parties will manage to overcome the still existing distances and critical aspects. In this prospective is of special importance the EU-China joint declaration on climate change signed in mid December 2017. Its signatories have confirmed their commitment in implementing the Paris agreement on climate, and their will to cooperate to enhance its implementation. As the COP23 was taking place, the EU released its report on greenhouse gas emissions, stating that from 1990 to 2016 they have decreased by 23%, in parallel with a 53% increase of GDP. This is good news, and so is the November agreement between the European Parliament and Council to revise the EU Emissions Trading System after 2020. This revision will contribute to achieving its objective of reducing greenhouse gas emissions by at least 40% by 2030. In the meantime, after COP23 the United Nations had gathered 193 countries for the 3rd session of the UN Environment Assembly (UNEA-3) that took place in Nairobi from 4-6 December 2017, with the theme “Towards a pollution-free planet.” EU has invited participant countries to promote sustainable life-styles, as well as a circular economy model enhancing reduce-reuse-recycle approaches to production. As for circular economy, the approval process for the legislative proposal on waste has finally progressed after the temporary agreement reached by the European Parliament and Council on December 18, 2017. The Circular Economy Package is likely to be definitively approved at the beginning of 2018. The EU Commission has also approved the forms to be used in relation to the import of mercury for purposes other than disposal as waste (Decision n. 2017/2287/EU, December 8, 2017). Of great importance for companies making use

of carcinogenic and mutagenic substances is the definitive approval on December 12, 2017 of the directive updating the rules on the protection of workers against health and safety risks from exposure to these dangerous substances, that replaces directive 2004/37/EU. On November 20, 2017, the European Chemicals Agency (ECHA), has published the new guidance on labelling and packaging of substances and mixtures, a useful guide for chemicals distributors in the effective application of the EC Regulation 1272/2008. Cadmium is still used on some LED because at the moment technology can’t provide an alternative solution. Directive 2017/1975/EU of November 20, 2017, establishes therefore a derogation until December 31, 2019, to the general ban of heavy metal established by directive 2011/65/EU. As for industries producing organic chemicals, the Best Available Techniques (BAT) conclusions have been approved through the European Commission Decision 2017/2117/EU. These conclusions are to be used by factories producing chemicals to define environmental authorizations conditions and prescriptions. The European Commission has allocated the new quotas for placing hydrofluorocarbons on the market for 2018-2020. Decision 2017/1984/ EU affects the 450 European companies that have declared their hydrofluorocarbons placement on the market from January 1, 2015 onwards. Of increasing importance for companies’ competitiveness is their commitment to environmental management systems like EMAS (the European Ecomanagement and Audit Scheme). The European Union is constantly urging companies to adopt it, and therefore the EU Commission has amended the guidelines to participate in EMAS (decision 2017/2285/EU). At the same time, in order to facilitate the implementation of EMAS it has recognised the Norwegian management system Eco-Lighthouse as “equivalent” to EMAS. Eco-Lighthouse can therefore be considered an environmental management system as complying with the corresponding requirements of EMAS (decision 6 December 2017, n. 2017/2286/EU). As for certifications, the Ecolabel brand has a new look. With the 2017/1941/UE regulation, the European Commission has approved Ecolabel new logo. In the meantime through decision 2017/1941/EU, the existing criteria to “label” hard coverings with Ecolabel have been extended till June 30, 2021.

renewablematter 19. 2017-2018

Innovation Pills

3D Printing and the Animal World Federico Pedrocchi is a science journalist. He directs and presents the weekly programme Moebius broadcast by Radio 24 – Il Sole24 ore.

I remember the smiling face of a jewellery artisan who, presented with all the possibilities offered by 3D printers, showed all his enthusiasm for the new creative opportunities, those he had been dreaming about for years. It really opens up a new world. 3D printers offer two new great possibilities. First, you can design an object from inside while traditionally it has always been designed from outside. If I shape something from the outside, then how can I go inside? I could glue pieces together, an awful choice when crafting jewels. And then with a 3D printer you can create extraordinary and very elaborate insides, this depends on the fact that you proceed by adding layer upon layer. For instance, an exact copy of our planet – with everything in it: white sea breams, microwave ovens – would be impossible to make, but if we had a big enough printer it could be done. A problem could arise though: could 3D printer use get out of hand? As with all great inventions, beautiful and useful, there is always the possibility that they get out of control. For instance, I ponder on the possibility – the first trials have already been carried out – to create nests for bees with tube of cells wrapped onto themselves. I have seen them: impressive. Compared to natural nests the internal surface is increase tenfold, but it can be diversified in a thousand ways, with the possibility of creating a sort of giant shopping centre for bees. Since very often shape creates substance, we might end up with bees selling us honey. Bees are people who know how to organize themselves and in more than one occasion, they have already shown a certain annoyance with flying from one flower to another. So this is what I envisage: 1) Bees will learn to use 3D printers, but this is an evolutionary scenario they have been ready for some time; 2) The appearance of American-Western like outlaws who started selling Winchester rifles to Indians, an activity that was then prosecuted, but from a moral historical point of view it is certainly not condemnable. In the near future, these guys will provide super fractal beehives to bees from whom, if we think about it, how much honey have we stolen without giving them anything in return? And then we move on to moles. Their penchant for using 3D printers is culturally physiological.

But in this case, printers can be used in a very dangerous way. Indeed, moles dig underground tunnels. A portion of these tunnels is located at 20-30 cm under the surface, but this a tiny portion, while 80% of tunnels can reach down to 10 m underground, a very hard job since we must bear in mind that all the soil dug must be removed. The use of 3D printers – we must remember that in the construction sector it is already producing interesting results – can cause a very efficient building reversal. Moles could just dig soil creating a space where they could use a printer, which, powered by the very dug soil, could build the entire tunnel structure. The problem is that moles can’t see, so by not perceiving the Escherian structure build by the printer, they could lose control of the project execution thus creating underground giant hollow and extremely fragile structures. Bearing in mind that moles are one of the least endangered animals, we are presented with a scenario where the planet could implode thus reducing its radius even by a third leading inevitably to the emission of soil into space. The planet’s mass would change, it would no longer be able to exert its gravitational force on the Moon and its orbit around the Sun could change dramatically and we could end up hitting Mars. Thus not everyone should be allowed to use 3D printers.

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At RadiciGroup we measure the impacts of this strategy through Life Cycle studies for a sustainable and sound approach to circular economy.

Presso RadiciGroup misuriamo gli impatti di questa strategia attraverso studi di Life Cycle Assessment per un approccio sostenibile e rigoroso all'economia circolare.

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