Why the circular economy and LCA make each other stronger

The circular economy is an inspirational idea. What if, instead of relying on virgin materials for our manufacturing processes, we could intensify the use of existing products, reuse their parts, and reuse their materials? Like all highly inspirational ideas, putting them into practice is often not that easy. At PRé, we think that life cycle assessment (LCA) is a perfect complement to the idea of the circular economy. Let’s explain why.

What is circular economy?

The concept of the circular economy promotes sustainable use of resources and minimizing environmental impacts while creating value for society, economy, and businesses. The main concept in circular economy is changing materials use from linear – a straight line from materials extraction to product use to landfill or incineration – to circular, where materials can be used again and again. This is called ‘closing’ the loop. In addition to closing the resource loop, circular business and design strategies can also focus on ‘narrowing’ or ‘slowing’ resource loops: improving the efficiency of processes and extending the lifetime of products. The use of renewable energy is a cornerstone of circular economy – burning fossil fuels can never be circular.

In a linear economy, goods are designed for a single lifetime and disposed of at the end of their useful life, or even before that. This linear approach is highly resource-intensive and produces enormous quantities of managed and mismanaged waste. In contrast, a circular economy aims to eliminate the concept of waste altogether. The idea is that the material from the end of one product’s life cycle acts as the input for another product’s life cycle, and that components and materials stay in the market at the highest quality possible for as long as possible. The closing of production and consumption loops can lead to reduced dependency on virgin materials in the long run.

Simplified models of the circular economy and life cycle assessment, and their strengths

Inspiring new products, services and business models

Linearity is still the norm in our economy. Between the UN Climate Change Conference in Paris (COP21) and the COP26 in Glasgow, half a trillion tons of virgin materials have been used worldwide, and calculations show that the anthropogenic world was only 8.6% circular in 2020. That means there is vast and growing opportunity for new innovations and businesses.

Product and service designers are key players in realizing the circular economy, since they have the opportunity to apply circular principles at the design stage.

For example, circular thinking pairs well with a service mindset in business – a shift in focus from selling products to offering valuable services. If implemented with care, such a service mindset could bring about innovative solutions that are less tied to resource consumption, reducing the environmental footprint per functional unit.

Circular business models can also promote collaborative consumption. This intensifies the use of products that have already been produced and reduces idle time, which means fewer products are needed. These models ask us to break free from how we normally do things and aim for radical improvements rather than incremental ones. This way, a transition toward circularity not only reduces impacts, but can also increase long-term resilience and generate economic opportunities with environmental and social benefits.

The challenge of implementation: how do we know it works?

The implementation of circular strategies, however, comes with its own challenges, which have so far hindered the large-scale adoption in business and enterprise. One important challenge is navigating between different innovation directions and design options. How do we know which ideas will have a real effect on reducing environmental impacts?

The interest in quantifying the benefits of circular efforts is growing, especially as researchers and businesses have started highlighting the risk of rebound effects and unforeseen responses to changes. For example, the reuse of components may add to environmental impacts because these components need transportation. If recycled materials are used, the product’s lifetime may be lower due to quality loss, thereby increasing waste. Energy or water use might increase due to recycling practices. It’s important to carefully evaluate potential burden shifting and trade-offs between various impact categories. And to test assumptions about how users will actually use the product or service. Here, scenario analysis becomes critical.

Circular economy and impact assessment: a great match

At PRé, we see a powerful and exciting synergy between circular innovation and systematic methodologies for assessing environmental, economic, and social impacts. These methods, in combination with circular thinking, can help make great strides in understanding and minimizing impacts. Especially if the process includes iterative innovation and testing of assumptions.

Life cycle analysis is a robust and science-based tool to measure and quantify environmental or social impacts of products, services, and business models throughout their life cycles — from the extraction of raw materials to manufacturing, distribution, use, and disposal. LCA is based on the ISO 14040/44 standards; its power lies in its robustness and transparency. LCA can also be combined with life cycle costing (LCC) for a more holistic analysis.

At PRé, we see two main ways that quantitative assessments could help drive the circular economy:

  1. LCA of circular solutions
  2. Complementary circularity indicators

1. LCA of circular solutions

By combining principles of the circular economy with LCA methodologies, product developers can measure the environmental performance of various product and supply chain configurations, compare circular strategies and ensure a positive environmental balance from the design of new circular products or services. Since it is still uncertain what the best strategy is for recycling, reuse, and other end-of-life recovery options, LCA is a great tool to evaluate options and quantify results. In addition, it can help define targets and indicators to measure and foster circularity over time.

There is still a lot of room for improvement, however. Critics highlight that LCA often zooms in on existing solutions, mainly searching for efficiency gains rather than supporting radically new designs. Another point is that many LCA studies provide a snapshot of the impact at a certain moment in time, rather than giving insight into how the product or technology would perform in the future. This is especially important if the results are to be used for investments that might take several years to materialize. In addition, the end-of-life allocation in an LCA model gives different results for the impacts and benefits of recycling or waste valorization activities.

At PRé, we are dedicated to keep on developing the intersection between the circular economy and LCA, in collaboration with our ecosystem of clients and partners. Our vision is to ensure that the potential benefits of promising innovations are highlighted and that any claims about impact are transparently assessed.

2. Complementary circularity indicators

Even though LCA can support the evaluation of environmental (or social) impacts of product and or service systems, the results do not currently show an indication of ‘how circular’ a solution is. Circularity indicators fill this gap. These complementary indicators can measure circularity of resources and material flows in LCA studies. Well-known indicators are the Material Circularity Indicator (MCI) by the Ellen MacArthur Foundation and the circular transition indicators (CTI) developed by the world business council for sustainable development (WBCSD).

The MCI measures which linear flow has been minimized and which restorative flow has been maximized, while considering the product’s lifetime and intensity of use. It concentrates on the flow of materials throughout the manufacture and use of the product, explicitly encouraging the use of recycled or reused materials and product life extension.

The CTI aim to assess material flows within company boundaries, to minimize resource extraction and waste material at three key intervention points:

  1. Inflow
  2. Outflow – Recovery potential
  3. Outflow – Actual recovery

Those three key intervention points can be measured with specific indicators and the results can help with closing and optimizing the loops.

The way forward

The importance of applying circular economy principles is becoming more urgent by the day. Well-defined metrics are key to a successful circular transition. What is measured can be managed – and what can be managed can be improved over time. We believe that the way forward is to collaboratively develop effective and practically applicable metrics that transparently report the circularity and sustainability of products and services.


Ready to make circular economy work for your company? Find out here how PRé can help your organization.

Emilia Ingemarsdotter

Consultant

All organizations have the opportunity and responsibility to monitor and act on their environmental and social impact. My drive is to support them through close collaboration and transparent, data-driven analysis.

Marina Dumont

Analyst

We live in highly interconnected systems. By using science and tools, we can learn to understand the dynamics between those systems – and what we can improve and where to do better. I strongly believe that we need interdisciplinarity to solve today’s challenges: improve how we deal with our environment, and by that improve our economy and our society. We need to take responsibility into our hands and change the status quo.

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