1.1 THE TRILLIONâDOLLAR QUESTION
This is a book about circular economy (CE) and the fourth industrial revolution (IND 4.0) and about their interlinkage and the way their interaction will determine the future of our planet, as the authors of this book assert. Despite the many ongoing discussions on both the circular economy and IND 4.0, rarely is it recognized that they are deeply interconnected, and in real life they cannot be discussed separately, and should not be considered to be mutually exclusive.
In spite of the widespread discussion and countless policy initiatives regarding circular economy, it is usually ignored the fact that IND 4.0 provides the technological, economic, and social framework in which a circular economy will flourish or fail. As an example, a wellâreferenced report [1] estimated that the implementation of the circular economy in the European Union (EU) will create 1.2â3 million additional jobs by 2030. However, the report seems to ignore that the essential works required in preparation for reuse, repair, and disassembly either will be automated and robotized or will not become economically viable. In the era of IND4.0, the circular economy will either be digitized, automated, and augmented, or it will not prevail at all.
On the other hand, discourse around IND 4.0 usually focuses on the advances relevant to resource and labor productivity, the radical changes to business models, and the social challenges involved. It is rarely discussed that IND4.0, unless it diverts from the âbusiness as usualâ linear approach, will also stimulate and accelerate resource depletion and pollution in an era in which Earth is fast approaching, or has already surpassed, some of its planetary limits. IND4.0 will either meet the circular economy or accelerate environmental deterioration and potential collapse of ecosystems and human societies. This will be covered in more detail in Chapter 2.
IND4.0 and the circular economy represent challenges that are valued, quite literally, in the many trillions of dollars. One of the key aspects that should be considered is that a shift to a circular economy might be the only possible means of sustaining economic growth in the long term through a serious rearrangement of the economic inputs and outputs in all the industrial supply chains. An online analysis [2] of the economic benefits of circular economy reveals that in the EU the annual material cost savings are estimated up to $630 billion, and that is only for the sectors of complex mediumâlived products such as mobile phones and washing machines. For fast consumption products such as those for household cleaning, the expected material cost savings are estimated at $700 billion/year. Accenture [3] has assessed that the shift to a circular economy has the potential to create an additional $4.5 trillion economic output by 2030, if circular business models are rapidly adopted. In addition, such a shift can contribute to closing the eight billionâtonne material gap between supply and demand that is expected in 2030. In the long term, an additional $25 trillion economic output is forecast by 2050. These economic benefits do not include the monetization of the expected environmental benefits such as the reduction of carbon dioxide emissions; the gradual decline in consumption of primary materials, which can reach to 32% within the next 10 years; and the benefits from the reduction of land degradation that already costs more than $40 billion annually. McKinsey has calculated [4] that for the EU an additional $1.3 trillion of benefits annually is expected in nonâresource and externality costs.
Moving to IND4.0, for the period 2015â2025, the World Economic Forum assessed [5] the economic and social benefits of the digital transformation to almost $100 trillion through digital consumption, digital enterprise, societal implications, and platform governance. By 2025, the digital economy will have a share of 24.3% of the global economy and a value of $23 trillion, compared with 15.5% and $11.5 trillion in 2016, according to a report prepared by Oxford Economics [6], providing extra income of $500/year for the average worker. The same report assessed that the digital economy is growing 2.5 times faster than the global economy and that, on average over the past three decades, a US $1 investment in digital technologies has led to a US $20 rise in gross domestic product (GDP).
Since both the circular economy and IND4.0 represent trillions of dollars in opportunities, this book poses the trillionâdollar question: will IND 4.0 and the circular economy converge, hence delivering not only better resource efficiency but a more sustainable future for everyone on the planet? Or will IND4.0 evolve according to the business as usual linear model, leaving the circular economy a mere flight of fancy, resulting in faster resource depletion, acceleration of environmental degradation, and deeper inequality? The authors of this book believe that any answer to the trillionâdollar question involves the transformation of the waste management sector. However, before delving deeper into this discussion, it is beneficial to outline the planetary framework in which the circular economy and IND4.0 are discussed. A warmer, continuously urbanized, and more resourceâdemanding planet sets the scene from which our future will evolve.
1.2 THE FUTURE IS WARMER, URBANIZED, POLLUTED, AND RESOURCEâHUNGRY
It has always been difficult to predict the future, but in a world that is becoming continuously more interconnected and complex, discontinuity and abrupt change become the rule and not the exception, as the 2008â2013 financial crisis proved. Still, there are some basic trends that will continue to shape our planet for the next 20â30 years.
The first trend is global warming. Although there are some differing opinions, there is a very strong consensus about the roots of the problem and the way to deal with it. About 97% of the studies published by climate scientists agree that global warming is extremely likely to be linked to human activities [7]. Almost all of the major scientific organizations worldwide [8] endorse such a view. Regarding extreme weather phenomena, between 2015 and 2018, more than 100 papers have been published on this subject, and 75% of them concluded [9] that extreme weather is related to global warming. In October 2018, the Intergovernmental Panel on Climate Change (IPCC) warned [10] that only a dozen years are available to keep global warming to a maximum of 1.5 °C, beyond which even half a degree will significantly worsen the risks of drought, floods, extreme heat, and poverty for hundreds of millions of people. In November 2019, more than 11 000 scientists from all over the world declared that âplanet Earth is facing a climate emergencyâ [11].
Global warming is directly linked with both IND4.0 and circular economy. The development of innovative lowâcarbon technologies, especially in the energy sector, which will allow the immediate reduction of carbon dioxide emissions and the hasty decarbonization of our economies, is an urgent necessity. IND4.0 not only brings the promise of unimaginable innovation, but it also provides new tools to coordinate the global responses on global warming, increase energy efficiency and reduce losses, as well as actively forecast and link energy supply and demand [12]. However, according to the International Resource Panel [13], by 2050 almost 1.5 billion tonnes of metals will be required to develop lowâcarbon infrastructure and wiring. The World Bank has predicted that the development of green lowâcarbon technologies will definitely drive a substantial increase in the demand for several minerals and metals such as aluminum, co...
