Circular economy in Finland 2030 scenario analysis
- 1. VTT TECHNICAL RESEARCH CENTRE OF FINLAND LTD Capitalising on Invisible Value - User-driven Business Models in the Emerging Circular Economy (AARRE project) Circular economy in Finland 2030 – scenario analysis H. Sundqvist-Andberg, J. Kohl, VTT 28.9.2017
- 2. 21/11/2017 2 Summary Participatory scenario development process was used in studying the multi-faceted nature of emerging Circular Economy (CE) in Finland and in engaging the stakeholders in the complex CE change process. The aim was to develop plausible and reachable futures that interpret the future by focusing on different dimensions and elements of circular economy. The scenario development methodology is based on qualitative scenario building and leans strongly on plausibility-based intuitive logics approach. The approach is explorative and aims at building future scenario spaces or images rather than creating narratives that describe the unfolding chains of causation. The scenario generation focused on the user-centric side of circular economy by interpreting the future through different scalable lenses which focus on different dimensions and elements of transformation. The target year for scenarios was set to 2030. The participatory scenario development resulted three complementary scenarios; § Factory of the future scenario, focusing on resource efficient production and consumption with clear conscious, § Experiential service economy scenario which depicts service oriented CE where access over ownership is mainstream and easy-access services facilitate consumers’ / users’ daily lives, and § New tribes scenario, which emphasices sharing economy side of CE. The scenarios were images of the complex reality of environmental and socio-techno-economic systems highlighting different aspects of potential futures. CE kaleidoscope tool was produced to open the complexity but also the potentials of CE for new sustainable business ideas. The work was carried out within Tekes funded AARRE project: Capitalising on Invisible Value - User-driven Business Models in the Emerging Circular Economy (AARRE)
- 3. 21/11/2017 3 Scenario building process The participatory scenario development included five phases: 1. Scoping phase for setting the initial scope and a timeframe, 2. Identification and analysis trends, drivers, and barriers 3. Framing and developing scenarios 4. Validation of the scenarios, and 5. Further development of scenarios. Phases 1, 2 and 4 involved stakeholder participation: § Scenario workshop § 26 participants from key stakeholder organizations; NGOs, government, industry and research organizations, and focused on identification of potential drivers, barriers and factors of change. § Consumer discussions § 42 consumers and focused on understanding the future customers and users of circular economy. § Online stakeholder discussions § within an online space called OpenWeb Lab (Owela) for the validation of the scenarios § Validation workshop § 11 participants from research organisations and AARRE project partner companies
- 4. Scenario images of circular economy enabled by digitalisation
- 5. 21/11/2017 5 Key assumptions Scenario 1. Efficient service experience Scenario 2. New Tribes Scenario 3. Factory of the future KEY TRENDS • Service economy, • Changing consumer habits (lower need for ownership) • Urbanization • Resource efficiency • Fair sharing economy • Sustainability • Urbanisation • Changing consumer habits (e.g. sharing / post-consumption) • Bioeconomy • Resource efficiency • Sustainability (incl. social) ENABLERS • Platforms • Digitalisation • Lower taxation of work • Trust /” design for trust” • Digitalisation • Platforms • Need to belong to something • Digitalisation • Eco-design • Collaboration • Certificates DRIVING ACTORS • Companies, users • Citizens/prosumers, NGOs, SMEs. • Bottom-up approach. • Companies (producer-led CE) and governments • Top down approach ROLE OF CITIZENS • Citizens as users • Citizens as users and prosumers • Citizens as consumers LEVEL OF COLLABORATION • Significant for companies • Collaboration and co-creation with users • Significant for citizens; co-creation and crowdsourcing • Low for consumers • Significant for companies; collaboration and coopetition • Circular supply chains SCIENCE APPROACH • Focus on digital service innovation, understanding consumer & user experience, behavioural, cognitive and social sciences. Multidisciplinary approach to innovation. • Citizen science and open innovation approach • Strong emphasis on technological, material and design innovations by (formal) organizations. Semi-open innovation.
- 6. 21/11/2017 6 Orientation towards future value creation Scenario 1. Efficient service experience Scenario 2. New Tribes Scenario 3. Factory of the future ORIENTATION • Services orientation • “Collaborative” and social orientation • Product orientation TANGIBLE VALUE Cost savings and revenue from • efficient use of materials and products • Improved performance • eco-design / long lasting products • less waste, pollution and Improved land utilization Cost savings and revenues from • better utilization of idle resources (cars, ride, housing, gear, etc.) Cost savings and revenue from • closing and slowing the loops, • product life extension, • re-use of components and cascading use of raw materials and utilization of side-and waste streams, • material efficiency, • design for sustainability / eco-design • long lasting products, • less waste and pollution, improved land utilization INTANGIBLE VALUE • Services approach • Better customer/ user understanding • Fast access over long-lasting ownership • New inspiring experiences • Increasing social equality • Increased community spirit and social capital • Increasing trust and social equality • Eco-labels and certificates allow consumption with clear conscience, and ease of recycling • Improved collaboration and supplier- buyer understanding • Improved company / brand image BUSINESS MODELS • Product as a service • Performance as a service • Renting, leasing, dematerialisation • Reuse, recycling • Sharing, lending • DIY -> DIT (Do it together) • Cascading use, industrial symbioses and circular supply • Light weighting • Lifetime extension; repair, remanufacturing, refurbishing • Recycling and reuse • Also service models
- 7. SCENARIO: EFFICIENCT SERVICE EXPERIENCE • User culture • Access over ownership • From buying physical products to buying services and performance • Making everyday life easier and more comfortable • Easy access via services • Lower risks • Experiencing become more important to consumers than owning • For companies performance, efficiency and timeliness are valued TRENDS Service economy Changing consumer habits Urbanization Resource efficiency ENABLERS Platforms Digitalisation Lower taxation of work OBSTACLES Attitudes (the desire to ownship) Profitability Lack of expertise
- 8. 21/11/2017 8 Efficient service experience The scenario gives us a circular economy in which consumption habits favour access over ownership. Ease and sustainability are key themes in the everyday lives of both consumers and businesses. Together with the Internet of Things (IoT), digital platforms enable the provision, management and use of comprehensive service packages. New kinds of integrated service platforms serve as multi-purpose service maps, bringing services and needs together. ”The drop off and take away” service concept combines resource flows (services and materials) in and out of homes. ”A pocket- sized circular economy” concept, consumers can purchase most everyday services via a single online platform. One of these could be an Optimisation service, using a single application to monitor well-being and health (food-vending machine, safety bracelet), household energy consumption and air quality.
- 9. SCENARIO: NEW TRIBES • Sharing culture • In production, consumption and use • New level of community spirit and crowdsourcing, co-operative 2.0, peer to peer activities • Local ”tribes” or as part of a virtual groups • Agile, rapid, experimental, and visible activities and entrepreneurship TRENDS Changing consumer habits Fair sharing economy Sustainability Urbanisation ENABLERS Trust / ”design for trust” Platforms Need to belong to something OBSTACLES Attitudes (e.g. desire to ownership, forced communality) Legislation Social unsustainability
- 10. 21/11/2017 10 New tribes In the scenario, the cooperative economy has become a supportive element of the circular economy. The key issues in this scenario are respect for social capital and neo-communality belonging to peer, sharing and consumer-producer communities. Communities can be physical or virtual tribes which bring people together to interact, while promoting the sharing and exchange of various types of ownership, resources, skills and knowledge. The basis of such activity is trust between citizens. The economy is being spurred on by renewed cooperative activities, so-called platform cooperatives, the sharing economy between consumers, and the firms and small businesses that provide such services. Business is agile, experimental, visual and audible, being based on the re-use, recycling, sharing and exchange of materials and products, in particular, and the supporting services. Business could be generated by Cooperative home-based factories, which incentivise social activities and focus on small-scale, fair peer production (such as urban farming), services (care, transportation and repair services) and use.
- 11. SCENARIO: FACTORY OF THE FUTURE • Consumer culture • Consumption with clear conscience; certificates and transparent material flows • Extended producer responsibility: producer is responsible during the whole life cycle of the product • Durable products • Recycling, reuse and repair are made easy to consumers • Symbiotic, narrowed and closed loops -> zero waste production and use TRENDS Resource efficiency Bioeconomy Sustainability ENABLERS Digitalisation Eco-design Collaboration Certificates OBSTACLES Profitability Availabilityof recycled materials Lack of expertise (e.g. in product design, innovative public procurements)
- 12. 21/11/2017 12 The factory of future In the scenario, production processes are resource-efficient and symbiotic within or between different sectors. Processes are designed to ensure that the resulting material flows are used efficiently and very little or no waste occurs. New kinds of logistics services could be the key to a resource-efficient circular economy. Products are designed on the terms of the smart circular economy from the outset and the product lifecycle has markedly lengthened. To function sustainably in the global economy, private-sector strategic management must commit to the principles of a responsible circular economy. A strong focus has been placed on the social sustainability of business. However, more-sustainable consumption has become commonplace, led by major consumer product brands. Shifting to the circular economy has been made easy for consumers, with manufacturers ensuring the easy recycling, re-use, refurbishment and repair of products. The consumer can continue consuming with a clear conscience – circular economy certificates guarantee that products are produced, recycled and renewed sustainably, and increasingly contain renewable and recyclable materials.
- 13. 21/11/2017 13 CE kaleidoscope tool for new sustainable business ideas • Circular economy kaleidoscope is a simple tool for business ideation and it can also be used in the scenario development process • The tool consist of three rotating discs; 1. key drivers, 2. circular economy business models and 3. economic, environmental, and social sustainability • The tool allows versatile combinations of different driving forces, CE business models and potential impacts • The tool aims at promoting transformation in niche scale by changing prevailing mindsets through realization of alternative options and their impacts to sustainability within different scenarios.
- 14. 21/11/2017 14 Conclusions The scenarios presented here are images of the complex reality of environmental and socio-techno-economic systems highlighting aspects of potential futures. Even small insights could make the circular economy smoother and more efficient on an everyday level and put change into motion. The scenarios describe such changes. The circular economy should not be viewed solely from the economic perspective. It is a multi-faceted diamond, which combines economic, social and environmental aspects. After a qualitative review of the scenarios, a more detailed review of the circular economy’s macroeconomic impact on employment, regional policy and taxation would be required, alongside a deeper understanding of its social impacts.