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The many faces of Digital Transformation – Societal Scenarios XIII

An example of circular economy with renewable sources are managed to use most of them and returning the by-products of manufacturing and usage into the cycle whereas non-renewable resources are managed in ways to prolong their life-cycle and to manage their disposal. Image credit: Hera

Circular Economy

Although our Planet is big and plentiful in the last decades the rate of resource consumption on the one hand and the waste produced has started to put a dent in our global assets. Also, the trends are for a worsening unless action is taken. This is in addition to the impact on clIndustry 4.0imate that CO2 and other substances can have.
Making the best use of resources has always been high in the consideration of engineers, however this may go against economic considerations. It is -at a microlevel- cheaper to get rid of wast by dropping it somewhere than to properly dispose it, it may be cheaper to use fossil fuel than to use a renewable source. Economics, as well as technology, has put recycling and resource focus in the background. However, there is now a growing cultural and societal pressure to revisit priorities and this is bringing Circular Economy to the fore.

The basic idea is to keep an environment balance between use and restitution. Theoretically this is possible since there is no fundamental transformation at atomi level (disregarding atomic fission an fusion processes). Every transformation requires power and this is obtained through a transformation of energy in different forms leading to an increase in entropy. This latter is unavoidable but we can outsmart the second law of thermodynamics by using the energy the Sun is throwing to us every moment. The solar system entropy will keep growing but, theoretically at least, we could keep entropy in check on our planet.

As an example, consider using petrol to power your car. The petrol combustion in the engine transform chemical energy into mechanical energy (kinetic energy) but -in principle- we could use solar power to reshuffle the combustion product back into fossil fuel. Actually, this would be extremely costly and indeed it would make much more sense to directly use solar energy to power the car. The example is just to underline that from laws of Nature (physics) there would be no obstacle in achieving a perfect environmental equilibrium. The increased heat produced by the energy transformations could be beamed out to deep space (again circumventing the second law).

The obstacle is in the economics, it cost quite a bit to reverse the downstream flow of energy and industry is very much cost conscious (but that applies to humans too: it cost effort to properly dispose of waste, it would be so much easier to drop your home waste just on the home floor or throw it out of the window. The reasons why we put effort in keeping the home and its surrounding clean is because we have been culturally educated that this is what should be done, even if it takes effort).

The cultural and societal awareness of the need to keep our planet in balance is what generates interest in the circular economy.

Having said that it is feasible (from Nature’s law standpoint) and knowing that economics is important the question is both how much are we willing to spend (invest) and how can technology be applied to reduce these cost. 

The Digital Transformation is a double edged sword. On the one hand by shifting the action from atoms too bits it decreases the use of atoms (physical resources) and by using bits to track atoms (products and products’ components /materials) it makes possible to become aware of the use and take actions to make it more efficient decreasing waste. Eventually, it helps in managing waste. On the other hand the management of bits is using plenty of resources (as an example a digital switch is more power hungry than an electromechanical switch – todays’ telecommunication networks use much more power than in the past, and they would use this power even if no-one uses them, they are “always on”. Data centres around the world now account for a sizeable percentage of electrical power use.

A significant contribution to the realisation of a circular economy is expected to come from Industry 4.0 and from its holistic view and approach to product life cycle. It is now well understood that cost for recycling and use of renewable sources of energy can be decreased by designing products for the circular economy. Having feedback from product usage leads to a fine tuning of the production and can make the whole value chain more efficient. Clearly one should understand that the circular economy is more expensive in the short time than the classical economy, however, on the longer term it becomes more effective and is likely to be much less costly systemwide. And here lays the true problem.

Cost are sustained by industry upfront, benefits are likely to appear at a later time, may be years after a product has been sold. So the ones sustaining the cost are not the ones reaping the benefit. This is why a cultural and societal awareness is fundamental and why regulations are needed. Notice that the economy is now worldwide, hence regulation shall be the result of a worldwide agreement. The planet does not know of country boundary, what happens here has impact everywhere.

The good news is that technology is now making possible the generation of awareness, the design of raw materials and the recycling of waste during a product life cycle and at the time of its demise.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the New Initiative Committee and co-chairs the Digital Reality Initiative. He is a member of the IEEE in 2050 Ad Hoc Committee. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.