Preview Book

2.2 Barriers of Implementation

As CESME project addresses SME inclusion in the circular economy, an overview of the barriers for the implementation of circular economy mechanisms seemed necessary. On the basis of the debates risen from project meetings and from Local support groups activities, 4 main barriers have been identified:

  1. Regulations and bureaucracy
  2. Lack of economic resources
  3. Lack of culture and knowledge
  4. Lack of collaboration

Regulations and bureaucracy

These are considered the main obstacle from business, institutions and the research sector. Companies pointed out how regulations are often too unclear and inhomogeneous; regulations are too difficult to understand and to apply, in particular legislation on waste and by-products. It even lacks an adequate control over their observance. Same critics came also from institutions, especially about inconsistency and fragmentation at different territorial levels. Bureaucracy can be considered as a consequence of the legislative framework: bureaucracy makes processes much slower (thus, more expensive) and more confusing.

The lack of economic resources

The economic issue is a real obstacle to the development and realization of projects. R&D, industrial scale-up and innovation of processes and products require financings that are hard to get (i.e. difficult access to loans). Moreover, investments on technology have long payback times, making them financially unsustainable for SMEs and therefore in competition with other projects with a more immediate return on investments. Another economic issue is the fall in prices of raw materials that undermines the market of secondary raw materials and in general the whole recovery industry.

The lack of culture and knowledge

This is one of the main obstacle to circular economy since it makes even its concept hard to understand. Companies point out a lack of competence and knowledge from the public administration on topics that should be often updated, public procedures are indeed considered too rigid and out of date. The little awareness on this topic and the little knowledge of its benefits are given by a bad communication which causes a stiffness of implementation, of change and of development of new visions. People’s perception and awareness is also of greatest importance for they must understand the benefits in order to change their consumption habits thus helping the development of green products markets.

The lack of collaboration

Companies need to collaborate and to create networks and agreements in order to guarantee an efficient flow of material and its exchange. The lack of collaboration comes from a lack of mutual knowledge and this makes the identification of potential partners (as well as, for instance, authorized plants to receive certain types of waste) quite difficult.  Another factor that undermines collaboration is data protection and industrial secrecy: intellectual property is seen as a barrier for sharing information. The same problem can rise if different companies compete on the same final product: in that case collaboration becomes more and more difficult. In order to have a first, quick glance over the identified barriers, every partner of CESME project has evaluated their relevance within their region, using the following value system (from 0 to 2):

0 =  in my region, this issue does not represent an obstacle to a transition towards circular economy

1= this is a critical issue also in my region, however we have found solutions to successfully overcome it

2 = this is a real obstacle to the transition towards circular economy in my country, it has never been overcome yet 

 

 

0

Absent

1

Present but not critical

2

Present and critical

BULGARY

Regulations and bureaucracy

 

 

x

Lack of economic resources

 

 

x

Lack of culture and knowledge

 

x

 

Lack of collaboration

 

x

 

DANEMARK

Regulations and bureaucracy

 

x

 

Lack of economic resources

 

 

x

Lack of culture and knowledge

 

x

 

Lack of collaboration

 

 

x

FINLAND

Regulations and bureaucracy

 

x

 

Lack of economic resources

 

 

x

Lack of culture and knowledge

 

 

x

Lack of collaboration

 

x

 

GREECE

Regulations and bureaucracy

 

 

x

Lack of economic resources

 

 

x

Lack of culture and knowledge

 

 

x

Lack of collaboration

x

 

 

 

 

 

 

ITALY

Regulations and bureaucracy

 

 

x

Lack of economic resources

 

 

x

Lack of culture and knowledge

 

 

x

Lack of collaboration

 

 

x

WALES

Regulations and bureaucracy

 

 

x

Lack of economic resources

 

 

x

Lack of culture and knowledge

 

 

x

Lack of collaboration

 

 

x

Barriers description

In the following paragraphs, every country/region participating in CESME has provided examples of critical situations related to some of the obstacles that they have rated 1 or 2,  in order to get a deeper understanding of the local mechanisms (in some cases, related to specific economic sectors) and for a better comparison among different countries/regions.

Bulgaria

Regulations and bureaucracy: Frоm а pоlicy pеrspеctivе, Bulgаriа’s lеgаl systеm аs а whоlе dоеs nоt currеntly crеаtе а unifiеd plаtfоrm fоr prоmоting thе circulаr еcоnоmy. Thе frаgmеntеd rеgulаtiоn systеms are оftеn challenged by such leads. Fоr еxаmplе, sоmе оf Bulgаriа’s currеnt tаx rеgulаtiоns discоurаgе еntеrprisеs аnd thе public frоm rеusing оr rеcycling rеsоurcеs. In mаny cаsеs the primary rаw mаtеriаls аrе sо chеаp thаt industriеs prеfеr tо purchаsе virgin rаw mаtеriаls rаthеr thаn rеcyclеd аltеrnаtivеs thаt sоmеtimеs rеquirе аdditiоnаl, sоmеtimеs cоstly, prоcеssing. Such а rеаlity dоеs nоt prоvidе аn еcоnоmic incеntivе fоr cоmpаniеs tо purchаsе secondary raw materials. It might be that relevant tax reductions or measures stimulating the use of recycled materials in certain productions could provide an improvement in this aspect.

The lack of incentives to separate waste collection as well as the lack of sanctions doesn’t contribute to the circular economy. There is space for improving the recycling rates. In аdditiоn, thе еnfоrcеmеnt оf еnvirоnmеntаl rеgulаtiоns is nоt vеry еfficiеnt duе tо lаck оf quаlifiеd pеrsоnnеl аnd budgеt to monitor and control the ones avoiding the laws enforced so far. Public procurement procedures do not help very much either e.g. in light of green public procurement as well as lack of capacity of the companies to bid for such tenders if any.

Lack of economic resources Withоut thе аpplicаtiоn оf stаtе-оf-thе-аrt tеchnоlоgiеs, it is unlikеly thаt еntеrprisеs will bе аblе tо imprоvе thеir еcо-еfficiеncy аnd rеducе thеir negative environmental impact, becoming part of the circular economy concept. Dеmаnd fоr еnvirоnmеntаlly friendly tеchnоlоgiеs is still wеаk, аnd bоth tеchnicаl cаpаbilitiеs аnd finаnciаl rеsоurcеs аrе inаdеquаtе for most of the Bulgarian enterprises, although it should be admitted that the number of successfully implemented technologies is increasing. The lack of support from supply and demand doesn’t facilitate the economic conditions of the value chain. Thеrе is lаck оf аpprоpriаtе trаining аnd finаnciаl rеsоurcеs to overcome these gaps. Small companies usually don’t have the capacity to improve technology and the big companies often lack incentives. Lack of finance in many cases refer to lack of initial capital, lack of financial opportunities or other adequate alternatives. Nevertheless many start-ups are looking into environmental innovations raising funds through alternative sources and try to compete on the international markets.

Lack of culture and knowledge. In pаrticulаr, whеn dеvеlоping thе circulаr еcоnоmy, knowledge is nееdеd fоr еffеctivе plаnning аnd mаnаgеmеnt, including thе crеаtiоn оf scеnаriоs fоr оptimаl rеductiоn, rеusе аnd rеcycling. Еvеry cоrpоrаtе еntеrprisе, frоm а smаll businеss tо а lаrgе multinаtiоnаl cоrpоrаtiоn, is pаrt оf а lаrgеr systеm. Cоmpаniеs аrе intеrlinkеd viа incrеаsingly cоmplеx supply chаins. Thеrеfоrе, аn infоrmаtiоn systеm spreading the knowledge about possibilities for circular economy is rеquirеd if dеcisiоn-mаkеrs аrе tо find mоrе еnvirоnmеntаlly аnd finаnciаlly bеnеficiаl wаys tо plаn аnd mаnаgе thеir rеsоurcеs. In mоst cаsеs, аccurаtе infоrmаtiоn is nоt аvаilаblе tо dеcisiоn-mаkеrs, оr is nоt cоnvеyеd in а timеly mаnnеr. The corporate culture in many companies is still not focusing on environmental performance which does not support establishing a mindset among the employees that supports the process.

Public pаrticipаtiоn is vеry impоrtаnt fоr implеmеnting а circulаr еcоnоmy, duе tо bоth thе cоmplеx nаturе оf thе cоncеpt. Full suppоrt оf аll stаkеhоldеrs (i.е. industriаl mаnаgеrs, gоvеrnmеnt оfficiаls, stаff оf rеsеаrch institutiоns аnd finаnciаl оrgаnisаtiоns) is needed. Withоut a brоаd public invоlvеmеnt, it will bе difficult tо cооrdinаtе cоntributiоns tоwаrds thе circulаr еcоnоmy. Currеntly, Bulgаriа has to increase the administrative, humаn аnd institutiоnаl cаpаcitiеs tо еncоurаgе public pаrticipаtiоn in а circulаr еcоnоmy. Some gоvеrnmеntal and municipal оfficiаls lаck аn undеrstаnding оf еnvirоnmеntаl principlеs. Аlsо, аwаrеnеss-rаising аctivitiеs rеlаtеd tо thе circulаr еcоnоmy cоncеpt (including TV prоmоtiоns, nеwslеttеrs аnd wоrkshоps) shоuld bе cаrriеd оut pеriоdicаlly in оrdеr tо build awareness, sincе such initiаtivеs cаn prоvidе the basis for debates and exchange of experiences from lеssоns learned. Thеsе аctivitiеs could crеаtе оppоrtunitiеs fоr stаkеhоldеrs tо strеngthеn thеir mutuаl undеrstаnding аnd trust, which could be a sound fоundаtiоn fоr furthеr cоllаbоrаtiоn оn prоmоting the circular economy concept. 

Lack of collaboration The major obstacle to a better collaboration is the lack of appropriate information. Again the lack of information results in less efficient collaboration. There is no well-organized data platform recording available secondary raw materials and resources, repaired products, etc. to potential buyers and sellers. Mоrеоvеr, duе tо frаgmеntеd mаnаgеmеnt frаmеwоrks, diffеrеnt kinds оf infоrmаtiоn оftеn bеlоng tо diffеrеnt аgеnciеs. Fоr еxаmplе, еnvirоnmеntаl protection аgеnciеs mаintаin cоntrоl оvеr еmissiоns dаtа whilе еcоnоmic dеvеlоpmеnt аgеnciеs usuаlly cоllеct аnd cоntrоl dаtа rеlаtеd tо еcоnоmic pеrfоrmаncе. Often such agencies do not interact with each other аnd crоss-аgеncy cоllаbоrаtiоn is still rаrе, with thе rеsult thаt none of them cаn plаy а lеаding rоlе nоr cоllаbоrаtе in prоviding such infоrmаtiоn tо thе cоrpоrаtе wоrld.

Greece

Regulations and bureaucracy: on the administrative side, it is an often repeated complaint that Greece’s complex bureaucratic stipulations (despite the progress achieved in the last years) dissuade if they do not prevent actors and investors from developing eco-innovations. Moreover, the regulatory framework changes frequently, thus limiting the ability of involved actors to plan and organize investments.

Until April 2016, all directives related to Circular Economy have been typically implemented in Greece, however it is indicative that no directive was implemented within the required deadline. Delays in some cases exceeded the period of one or two years following the implementation deadline. Actual implementation seems to have been delayed even more, until the required derivative legislative acts have been issued. And finally there is a lack of law enforcement, absence of sufficient audit mechanisms and subsequent delays in the imposition of administrative fines.

Lack of economic resources: an issue that needs to be mentioned has to do with the impact of economic crisis, since 2010 and the imposition of capital controls that have been imposed since July 2015 in Greece. In the context of the resulting economic volatility, this affected the private and public investments as well as the finance initiatives from banks to the private sector. The only money available comes from the EU structural and cohesion funds. As regards the EU structural and cohesion funds for the programming period 2014-2020, Greece has foreseen the allocation of significant amounts for waste management projects.

However, by the time of the Operational Programs the country had not fulfilled the relevant ex-ante conditionality. Although the new national Waste Management Plan and a Waste Prevention Program are in force in line with the requirements of the Waste Framework Directive, there is a need to prioritize the Circular Economy and formulate clear links with the financial instruments available in Greece.

Lack of culture and knowledge: social barriers towards eco-innovation remain, mostly related to public attitudes and ignorance of the benefits of innovation (especially in the area of energy efficiency in the built environment). There is a lack of programs aiming at changing current linear consumer habits, and understanding the value of circular products and business models might require education, take back schemes, consumer incentives, pricing policies, labelling of products and other.

In the early stages of the transition to a Circular Economy and until its core principles and benefits have started to become clearer to the public, it would be beneficial to focus on raising the awareness on more established ideas like environmental benefits and cost savings, rather than the concept of the Circular Economy per se. Furthermore, the local society appears to be hesitant about the quality and the way of use and sometimes this fear is well founded (first application, potential failure of environmental control).

Lack of collaboration: there is a lack of systematic approach to the Circular Economy, including cross-sector collaboration, which is imperative in order for the applied circular models to reach their potential.

Italy

Regulations and bureaucracy. In Italy a slow and complex bureaucracy is widely considered as an obstacle to development and competitiveness in general, therefore an obstacle also for the innovation needed for the transition toward a circular economy. On the basis of a review from the association of foreign banks in Italy (AIBE, 2014), 58% of foreign investors point out that legislative and bureaucratic burdens undermine the attractiveness of the country and 41% highlight the uncertainty of the legislative framework.

Three issues can be considered as the main obstacles: the complexity of procedures;  the overlapping of different legislations; the long time needed to get authorizations and licenses. These issues lead to an economic burden too, not only because of the direct costs (taxes, stamp duties, fares,…) but also because of the human resources needed: Italian small and micro enterprises are estimated to use more than 30 man-days/year for bureaucratic requirements (Report PROMO PA, 2013).

Even the regional structural funds calls (that represent a good opportunity to get financial support for investments) are considered from companies too complex from the bureaucratic point of view (for the submission but even more for the reporting phase); this complexity represents a highly discouraging factor for those SMEs needing a financial support.

Lack of culture and knowledge. This barrier is seen from companies at different levels:

  • žcompanies complain for the lack of knowledge of public administrators on fast growing topics (such as green technologies), which would need permanent training; therefore, the administrative procedures seem often anachronistic if compared to best available technologies and the stаtе-оf-thе-аrt innovation;
  • žcompanies point out that a higher knowledge and awareness is needed also within suppliers; without the involvement of the suppliers, it would be difficult to set up a sustainable value chain;
  • žthe perception of citizens could also be an obstacle: if they don’t know the technology and are not fully aware of impacts and benefits, they can oppose to the realization of new plants. For example, one of the most contested type of plant in Italy is the biomass plant. On the other hand, citizens may have a positive impact on green companies activities: public environmental awareness leads to a more sustainable consumption and a higher demand for green products.

Denmark

Lack of culture and knowledge: The social factor barriers of capabilities and skills and custom and habit are widespread, as the behavioural changes needed to realise many of the opportunities go against ingrained patterns of behaviour and skill-set on the part of consumers and businesses. Imperfect information is also a barrier: businesses is often unaware of potentially profitable new opportunities, or the information necessary to realise them is unevenly distributed.

Technology can be a critical barrier as well, especially for the more technology-dependent opportunities such as cascading bio-refineries, 3D printing of building components and bio-based packaging.

Lack of collaboration: The key barriers include unintended consequences of existing regulations (e.g. definitions of waste that hinder trade and transport of products for remanufacturing), social factors such as lack of experience among companies and policy makers to detect and capture circular economy opportunities, and market failures such as imperfect information (e.g. for businesses to repair, disassemble and remanufacture products) and unaccounted, negative externalities (e.g. carbon emissions). In addition to creating enabling conditions, policy makers can, as appropriate, set direction for a transition to circular economy.

The barrier of unintended consequences from existing legislation limiting circular economy opportunities is present for example in bio-refining where food safety regulations prevent the use of certain certain animal products as feedstock. Such barriers can be in the complexity and cost adhering to regulations as well as in actual prohibition of certain activities.

As businesses are already starting the transition, the circular economy offers an opportunity for policy makers to collaborate with businesses. In Denmark there is a need for cooperation between different government departments (including business/industry, finance and environment) so that no new unintended policy barriers are created and – like the business solution – the policy response is designed to maximise system effectiveness. Other society stakeholders, including citizens and consumers, labour unions, environmental organisations and the scientific and educational community should also be engaged. 

Finland

Lack of economic resources. Companies in South Ostrobothnia are very small in size. It is estimated that about 98% of all companies are micro-companies employing less than 10 people. In small-sized companies the material flows are usually small too. In addition to this, companies are widely spread throughout the area, and sometimes in challenging locations. This means that the transportation costs for small amounts of material flows might rise too much and be unprofitable. This doesn’t encourage small companies to seek solutions for their by-products (at least in collaborative way) and would probably need more incentives from the public sector.

Small size often means small resources both in time and money. If the circular economy solutions demand big investments, most of the companies don’t have the financial capacity to make them. In small companies there is also less knowledge.

Lack of culture and knowledge. Circular economy is not a completely familiar concept within all the companies and the general public. It is a broad concept that are often misunderstood or simplified in to recycling. The attitude towards recycled materials should also be improved. Consumers are being more and more conscious in their choices so the companies might follow them. These sceptic attitudes lead to the fact that there are not that many companies that use recycled materials yet. The market is still too small. The sceptic or ignorant attitudes towards circular economy are relevant especially in the Finnish building habits, when building the new instead of renovating and repairing the old ones is highly preferred. When considering the smallest companies the lack of technological knowledge is also relevant.

Lack of collaboration. The lack of collaboration is present in South Ostrobothnia. There are probably various reasons for this, varying from business to business and industry to industry. In some areas such as food production, there is a high competition that makes the collaboration and sharing of good practices between competing companies very difficult. Long distances between the companies might also affect to the lack of collaboration. There are not that many good examples of collaboration networks that are built on the logic of circular economy.

United Kingdom (Wales)

Lack of culture and knowledge.

1.Potential ambiguity: circular economy seen as a cost. Traditional perspectives such as the ‘polluter pays’ principle may be considered to have contributed to an antagonistic relationship between businesses and environmental lobbies. The externalities such as pollution that companies all around the world produce have led policymakers to impose disincentives (e.g. taxes) in order to compensate society for damage to environment and health. Waste products are viewed as a burden, for society which must dispose of them when they are no longer required, and for business which must pay financially for them to be treated.

Thus the scene is set for a standoff between the ‘money makers’ and the ‘planet savers’, and when government or another body sees fit to introduce ‘green’ or ‘eco’ framed initiatives for businesses, the common perception is that these are costly programmes to mitigate negative impacts or token measures that don’t take the reality of business into account.

The circular economy invites a new vision, based on a unified systems perspective: just as growth is the only common attribute of life, so growth is vital to a living and functioning society.  In closely mirroring natural systems, the circular economy presents waste as a resource or a ‘food’ rather than a burden, and as such something to be valued and maintained at the highest possible quality, rather than disposed of at the lowest possible cost.

The understanding and assimilation of this circular economy vision at government and business levels is vital, since this directs the communication and implementation that follows.  It is therefore crucially important that key decision makers understand the relative costs and benefits of innovative approaches and so they can then provide the necessary support and encouragement for their operational staff.

2. Danger of polarising language and framing – from the research (Ellen MacArthur Foundation /Wrap Wales report) it is reported that several interviewees stressed the fact that terms such as ‘green’, ‘eco’ or ‘sustainable’ have a tendency to exacerbate existing divisions by playing into the assumptions of many business leaders that any initiatives that are environmentally beneficial are automatically deleterious to business. Thus policies such as ‘green growth’ and ‘sustainable development’, whilst trying to promote a positive message, may unwittingly be inviting the cynicism of the status quo.

Centred on economic activity and on opportunity, the circular economy framework goes beyond traditional “end of pipe” solutions and the inevitable tension they create when presented to companies. Rather than offering more schemes and more efficient ways to “clean up”, the circular model embodies a system redesign based on generating positive outcomes from the outset.

The framing and dissemination of circular economy at a localised level can prove a further barrier: in several instances, both business and policymaker interviewees reverted to a discussion of ‘recycling’, which ultimately negates the increased value brought by circular economy practices such as reuse, repair, remanufacturing and pure materials flows, and implies a cost to business which managers may equate to dumping, or landfilling.

The lack of clarity in language used around recycling and the waste hierarchy exacerbates this problem, leading to poor understanding and valorisation of resource flows. For example, although Wales’s major waste policy document describes ‘high levels of clean, high quality, source-separated recyclates’ and the ‘right kind of recycling’, it is the target of 70% ‘recycling’ that stakeholders and local authorities recognise and work towards; the alternative here is to capitalise on the greater opportunities for reuse and longer cycling.

The confusion that exists around the EU’s Waste Framework Directive and the conflation of reuse with preparation for reuse and recycling  also exemplifies this issue, and it is likely that by classifying reusable materials as waste, policy has contributed to the lack of uptake of reuse over recycling. The classification of hazardous waste materials, moreover, can prove a barrier to industrial symbiosis activities for certain companies.

For example, it affects the speciality chemicals manufacturer Dow Corning (Wales) in that businesses which could otherwise be interested in using its silica waste streams are put off by the ‘hazardous’ label and neither party releases the potential valorisation. Of course, such labels have been applied by the regulator for good reason, but there may be cases in which better coordination of the intentions of both parties is useful.

Lack of collaboration. Inconsistency of approach it is evident from speaking to a number of stakeholders that differences in understanding and motivation within an organisation can contribute to fragmentation and ineffectual action. The two core sustainable development principles of policymaking in Wales are Involvement and Integration, an approach that ‘makes the connections between, and effectively integrates economic, social and environmental challenges’.

It appears that there is an opportunity for increased collaboration among and between government departments – for instance Economy, Science and Transport and Natural Resources and Food (Welsh Government). The importance of replacing ‘silo’ mentalities, which focus almost exclusively on given targets and lack practical recognition of the interrelated nature of environment, economy and society, with ‘systems’ thinking as a tool for circular economy is very apparent here.

Several businesses place huge importance on the coordination and consistency of Local Authority collections, and government insiders acknowledge this as an area for improvement. Separate materials streams and effective reverse logistics are a key aspect of a circular economy, and the Welsh Government’s Collaborative Change Programme provides support to local authorities looking to provide higher quality recycling services. However, consensus between local and central government is yet to be reached, particularly with regards to the desirability of a ‘one size fits all’ approach, whether kerbside separation or comingled recycling should be instigated and who should bear the related costs.

Price differentials play a significant part here, and according to a spoke person of the ‘Welsh Local Government Association’, waste reprocessors sometimes offer local authorities similar prices for certain mixed and separated waste materials (e.g. clear and coloured glass), which then makes it hard for the authorities to justify the additional costs of separation. Some businesses also suggest that reuse credits should be paid consistently by Local Authorities in Wales, and at a higher price than recycling credits – thereby incentivising reuse as of higher value than recycling.

Varying motivations between business, government, or the regulator also make for differences in interpretation and implementation of the same legislation, in some cases leading to potential waste of resource.  In some cases where the letter of the law may conflict with the spirit it is vital that a whole-systems perspective is taken by businesses and regulators alike.

1. Business as Usual lock-in -In order to reap the benefits of a circular economy, companies will need to innovate and collaborate along supply chains, apportioning the rewards of innovative product redesign or takeback systems. However, some businesses are anxious about collaborating when for so many years they have acted on a competitive instinct alone. Barriers around competition legislation mean that organisations have to be careful with the manner of collaboration and the information that they disclose, and for some this is a disincentive to circular innovation.

The remit of sales and marketing teams is traditionally to increase the number of units sold as a means to grow the business, but this approach fails to take into account the opportunities for growth and valorisation through repair and remanufacturing of existing materials. At a purchasing level, ‘business as usual’ practices support the custom of over-buying and then disposing of unwanted items, for instance in the clothing industry. This creates needless waste as superfluous stock clogs up the system, bringing down prices to levels that fail to reflect costs of production and discouraging reuse.

Bias towards the status quo is a key challenge for transition to circular economy, and when businesses are struggling to stay afloat in a difficult economic climate there is inevitably a reluctance to risk bold innovations that are perceived as risky to the bottom line, compared with more traditional approaches.

2.Limited take up of public procurement drivers -Following the work of the UK Sustainable Procurement Task Force in 2005 Welsh Government, with the assistance of the Environment Agency Wales developed the Sustainability Risk Assessment (SRA), to promote consideration of life cycle thinking in contract planning. The SRAs encourage consideration of the potential economic, social and environmental impacts linked to specific procurements.

For example in the last all-Wales Print Framework awarded by Welsh Government, the opportunity to move to vegetable based inks and dyes was identified which were less environmentally hazardous and consequently also less costly for contractors to use, manage and dispose of. The collaborative approach to procurement not only saved 25% but also enabled the move to vegetable dye to be made across all the print work procured.

The SRA templates also prompt consideration of options such as reused or leased products, and take-back options. In a survey of SRA usage undertaken by Value Wales in 2012, 85% of respondents confirmed that the SRAs are specified in their organisations procurement strategy and or, policy documentation or in procurement desk instruction or standing orders.  However, only 49% of respondents stated that in their experience the SRAs were widely used.

Existing critical situations and vicious circles

Starting from the categories of obstacles examined above, every region reports one case of “failure” considered as the most characteristic, at local level, or some kind of dynamic that happens regularly.

Bulgaria

Regarding waste collection a common practice is the existence in parallel to the extended producer’s responsibility scheme, another scheme which allows scavengers sell the recyclable fractions of the waste to be collected by the packaging recovery organizations and get some income. This dualistic approach needs to be monitored and controlled, or even redesigned, because it makes the process of collection of recyclables very controversial – from one side the packaging recovery organization are drained from substantial amount of recyclables, on the other it demotivates the households and the companies to separate waste at the source.

Greece

Regarding regulations and bureaucracy and the lack of economic resources, there is a delay in licensing and financing business to start operation. The process is long and complex as many entities are involved. Collection and recycling systems as applications on circular economy are not always easy to develop. There is a delay in the development of entrepreneurial initiatives from the public and the private sector for their utilization. It is of great importance the licensing process to be simplified in order to give motives for the construction and operation of new plants.

Regarding the lack of culture, knowledge and collaboration, there is lack of information about the benefits of implementing circular economy in order to facilitate industrial symbiosis. The economic crisis has reduced economic activity and this can lead to a shortage of recycled raw materials. Stakeholders such as farmers and livestock farmers do not believe in the benefits of circular economy, they are hesitant to use products derived from recycled materials.

Moreover, there is need for well experienced staff, technologically advanced machinery and the development of networks to ensure continuous operation of the system. The lack of expertise and qualified staff means that the company should provide an investment amount in its annual budget.

Some kind of dynamic that happens regularly tends to be the utilization of waste generated from constructions and are used for asphalt construction. The major problem that would break this circular utilization of recovered product would be the lack of this material, but this problem does not exist. The efficiency of raw materials is 30%, as it is the reclaimed asphalt which is used for preparing new. Furthermore, in the tourism industry there are remarkable application examples of circular economy, as exploiting seawater, reusing water, recycling wastewater, managing waste and provide the sustainable procurement.

Italy

An example of failure deriving both from the lack of knowledge and an unclear legislation comes from the building sector (from the report “Circular Economy in the building sector”, 2017, Legambiente): nowadays a great opportunity of this sector is represented by the use of recycled aggregates deriving from construction and demolition waste, that are available in great amounts (25-30% of the total amount of waste in Europe is represented by this kind of waste); environmental benefit will be great considering the amount of saved virgin material.

The lack of knowledge is a real obstacle:  the specification criteria for public works often restrict or even forbid the use of this kind of recycled material because public administrators who don’t know this material are skeptical about it and don’t consider it as performing as the virgin one. The technicians who have to coordinate their works are often concerned about the administrative or criminal liability for the misuse of recovered material, because of the strict legislation on waste and consequences for those who manage waste without permits.

Legislation could provide a clear framework for the use of recycled aggregates, defining the requirements for the end-of-waste and all the technical and environmental characteristics the material must have in order to be reused; this would provide awareness and certainty for all actors of the value chain.

Denmark

Denmark has many leading companies pioneering circular solutions, a long an rich tradition of innovative policies that stimulate the circular economy, as well as a long-term strategic commitment to energy efficiency and renewable energy. Denmark outperforms EU28 on a majority of selected resource and innovation metrics, such as share of renewable energy og eco-innovation.

Still, significant value is left on the table across the economy, which could be unlocked by e.g. improved utilisation of assets and better use of waste or by-products as a resource. For example, one third of all waste is incinerated for heat and power generation before extracting its full potential value as a resource, and the materials that are looped back into the value chains are predominantly recycled for material value instead of being usedin higher-value cycles, such as reuse or remanifacturing. 

Finland

When thinking about the problems of implementing the Circular Economy particularly within SMEs, probably the most vicious obstacle in South Ostrobothnia is the small size of the companies and the widely spread infrastructure between them. When the companies are small usually the amounts of their by-product flows are small. Transporting only small amounts of by-products long ways is felt logistically difficult and expensive and therefore the small companies are sometimes hard to introduce to Circular Economy.

For example there are small quantities of different kind of plastic products and –packages in almost all SME companies, shops and farms, which are difficult to sort, collect and circulate. In bigger industrial and commercial units there is no problem to properly sort, collect and circulate plastic and other packaging material etc.

United Kingdom (Wales)

The Public Sector framework for the procurement of office furniture for the public sector did not prioritize furniture for reuse or remanufacture. Public sector continuing to procure new furniture and at best recycling old furniture.

A way out – virtuous examples and initiatives  

Some existing case studies (as the ones described in chapter D) could represent a solution to the barriers examined above; where possible, every region has provide a good practice that can represent a practical solution to overcome the above mentioned obstacles.

Bulgaria

The transformation of transport shipping containers into social houses appeared to be a successful best practice example because due to the knowledge, enthusiasm, the proper communication and solid financial justification in terms of value for money the founders of the company running this project succeeded to overcome all of the barriers for implementation of the concept behind these project and make it sustainable in terms of economic, social and environmental perspective by:

  • Effective and efficient collaboration with municipal and state authorities to fix administrative and regulatory issues in the process of building and maintaining the social houses;
  • By explaining accordingly the benefits of transforming a marine transport container into a “house”, a lot of business undertakings declared readiness and supported the initial stages the project and thus the lack of financial resources was overcome. Consequently everybody realized the economic efficiency of such a project;
  • The lack of culture and knowledge was overcome the same way – proper, adequate communication and conveying the right messages to the public and the stakeholders concerned;
  • As a result of the above mentioned the collaboration among parties was very effective and efficient;

Greece

The application of the model of circular economy in Greece is seen as a challenge and an opportunity. The recycling and recovery of waste before final disposal is the solution to one of our biggest problems, which is their management. Businesses contribute to environmental protection, using waste as alternative raw materials in the production process while improving competitiveness by reducing the raw material costs. This solution contributes to sustainable development by reducing the environmental footprint of human activity, increasing the level of quality of life, while offering new jobs in the waste management sector and provides solutions to local communities on the critical issue of the waste management, reducing costs for their management. Furthermore it helps the quality of life and resource efficiency.

Businesses aiming for economic benefit by implementation of circular economy have an incentive to overcome the obstacles. So indirectly they offer knowledge, expertise and experience. Furthermore, they promote the implementation of the goals that the European Directives set within circular economy as wel as the simplification of national legislation. The society directly benefits by the integrated, safe and low cost waste management.

There is a positive impact at the local and regional level regarding the reduction of materials disposed to landfills, the saving of natural non-renewable resources (fossil fuels), the impact on climate change and pollution of natural resources. Through good business practices, environmental consciousness is created. Businesses enhance the information regarding the benefits of applying CE and disseminate the necessity and usefulness of good environmental practices through their employees, the local community, their visitors and the Internet.

Italy

One of the best practices described in chapter D, even if not related to the building sector described above, is a good example of how to use recycled materials without obstacles.

ILPA is a group of 3 companies which all together manage the whole supply chain of r-PET: from post-consumer plastic to a new thermoformed food packaging; the 3 companies belonging to ILPA are:

  • ž   ILIP – business units: fresh products packaging; foodservice packaging; fresh food packaging
  • ž   MP3 – business units: semi-finished products; thermoformable and FF&S reels; cut sheets
  • ž   AMP Recycling – business units: PCW PET recycling; R-PET films extrusion; horticultural packaging

ILPA’s three main commitments are: (1) REDUCE packaging weight without compromising the safety and shelf life of the packaged products by promoting a more sustainable and innovative packaging system, like heat sealing; (2) RECYCLING: as part of the vertical integration of the r-PET supply chain, ILPA creates a closed loop system from post-consumer water bottles for food packaging; (3) RENEWABLE RESOURCES: I.L.P.A. is the only European manufacturer with complete ranges of disposable tableware, food service packaging and fresh produce packaging made in PLA. ILIP represents the final stage of ILPA recycled -PET vertical integration converting r-PET in food trays and securing its origin and traceability:

  • washing, sorting and grinding post-consumer water bottles (the water bottles supply is in accordance with COREPLA standards, the Italian consortium for the collectinon, the recycling and recovery of the plastic packings)
  • extruding r-PET flakes
  • thermoforming r-PET sheets   

The E.F.S.A. (European Food Safety Authority) approved the food grade r-PET flakes, therefore ILPA is entitled to manufacture 100% r-PET punnets. In compliance with the Reg. EC 1935/2004 and the Reg. EU 10/2011 ILPA is now producing multi-layer sheets made of 20% virgin pet layer and 80% r-PET layer, and its next step will be the production of monolayer sheets made of 100% r-PET layer, in compliance with the Reg. EC 282/2008. The current recycling capability of ILPA group is 15.000t and by recycling 15.000t of waste into secondary raw material ILPA contributes to avoid the production of the same amount of virgin PET which, in terms of Global Warming Potential (carbon footprint), is equal to 25.800.000KgCO2eq.

ILPA is a virtuous example of a company which managed to close the loop of its production by collaborating with the three companies belonging to the group and by respecting European regulations, getting also the due approvals from the competent authorities.

Denmark

Denmark is internationally recognised as a front runner in the circular economy. As such Denmark is one of the world leaders in the domains of energy efficiency and the  adoption of renewable energy. Yet, even Denmark has significant opportunities to further transition towards circular economy. The Ellen MacArthur Foundation has identified 10 circular economy opportunities in five focus sectors in Denmark: 

Food and beverage:

1. Value capture in cascading bio-refineries

2. Reduction of avoidable food waste

Construction and real estate:

3. Industrialised production and 3D printing of building modules

4. Reuse of high-value recycling of components and materials

5. Sharing and multi-purposing of buildings

Mashinery:

6. Remanufacturing and new business models

Plastic packaging:

7. Increased recycling of plastic packaging

8. Bio-based packaging where beneficial

Hospitals:

9. Performance models in procurement

10. Waste reduction and and recycling

These ten identified opportunities are already being pursued to some extent today, inside or outside Denmark. There is however significant potential to scale up. Doing so could bring Denmark to an advanced transitioning and in some areasalmost fully circular economy by 2035. 

Finland

Lapuan Peruna is a company that makes potato starch for the use of paper industry. During the recent years they have actively developed new ways to use the waste material flows from the extracting process and been successful in this. Through new technology and methods they have been able to produce more enriched and versatile fruit juice that can be used as a protein feed for animals and a fertilizer for soils.

Lapuan Peruna is a good example in many ways and they have overcome many of the earlier mentioned obstacles. Firstly, they have managed to get financing for their new process of using the by-products from the starching process. This has been done through the European Fund for Strategic Investment (EFSI).

Secondly, one could say that Lapuan Peruna has overcome the obstacle of lacking knowledge and culture. They have been actively seeking ways to use their by-product flows more efficiently and sought and found opportunities from the circular economy. In addition to the EFSI funding they have successfully received funding from a program to enhance nutrients recycling run by the Finnish Ministry of Environment for a research project. Thirdly, they have been collaborating with their potato suppliers very well and thus have been able to test their new products with them. So in other words their company works in a good circular economy system where they buy potatoes from local contract farmers and also make products from by-product-flows for local farmers.

In another case example Kohiwood Ltd is producing wooden glulam panels for furniture industry and construction material. In Kohiwood the material flow is so enough, that all side products of the main production are able to be sorted and used according to sustainable circular economy principles. The wood material which is not going to the main products is chipped and sold to the pulp- and paper industry as raw material. Wood bark is used in bioenergy production and all kind of packaging and handling material used in production chain is sorted and circulated. 

Wales

Working collaboratively Public Health Wales were able to appoint a consortium to deliver the office furniture solutions for their organization.  The consortium included an SME and social enterprise that were able to deliver a local solution remanufacturing the majority of the equipment and avoiding unnecessary waste to landfill (41 tonnes). Public Health Wales decided not to use the office furniture framework and took a bespoke approach with a tender specification designed to promote reuse and remanufacture. The tender was put out through OJEU, the Official Journal of the European Community (http://www.wrapcymru.org.uk/sites/files/wrap/Public%20Health%20Wales%20Sustainable%20Workplace%20(4).pdf).

Conclusions

By looking at the partners contributions on the barriers of implementation, it is clear how the circular economy is an already well-known yet controversial concept. The barrier that results to be the hardest to overcome by all partners is  “lack of economic resources”, followed by “regulation and bureaucracy” together with “lack of knowledge” and lastly by “lack of collaboration”.

Economic resources are obviously fundamental for developing circular economy models and their lack makes it impossible for companies to switch to new business models. New models often require new technologies, new know-how which require both big investments, that SMEs cannot always afford, and human resources. Although the demand for green technology may still be weak and green investments may not be seen as profitable, more incentives and dedicated financing opportunities are desired if not necessary. In the same way, regulations should also facilitate the access to the circular economy, whereas they are often considered too confusing, complex, fragmented and subject to frequent changes.

Moreover, if regulations are complicated and do not always make it easier for companies to implement new circular models, bureaucracy complicate the framework even more by making the process longer thus representing an even more discouraging factor. As for the lack of culture and knowledge, it emerged quite clearly how the circular economy concept has not yet been understood by many within the most important actors. In fact, companies point out how the public administration is not enough prepared, so the lack of knowledge is a big problem not only within the general public, but also within the civil servants. Lastly, collaboration seems to be not as urgent as the other barriers, demonstrating that there is a general interest towards the circular economy and thus a general desire to implement it, however the essential starting points (such as economic resources, regulations and knowledge) are sometimes still missing.  

Although the barriers of implementation are clear there in every country, each partner also described virtuous examples of implemented circular models that were able to overcome the above mentioned barriers. The circular economy is a relatively new concept but for sure one of the most relevant and definitely something at which companies want to aim; of course it needs to be improved, society as well as business need time to adapt but nevertheless circular economy is already giving very good results. For this reason, information and awareness need to be boosted on all levels, for culture and knowledge represent the ground on which circular economy can actually grow.