"Circular Economy," "Extended Producer Responsibility,"...What Does it All Mean? 

October 2016

     Our traditional economy has been based off of a linear economic stream. Let’s use smart phones as an example. The linear economy starts with resource extraction (copper, gold, and petroleum-based plastic are all non-renewable resources extracted to make smart phones). These resources are then manufactured into a product using capital, electricity, water, and human labour. The product is marketed and sold to the customer, and the customer spends a few years carefully timing their next upgrade (depending on their ability to not drop their phone or double check the back seat of the cab before they exit on a Saturday night). At this point, the phone has reached its ‘end-of-life.’ Years ago, the majority of people at this stage would throw their cell phone away or hoard it in a drawer with other relics of the past. Companies are seeing now that there is too much value in electronics and other goods to bury them, and nobody wants to open up hazardous landfills in the future to dig for valuable resources (although this has happened with vintage Atari video games in New Mexico).

     Today, almost 50% of Canadians recycle their cell phones according to recyclemycell.ca. This might mean that the recycled phones are refurbished and resold, if in good condition. If the phone is no longer useable, it means that the gold, copper, and other precious resources are extracted from the phone and reused again as inputs into new phones. There is now even a robot owned by Apple named Liam whose sole purpose is to disassemble and salvage materials from the IPhone 6S. This investment by Apple is indicative of a change to the circular economy where materials that are extracted are kept in the economy longer in cycles of reuse. 

     Companies are doing this not because the Lorax told them to. They are doing so for a myriad of financial reasons. Regulations, including the Canada Wide Action Plan for Extended Producer Responsibility have instituted fees and penalties for companies that fail to not only finance, but also to help design and operate waste diversion programs for their own sector. The purpose of this is to promote design for the environment (DfE) and curb our single-use, disposal commodity culture. Recycling, while certainly superior to landfilling for the environment, does little to address the massive amount of virgin materials needed to make the recyclable products in the first place, and the fact that most materials (except aluminum; you’re the best, Aluminum!) can only be recycled into inferior materials and only when there is enough supply and demand to constitute a market. This EPR structure protects scarce natural resources and lets companies determine the most efficient methods for them to manage the end of life collection and processing of their used products.

     Aside from regulatory pressure, companies are changing to ‘circular economy’ thinking to protect themselves against fluctuating costs for important inputs. Natural resources such as copper, which delivers our God-given wifi and other telecom miracles, are growing increasingly scant and the mines we have dug to reach them are starting to look like this:

                                     Bingham County mine in Salt Lake City, Utah

                                     Source: commons.wikimedia.org

     Some resources are becoming so difficult and costly to extract from Earth that there is actually a business case to mine certain minerals from asteroids. In space!

     So there you have it folks. The Circular Economy is a means to hold on to the value that companies initially invest in raw materials, and to reduce extraction from a stressed out Mother Earth, while Extended Producer Responsibility is a regulatory tool in this new economy that will forever change the way that products are designed with end of life and reuse in mind. Canasco promotes the circular economy by advancing products that turn waste from one process into inputs for another process, such as food waste into biomass (Hungry Giant), and wood pallets into fuel chips (Auto Breaker).