For ages, industries have been practicing a linear economy model—make, use, dispose of—that is neither sustainable nor environmentally friendly and results in huge waste. On the other hand, a circular economy model uses the 3Rs (Reduce, Reuse, Recycle) concept and intends to replace the ‘end-of-life’ concept with restoration and regeneration.
This paper proposes a mechanism for trading ‘waste’ derived from conventional cap-and-trade mechanisms for carbon trading and a clean development mechanism (CDM). The proposed mechanism can be leveraged via policy making for a circular economy and organizations aiming to achieve Net Zero.
The Importance of a Circular Economy
A circular economy is an alternative to the traditional, linear economy of make, use, and dispose of. Based on the 3Rs, a circular economy closes the loop and eliminates the end-of-life for any product.
Using the waste generated when a product’s life cycle ends, either as a raw material for some other industry or an upcycled product, promotes the concepts of regeneration and restoration.
Waste Trading in a Circular Economy
This paper proposes introducing waste trading into the conventional carbon trading mechanism and promotes that industries shift from a linear to a circular model.
Waste Trading: Using a trading mechanism to contribute a unit of waste (say, one unit = one tonne) to a circular economy.
Aim: To reduce or manage the waste generated in a product’s or service’s lifecycle
Proposed Mechanism: The proposed mechanism takes into consideration the cap-and-trade mechanism for carbon trading and reduces carbon emissions:
Many examples of such symbiotic industrial relationships can be found in the Kalundborg Eco-Industrial Park, be it steam-waste of one industry being used to run turbines for another or a refinery extracting pollutant gases and supplying them to a chemicals manufacturer.
Figure 1 depicts the basis on which we have derived the mechanism for waste trading.
If new and existing products are designed and redesigned in a way that they either produce less waste at the end of their lifecycle or can be used as a secondary raw material by other industries, the amount of waste reduced, managed, or consumed would lead to a reduction in carbon emissions.
The emissions produced can be measured, and the difference between the emissions and the capped limit can be traded in the form of carbon credits (see Figure 2). This would lead to the development of sustainable products.
In the clean development mechanism, developed countries earn credits by investing or helping developing countries set up clean projects. Similarly, we propose that developed countries help developing countries set up:
The integration of a waste trading mechanism with the carbon trading mechanism will further help reduce the carbon footprint and introduce circularity in the ways of working. Industries must transition toward a circular economy to achieve a sustainable and more profitable economic model. Technology will have a major role to play in shifting the linear economy to a circular one. Technological advancements and a shift towards a circular and a more sustainable world would generate more employment opportunities as the industries would undergo a complete redesign & revamp. The proposed integrated mechanism is scalable to various industries aiming to help them achieve circularity, make them more sustainable, and thereby reduce their carbon footprint to Net Zero.
Global Head - Energy & Commodity Trading Business & Digital Transformation, Wipro Ltd.
Kapil has 20+ years of extensive global experience, complemented by sharp business acumen, a hands-on management style, and a strong foundation in on-time, on-budget delivery within the ETRM ecosystem. He has built large, global, culturally diverse teams. At Wipro, as Global Head of Energy & Commodities, Kapil is responsible for growing the Energy & Commodities business globally. He is also responsible for building the global consulting organization and value-added services for industry, both in traditional and transformational solutions, with a deep focus on getting clients ahead in their Digital journey. Kapil is passionate about how businesses can reduce their carbon footprint and focus on renewables, keeping a close tab on Circular Economy principles and eventually helping businesses to reach Net Zero by changing how traditional businesses are being operated. Kapil has a Master’s in Business Information Technology from Middlesex University, London, and a post-graduate diploma in Business Administration from the University of West London.
Kapil can be reached at Kapil.email@example.com.
Business and Digital Transformation Consultant
Energy and Commodity Trading Business, Wipro Ltd.
Upasana Singh is a Consultant at Wipro working with the ETRM practice. She is a Management Graduate in the field of Energy Trading from the University of Petroleum & Energy Studies, Dehradun. Before completing her MBA, she received her M.Sc. in Industrial Chemistry from Amity, Noida, and was associated with the Council of Scientific & Industrial Research – AMPRI, Bhopal, wherein she worked on extracting and synthesizing nanoparticles from red mud and synthesizing geo-polymers using fly ash. She has been focused on reducing the carbon footprint, renewables, and the concept and the means of implementing a circular economy for a decade. She graduated with honors in chemistry from Dayalbagh Educational Institute, Agra. From the days of graduation, she was introduced to the idea of a symbiotic ecosystem where inhabitants can lead an active, disciplined, and co-operative life in a self-sustained community. With this innovative idea of integrating waste trading with carbon trading and a clean development mechanism, she aspires to embark on an active journey towards a sustainable and circular world.
Upasana can be reached at firstname.lastname@example.org.