Concrete examples of what the circular economy means

Did you know that at least one-third of food produced worldwide is never eaten? That’s according to UN estimates. A large proportion of wasted food is retailers’ unsold stock - consumers often reject perfectly edible products based on appearance or proximity to a sell by date.

Enter Phenix, a French company that started offering retailers an attractive alternative to disposing of this food. Traditionally, retailers and industrial companies paid outside firms to take unsold products and either incinerate them or place them in a landfill. Phenix created digital services that allow its customers to optimise sales of food close to its expiration date and connects retailers with charities in need of food donations. The company also develops new recycling possibilities to give unsold products a second life. In addition to saving the cost of paying someone to get rid of the waste, customers can qualify for financial incentives such as tax credits when donating to non-profit entities.

In France, it currently manages 5% of all French food donations – the equivalent of 100 000 meals distributed a day and 50 tonnes of avoided waste daily. It has already expanded to Portugal and Spain. With the help of a €15 million equity investment co-lead by Bpifrance (subsidiary of Caisse des Dépôts et Consignations group), Phenix aims to expand its activities and grow internationally.

It’s a perfect example of the circular economy, which takes the traditional linear economy and bends it into a more sustainable model. Traditional, linear business models have typically relied on taking a resource, producing something out of it – often with considerable waste in the process – and then selling it to the customer. The customer then uses the product until it gets scrapped. Then he buys a new one. The circular economy looks for ways to design products so that they never become waste. The idea is to recover materials and other resources after they have been used, and reduce waste in the production process.

Five national promotional institutions – from Poland, Italy, France, Germany and Spain, plus the European Investment Bank – on July 18th launched a joint initiative on circular economy. The initiative seeks to combine the expertise the 5+1 institutions have gained from financing innovative projects – projects that are setting the circular economy in motion. The initiative calls for €10 billion in investments over the next five years to accelerate the EU’s transition to a sustainable and circular economy.

Here are five other examples of circular economy projects from across Europe:

Novamont makes bioplastics from starches, cellulose and vegetable oils. They also make biolubricants such as hydraulic fluids, transmission fluids and greases, which decompose in just a few days without leaving a trace. The biolubricants are ideal for ecologically sensitive sectors such as agriculture, forestry, boating, etc. The company also make biodegradable microparticles for exfoliating creams, and other cosmetic ingredients out of food crops. Novamont produces these materials in facilities that have closed down or become unprofitable, thus regenerating industrial sites and creating new jobs in places that have experienced downsizing. The European Investment Bank lent the company €30 million for production and research and development.

Another example of giving deserted, former industrial space new life comes from the centre of Milan. In 1930, Manifattura Tabacchi built a 90 0 00 square-meter site to store raw tobacco. The site had been abandoned since the 1990s when production stopped. That is until Italian Cassa Depositi e Prestiti (CDP) invested €40 million in a project to redevelop it. One building has already been successfully retrofitted to provide 17 000 square-meters of residential space and 2 000 square meters of office space, with the rest of the complex to follow.

In Spain, the biomass district heating plant in Soria (Red de Calor de Soria) uses woodchip residue from the local timber industry as fuel. The Spanish promotional bank, Instituto de Crédito Oficial (ICO), made an equity investment into the project through its venture capital firm AXIS. The project will provide 80 GWh of renewable energy a year, enough to supply heat to more than 16 000 inhabitants in 8 000 homes, and saving 28 000 tons of carbon emissions in the process.

Circular economy starts with simple things, like extending the lifetime of something – instead of throwing it away and buying a new one. This is what a local railway carrier, PKP SKM did in the Tricity area in northern Poland, where they connect three cities on the coast of the Baltic Sea. Wih 55 million PLN (around €13 million) from the Polish Bank Gospodarstwa Krajowego (BGK) they refurbished 22 electric railway carriages, extending their lifetime by another 20 years.

Finally – have you ever been hot in the kitchen because the oven was on? Just imagine the heat generated by baking 4 500 loaves of bread and 75 000 rolls every day. Now, imagine what you could do with that heat!

For Müller Egerer, a chain of traditional bakeries in Germany, the answer was simple: run the dishwasher.

“Baking is done at night, and this generates exhaust heat. The dishwashers are run at another time,” explains Jan-Christoph Egerer, managing director of Müller Egerer. “The exhaust heat can then be used again.”

The bakeries also use the energy generated from the exhaust heat to cool down pieces of dough in fermentation inhibitors, and then warm the dough up again in the afternoon. The complex system of capturing and then releasing the energy was set up with the help of a certified energy consultant and financed with a €900 000 promotional loan from Kreditanstalt für Wiederaufbau (KfW). The repayment can be reduced by €150 000 upon proof of the energy savings created.

The new system is already saving the bakery chain up to 650 000 kWh of energy per year. That’s savings not only for the bakery, but for the planet.

And these projects are just the beginning. As the €10 billion is in loans, equity investments and guarantees – it can hopefully be recycled (in the true spirit of the circular economy) to finance even more projects in the future.