How the Internet of Things Enables the Circular Economy

Ellen MacArthur,founder of Ellen MacArthur Foundation, and a global expert on circular economy,gave a keynote during the first European Circular Economy Summit, held in Barcelona together with the Smart City Expo World Congress. After describing her experience as a sailor, and how going solo around the world taught her about finite resources, she gave a comprehensive explanation of the Circular Economy concept and why we need to embrace a new way to manufacture and consume products.

In her presentation, she introduced the report “Intelligence Assets”, and how the internet of things (IoT) is enabling the Circular Economy. “[IoT] it’s allowing the Circular Economy to develop at a much faster pace than it ever could without into ICT and the internet of things in telemetry,” she said.

The key to make it happen, she argued, is the implementation of internet of things (IoT) technologies, with reuse and repurpose in mind, in the design and manufacturing of today’s products. While the IoT is already present in industries such as transportation, where buses, metros, railways, and aviation are taking advantage of billions of sensors to schedule maintenance, and reduce waste, many other markets are still behind, especially consumer products, and they are ripe for transformation.

The IoT and intelligent assets, which can sense, communicate, and store information about themselves, will enable the fusion of manufacturing and digital technologies, creating products that can signal any problem, determine when need to be repaired, and schedule their own maintenance. MacArthur said:

Digital technologies are driving a profound transformation of our economy. Guiding this wave of change by applying circular economy principles could create value, and generate wider benefits for society, as this report shows. Intelligent assets are a key building block of a system capable of ushering in a new era of growth and development, increasingly decoupled from resource constraints.

Inexpensive sensors could be fitted in everything from dishwashers to coffee makers, and from drills to lawn mowers, and help keeping them in perfect working condition for longer.

It is necessary to make products easy to maintain and repair, and help local communities share their use. The drill that people store in their garage, for example, is used an average of 45 minutes over its lifetime. People buy them because they are cheap and convenient to have on hand. You probably have one stored in a drawer or toolbox. Do you remember when was the last time you used it? Chances are you don’t.

A new generation of IoT enabled products could help eliminate waste if those are manufactured to be shared. Apps like Uber and AirBnb could be used to share rarely used equipment and charge a small price per use. For example, a lawn mower could be reserved, located, and rented as needed. It is like having a library where, instead of borrowing a book, you can borrow some tools only when you need them.

That could also be a new business for manufacturers. If a company such as Black & Decker could produce a durable drill, equipped with sensors to charge people per minute of use, as well as indicate when a component needs be replaced. Instead of making millions of drills every year, it could make thousands and collect usage fees.

One example of pay per use is electric-cars’ batteries. Most manufacturers, including Nissan, Renault, and Tesla, are starting to use a lease per km model. The electric vehicle owner leases the battery from the manufacturer, who charges a rental price per distance traveled or hours used, and the replaces the battery when its performance falls below 80%. Those batteries are then being repurposed to store electricity produced by renewable energy sources, where they can have a much longer operating life. At the end of their life cycle, batteries will be disassembled, and their still good components will be used to make new ones.

Another example is solar power. The Ellen MacArthur Foundation report Intelligent Assets explained:

For instance, an ecosystem of intelligent asset-enabled services could jointly open widespread access to reliable, grid-free renewable energy. Solar panels could be provided as a service to individuals and businesses without access to the capital to buy solar panels themselves, through weekly online payments. Battery health monitoring, predictive maintenance of panels, automated management of distribution systems and other IoT-enabled services could complement this model to avoid the massive investment in capital and resources needed to develop a centralized grid infrastructure.

Unfortunately, the consumer electronics market is one of the biggest culprits. If you look at the smartphone vendors, they are making their products more difficult to repair all the time, and impossible to upgrade. Companies such as Apple, Samsung, Huawei, Sony, and others have moved from removable batteries to fixed ones, and they do not allow memory upgrades on many of their flagship models. They just want power users to replace their smartphones every two years.

A recent short film about the circular economy directed by Ed Scott-Clarke, in partnership with Dell and the Ellen McArthur Foundation, explains the circular economy and the problem of consumer electronics waste:

While most of the replaced high-end smartphones are still used for a couple of more years, as they are handed down to other family members, or sold on eBay, the inexpensive, low-end models have no such luck. They are completely discarded as soon as their owners can purchase a more powerful model. The best thing that can happen to those low-end smartphones is that they will be dismantled and some of the key components and metals recycled.

Ellen MacArthur was outspoken about the need to embrace the circular economy. She asked key questions:

  • What economic model can actually function for the long term?
  • What model could be regenerative and restorative?
  • What can actually allow us to thrive with the growing population?

She answered:

An economy which is restorative and regenerative by design, an economy which is resilient, an economy which looks at the entire world through a different lens, where by design the first line on a design brief is: we need to be able to keep this product at its highest value at all times, and when it gets to the end of its life, if we can’t recover the components, we need to be able to recover those materials, and feed that back into the economy again.

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