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Let’s talk about: circular economy with Vojtěch Vosecký

Michael Londesborough: Today’s guest is Vojtěch Vosecký. He works for the nonprofit organization INCIEN, interested in innovative environmental solutions, strategy and management. Specifically, he is working on projects that will enable our transition from our linear economy to a circular economy.

Vojtěch, why do we want to go toward a circular economy? What’s in it for us?

Vojtěch Vosecký: I think it’s quite straightforward, at least for me. In a linear economy, we take resources, make products out of them, and then distribute them across the whole world. We consume them and at the end of their lifecycle, they become waste. As it is, we’re not very effective at working with that waste and recycling it. Currently in the EU, we produce 2.5 billion tons of waste every year. Half of that gets landfilled and incinerated. A circular economy proposes a healthier alternative by proposing a system where there is no waste. Where waste equals resource.  Same as in nature, where the concept of waste doesn’t exist.

ML: Of course, waste is bad. If we look at any natural system there is no waste. How did our economy get this wasteful? Is waste a necessary part of the linear economy?

VV: Until recently, humanity wasn’t such a waste-producing entity. A few thousand years ago, we didn’t produce as many products or types of materials that would become waste. People were also quite smart about finding ways to extend product lifecycles by finding use for them even after they’ve served their primary purpose. Academia believes that this changed after the Second World War when economy needed to be started again. The US and other Western nations began producing a lot of great stuff, in large quantities. The idea was to put a fridge into every home, globally. That’s when the different age… of the linear economy and thus waste, started. It’s just getting worse.

ML: A linear economy has a beginning, middle and an end. The end is a production of waste. The beginning is me, owning something new. How important is ownership in this whole debate? Will ownership change when we go to a circular economy?

VV: I don’t think that it starts with the consumer, who already buys a finished product or service. Someone has to take resources and turn them into a product, then distribute it and sell it, so that has to be taken into an account. However, you as a consumer do play an amazingly important part in that whole process. Ownership itself is also an amazingly important part. It’s a big topic and actually a big problem. The circular economy relies on a transformation of the concept of ownership, from owning something to using services. Maybe you don’t need a lightbulb, you just need to use the light as a service, maybe you don’t need a car, and you just need to get from point A to B. But that kind of thinking offers great challenges.

ML: I think it particularly belongs to younger generations. I’ve read studies suggesting that people perhaps my age and a bit older, want to own a car, they want their car, they want to have ownership. Have it outside in front of their house, they can clean it, they can look after it. Meanwhile, younger generations are thinking “I’m not interested in owning a car, I just need to go from A to B. I’m not interested in going to buy a new lightbulb, I just want to buy light. I can understand that. So, I can see this having strong potential with younger generations. Is that fair to say?

VV: I would’ve thought so, but when we looked into textile purchases in Czech, the youngest generations were the heaviest purchasers from H&M. So it’s also young people driving the current system forward. At the same time, I think they are more open to innovative ideas. It’s not a crazy thought for them to share a car with someone and so on, in comparison with someone who has been here for 80 years and is not interested in changing anything anymore.

ML: Presumably this system makes sense and yet so far, it doesn’t really exist. That must mean there’s costs involved. What costs will we have to absorb to make the circular economy work?

VV: Right now, circular economy relies on using and working with what we already have. That means, for example, using recycled content in new products. Sometimes that comes with a bigger price tag than if sourcing from virgin resources. One bitter pill that will come with owning more circular products will be higher cost. The other issue is with the concept of ownership. In order to really have a successful circular economy model where materials flow in perpetual cycles without loss of quality, the producer has to stay in charge of that material. It requires a change of ownership, from the customer to the producer. People are sometimes not interested, or maybe not ready for that. Working here in Czech Republic has shown us that sometimes you manage to push through an ambitious pilot or a solution that can change a whole industry, but that change can be quite disruptive. With disruption there are some winners and there are some losers. So the current system is fighting hard against these strong changes.

ML: I think that what’s exciting about this- it’s a true transition. We are looking at a big change. So who will be driving it? Will it be consumers? Company owners? Is it going to be governments, providing incentives and tax breaks? Who is going to drive this groundbreaking change?

VV:  I think that it’s coming from all sides. It’s coming from consumers who want to see change around them and are looking for ways to change their purchasing behavior. It’s, of course, also coming from the companies themselves. For them it’s not just a way to look more sustainable, it’s a huge business opportunity. There’s tremendous potential and profits to be gained from changing from the linear to the circular economy, with a lot of bitter pills on the go. Governments also play a huge role. We can work with one company on making their product circular, but one paper from the Czech Parliament can change the whole system. Everyone needs to play their part in making this change happen, but I see the biggest driver in companies themselves.

ML: In regards to materials, I am particularly interested in plastics, which have incredible potential. Yet, at the moment we see a lot of problems with waste and recycling of this particular material. I think the circular economy gives us a lifeline to change how we are treating it. One thing at play is our perception of value in these materials, in these chemicals. In the linear model, we see value when we buy, we use the value and then we discard. We don’t actually see the value at the end. Circular economy could help that. Could you tell about how suitable is plastic material for a circular economy?

VV: Well, I think that there’s a lot of talk, maybe even hysteria around plastic pollution. Rightfully so, 8 million tons of it end up in our ocean every year…we’re seeing pictures of pollution from all around the world. Clearly something has to change. But it’s not just about plastic. 2 million tons of the waste we throw into black bins get buried underground, leaking into our soil and the atmosphere. It’s not just plastics that are the problem. In the realm of consumer plastics we are currently busy with the fact that there are too many types- PE,PP,PET… it’s very confusing not just for consumers, but especially for the recycling industry.

ML: There are different types of plastics, of course that’s important to say. Many plastics are very highly reusable, but then there’s issue with single use plastics, in particular with bottles. PET bottles, which are being discarded and losing their value. When I was a young kid, I remember broken glass bottles everywhere, until they went circular and people saw value in recycling them. I think we’ll have to find a similar system for plastic bottles. Is there any hope in that regard, are any people doing some interesting projects there?

VV: Yes, it’s us. We’re working with the biggest PET bottled water producer in Czech and central Europe, Mattoni. About a year ago, they approached us with the question of how to make their product more circular. After assessing that challenge, we figured that the only way for such a company to be circular, is to set up a deposit system. To put extra economic value, let’s say three crowns, on the material at point of purchase and give it back at point of return. By adding an economic incentive, we are already solving one big problem with plastics, which is pollution. It makes sense both economically and environmentally…

ML: So this would be a depository specifically for PET bottles.

VV: Right, same as people already do with glass refillable beer bottles. It’s not new for the Czech consumer. This time it’s different because they’ve been taught to take PET to the yellow bin, maybe smash it… that hasn’t been so successful- about 40% of plastic bottles transported in yellow bins are not smashed, so we’re transporting air. So yes, people know what the deposit is; they know it from the beer bottles. This time it’ll be for plastic ones. The difference is what happens with it after you return it to the retailer.

ML: I get my three crowns and the bottle goes back. Ownership remains with the company that produced it in the first place. And they then clean and reuse it?

VV: So at this point, it’s a concept that we have proposed. In theory it would work like this- the bottle would get returned to the retailer then go from the retailer to a facility, where all the bottles would get baled and sent for recycling. They would get re-granulated into PET flakes, which can be used for a variety of purposed. Our client’s idea is to use the material in the design of a new bottle. The ultimate goal is to collect up to 100% of product they are putting on the market and use as much of it as possible for designing new bottles, thus recycling the material again and again.

ML: What do your economic models suggest? Will this come as a financial loss for the producers? Do they gain? Is three crowns per bottle enough? When it comes to money, how is it going to work?

VV: There are many questions about economic implications… direct ones, indirect ones. First, the question of the deposit amount-is three crowns enough motivation for people to return. Evidence shows that 95% of glass bottles get returned. The deposit for them is three Czech crowns, so we assumed that the amount for plastic ones shouldn’t be significantly lower than that. There will definitely be some investment from producers involved at the start. They have to basically fund the whole system. In time, the system funds itself from the material collections and sales. Interestingly, it funds itself, up to around 30% from the amount of unredeemed deposits. The remainder, around 15%, of the whole system would be funded by the producer fee for every bottle they put on the market. They are already paying that today for putting one ton of the PET on the market.

ML: As a chemist, I value the properties of these plastic bottles and I like the idea of projects which instill in people that there’s value to this bottle even after use. We can recycle that, thus reducing waste, helping the environment… however, this transition will have knock-on effects on other partners in the linear system. Plastic producers and current recycling projects will presumably be affected. So what happens to them?

VV: There’s the disruption that we’ve been discussing. I don’t presume a big impact on primary plastic producers- demand for plastic will continue to grow exponentially, as it has been for the past few decades. The current system of waste management and recycling is a different story. Currently it relies heavily on PET. PET bottles are driving the separation and recycling of the content in yellow bins. If you eliminate that, there won’t be as much money to support the collection and recycling of the remaining plastics inside.  That’s really the first challenge that needs to be solved. We are afraid that municipalities will end up bearing these extra costs for yellow bin collection and content recycling, but we believe it should be the plastic producers. Plastic packaging should be designed in a way that renders its recycling and re-entry into the system valuable.

ML: And you feel there’s a consensus throughout government, private companies, industry and consumers that transitioning from linear to circular is the way to go forward.

VV: If you explain all of the problems that we’re facing today and offer a solution in the shape of a circular economy, everyone always agrees. I never had a conversation where someone told me this is something they don’t believe in. Everyone knows something needs to change and a few minutes of discussion usually manage to convince people that a circular economy is the way. But that’s just talking. Then we need action. With action come sacrifices, come the bitter pills, come these challenges, but also tremendous opportunities.

ML: Who’s leading the way internationally? How do we compare here in the Czech Republic to our neighboring countries and elsewhere in the world?

VV: A great example is the EU itself. A few years ago they placed circular economy as one of the top ten priorities for midterm and long-term development of the whole EU. They came up with a circular economy action plan with a many targets for a lot of different schemes, mostly waste. EU is doing great; you can compare it, for example, with China or the US… China is huge on circular economy.

ML: It’s going to be important to get… the big beasts in the room. We need America and we need the Far East, right? We need China and India to get into it. I understand that a lot of waste and pollution is coming from only a select number of rivers, often passing through the Far East and Africa in particular. In poorer countries, the problem is magnified and increasing. Do you believe that the circular economy can outreach to these poorer, less well-developed parts of our world?

VV: Absolutely. But it has to go hand in hand with setting up waste management infrastructure. There’s so much waste and so much pollution because these people don’t have the means to get rid of it. They have the same products, same materials as we have, where chances are there’s a bin on every corner… that’s just not the way in developing countries

ML: If the plastic bottle gains a three crown value, will that be international? Will that be necessarily limited to the Czech Republic? Can that value be universal? In that case, will there be a big incentive, especially to poorer people, to really collect a lot of waste?

VV: Absolutely, and it’s not just with plastic bottles. It’s the case with a lot of different commodities.

ML: Who’s going to pay them? This is the problem. Our pollution becomes a global problem and who pays for the recycling? Who’s going to pay the three crowns? If you’re in the Czech Republic, you buy a Czech bottle, give it back in a Czech shop, get three Czech crowns, it’s understandable… But if that bottle flows out somewhere to the North Sea, then goes to the Pacific and somebody picks it up, who pays them?

VV:  So far, it has usually been the municipalities- the villages, the cities that are in charge of their waste management and thus of funding the whole system. They sometimes get a little money from producers that unite in these schemes, and different NGOs and associations. So that responsibility needs to shift. It goes hand in hand with change in ownership, retaining control of the material and turning it back into products. Producers will need to take much bigger responsibility for what they’re putting on the market. They can’t just think about how to sell as much product as possible and not worry about what happens afterwards. They need to start thinking about how to get it back, refurbish it, and use that material again and again. I think it will help even in these developing countries.

ML: Vojtěch, I wish you all the luck in convincing people to take ownership, take responsibility and make the circular economy happen. Thank you very much for coming around.

VV: It was a pleasure

ML: It has been fascinating speaking with you about the circular economy. Every transition is an exciting one.