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Circular Economy and the "Golden Age of Chemistry"

June 06, 2016

The term “circular economy” often refers to the recycling economy, which evokes thoughts of waste sorting and recycling bins. However, this is only true to a certain extent. During the employee event “Talk Sustainability”, we spoke to the circular economy expert Dr. Martin Stuchtey about “throwaway society”, the advantages of a circular economy and the “golden age of chemistry”.

Dr. Martin Stuchtey at the employee event "Talk Sustainability" in Ludwigshafen.

Dr. Stuchtey, you talk about a circular economy as an industrial revolution with a significance similar to that of globalization. Could you explain this in more detail?

Martin Stuchtey: A circular economy involves far more than recycling – it is an alternative economic model where, in the best case scenario, there is neither waste nor garbage. Growth would no longer be coupled to ever increasing production rates and the associated use of raw materials. Instead, the priority is to complete cycles and use products and resources in the best way possible without any loss in value. We are currently following a linear principle: we take raw materials, make products from them, use it a few times, then it usually gets thrown away. A privately owned car is an example of this. We only use it for actual movement 8% of the time, and during the other 92% of a car's lifetime it sits idly in a parking space. The point of a circular economy is to avoid structural waste throughout the product's entire life cycle.

Could you give us a few examples of how this can be implemented?

Stuchtey: For instance, when manufacturing products, sustainable raw materials can be used instead of or in addition to fossil resources. Even garbage can be reused as a secondary raw material. Online “sharing” platforms ensure that products are used more efficiently. This can include housing that is rented out during vacation time, ride shares, and used clothing or furniture looking for a new owner. Additionally, generating garbage can be avoided by further developing products to have longer life cycles and greater efficiency. Thanks to digitization and new technologies, certain products can even be completely replaced. Smartphones are the best example, as they combine a CD player, alarm clock, appointment calendar, camera, books or even flight tickets in one device. Many companies have already identified the huge economic potential and are developing their business models accordingly: They no longer sell just products, but performance and service; not a car, but mobility.

What potential do you see for the chemical industry and especially for a company like BASF?

Stuchtey: Chemistry plays a key role with its innovative strength when it comes to developing new processes and solutions. Products incorporating chemistry can include end products that are more efficient and have a longer life cycle, whether that be in the automotive industry, packaging or in urban development.

Moreover, the BASF Verbund is a wonderful example of how a company can already implement a circular economy with its own products. The Verbund uses energy and raw materials efficiently, the generation of garbage is avoided as much as possible, most recently by using renewable raw materials based on organic waste. However, a circular economy is also about abandoning traditional business models. In the future, profit will be made from a provided service or expertise rather than per ton of product sold. This requires a new way of thinking, especially for large companies. The chemical industry may well be approaching a “golden age” if it finds the courage to forge new paths – because we need innovations from chemistry in order to achieve a circular economy.

About Dr. Martin Stuchtey

Dr. Martin Stuchtey is founder and managing partner of SYSTEMIQ Ltd, a company that develops new markets and assets in the sustainability space. Before founding SYSTEMIQ Martin has worked for the McKinsey & Co for twenty years, where he co-founded McKinsey's Sustainability Practice. He worked with various customers on projects relating to the topic of a circular economy. Stuchtey initiated the Circular Economy Initiative of the World Economic Forum together with Ellen MacArthur and worked as a strategic consultant there. Stuchtey is a lecturer at Universität Innsbruck and is the author of many articles and film contributions on the topic of resource management. Last year, he and the Ellen MacArthur Foundation published the study “Growth Within: A circular economy vision for a competitive Europe”, wherein the authors calculate that EUR 1.8 trillion can be saved by 2030 through the introduction of a circular economy in Europe.