Circular economy in Finland 2030: Scenario Analysis

VTT TECHNICAL RESEARCH CENTRE OF FINLAND LTD

Capitalising on Invisible Value - User-driven

Business Models in the Emerging Circular Economy

(AARRE project)

Circular economy in Finland 2030 – scenario

analysis

H. Sundqvist-Andberg, J. Kohl, VTT

28.9.2017

17/10/2017 2

Summary

Participatory scenario development process was used in

studying the multi-faceted nature of emerging Circular

Economy (CE) in Finland and in engaging the

stakeholders in the complex CE change process. The aim

was to develop plausible and reachable futures that

interpret the future by focusing on different dimensions

and elements of circular economy.

The scenario development methodology is based on

qualitative scenario building and leans strongly on

plausibility-based intuitive logics approach. The approach

is explorative and aims at building future scenario spaces

or images rather than creating narratives that describe

the unfolding chains of causation.

The scenario generation focused on the user-centric side

of circular economy by interpreting the future through

different scalable lenses which focus on different

dimensions and elements of transformation. The target

year for scenarios was set to 2030.

The participatory scenario development resulted three

complementary scenarios;

Factory of the future scenario, focusing on resource

efficient production and consumption with clear

conscious,

Experiential service economy scenario which

depicts service oriented CE where access over

ownership is mainstream and easy-access services

facilitate consumers’ / users’ daily lives, and

New tribes scenario, which emphasices sharing

economy side of CE.

The scenarios were images of the complex reality of

environmental and socio-techno-economic systems

highlighting different aspects of potential futures. CE

kaleidoscope tool was produced to open the complexity

but also the potentials of CE for new sustainable

business ideas.

The work was carried out within Tekes funded AARRE

project: Capitalising on Invisible Value - User-driven

Business Models in the Emerging Circular Economy

(AARRE)

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Scenario building process

The participatory scenario development included

five phases:

1. Scoping phase for setting the initial scope

and a timeframe,

2. Identification and analysis trends, drivers,

and barriers

3. Framing and developing scenarios

4. Validation of the scenarios, and

5. Further development of scenarios.

Phases 1, 2 and 4 involved stakeholder

participation:

Scenario workshop

26 participants from key stakeholder

organizations; NGOs, government, industry

and research organizations, and focused on

identification of potential drivers, barriers and

factors of change.

Consumer discussions

42 consumers and focused on

understanding the future customers and

users of circular economy.

Online stakeholder discussions

within an online space called OpenWeb Lab

(Owela) for the validation of the scenarios

Validation workshop

11 participants from research organisations

and AARRE project partner companies

Scenario images of circular

economy enabled by

digitalisation

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Key assumptions

Scenario 1.

Efficient service experience

Scenario 2.

New Tribes

Scenario 3.

Factory of the future

KEY TRENDS • Service economy,

• Changing consumer habits (lower need for

ownership)

• Urbanization

• Resource efficiency

• Fair sharing economy

• Sustainability

• Urbanisation

• Changing consumer habits (e.g. sharing /

post-consumption)

• Bioeconomy

• Resource efficiency

• Sustainability (incl. social)

ENABLERS • Platforms

• Digitalisation

• Lower taxation of work

• Trust / ”design for trust”

• Digitalisation

• Platforms

• Need to belong to something

• Digitalisation

• Eco-design

• Collaboration

• Certificates

DRIVING ACTORS • Companies, users • Citizens/prosumers, NGOs, SMEs.

• Bottom-up approach.

• Companies (producer-led CE) and

governments

• Top down approach

ROLE OF CITIZENS • Citizens as users • Citizens as users and prosumers • Citizens as consumers

LEVEL OF

COLLABORATION

• Significant for companies

• Collaboration and co-creation with users

• Significant for citizens; co-creation and

crowdsourcing• Low for consumers

• Significant for companies;

collaboration and coopetition

• Circular supply chains

SCIENCE

APPROACH

• Focus on digital service innovation,

understanding consumer & user

experience, behavioural, cognitive and

social sciences. Multidisciplinary approach

to innovation.

• Citizen science and open innovation

approach

• Strong emphasis on technological,

material and design innovations by

(formal) organizations. Semi-open

innovation.

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Orientation towards future value creation

Scenario 1.

Efficient service experience

Scenario 2.

New Tribes

Scenario 3.

Factory of the future

ORIENTATION • Services orientation • “Collaborative” and social orientation • Product orientation

TANGIBLE VALUE Cost savings and revenue from

• efficient use of materials and products

• Improved performance

• eco-design / long lasting products

• less waste, pollution and Improved land

utilization

Cost savings and revenues from

• better utilization of idle resources (cars,

ride, housing, gear, etc.)

Cost savings and revenue from

• closing and slowing the loops,

• product life extension,

• re-use of components and cascading

use of raw materials and utilization of

side-and waste streams,

• material efficiency,

• design for sustainability / eco-design

• long lasting products,

• less waste and pollution, improved land

utilization

INTANGIBLE

VALUE

• Services approach

• Better customer/ user understanding

• Fast access over long-lasting ownership

• New inspiring experiences

• Increasing social equality

• Increased community spirit and social

capital

• Increasing trust and social equality

• Eco-labels and certificates allow

consumption with clear conscience, and

ease of recycling

• Improved collaboration and supplier-

buyer understanding

• Improved company / brand image

BUSINESS

MODELS

• Product as a service

• Performance as a service

• Renting, leasing, dematerialisation

• Reuse, recycling

• Sharing, lending

• DIY -> DIT (Do it together)

• Cascading use, industrial symbioses

and circular supply

• Light weighting

• Lifetime extension; repair,

remanufacturing, refurbishing

• Recycling and reuse

• Also service models

SCENARIO: EFFICIENCT SERVICE EXPERIENCE

• User culture

• Access over ownership• From buying physical products to buying services and

performance

• Making everyday life easier and more comfortable• Easy access via services• Lower risks• Experiencing become more important to consumers than

owning

• For companies performance, efficiency and timeliness are valued

TRENDSService economy

Changing consumer habitsUrbanization

Resource efficiency

ENABLERSPlatforms

DigitalisationLower taxation of work

OBSTACLESAttitudes

(the desire to ownship)Profitability

Lack of expertise

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Efficient service experience

The scenario gives us a circular economy in which consumption habits favour access

over ownership. Ease and sustainability are key themes in the everyday lives of both

consumers and businesses. Together with the Internet of Things (IoT), digital

platforms enable the provision, management and use of comprehensive service

packages.

New kinds of integrated service platforms serve as multi-purpose service maps,

bringing services and needs together. ”The drop off and take away” service concept

combines resource flows (services and materials) in and out of homes. ”A pocket-

sized circular economy” concept, consumers can purchase most everyday services

via a single online platform. One of these could be an Optimisation service, using a

single application to monitor well-being and health (food-vending machine, safety

bracelet), household energy consumption and air quality.

SCENARIO: NEW TRIBES

• Sharing culture • In production, consumption and use

• New level of community spirit and crowdsourcing, co-operative 2.0, peer to peer activities

• Local ”tribes” or as part of a virtual groups

• Agile, rapid, experimental, and visible activities and entrepreneurship

TRENDSChanging consumer habits

Fair sharing economySustainabilityUrbanisation

ENABLERSTrust / ”design for trust”

PlatformsNeed to belong to

something

OBSTACLESAttitudes

(e.g. desire to ownership, forced communality)

LegislationSocial unsustainability

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New tribes

In the scenario, the cooperative economy has become a supportive element of the

circular economy. The key issues in this scenario are respect for social capital and

neo-communality belonging to peer, sharing and consumer-producer communities.

Communities can be physical or virtual tribes which bring people together to interact,

while promoting the sharing and exchange of various types of ownership, resources,

skills and knowledge. The basis of such activity is trust between citizens.

The economy is being spurred on by renewed cooperative activities, so-called platform

cooperatives, the sharing economy between consumers, and the firms and small

businesses that provide such services. Business is agile, experimental, visual and

audible, being based on the re-use, recycling, sharing and exchange of materials and

products, in particular, and the supporting services. Business could be generated by

Cooperative home-based factories, which incentivise social activities and focus on

small-scale, fair peer production (such as urban farming), services (care,

transportation and repair services) and use.

SCENARIO: FACTORY OF THE FUTURE

• Consumer culture

• Consumption with clear conscience; certificates and transparent material flows

• Extended producer responsibility: producer is responsible during the whole life cycle of the product

• Durable products• Recycling, reuse and repair are made easy to consumers

• Symbiotic, narrowed and closed loops -> zero waste production and use

TRENDSResource efficiency

BioeconomySustainability

ENABLERSDigitalisation

Eco-designCollaboration

Certificates

OBSTACLESProfitability

Availability of recycled materials

Lack of expertise(e.g. in product design,

innovative public procurements)

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The factory of future

In the scenario, production processes are resource-efficient and symbiotic within or

between different sectors. Processes are designed to ensure that the resulting

material flows are used efficiently and very little or no waste occurs. New kinds of

logistics services could be the key to a resource-efficient circular economy. Products

are designed on the terms of the smart circular economy from the outset and the

product lifecycle has markedly lengthened.

To function sustainably in the global economy, private-sector strategic management

must commit to the principles of a responsible circular economy. A strong focus has

been placed on the social sustainability of business. However, more-sustainable

consumption has become commonplace, led by major consumer product brands.

Shifting to the circular economy has been made easy for consumers, with

manufacturers ensuring the easy recycling, re-use, refurbishment and repair of

products. The consumer can continue consuming with a clear conscience – circular

economy certificates guarantee that products are produced, recycled and renewed

sustainably, and increasingly contain renewable and recyclable materials.

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CE kaleidoscope tool for new sustainable

business ideas

• Circular economy kaleidoscope is a

simple tool for business ideation and it

can also be used in the scenario

development process

• The tool consist of three rotating discs;

1. key drivers,

2. circular economy business

models and

3. economic, environmental, and

social sustainability

• The tool allows versatile combinations of

different driving forces, CE business

models and potential impacts

• The tool aims at promoting

transformation in niche scale by

changing prevailing mindsets through

realization of alternative options and

their impacts to sustainability within

different scenarios.

17/10/2017 14

Conclusions

The scenarios presented here are images of the complex reality of

environmental and socio-techno-economic systems highlighting aspects of

potential futures.

Even small insights could make the circular economy smoother and more

efficient on an everyday level and put change into motion. The scenarios

describe such changes. The circular economy should not be viewed solely

from the economic perspective. It is a multi-faceted diamond, which

combines economic, social and environmental aspects.

After a qualitative review of the scenarios, a more detailed review of the

circular economy’s macroeconomic impact on employment, regional policy

and taxation would be required, alongside a deeper understanding of its

social impacts.