Circular firm behaviors are usually classified as the 9R-actions (Refuse, Rethink, Reduce, Reuse, Repair, Refurbish, Remanufacture, Repurpose, Recycle, and Recover). They may use varying business models aiming at saving materials and energy (e.g., sharing economy, renting instead of selling, etc.).
Within the CircEUlar project, we strive to understand these behaviors and to see what promotes them. We are interested in these behaviors because of their expected potential to save materials and energy at a broader scale and, thus, to reduce associated greenhouse gas emissions. However, at a large scale, these behaviors can sometimes deliver results contrary to what was expected or what is observed within a single company.
To explain this, let us briefly explain the paper of Zink and Geyer (2017): “Circular economy rebound”. The rebound effect illustrates that a policy or action aimed at reducing the use of a resource by improving its efficiency (e.g., recycling) can ultimately lead to an increase in the use of that resource in society.
The authors identify two main mechanisms for a rebound related to circular behaviors. The first mechanism, known as the price effect, occurs when recycled materials (or second-hand goods) closely resemble the characteristics of virgin materials (or new goods). The development of recycling, without constraint on the production of virgin materials, increases the supply of materials, thereby lowering prices and stimulating resource demand.
The second mechanism arises when recycled materials or goods for reuse are of lower quality. Consequently, they do not compete with virgin materials or new goods in the same market. For example, there will be applications for lower-quality recycled plastic, such as applications for new road construction. In the case of reuse, purchasing second-hand items could replace situations where nothing would have been purchased instead of situations where new items would have been purchased.
It should be noted that quantifying and predicting the magnitude of the rebound effect is challenging. It can vary significantly due to various factors. In our research project, while focusing on circular behaviors, we are trying to identify the mix of public policies that would prevent or mitigate this rebound effect.
We will keep you posted on the progress of the project soon!
By Eugénie Joltreau, Cristina Cattaneo and Elena Verdolini – CMMC
Zink, T. and Geyer, R. (2017), Circular Economy Rebound. Journal of Industrial Ecology, 21: 593-602. https://doi.org/10.1111/jiec.12545