IoT: Defining Circular Economies

Thought Leaders

As global resources lessen and waste products multiply, humanity must find a way to curtail both trends. If you haven’t heard of the term ’Circular Economy,’ you almost certainly will soon – but chances are you already have some idea of what it entails. We need to transform waste into energy. This is the most basic concept behind a circular economy.

It might sound like recycling, and the two processes are related. The main difference, however, is that the goal of a circular economy is to combine diverse processes that rely on one another. And their reliance is based on the fact that one process’s waste is the next process’s fuel.

Amazingly, circular economies are common. Think of a flower. A flower needs water and carbon dioxide to grow, combining them using light energy to form carbohydrates. The by-product of this is oxygen. We don’t typically call oxygen ’waste’ but in a flower’s cycle it is. However, when you add an animal to the cycle, the loop is closed, as the animal utilizes oxygen and releases carbon dioxide which is, in turn, absorbed by the flower. That is a fully functional circular economy.

In the way that the Industrial Revolution gave the world a great many technological advances, it also gave us pollution and waste on a scale never seen in the history of earth. The Digital Revolution, however, has given us the possibility not simply to cut back on producing waste products, but to actually use the waste products. This would, at the core, change the actual definition of ’waste products’ to ’ingredients,’ ’materials,’ or ’necessities.’

The Digital Revolution is marked by the transition from analog to digital technology. The creation and flourishing of the Internet is included in the term. But the current vanguard of this revolution is the Internet of Things, or IoT.

If we can agree that sustainability is one of the main tenets of IoT in the form of energy management, then it also means that IoT is one of the first technological developments that contributes, by definition, to a circular economy.

In a discussion about circular economy, a ‘closed loop’ is a good thing. An open loop means that there is waste somewhere. IoT provides intelligent tracking and smart sensors, improves industrial energy management, encourages smarter mass transportation, and is deployable on a huge scale for a minimal cost. Simply put, IoT is fundamental in closing loops in the circular economy.


Linear vs. circular economy

This isn’t theoretical either. Having a smart home powered by solar panels can make a house self sufficient, contribute to energy neutrality, and actually earn the home owner money in government refunds. On a larger scale, Trina Solar, a giant solar panel manufacturing company in China, actually deconstructs old solar panels to reuse the viable parts instead of dumping them in a landfill. This provides the solar energy circular economy with one more step in its loop. Smart tracking and energy management (both fields of IoT) help to alert Trina Solar when and where solar panels are functioning less than ideally, so that the panels can be recycled and replaced. IoT successfully closes the loop.

A more well-known company that has already designed and implemented an internal circular economy is Dell Computers. Their program won the inaugural Accenture Award for Circular Economy Pioneers in 2015. It’s described as a five-part process that utilizes both disused computers and plastics from varying sources to ‘downcycle’ them into parts for future computers. Parts of Dell’s computer monitors were actually plastic water bottles a generation ago. And though IoT is already at play in this cycle (analyzing carbon emissions, optimizing industrial machinery operations), Dell admits that it can only get better as cloud services are embraced more thoroughly and smart sensors become smarter. The analytics from such IoT services will to streamline, widen, and improve already existing circular economies.

Finally, consider the example of recycling in the country of Sweden. 50% of household waste is burned for energy in Sweden. When the incineration is complete, the ashes are less than a fifth of the weight of the original waste. From those ashes, non-incendiary material, like porcelain, is sifted out and added to gravel for road construction. Metal is also removed and recycled separately. In the end, about 1% of the original waste is left and deposited in landfills. There is obviously other pollution caused by burning waste: smoke. However, with advanced biotechnology and sensors, 99.9% of the smoke becomes carbon dioxide and water. These count as ’waste’ but they are ’waste’ as defined previously: ’necessities’ or ’materials.’ This is a closed circular economic loop on a massive scale.

The Ellen MacArthur Foundation, founded by the world record holder for fastest solo circumnavigation of the globe, focuses heavily on the creation of a circular economy. MacArthur led a workshop attended by Thomas Odenwald at SAP Community Network, who wrote that IoT is not simply a valuable addition to a circular economy, it is a necessary pre-requisite. The Foundation, in a report written with McKinsey & Company, predicts that the global transformation to a circular economy will provide $1 trillion of savings every year for the next ten years.

Nothing I’ve mentioned is hypothetical. Circular economics exist and can only grow and improve. IoT exists and continues to innovate every day. In a vacuum, a circular economy can work perfectly. In everyday life, it must interact with outside factors. But these outside factors do not necessarily affect a circular economy negatively. In fact, they can serve to enhance the circular economy’s positive effects. A flower might be eaten by a bird. However, the bird is then introduced into the flower’s circular economy. The bird is provided energy from the consumption of the flower and releases waste that includes the flower’s seeds, thus enlarging the flower’s habitat, which results in providing more sustenance for birds, and so on.

IoT encourages the growth of circular economies in just this way. And it does so exponentially. IoT helps by actually giving circular economies the ability to close the loop. IoT also helps functional circular economies incorporate other processes into their loop, to multiply their reach and effectiveness. As global awareness of IoT grows, IoT should no longer be spoken of in relation to the Circular Economy, but as part of its definition.