Economy of circular economy

Economy of circular economy

There has been a lot of talk in recent years about the circular economy. It is an economy in which used products are used as raw materials for new products.

In order for the processing of some waste to become mass, there must be the possibility of some kind of profit on that production. This means that revenues from production or processing must be greater than the total costs, that is, if the costs are higher then someone has to finance the losses. And this coverage of losses always falls on the taxpayers, so this should be included in the overall cost of waste disposal or recycling.

The largest amounts of waste are generated in the manufacturing industry.

And Agriculture throws away much of its production.

The store also discards a large amount of its merchandise.

The construction industry is a major source of waste.

Very large amounts of waste are generated by households.

The media most often talk about the need to reuse household waste, while other types of waste are rarely heard. Waste can also include harmful gases released into the air, as well as waste heat that heats the environment of production plants, machines or consumers. There are special regulations for the disposal of hazardous types of waste, such as chemical, nuclear, or medical, and they are specially financed, either at the expense of the person who generates them, or at the expense of taxpayers. If they are paid by the one who creates them then it raises his costs and thus the price of his products. In this way, the product becomes less competitive in relation to substitutes, or in relation to competitors from other countries where waste disposal regulations are more lenient. Therefore, many industries have shifted their production to countries where regulations on waste disposal, especially hazardous waste, are much more lenient.

In the manufacturing industry, the environment is most affected by mines, which try to dispose of their waste as close as possible to the mines, in large piles, lagoons, and sometimes in the mines themselves, which is the best solution. Many states require mine owners to restore surface mines to their original condition, which increases the price of excavated raw materials.

The industry tries to use its waste usefully and at the same time keeps a precise economic calculation. If they can make money on waste processing, then they do, and if there is no profit, then they try to dispose of the waste in the cheapest way. In doing so, they make calculations whether it is more expensive to just dispose of waste, or it is cheaper to process waste into another product. Thanks to such calculations, producers can be forced to use more waste by increasing the costs of waste disposal with special taxes, but this reduces their competitiveness on the world market.

Large farms often throw up to 30 percent of their production already in the field. The main cause of this behavior is large retail chains that buy products only of a certain quality and size. Everything else is discarded before coming to the shelves.

Large food processing and packaging factories also have large amounts of waste, and in order to reduce the amount of such waste as much as possible, they try to export less valuable parts of food to poor countries at a price much lower than the cost of production. It is more cost-effective to export them than to pay for expensive disposal, or processing into other products. They thus destroy agricultural production in the poorer countries where they export, and encourage migration to richer countries. In order to reduce the amount of waste in food processing, and to reduce migration, poor countries should protect their agricultural production with high tariffs. After that, food processors in developed countries would process all parts of food for which they do not have a domestic market much more into animal feed.

Small agricultural households reject much less food because they can use low-quality and uncalibrated products for their own use, or for feeding livestock. This increases the efficiency of agricultural production. However, small producers have a declining share of production. The main cause of their downfall is large retail chains that do not want to buy products from small manufacturers who cannot guarantee constant and sufficient delivery. Therefore, they are blackmailed by price, speed of delivery, or quantity of delivery. Small retailers cannot oppose large retailers who have much lower costs per unit of measure for purchasing and selling, administrative and general expenses, rental costs, marketing, and the realized profits can legally transfer to their branches where there are lower tax burdens. Large producers can fetch a much higher price than small ones, and often blackmail commodity chains that take goods from more small producers. This is why many large retailers refuse to buy many goods from small producers so as not to offend large suppliers who see small ones as competitors they seek to destroy.

In order to reduce the amount of waste in food production and processing, the state could help the survival of small farmers by abolishing aid to large farmers, and stimulating the survival of markets and small neighborhood shops where small farmers can reach customers much easier. Agricultural incentives should be limited to around one million kuna per OIB, and for the survival of small shops and small producers it would be very useful to raise the minimum for entering the VAT system from 300 thousand kuna to 2 to 3 million kuna. This would make all small producers who sell their products through small shops much more competitive, and food waste would be much less. Small food producers and small traders can more easily supply expired food to animal producers who can use such food.

Large commodity chains also destroy a large percentage of their goods, especially food. In order to reduce the amount of waste in the store, they should increase taxes on discarded and destroyed food, as well as other goods. This would encourage them to donate surplus food and goods to humanitarian organizations, but they would also encourage them to sell waste food to small local processors for animal feed. Higher taxes on textile waste disposal would also encourage retailers to sell such textiles to local textile waste processors. However, large food processors, with their lobbying influence, often push laws that prohibit the processing of old food into animal feed and the donation of food so that the market price of their products does not fall due to reduced demand.

In the construction industry, waste recycling is becoming more successful, mostly with the development of new tools for excavators and backhoe loaders that are very successful in demolishing old buildings and grinding concrete. Very successfully, old asphalt can also be reused for reuse. This is done by many small construction companies specializing in demolishing buildings, or repairing roads. When demolishing larger newer buildings, large quantities of concrete remain, which are crushed into a small material suitable for the re-production of concrete, or as a base for road construction. And they make the most money by extracting iron from concrete, which is easiest to sell at a good price. By demolishing old houses, old wooden beams and old solid bricks can often be reused. Many small builders even pay the owners of old houses that are intended for demolition in order to become the owners of old beams and bricks. Beams are sold to carpenters, and bricks are used to build new buildings. As waste remains rubble consisting of dust, plaster, hollow blocks of brick and the like. And this material could be used by developing new tools for excavators and mobile machines that could sift the rubble and select it in multiple granulations. Such granules of a certain size could also be used as a base for roads, or as a material for fixing field non-asphalt roads.

Encouraging the reuse of such waste construction material can be achieved by increasing concessions for the extraction of stones in quarries, and gravel and sand in rivers, but also by encouraging the development of new tools and machines for the treatment of construction waste. This would not reduce the competitiveness of the domestic construction industry and quarries because the construction material is not worth transporting over long distances, and there is no danger of imports, except in border areas.

Household waste is the most difficult to process and reuse.

It consists of a very diverse material and needs to be sorted so that it can be reused. Most of the municipal household waste is food scraps. In second place is the paper. Scrap metal is best sold through numerous metal collectors, and no incentives are required to collect such waste. For old cars, it is also possible to get money from companies that disassemble such cars into parts that they sell partly to service technicians and partly as scrap metal.

To facilitate the reuse of part of the household waste, many countries are introducing special bins for different types of waste. However, if users are not careful what they throw in which bin and useful waste can become worthless. In addition, in many countries, there are no processors for certain types of waste, and once collected separately, it is often disposed of in the same large regional landfill along with other types of waste. This only makes waste disposal more expensive, because containers for different types of waste are not cheap and easy to destroy. And collecting in multiple different containers also increases collection costs. In practice, only the processing of scrap metal collected in separate containers is cost-effective. In some places, paper collection also pays off, but only if it is clean and processing plants receive incentives for processing. However, there is a problem here as well. As soon as the incentives are introduced, mafia entrepreneurs appear who, due to the incentives, start doing this business, and secretly dump the waste in hidden places in order to earn as much as possible. Where the state finances the purchase of containers for separate collection, there are also criminals who try to procure cheap containers and resell them to local utility companies as expensively as possible, in cooperation with the directors of local utility companies.

The collection of plastic bottles is organized in a very efficient way in Croatia. This is done by the poor and the homeless, to whom they do useful work. The amount of waste in landfills has been reduced, and the poor have been given a way to earn something and thus survive. In this way, in addition to the problem of plastic waste, their social problem has been largely solved. Earnings here are small so the mafia has no interest in putting the business under their control.

In recent years, the most talked about are dangerous plastic bags that often end up in the sea and destroy life there. However, it is only the promotion of various lobbying environmental associations that are thus trying to prove their concern for the environment and obtain large donations at the expense of taxpayers. Over 80 percent of the plastic that floats in the seas is fishing nets. In addition, the larvae of various shellfish are caught on the plastic, which grow and after a while fall to the bottom of the sea where the plastic becomes part of the sediment. Thanks to this, the actual amount of plastic floating in the seas is about 90 percent less than what rivers flow into the sea. Environmentalists are hiding this, and they are also hiding other real data. They propagate paper bags, and keep quiet about how forests must be cut down for paper, probably encouraged by donations from the paper industry. The production of paper bags consumes much more water, which burdens rivers and the sea. And more transport is used for removal than for lighter plastic bags. And the production of natural cotton bags requires a lot more water and energy than paper or plastic ones. However, environmentalists are also happy to advertise such cotton bags, for which they probably receive large donations from the manufacturers of such bags.

In addition to the above, plastics have a lower overall impact on the environment from the moment of production of the raw material to the finished product than glass or disposable metal products. Only glass and metal objects that can be used many times have a lesser impact on the plastic environment.

The remaining municipal waste, even after separate collection of plastic, paper, glass and metal, is still unclean and is most often disposed of in landfills. In some countries, municipal waste is incinerated to produce energy. However, environmentalists are motivated by the interests of manufacturers of separate collection containers and see this as a problem by claiming that such incinerators emit toxic gases, although such incinerators are most often found in cities where contaminants are very easily detected.

In some countries, biological waste that is processed into humus by composting is also separated. This is particularly unprofitable due to the high cost of transport collection, so this kind of humus production can only survive by using copious incentives at the expense of taxpayers, or households.

Municipal waste could be processed much more economically in several ways, but this could only happen by abolishing incentives to procure containers for separate collection, or to process waste that is not worth processing without incentives.

One possible technology is the processing of complete household waste in a biological way, using earthworms that do it much better and faster than composting. According to the existing biological technology, it is necessary to first separate the biological waste and then process it by biological methods by composting, but this can be done without prior separation, which is described here.

With very frequent watering every half hour, earthworms can live in a deep mass that they turn into humus, after which the humus is separated by rinsing, which results in inert waste. It can be safely disposed of, or processed much cheaper, because after the separation of biological waste, it is much cleaner and has much less. By processing and separating humus from waste food, paper and dust, the amount of waste can be reduced by 70 percent.

Another possible technology is the thermal selection of different types of waste, which can produce a whole range of useful raw materials very cheaply.

It would be most cost-effective to first separate the biological waste converted into humus from the earthworms, and after rinsing the remaining waste, to process all the remaining waste in thermal waste selection plants.

Both of these technologies can be installed in numerous small landfills near the generation of waste, which would greatly reduce the cost of transportation to remote waste disposal facilities. At the moment, around 800 euros are spent in Croatia for the disposal of one ton of waste, and these technologies could significantly reduce these costs. The cost of transporting waste would be several times lower, the amount of energy required for waste processing would be reduced, the cost of purchasing containers for separate collection would be much lower, while revenues from produced humus and other raw materials would increase significantly.


Other of my technical analyzes and innovations can be found in this book.