As a result of using an innovative circular economy in business, we enrich local production, reduce dependence on external shocks, align businesses with the environment’s natural capacity and increase company resilience – in every sense of the word
What are the benefits of the circular economy? How are business models, that respond to the impact of climate change, implemented? Siniša Mitrović, Head of the Centre for Circular Economy of the CCIS, answers these and other circular-economy-related questions.
If the opportunities for implementing the circular economy model are not feasible, is there another solution instead?
The circular economy is the best navigation for GDP growth because it is based on the use of internal reserves and domestic resources – waste, recycling and energy – which form space for creating a large number of jobs that we need right now.
Also, the opportunities for savings and promotion of green procurement are quite ample.
As a result of using an innovative circular economy in business, we enrich local production, reduce dependence on external shocks, align businesses with the environment’s natural capacity and increase company resilience – in every sense of the word.
Moreover, this path becomes inevitable. The EU will view the recovery from COVID and the Ukrainian crisis even more through the green filter, and resistance to change only increases total costs and indebts our economy in terms of time (as well as consequence- and cost-wise). If we turn to the old-fashioned take-produce-throw kind of waste treatment, we remain trapped in the 1990s until 2040. If we connect, explore opportunities and align our business with the CEAP (the European Union’s Circular Economy Action Plan), we acquire a new market position.
The disadvantages of the linear economy are 1. Short-term and narrow process planning with one parameter of success – profit, and a narrow range of measured impacts. In other words, linear business abstracts almost all the levers that create all the major systemic shocks listed above. 2. High dependence on the old-fashioned supply chains. First and foremost, strong dependence on disappearing resources – crude oil (depleted in about 40 years), gold (depleted in about 10 years), zinc (depletion time 10 years), etc. 3. The irrational setting of value creation. Today, we generate profit by wasting limited resources and reducing the system’s capacity to supply us with basic work conditions (air, water, biopotential, and other raw materials). With such a framework, we inevitably come to a complete depletion of capacity. We have to put everything we throw away back into use. We must separate our prosperity from environmental pollution, as we depend on the ecosystem services that nature provides us. 4. Neglecting the system on which the economy is based – health and education of people and employees.
The circular economy (CE) has a systematic view of business and envisages long-term benefits. Specialization is a thing of the past, while a multidisciplinary approach is a new business approach. This is perhaps the most difficult aspect to understand, as it requires a different way of thinking about business.
One way to reduce CO2 emissions is by switching to renewable energy sources. That, however, is not sufficient. Research shows that we can achieve about a 55% reduction in the impact that leads us to 1.5 oC. The other 45% is related to the change in the way we design, produce and use products, i.e. via the circular economy. In other words, we cannot rely on technology alone, but we must also change the way we work.
The ultima of profitability has created an imbalance in societies – with some being wealthier and some poorer. COVID or any emergency are far more harmful to less developed countries. The circular economy highlights the knowledge economy and participatory decision-making in the local context. It creates more independent societies and economies and underlines more proper allocation of natural resources and resource management through closed supply chains. In translation, the circular economy implies more logical use of the resources that are close to us (if there are any) and engagement of domestic experts. This type of economy also implies an emphasis on innovation, not waste management. It is one thing to recycle wood, but another to extract lignin and use it in the construction industry.
“The circular economy is an increasingly talked about topic in our country”
Today, economic growth is closely linked to the growth of resources, energy and water use. Subsidizing basic fossil energy and the labour tax made sense when we had a labour shortage, and labour efficiency had to increase. Are we talking about old approaches and outdated policies here? The circular economy proposes a change in policies from taxation of labour to taxation of the use of raw materials, energy and water, and extended producer responsibility for waste generation and environmental pollution. Today, we are having to deal with unemployment and depleted resources. One of the things that this new economy also entails is the transition from subsidies for fossil fuels to subsidizing cleaner technologies that will generate energy with local natural capacities. Clean technologies have moved from the high-risk-high-reward category to the mass production category, while the risk of investing in fossil fuels is increasing.
We need to underline two phases of the transition to the circular economy. Phase one implies subsidies and rewards for economies that are actively and decisively embarking on the transition, while phase two omits subsidies and begins to affect the cost side of the entire economic system. From experience and direct insight, I can say that the EU does not plan to deviate from its “green” path and “green” investments. The Serbian business system is an integral part of the European market. So, the question is – when is it logical to start building an economic and social system resistant to disruption? My answer is yesterday. What is yours?
The circular economy is an increasingly talked about topic in our country, both because of the real need for sustainable development, and the implementation of all standards implied by Chapter 27 in Serbia’s accession negotiations with the European Union. The circular economy is a new business model that envisages maximum optimization of economic processes, with the reuse of available raw materials and energy resources from waste streams, efficient use of energy and human resources and savings related to both time and organization of business, with a maximum reduction of negative impact on the environment and climate change.
The Republic of Serbia has taken several important steps toward transitioning from a linear to a circular economy. Defining a strategic framework is one of the most important steps.
In 2019, as one of the activities of the Ministry of the Environment, an ex-ante analysis of the effects of the circular economy was made, which precedes the public policy document. In conclusion, the document states that there is a need to write a special public policy document covering this area. A public policy document called ‘The Circular Economy Programme with a Three-Year-Action-Plan’ will be drafted following the Republic of Serbia’s Law on Planning System and relevant bylaws that prescribe the methodology for drafting these documents. This document will stipulate measures and activities that will help implement the concept of the circular economy in Serbia up until 2023.
The goal of the Roadmap is to increase market opportunities for production through circular business models and encourage industry to create new jobs and improve business through finding innovative environmentally sustainable solutions. The intention here is to encourage the whole society to make radical changes in thinking, culture and attitude towards resources, as well as to encourage decision-makers to politically commit to changes in public policies and dialogue in the context of the circular economy. The Roadmap is an initial document that will launch a dialogue between decision-makers and representatives of industry, academia and civil society.
Our economy is also showing interest in innovative solutions and adapting to global trends. The domestic business system Elixir Group, which has seven members and 1,500 employees working at mineral fertilizer and phosphoric acid factories in Šabac and Prahovo, is working on a new business model, aimed at rationalizing the consumption of natural resources and energy efficiency. Metalfer from Sremska Mitrovica, for instance, is a 100 % circular company engaged in using scrap iron to make new products. There are also numerous recycling companies and foreign companies that use the model of industrial symbiosis to give generated waste to small and micro companies as a new raw material for production.
“The goal of the Roadmap is to increase market opportunities for production through circular business models”
We simply have to create opportunities for the implementation of the circular economy. It is no longer a question of whether we want to or not, but whether our production will survive if we do not accept the circular economy instead of the linear one in the next 5-10 years. There are fewer and fewer natural resources, energy is becoming more expensive, while rivers, land and air are becoming increasingly polluted.
What is the Chamber of Commerce and Industry of Serbia’s Centre for Circular Economy doing to promote and implement business models that can respond to the impact of climate change?
Since 2017, the Centre for Circular Economy has been implementing EIT Climate-KIC projects and programs. The EIT Climate-KIC was founded by the European Institute of Innovation and Technology (EIT) twelve years ago. It is the largest European public-private partnership organization focused on combating climate change and accelerating the transformation of society and the economy towards zero carbon emissions. We identify and support innovations that contribute to climate change mitigation and adaptation. We believe that a decarbonized, sustainable economy is necessary not only to prevent catastrophic climate change but also creates an abundance of opportunities for business and society.
EIT Climate-KIC was financially supported by the Horizon 2020 fund until last year, and Horizon Europe as of this year until 2027.
In the last twelve years, thanks to EIT Climate-KIC programmes and projects, at the European level, we now have over 450 partners and have supported almost 2,000 startups that have attracted more than 1 billion euros worth of investments. We have created 2,500 full-time jobs and launched more than 600 innovative products and services. 54,000 people participated in our activities.
The EIT Climate-KIC Serbia Hub consists of four organizations – the Chamber of Commerce and Industry of Serbia (CCIS), Climate Innovation Hub, Cirecon and Niš Science and Technology Park. Last year, the SEE ICT hub, better known as the Startit Centre, left the hub.
All EIT Climate-KIC programmes and projects we implement aim to reduce greenhouse gas emissions, mitigate climate change and adapt to it.
In addition to existing programmes and projects in Serbia, EIT Climate-KIC offers a handful of professional development opportunities, which are available to everyone, while some segments of the programme are free.
What kind of cooperation do you have with local and foreign institutes and institutions?
Representatives of the business and academic community, public and non-governmental sectors participate in our projects and other activities, to create and boost a network of experts who can develop innovative products, services and ideas, market them and thus contribute to the decarbonization of the business sector and society. The inclusion of all significant stakeholders, which sometimes have different interests, is a necessary prerequisite for doing the required changes in the transition from the current linear business model to a circular one.
For example, in early June, the Centre celebrated World Environment Day at the Belgrade Fortress, in cooperation with the Ministry of Environment, the United Nations Development Program (UNDP), the EU Delegation to Serbia, the City of Belgrade and many others.
You also assemble all business associations with environmental interests under one roof. What projects do you have planned?
Two key projects launched by the Centre for Circular Economy this year, supported by the Ministry of Economy, are decarbonization of the business sector and wastewater management. Both projects involve most industrial companies that create environmentally harmful emissions in their production processes, which can be influenced in order to reduce or reuse them.
“Decarbonization implies monitoring of carbon footprint which is required to manufacture a product or provide a service”
Decarbonization implies monitoring of carbon footprint which is required to manufacture a product or provide a service. The first groups of products that are expected to be taxed on exports to the EU market from 2026 are products made of steel, iron, aluminium, cement, as well as clinkers, fertilizers and electricity. The transition period, in terms of adjusting the measurement and quantification of CO2 in the product declaration, starts in 2023. The CCIS Centre for Circular Economy is putting together a guide that will give companies comprehensive information on cross-border taxation of goods, as well as ways to manage carbon dioxide emissions for the mentioned product groups.
According to the Law on Environmental Protection, every company or small business owner who has a wastewater treatment plant and/or discharges its wastewater into a recipient or public sewer is obliged to harmonize its emissions with the emission limit values for pollutants in water, defined by regulation until December 31, 2025.
The Centre for Circular Economy has held a training session for more than 150 interested companies and individuals. The training was preceded by a workshop with representatives of local governments and inspectorates to enhance the content of the training with their experiences.
The Alliance for Green Transition is the leading organization in the country that facilitates green transition and we are very proud of its capacity and influence to design a green, sustainable and smart regulatory framework and open market.