Luca Meini, Head of Circular Economy, Global, Enel Group SpA held the fourth lesson at the fourth edition of the Siena International School on Sustainable Development. Here are some of the key points to remember:
The Circular Economy represents a huge opportunity in terms of innovation, competitiveness and environmental sustainability. Since it encompasses a wide range of applications, the definition and implementation of effective Key Performance Indicators (KPIs) to measure, compare, and improve circularity in projects and products has always been a major challenge. Circular KPI is an elusive concept to be approached, both because it is a relatively new topic and because it covers a broad range of topics. Enel is working on a number of initiatives in the field of Circular Economy, and has developed its own approach to KPIs in order to improve its activities. The aim of the approach is the definition of a final KPI that can be used as a proxy for all the circularity parameters of the product or project.
Enel is demonstrating leadership in the new energy world as the first Network Operator with 74 million end users. It has built 54 GW of renewable capacity as the world’s largest player in renewable energies and has the largest retail customer base in the world with 70 million customers.
Environmental impacts
Current economic model based on a linear approach has provided unsustainable prosperity, such as the industrial revolution, oil adoption and plastic adoption that occurred between the 18th to the 20th century. Therefore, there is a growing awareness about correlated environmental challenges and decarbonization to reconsider the economic models.
Circular Economy was developed as an “umbrella concept” during the end of the 20th century and the beginning of the 21th century, including “cradle to cradle”, life extension, remanufacturing, “performance economy”.
The drivers of Circular Economy are as follows:
- Environmental Awareness given that environmental impact serves as a fundamental driver.
- New Business Models such as Performance economy, Cradle to cradle (C2C), Upcycling, Subscription economy, etc.
- Innovation that enables circularity acceleration.
- Strong Institutional focus around the world.
Enel’s vision and approach
- Sustainable inputs: From renewable, reuse, and recycle.
- Increased product life: Extending life through design, maintenance and repair. It considers the extension of the useful life of a product or project through the solutions such as modular design, predictive O&M, etc., which have to be innovative and not be standard market solutions.
- Sharing: Increasing the utilization rate through shared use, access, and ownership, which allows for a higher load factor. Sharing refers to the distribution of an asset among two or more customers in a “client to client” relationship.
- Product as a service: Selling a service instead of a product. The Company does not sell a product to the client but just the service (i.e. the use). This allows for the use of a single asset by a large number of clients, thereby increasing the load factor.
- New life cycles: Maintaining value through upcycling, reuse, and recycling
Circular Economy opportunities
- New revenues by keeping material value and the value from services
- Risk reduction through lower exposure to commodity prices and environmental risks
Innovation
- New technologies as enablers of circular solutions
- New business model to create value from use
- Taking into account environmental and social impacts, minimizing environmental impacts
- Combination of maintenance and services instead of combining resources extraction and automation
Moreover, Recycling alone is not circular enough. In fact, when starting from 100% material to be recycled, the recycling efficiency is around 25%. To apply this to the reverse compound principle, the efficiency of the first cycle is around 25%, then drops to around 6.3 percent in the second cycle, and finally to 1.6 percent in the third cycle.
The growing importance of the European Union
The European Commission’s interventions have progressed from a waste-focused approach (Circular Economy Package in 2015) to a strategic approach (Green New Deal and Circular Economy Action Plan 2020).
The Circular Economy action plan, adopted in March 2020, is one of the main building blocks of the European Green Deal, Europe’s new agenda for sustainable growth. The EU’s transition to a circular economy will reduce natural resource pressure while also generating sustainable growth and jobs. The new action plan announces initiatives along the entire life cycle of products. It aims to prevent waste and keep resources used in the EU economy for as long as possible by focusing on product design, promoting circular economy processes, and encouraging sustainable consumption.
Enel’s vision and approach
1) Pilot phase started in 2016
- Leveraging on existing projects
- Engagement and value assessment
- First external positioning
2) Scaling up started in 2017 and is still ongoing
- Defining company’s circular economy strategy
- Group-wide approach and KPIs
- Further strengthening Enel’s positioning at Global level
3) Business driver started in 2018 and is still ongoing
- Circular economy as a business opportunity
- Developing cross divisional circular economy activities
- Driving the ecosystem
Alliance for the Circular Economy
The companies participating in the Alliance are interpreters of a transformative economy that preserves natural capital by not wasting resources, which combines competitiveness and environmental sustainability. It is a transformation that revises and innovates production processes and business models. The Alliance’s goal is to lead an overall evolution of the production context in a circular perspective that enhances Italian excellence by focusing on innovation, encouraging the sharing of experiences and best practices, and maintaining constant communication with the entire ecosystem.
Other companies that participated with Enel include: A2A, Aquafil, Bulgari, Cassa Depositi e Prestiti, Cetena (Fincantieri Group), CIRFOOD, Costa Crociere, ERG, FaterSMART, Hera Group, Intesa Sanpaolo, NextChem, Novamont, Salvatore Ferragamo, Touring Club Italiano and Lavazza.
