Virtuous Circles

Waste not, want not, runs the old adage, but traditionally, Germany has been more interested in recycling than in circular-economies. All that’s starting to change.

February, 2022

In the second half of 2021, the global shortages in raw materials and essential industrial components and parts underscored how vulnerable supply chains are in Germany and most other developed countries around the world. Consumers were forced to wait months, for instance, for new cars, and businesses lost out on revenue. But what if there were a way to program the procurement of materials into the production process itself?

There is, and it’s called the circular economy: a model of production and consumption where existing materials and components are modularized and utilized as thoroughly as possible. The concept goes above and beyond conventional recycling. And for Germany, a country not blessed with an overabundance of natural resources, it’s a logical path to take.

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Statistics underscore how central circular economies can be to Germany’s future: The Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection’s most recent GreenTech Atlas put the market value of Germany’s circular economy sector at EUR 24 billion. That amounted to over 16 percent of the world total for 2020. The Atlas also predicted average annual growth of 5.9 percent, with market value reaching EUR 32 billion by 2030.

A new economic model

In November 2021, the German business newspaper Handelsblatt published a study by the Boston Consulting Group projecting that Germany could source up to 75 percent of many materials from recycling.

To achieve this, the country would need to invest EUR 50–60 billion between now and 2040, but it would also create countless business opportunities and one million new jobs in the process. By comparison, the sector currently employs approximately 310,000 people.

“Recycling plays an important role in a rapidly increasing number of areas, such as battery recycling and wind turbine recycling, and the whole area for investments in recycling technologies made in Germany is gaining momentum,” says expert Victoria Kintzinger. “Environmental technology and the companies active in this field play an outstanding role for Germany, with German solutions being well received internationally.”

Germany’s green foundations

The policy groundwork for the current dynamic was laid early. For four decades, companies in Germany have tapped into incentives of the Environmental Investment Program (Umweltinnovationsprogramm) to invest in innovative technological processes.

In 1996, the Circular Economy Act came into force, setting clear rules for waste avoidance, reuse and recycling. And since 2009, all companies selling packaged products to end-consumers are obligated to pay license fees to the recycling sector under the Dual System.

GERMANY’S CIRCULAR ECONOMY IS ON THE INCREASE

Projected annual growth in Germany from 2020 to 2030

+5.9 %

CIRCULAR ECONOMY OVERALL

+13.9 %

RECYCLING

+34.6 %

CO2 CAPTURE

Source: Roland Berger

But regulation alone cannot bring about the sea change that is needed. Impetus must come from innovative companies bringing original new solutions to market. “Germany is a world champion in recycling and has the best infrastructure for the waste industry,” said Henning Wilts, director of the circular economy division at the Wuppertal Institute for Climate, Environment and Energy, speaking to Handelsblatt. “But we’re only average where the circular economy is concerned.”

As a result, big companies in Germany are waking up to the need for change and the potential business opportunities that entails. Chemicals firm Covestro says it wants to switch completely to a circular economic model. BASF, the German multinational chemical company, is building a new battery recycling prototype plant in Schwarzheide, eastern Germany. The plant will use innovative technology for extracting lithium, nickel, cobalt and manganese from end-of-life lithium-ion batteries and production scrap. And at last year’s international mobility show in Germany, the IAA Mobility, BMW debuted a prototype of a circular concept car made nearly entirely of recyclable or already used materials. It’s called “i Vision Circular.”

International cooperation

In an example of groundbreaking international cooperation in the private sector, Dresden-based equipment manufacturer Biofabrik and Switzerland-based ENESPA are currently setting up a recycling plant for mixed plastic waste from the Dual System. It is located at Schwarze Pumpe, a coal energy plant scheduled for decommissioning and an industrial park near Spremberg in the eastern regional state of Brandenburg.

“In Spremberg, our project was welcomed with open arms,” says ENESPA CEO Cyrill Hugi. “Choosing Germany as our first market was a no-brainer, because there is strong policy pressure to collect plastics, and refineries are under pressure to include recycled plastics in their mix of inputs. The location will allow us to adhere to the wall-to-wall concept, meaning CO2 emissions from the transportation of waste and recycled materials will be kept to a minimum.”