CIRCULAR ECONOMY & POLICIES:

FUNDAMENTALS & APPLICATIONS IN

THE ENERGY SECTOR

The Energy Club | Parv & Ruchir IIT Bombay

 WEEK 1
DAY 2
The Energy Club IIT Bombay
 REVIEW: HOW DOES THE CIRCULAR
ECONOMY CREATE VALUE?
The global economy has created a great deal of value to people over the decades. It has
provided products and services that satisfy many of our needs and desires. While this value
is very unevenly spread, some societies have gained from high levels of material wealth and
many millions of people have been pulled out of poverty.
However, the economy that creates this value is linear, or ‘take-make-waste’, in the way it
handles materials. It extracts resources to make products that eventually end up buried or
burned. This approach pollutes nature, consumes finite resources, and is the main
underlying driver of climate change and biodiversity loss.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 THE CIRCULAR ECONOMY: ELIMINATE,
CIRCULATE, REGENERATE
The circular economy takes a different approach. Instead of allowing valuable
materials to go to waste and natural systems to be degraded, it applies three
principles: eliminate waste and pollution, circulate products and materials, and
regenerate nature.
This means designing buildings, cars, and electronics, for instance, to be used
longer, reused many times, remanufactured, and in the end recycled. This
keeps the resources that went into making them – the materials, energy, and
people’s time – in the economy.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 CREATING VALUE IN A
CIRCULAR ECONOMY
The value created for businesses is reduced costs of buying raw materials and making new products (even if
more materials are used upfront to make products durable). The value for customers is getting access to goods
at lower prices. The benefits to the environment and society include lower greenhouse gas emissions, cleaner
water, and fewer landfills.
Digitally-enabled business models such as product-as-a-service, reuse and refurbishment, and predictive
maintenance can help capture this value for businesses and customers. Examples for durable goods include
on-demand car services, subscription models for clothes, and remanufacturing jet engine components before
they wear out.
Further Reading: https://www.ellenmacarthurfoundation.org/towards-the-circular-economy-vol-1-an-economic-
and-business-rationale-for-an

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
i
 CIRCULAR ECONOMY VALUE FOR
THE FOOD INDUSTRY
When it comes to food and agriculture, regenerating nature is key to creating value. Designing
food to come from regenerative farming systems can increase farmers’ profits and food output
while reducing pollution, storing carbon in the ground, and helping biodiversity. This is achieved
by cultivating healthy and highly productive soils in which to grow a wide variety of crops.
Other circular economy opportunities in food also create value. Designing out food waste
reduces the overall cost of producing food and the amount of land needed for agriculture.
Making use of food byproducts to make textiles, building materials, or new food products
reduces raw material costs for businesses in those industries.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 MEASURING THE VALUE OF A
CIRCULAR ECONOMY
The size of this value can be measured. For example, analysis shows that in Europe, putting in place a circular
economy for buildings, transport, and food could create EUR 900 billion a year more than would be created
without it in 2030. This is a mix of cost savings to businesses and customers and wider benefits to society and
the environment.
While these wider benefits do not always have a price, their economic value can be estimated. For example,
lower GHG emissions means lower future costs resulting from climate change, reduced road congestion
means higher productivity, and less local air pollution means reduced spending on healthcare
Further Reading: https://www.ellenmacarthurfoundation.org/growth-within-a-circular-economy-vision-for-a-
competitive-europe

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 MEASURING THE VALUE OF A
CIRCULAR ECONOMY
While they might not always benefit their bottom line in the short term, these benefits can
create value for businesses. Circular economy business models can, for instance, help
companies meet their climate change commitments, get ahead of government regulations
to protect biodiversity, and increase the security of their raw material supplies.
Creating value in a circular economy is to harness innovation to grow regenerative
businesses. These businesses improve profitability and resilience, reduce costs for
customers, and benefit society and the environment: a compelling economic rationale.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 THE BUTTERFLY DIAGRAM:
VISUALISING THE CIRCULAR ECONOMY
The circular economy system diagram, known as the butterfly diagram,
illustrates the continuous flow of materials in a circular economy. There are
two main cycles – the technical cycle and the biological cycle. In the technical
cycle, products and materials are kept in circulation through processes such
as reuse, repair, remanufacture and recycling. In the biological cycle, the
nutrients from biodegradable materials are returned to the Earth to
regenerate nature.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
The Butterfly Diagram
 BUTTERFLY DIAGRAM: THE
BIOLOGICAL CYCLE
On the left-hand side of the butterfly diagram is the biological cycle, which is for
materials that can biodegrade and safely return to the earth. This cycle mainly
concerns products that are consumed, such as food. However some other
biodegradable materials, such as cotton or wood, may eventually make their way
from the technical cycle into the biological cycle once they have degraded to a
point where they can no longer be used to make new products.
The biological cycle describes the processes that return nutrients to the soil and
help regenerate nature.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 MAIN PROCESSES IN THE
BIOLOGICAL CYCLE

REGENERATION
FARMING
COMPOSTING & ANAEROBIC
EXTRACTION OF BIOCHEMICAL
DIGESTION
FEEDSTOCK
CASCADES

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 REGENERATION

The circular economy's third principle, regeneration, emphasizes

building natural capital rather than degrading it. It promotes
sustainable farming and waste practices to rebuild soils, increase
biodiversity, and improve the environment, shifting the focus from
minimizing harm to enhancing nature.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 FARMING
We can manage farms, forests, and fisheries to create positive
outcomes like healthy soils, improved biodiversity, better air and water
quality, and increased carbon storage. Techniques such as
regenerative agriculture and agroforestry help regenerate ecosystems.
Organic waste nutrients should be returned to the soil to prevent
depletion and reduce reliance on chemical fertilizers.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 COMPOSTING AND
ANAEROBIC DIGESTION
1.Composting: This process involves the microbial breakdown of organic matter with
oxygen, turning food by-products into compost used as a soil enhancer, replacing
artificial fertilizers.
2.Anaerobic Digestion: Microorganisms break down organic waste without oxygen,
producing biogas and digestate. Digestate can be applied to land or composted.
3.Biogas: Produced from both processes, biogas, mainly methane and carbon dioxide,
serves as an energy source, contributing to the circular economy by recycling organic
materials.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 CASCADES
These loops of the biological cycle make use of products and materials already
in the economy. This could mean, for example, using food by-products to make
other materials, such as textiles made from orange peel, or designing new food
products using ingredients usually considered waste, like ketchup made from
banana peel. It could also mean using the material for applications such as
animal feed. When products or materials can no longer be used, they move to
the outer loops of the biological cycle where they are returned to the soil.

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 EXTRACTION OF
BIOCHEMICAL FEEDSTOCK
Taking both post-harvest and post-consumer biological materials as feedstock, this
step involves the use of biorefineries to produce low volume but high value chemical
products. On top of this, biorefineries can produce a range of other valuable
products from organic materials through a series of steps. These processes could
consecutively produce, for example, high value biochemicals and nutraceuticals
followed by bulk biochemicals.
Further Reading: https://www.ellenmacarthurfoundation.org/articles/the-biological-
cycle-of-the-butterfly-diagram

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 REFERENCES

https://www.ellenmacarthurfoundation.org/circular-economy-
diagram
https://www.ellenmacarthurfoundation.org/articles/the-biological-
cycle-of-the-butterfly-diagram
https://www.ellenmacarthurfoundation.org/how-does-the-circular-
economy-create-value

Presentation by The Energy Club | Technical Summer School | 2024 | IIT Bombay
 THANK YOU

The Energy Club | Technical Summer School IIT Bombay