As a result of using an innovative circular economy in business, we enrich local production, reduce dependence on external shocks, align businesses using the environment’s natural capacity and increase company resilience – in each and every sense of the word
What are the benefits of the circular economy? How are business models, that react to the outcome of global warming, implemented? Sinisa Mitrovi'c, Head from the Centre for Circular Economy from the CCIS, answers these and other circular-economy-related questions.
If the opportunities for utilizing 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 in line with the use of internal reserves and domestic resources – waste, recycling and – which form space for creating a large number of jobs that people need right now.
Also, the opportunities for savings and promotion of green procurement are very ample.
As a result of utilizing an innovative circular economy in business, we enrich local production, reduce reliance on external shocks, align businesses using the environment’s natural capacity and increase company resilience – in every sense of the term.
Moreover, this path becomes inevitable. The EU will see the recovery from COVID and the Ukrainian crisis much more through the green filter, and potential to deal with change only increases total costs and indebts our economy when it comes to time (in addition to consequence- and cost-wise). If we turn to the old-fashioned take-produce-throw type 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 get a new market position.
The disadvantages from the linear economy are 1. Short-term and narrow process planning with one parameter of success – profit, along with a narrow range of measured impacts. In other words, linear business abstracts the majority of the levers that induce all the major systemic shocks listed above. 2. High dependence on the old-fashioned supply chains. First of all, strong dependence on disappearing resources – oil (depleted within 40 years), gold (depleted within Ten years), zinc (depletion time Ten years), etc. 3. The irrational setting of worth creation. Today, we generate profit by wasting limited resources and reducing the system’s ability to supply us with basic work conditions (air, water, biopotential, and other recycleables). With such a framework, we inevitably come to an entire depletion of capacity. We have to put everything we discard 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 machine which the economy relies – health insurance and education of individuals 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 really a start up business approach. This is perhaps the most challenging aspect to understand, because it needs a different way of thinking about business.
One way to reduce CO2 emissions is as simple as switching to renewable energy sources. That, however, is not sufficient. Studies have shown that people can achieve about a 55% decrease in the outcome that leads us to at least one.5 oC. The other 45% is related to the modification 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 should also change the approach we take to work.
The ultima of profitability has established an imbalance in societies – with some being wealthier and some poorer. COVID or any emergency are far more bad for less developed countries. The circular economy highlights the knowledge economy and participatory decision-making from our context. It makes more independent societies and economies and underlines lighter allocation of natural resources and resource management through closed supply chains. In translation, the circular economy implies more logical utilisation of the resources that are near to us (if there are any) and engagement of domestic experts. This kind of economy also implies an emphasis on innovation, not waste management. It is one thing to recycle wood, but another to extract lignin and employ it in the construction industry.
Today, economic growth is closely linked to the development of resources, energy and water use. Subsidizing basic fossil energy and the labour tax made sense whenever 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 general 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 thing that this new economy also entails may be the transition from subsidies for non-renewable fuels to subsidizing cleaner technologies that will generate energy with local natural capacities. Clean technologies have moved from the high-risk-high-reward category towards the mass production category, as the risk of investing in fossil fuels is increasing.
We have to underline two phases from the transition to the circular economy. Phase one implies subsidies and rewards for economies which are actively and decisively starting the transition, while phase two omits subsidies and begins to modify the cost side from the entire economic system. From experience and direct insight, I can state that the EU does not plan to deviate from the “green” path and “green” investments. The Serbian business system is a fundamental element of the ecu market. So, the question is – just when was it logical to start building a fiscal and social system resistant to disruption? My answer is yesterday. What's yours?
The circular economy is an increasingly discussed topic in our country, both because of the real need for sustainable development, and the implementation of standards implied by Chapter 27 in Serbia’s accession negotiations with the Eu. The circular economy is a start up business model that envisages maximum optimization of monetary processes, using the reuse of available recycleables and energy resources from waste streams, efficient use of energy and human resources and savings associated with both time and organization of business, having a maximum reduction of negative effect on the environment and global warming.
The Republic of Serbia has had several important steps toward transitioning from the linear to some circular economy. Defining a strategic framework is one of the most significant steps.
In 2023, among the activities of the Ministry of the Environment, an ex-ante research into the results of the circular economy is made, which precedes the general public policy document. In conclusion, the document states that there is a have 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' is going to 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 can help implement the idea of the circular economy in Serbia up until 2023.
The objective of the Roadmap is to increase market opportunities for production through circular business models and encourage industry to produce new jobs and improve business through finding innovative environmentally sustainable solutions. The intention here's to encourage the entire society to create radical alterations in thinking, culture and attitude towards resources, in addition to encourage decision-makers to politically invest in changes in public policies and dialogue in the context of the circular economy. The Roadmap is definitely an initial document which will launch a dialogue between decision-makers and representatives of industry, academia and civil society.
Our economy can also be 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 Sabac and Prahovo, is focusing on a brand new business design, aimed at rationalizing the intake of natural resources and energy efficiency. Metalfer from Sremska Mitrovica, for instance, is really a One hundred percent circular company engaged in using scrap iron to make services. There are also numerous recycling companies and foreign companies that make use of the model of industrial symbiosis to give generated waste to small and micro companies like a new raw material for production.
We simply have to create opportunities for that implementation from the circular economy. It is no longer an issue of whether you want to or otherwise, but whether our production will survive if we don't accept the circular economy rather than the linear one in the next 5-10 years. There are dwindling natural resources, energy has become more expensive, while rivers, land and air have become increasingly polluted.
What may be the Chamber of Commerce and Industry of Serbia's Centre for Circular Economy doing to advertise and implement business models that can react to the outcome of climate change?
Since 2023, the Centre for Circular Economy has been implementing EIT Climate-KIC projects and programs. The EIT Climate-KIC began 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 also the economy towards zero carbon emissions. We identify and support innovations that contribute to climate change mitigation and adaptation. We feel that the decarbonized, sustainable economy is necessary not just to prevent catastrophic global warming but also creates a good amount of opportunities for business and society.
EIT Climate-KIC was financially supported by the Horizon 2023 fund until last year, and Horizon Europe as of this year until 2027.
In the last twelve years, because of EIT Climate-KIC programmes and projects, in the European level, we now have over 450 partners and have supported almost 2,000 startups which have attracted a lot more than 1 billion euros price of investments. We've created 2,500 full-time jobs and launched more than 600 innovative services and products. 54,000 people took part 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 Nis Science Park. This past year, the SEE ICT hub, better known because the Startit Centre, left the hub.
All EIT Climate-KIC programmes and projects we implement try to reduce greenhouse gas emissions, mitigate global warming and adjust to it.
In accessory for existing programmes and projects in Serbia, EIT Climate-KIC provides a handful of professional development opportunities, which are available to everyone, while some segments of the programme have the freedom.
What type of cooperation do you have with local and foreign institutes and institutions?
Representatives of the business and academic community, public and non-governmental sectors take part in our projects along with other activities, to produce and boost a network of pros who can develop innovative products, services and concepts, market them and therefore bring about the decarbonization from the business sector and society. The inclusion of significant stakeholders, which sometimes have different interests, is a necessary prerequisite for doing the necessary changes in the transition from the current linear business design to a circular one.
For example, at the begining of June, the Centre celebrated World Environment Day at the Belgrade Fortress, in cooperation using the Secretary of state for Environment, the Un 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 season, based on the Ministry of Economy, are decarbonization of the business sector and wastewater management. Both projects involve most industrial firms that create environmentally harmful emissions in their production processes, which can be influenced to be able to reduce or reuse them.
Decarbonization implies monitoring of carbon footprint that is required to manufacture an item or provide a service. The first groups of items that are required to be taxed on exports to the EU market from 2026 are products made from steel, iron, aluminium, cement, in addition to clinkers, fertilizers and electricity. The transition period, when it comes to adjusting the measurement and quantification of CO2 in the product declaration, starts in 2023. The CCIS Centre for Circular Economy is putting together helpful information that will give companies comprehensive info on cross-border taxation of products, as well as methods to manage carbon dioxide emissions for the mentioned product groups.
According to the Law on Environmental Protection, every company or small business owner with a wastewater treatment plant and/or discharges its wastewater into a recipient or public sewer is obliged to harmonize its emissions using the emission limit values for pollutants in water, based on regulation until December 31, 2025.
The Centre for Circular Economy has held an exercise session for more than 150 interested companies and individuals. The training was preceded with a workshop with representatives of local governments and inspectorates to enhance the information from the training using their experiences.
The Alliance for Green Transition is the leading organization in the country that facilitates green transition and we're very happy with its capacity and influence to design an environmentally friendly, sustainable and smart regulatory framework and open market.
