Why more businesses haven’t caught onto ‘industrial symbiosis’
This post first appeared on BusinessGreen.
There’s an old joke about generating electricity from nuclear fusion: that it’s always just 50 years away, no matter when you’re starting from. Perhaps unfairly, I have the same feeling about industrial symbiosis, the idea that the unwanted by-products of one manufacturing process become the valued inputs for another. Despite the concept being decades old, it’s still much more likely to feature in academic reports than on boardroom agendas or factory floors. Hopefully that’s about to change, as promoting industrial symbiosis is a priority for Germany’s leadership of the G7 this year. But, if the G7 initiative is to prove more successful at embedding the theory in business thinking, it’s worth considering where industrial symbiosis has and hasn’t worked before.
Kalundborg – the Danish poster child
For a long time the poster child of this concept has been the Danish town of Kalundborg. Since the 1970s, a cluster of industries anchored around the town’s power station have shared inputs and outputs, motivated primarily by a need to minimise their dependence on scarce groundwater resources. Studies of how industrial symbiosis has worked in Kalundborg have demonstrated the benefits of the approach in terms of reducing feedstock and waste management costs, increasing revenues, expanding sources of revenue and securing supplies of critical resources, including water and energy. They’ve also revealed two sources of Kalundborg’s success that would be hard to replicate elsewhere, particularly the many personal connections between the town’s industrialists, which supported high levels of trust, and the concentration of industries that meant minimal transport costs.
It’s not just trust and proximity that help foster symbiosis. When the manufacturers association EEF surveyed their members on industrial symbiosis, the major barriers they uncovered to wider adoption included lack of expertise on the opportunities, lack of senior management time and lack of government support for investment. These barriers aren’t unique to industrial symbiosis and are familiar from conversations with businesses about investing in wider resource efficiency opportunities. They reflect two systemic problems. One is that the cost of resources does not reflect all the costs borne by society of their production and consumption (the externalities problem). The other is that managers prefer investing their time and money in developing new products and services, where the upside is theoretically limitless, over efficiency improvements where the gains are certain but finite.
Facilitation helps companies manage new relationships
So what does this mean for efforts to promote this potentially transformational system of resource use? Apart from blanket measures, like costing in more externalities, it suggests that the key to boosting symbiosis is helping businesses to reduce the amount of time and cost required to engage with the idea.
One way of achieving this is by providing expert facilitation, such as that provided by International Synergies. Facilitation helps companies to shortcut the process of identifying where their by-products might be useful and which other businesses might be interested in them. Having a third party involved can also help foster the all important trust required to get new business relationships off the ground and negotiate issues like who owns the intellectual property for any new technologies developed.
The problem with this is it doesn’t come free. Whilst it has traditionally been funded by local or national governments as part of efforts to help businesses improve their competitiveness, reduce their environmental impacts and contribute to local economic development, central government budgets for things like facilitation services are the first to be cut.
Cities are already doing it
So what could the G7 initiative do to help? One possibility would be to concentrate on actions that local and regional governments can take. City regions have emerged as a key focus for economic development and appear well suited to implementing symbiosis; they are small enough to have local industrial knowledge but large enough to be able to successfully match supply with demand. This idea is already being tested in Birmingham where industrial symbiosis is part of its Big City Plan for local economic development.
Another option is to promote new technologies which reduce the need for paid-for facilitation. Smart cities and big data are very much flavour of the month, if not the decade, and the example of Madrid’s proposals to open up access to data generated in the city highlights the potential for opening up databases of what materials are available where. This would enable enterprising businesses to approach companies with symbiotic solutions for their waste streams, such as Bio-bean’s demand for coffee grounds to make bio fuel.
A fresh approach to industrial symbiosis, targeting cities as the future centres of economic growth and exploiting new technologies, could turn an old theoretical concept into the state of the art in resource management.