Road-as-a-service.pdf

Pursuing Financial Reality of the Circular Road: A pathway to Road-as-a-Service

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Circle Economy and ICLEI have partnered up to initiate the go to knowledge hub of case studies about the circular economy in cities. The Cities Collection is a repository of case studies that demonstrate the role of cities in the circular transition, and includes policies, business cases and research articles. Cases in the Collection flow into an ecosystem of digital products which support users in transitioning cities to circularity, for example [Ganbatte](https://ganbatte.world/cities/) and <a href="https://circulars.iclei.org/" target="_blank">ICLEI Circulars</a>, both part of the <a href="https://circulars.iclei.org/circle-lab-for-cities/" target = _blank">Circle Lab for Cities Programme.</a>

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Circular Cities

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Article / Report

Direct and indirect effects that increase revenues or the potential for new revenues, for example from new products, customer segments, partnerships or business models

Revenue Potential

Impact on the ease of innovation, and facilitating uptake of innovations

Innovation

Reduced use of virgin materials and/or an increase of the use of secondary and bio-based materials

Reduce Material Consumption (SDG12)

Minimise waste through diversion: Instead of sending waste to landfill, it is redirected into other industrial processes for handling, treatment, recycling, recovery, or reuse in various forms. 

Minimise waste through design: At the outset of a process of project, plan and design such that there is zero waste or minimal waste during production, use, and at end of life. 

Minimise Waste (SDG12)

Providing air, water, rail, and land transportation and related services for the distribution of goods, such as air freight, air courier and logistics services, maritime freight, marine courier and logistics services, rail freight, rail courier and logistics services, land freight, land courier and logistics services, including package and mail delivery and customs agents, as well as storage and warehouse facilities

Logistics Services

Producing building materials and finished and semi-finished building products for construction

Construction Materials and Products

Consider opportunities to create greater value and align incentives that build on the interaction between products and services

Rethink the business model

Deliver products through business models that ensure maximum value

Product business models

Providing products through leasing, rental, or pay-per-use models instead of sales

Leasing, rental, pay per use

Providing services through a subscription plan with regular payment schemes

Subscription-based services

'Manage' influences the use and function of physical and material elements within the urban environment. 

Manage

'Mobilise' sets the direction of and builds momentum towards long-term change, while also determining how this direction is determined and governed.

Mobilise

Govern the Transition

Institutional design to enable circularity

'Regulate' changes the rules of the systems to achieve compliance through enforcement. 


Regulate

Legislation

Review and update regulation

Asset Management

Circular use of public-owned assets (land, buildings and equipment)

Other legislation

Redesign systems to lay the foundation for circular activities and enable the transition to a circular economy 

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Rethink

Do better with less by using and supporting infrastructure, processes and products that are designed to minimize material, water and energy use and waste generation from production to end of use


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Reduce

Facilitate cross-collaboration by engaging city departments, industries and businesses on ambitious, closed-loop circular projects.

Support closed-loop systems and cross-sectoral synergies

Put enablers in place that allow circular businessesto grow, thrive and innovate (e.g. incubators, start-up funding, partnerships, innovation deals, business capacity building and testing groundsfor new business models).


Support circular and resource-efficient business innovations

The built environment, including housing, commercial buildings, and the necessary infrastructure for mobility, is essential for our livelihoods, but:
- the extraction of minerals used to produce construction materials is responsible for a quarter of global land use change,
- approximately 40% of global GHG emissions can be attributed to buildings’ construction, use and demolition, and
- construction and demolition processes drive nearly one-third of all material consumption. 

Making the built environment more circular must prioritise a heavy reduction in material use—while also closing the loop on materials and bringing secondary and renewable material choices to the fore. Our four key solutions for the built environment are:
- Make the most of what already exists: Make the most of existing materials by reusing, repurposing, upgrading and renovating following circular approaches. Where new builds are needed, use secondary materials and be as efficient as possible with urban planning solutions that follow circular design principles so that buildings can be reused, repurposed, and easily disassembled in the future.
- Be as energy efficient as possible: From the design phase, utilise circular strategies to create material- and energy efficient buildings. Couple these designs with a rollout of clean energy solutions, and prioritise energy-efficient appliances and retrofitting. 
- Utilise secondary materials: Maximise the high-value reuse of buildings and components where possible. Ideally, enable the utilisation of construction and demolition outputs and ensure that as much of it as possible is recycled to avoid the need for virgin materials, such as sand and gravel.
- Prioritise circular materials and approaches: Transition to using renewable wood, timber or cross-laminated timber instead of steel and concrete, or move to other locally available materials. Utilise mainstream modular construction and prioritise lightweight frames and structures to reduce cement and steel use, as well as green roofs where possible.



🏢 Built Environment

The demand for transport is rising globally—but current modes are heavily material- and fossil-fuels-intensive. Emissions from the transport system could grow by 60% by 2050, and transport is the number-one user of oil worldwide. GHG emissions result not only in warming global temperatures, but also in ocean acidification, which has severe consequences for entire ecosystems and further destabilises our climate. The transport system also drives land-use change and biodiversity loss through the development of infrastructure—also releasing harmful pollutants into the ocean. Key circular solutions:

- Embrace and enable car-free lifestyles
- Invest in high-quality public transport
- Rethink unnecessary air travel
- Electrify remaining vehicles

🚌 Mobility Systems

Businesses

Governments

Impacts

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Industries

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A framework of policy instruments that enabled and encourage the transition to the circular economy

Policies

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A framework of policy instruments that enable and stimulate the transition to the circular economy

The principles of a circular economy concern designing out waste, regenerating ecosystems and keeping items in use. Decoupling the economy from material flows—improving the rate of resource productivity faster than the economic growth rate—is also a consistent guide. By evolving with the growing number of applications of circular economy principles, and consolidating these strategies across thematic areas, Circle Economy’s Key Elements Framework (KE) renders the elements of the circular economy salient and serves as a basis to derive contextual strategies and interventions. 


The Framework consists of:
- Core Elements: Activities directly handling product or material flows; and uniquely,
- Enabling Elements: those that remove obstacles for core actors.


Key elements of the circular economy

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Circle Economy's framework of strategies and activities that define the circular economy

The Circular City Actions Framework provides urban changemakers with five complementary strategies they can use to start working towards a more circular system. 

The framework is action-based to provide users with concrete strategic directions and showcase the desired outcomes of each strategy. 
The framework consists of five complementary **strategies**, under which **sub-strategies** provide further detail. Finally, each sub-strategy consists of a diversity of tangible **solutions** which are framed in relation to key thematic areas. 

Note: solutions are currently focused on:
- 🍏 **Food systems**
- 🏢  **Built environment**
- 👕📱  **Consumer goods**
- ⚡ **Energy Systems**
- 🚌 **Mobility Systems**
- 💧 **Water Systems**

More thematic areas are coming soon...

'Click through each of the five strategy cards below to explore the framework and circular economy case studies in more depth!'



This framework was developed in collaboration with ICLEI, Metabolic and Ellen MacArthur Foundation with support from the MAVA Foundation. Read more about it [here]( https://circulars.iclei.org/action-framework/). 



Circular City Actions Framework

An action-based framework for local governments working towards circular cities

Thematic Areas

City Stakeholders

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Amsterdam

Netherlands

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ABN AMRO Bank

 Rabobank 

OUR MISSION IS TO ACCELERATE THE PRACTICAL AND SCALABLE IMPLEMENTATION OF THE CIRCULAR ECONOMY

At Circle Economy, we believe in a visionary future for our planet — one in which we do not have to compromise in order to achieve economic, social, and environmental prosperity. As an impact organisation, we connect and empower a global community to create the conditions for systemic transformation. With nature as our mentor, we work alongside businesses, cities and governments to identify opportunities to make the transition to the circular economy, and provide a powerful combination of practical and scalable solutions to turn these opportunities into reality.
‍
Our mission is to empower a global community of businesses, cities and governments to accelerate the transition to the circular economy through practical and scalable insights and solutions that address humanity’s greatest challenges.

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Circle Economy

Nyenrode Business University

Avans Hogeschool

Groningen University

Open University

Overijssel Province

Dura Vermeer

A pilot project of Dura Vermeer and Overijssel Province has provided a practical case for investigating how a circular road can be exploited as a&nbsp;Road-as-a-Service. A white paper on this project, launched by a new coalition for circular accounting, demonstrates how to modify and rethink current financing and reporting practices for the circular economy. A discussion about contractual structuring and its implications has led to new insights. Dura Vermeer wants to retain the economic ownership of the road while providing its functionality (i.e. the use of the road) as a service to their client Overijssel Province. This incentive ensures that it will maintain the road as well as possible from its knowledge and expertise. This will ultimately lead to a higher residual value.The participants formed a Coalition Circular Accounting (CCA). This is a collaboration between&nbsp;Circle Economy,&nbsp;Sustainable Finance Lab,&nbsp;The Netherlands Institute of Chartered Accountants&nbsp;(NBA),&nbsp;Dura Vermeer,&nbsp;ABN AMRO,&nbsp;Rabobank,&nbsp;KPMG,&nbsp;Provincie Overijssel&nbsp;and scientists of&nbsp;Erasmus University,&nbsp;Open Universiteit,&nbsp;University of Groningen,&nbsp;Nyenrode Business University&nbsp;and&nbsp;Avans University of Applied Sciences. The CCA was co-funded by&nbsp;Nederland Circulair! To sell or not to sellThe fundamental question is “to sell or not to sell”, according to CCA. Financial reporting is about economic ownership and the transfer of risks and rewards. If at the end of the contract, economic ownership is transferred to the client (in this case Overijssel Province), it still appears on their balance sheet from the start as it would in a ‘normal’ sale. The alternative is to specify explicitly the ongoing nature of the agreement, which excludes a transfer. This ownership question has implications for the reuse of the road and its materials at the time of harvesting. The owner of the road is incentivised to optimize the durability of the road, its maintenance and (re) use of raw materials, with potential effects such as a longer lifespan, lower overall maintenance costs, and higher residual material value.&nbsp; Combining different financial structuresThis above decision has important consequences for the balance sheet of both parties and how to obtain financing for the investment. When no sale takes place, we have to alter our traditional financing perspective. A possible solution is to create a combination of financing projects, while also having some corporate debt that should lead to a different type of financing. A surprising result is the fact that the actual accounting of the circular road turned out not to be the main challenge in this case. Creating a financial incentive for circularity is the foremost objective. A contractual agreement should express circular incentives and the distribution of risk and reward. The actual accounting ultimately follows.

The Circular Facade.pdf

Business case

Archetypes

CE Materials

Materials

Nace Sectors

Whilst no two countries are the same, there are still obvious similarities between some of them, with discernible development patterns and parallels in evidence. Common problems and shared solutions help place unique country identities and individual issues in context.

Whilst this classification is far from clear-cut and exhibits some overlap, it does underline how the discourse on transitioning to a circular economy needs to account for both differences and commonalities, if we are to arrive at a more strategic and instructive analysis. It also allows to highlight a set of key themes that are likely to be central to the countries that fall under the respective profiles. 

Country profiles (Build, Grow, Shift)

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A framework to distinguish between different country profiles and their circular transition needs.

Browse case studies by type of implementing stakeholder.

Implementing stakeholders

Rabobank 

Triodos

Invest-NL

KPMG

De Groot en Visser

Alkondor

Allen & Overy

Sustainable Finance Lab

Blitta

In its second whitepaper, the Coalition Circular Accounting (CCA) explores Facades-as-a-Service as a method to battle waste and increase the circularity of buildings. The Facades-as-a-Service will provide a customisable, dismantable facade that provides a building with ventilation, sunlight regulation and energy generation, all adjustable by remote control. The Product-as-a-Service business model benefits circular construction by incentivising manufacturing companies to retain responsibility for their product and their performance before, during and after its lifespan.&nbsp;‍However, current financing models can present major barriers for companies with circular business aspirations. Asset ownership for example, characterized by an extended balance sheet, is unpopular amongst financiers and suppliers, whilst essential for incentivising a long term business perspective.‍In light of these current and persistent financing barriers, the Coalition Circular Accounting has launched a white paper that elaborates on the opportunities and risks of Product-as-a-Service business models. The paper proposes a new contractual structure as an enabler and raises the issue of the misfit between current financing structures and circular business models.

The Circular Facade: Building a sustainable financial reality with Facades-as-a-Service

Impact on the quantity or quality of jobs, and shifts in the labour market

Jobs

Impact on the health and happiness of human populations

Well-being

Efficiency gains on operations or transactions either through cultural or technological shifts

Productivity

Reduced green house gas emissions released into the biosphere

Reduce Emissions (SDG13)

Reduced use and withdrawal of water and rate of recycling and reuse of water

Save Water (SDG6)

Reduced use of fossil fuel energy sources and/or increased use of renewable energy

Reduce Energy Consumption

Collecting waste from households and businesses by means of refuse bins, wheeled bins, containers, etc., and providing treatment, incineration, materials recovery and reclamation, and disposal of hazardous and non-hazardous waste

Waste Management

Processing and producing food and beverages for consumption

Food and Beverage

Enacting measures that optimise material use such as 3D printing, etc.

Material efficiency

Using materials that can be easily reused or recycled after use

Reusable, recyclable materials and inputs

Enacting measures that optimise water use

Water efficiency

Enacting measures that optimise energy use

Energy efficiency

Using renewable energy like solar, wind, etc. or renewable fuels like biomass, etc.

Renewable energy, fuels

Collection programmes that process products and parts for reuse or recycling within the same industry

Closed loop collection

Collection programmes that process products and parts for reuse or recycling within other industries

Open loop collection

Transforming waste products, materials for reuse within other industries

Open loop upcycling

Generating energy from waste through processes such as anaerobic digestion, gasification, incineration, etc.

Generating energy from waste

Processing waste streams into fuels such as biogas, biofuels, pellets, etc.

Processing waste into fuel

Recovering and reusing waste heat, gas, etc. for energy

Recovery and reuse of waste energy

Designing products that can easily breakdown and degrade in the environment

Design for bio-degradability

Utilising data and models to to identify, enable and/or implement circular strategies (eg. effective resource use & logistics planning, circular business models & design)

Data analytics, modelling

Meerlanden

Impact Institute

Alfa Accountants & Adviseurs

This white paper details the importance of measuring circular impact and using it to steer decision making in business. Using the case study of Meerlanden, the paper shows how data on circularity can bolster profitability in business while limiting negative environmental and social externalities through two avenues: integrated profit and loss and multiple balance sheets. Next steps and recommendations are provided for companies, financiers and accountants.&nbsp;

How to find the value of circular impact in business: Circular impact management and financial reporting

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This collection was curated by the Circle Economy team from Knowledge Hub case studies for businesses, local and national governments around the world to find inspiration in practical examples of the circular economy. 

Visit the <a href="https://circle-economy.com" target="_blank">Circle Economy website</a> for more information and for more publications on the circular economy.

ABN AMRO, ING and Rabobank co-developed international circular economy finance guidelines to support a common framework for financing circular business models. By introducing these guidelines, the three banks aimed to 'lay the groundwork for accelerating investment in and funding of circular business models' and are encouraging financial players across the world to follow suit.