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.
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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.