Research Project on Industrial Symbiosis and Input-output Analysis Vito Albino, Claudio Garavelli, Rosa Dangelico

1. Industrial ecology and industrial ecosystem The literature on industrial ecology mainly focuses on the physical flows of substances and the physical transformation processes of a set of organizations, disregarding the coordination issues within and between organizations. Such a coordination may be performed by markets for raw materials, commodities, products, services, labour, capital and insurance. It may include legislative issues related to the competition and the ‘right to know’, the fiscal incentives, the environmental regulations and the liability. Coordination may be analyzed by cultural, social, historical or ethical aspects. Industrial ecology should include the ‘competition between species’ and the ‘population dynamics’ without getting trapped in oversimplifications of socio-biology [1]. Following Tibbs [2] “industrial ecology involves designing industrial infrastructures as if they were a series of interlocking man-made ecosystems interfacing with the natural global ecosystem. Industrial ecology takes the pattern of the natural environment as a model for solving environmental problems, creating a new paradigm for the industrial system as a process.” On the other hand, Kirschner [3] introduces the idea that “industrial ecology applies the principles of natural systems – such as carrying capacity, material flows, resilience, and connectivity – to man-made systems”. Additionally, Ayres [4] developed the concept of industrial metabolism as “the whole integrated collection of physical processes that convert raw materials and energy, plus labour, into finished products and wastes in a more or less steady-state condition.” Ehrenfeld [5] includes the concepts of technology flows and consumption in the industrial ecology definition: “industrial ecology is a large analytical framework that serves mostly to identify and enumerate the myriad flows of materials and technological artefacts within a web of producers and consumers.” Allenby [6] defines industrial ecology as: “To manage the earth’s resources in such a way as to approach and maintain a global carrying capacity for our species which is both desirable and sustainable over time, given continued evolution of technology and quality of life. The study of what this entails, especially in terms of existing (objective) and desirable (normative) patterns, is industrial ecology.” Hirschhorn’s critical review [7] of approximately 15 years of pollution prevention (P2) innovation concludes that the P2 revolution failed, among other reasons because of the strength of the pollution control (PC) stakeholders considering that PC gives to regulators and environmentalists more certainty than P2. In the analysis of Geiser [8] an interesting observation occurs. The P2 innovators were environmental idealists, not revolutionaries. In that way governments and industry perceived the P2 innovations only at the micro-level, but “the movement can still be revolutionary” [8]. For this scope, a new environmental and industry policy is required, but to do this, “the pollution prevention movement would need to be more visionary in its goals and more aggressive in its tactics” [8]. One of the mentioned movements is the industrial ecosystem (IE) which is first defined by Frosch and Gallopoulus [9] as: “the transformation of the traditional model of industrial activity, in which individual manufacturing takes in raw materials and generates products to be sold plus waste to be disposed of, into a more integrated system, in which the consumption of energy and materials is optimized and the effluents of one process serve as the raw material for another

process.” This concept focuses on the relations among companies in a direct waste/by-product exchange. Connections with a natural ecosystem have also been made, both at the level of the interface between man-made ecosystems with the natural global ecosystem[2] as well as the application of the principles of natural systems to man-made systems [3]. The Kalundborg (Denmark) industrial ecosystem became the premier case demonstrating that industry can coexist with nature generating bottom-line benefits where the plant managers made only a modest beginning to improve environmental performance [10]. The IE is only one aspect of the industrial ecology concept. “The field basically enables multiple stakeholders to view the system they share as a whole and plan action to tune it to natural systems in an integrative way” [10]. Gertler [11] defines four basic goals of an IE giving a more specific definition: • Reduce the use of virgin materials; • Increase energy efficiency leading to reduce systemic energy use; • Reduce the volume of waste products requiring disposal; • Increase the amount and types of process outputs that have market value. 2. Four principles for an industrial ecosystem Many approaches to corporate and industrial environmental management as well as methods, techniques and tools have been created and environmental or sustainability programs have been implemented. But the problems still remain. In some cases a new problem is created when another one is solved. This holds the environmental management agenda, note the familiar notion of “end-of pipe policy” or the tendency for “problem displacement” [12]. For example “an environmental bad” can be exported from medium to another or from one stage in a product’s life cycle to another, e.g. from landfills to de-inking sludge in the case of paper life cycles and paper recycling [13,14]. The concept of environmental problems can be defined within the societal construction in the sense that if the societal actors (scientists, media, land owners, environmental groups) mention the problem, it becomes an environmental problem. If not, nobody see it as an environmental problem. The fundamental “cause” of modern societal environmental problems is the fact that two systems, societal, economic, or industrial and the ecosystem operate through different principles of system development. So the coexistence areas must be defined between these two systems. In the following section there is a temptation to learn from ecosystem principles in an industrial system, to try and illustrate some of the important challenges of industrial environmental policy and industrial environmental management and to understand the direction along which the IE approach could be developed. 2.1. Roundput The IE analogy is based on provocative ecosystem model calling attention on the basic condition of natural recycling systems and roundput [15] systems. In ecosystems, waste equals food, and the energy is cascaded along the food chain while the only input to the system is the solar energy from the sun. So, the basic philosophy in the IE approach relying co-operation between the actors involved, in that they use each other’s waste material and energy as resources and minimize virgin material and energy input, reducing waste and emission output. The “recycling of energy” (or utilization of residual energy) happens through cascading in food chains with the only driver of the system being the input from the solar energy. Following Daly [16] , the limiting factor of economic development is changing now as economic development is limited by natural capital instead of human manufactured capital, e.g. oil in the ground instead of pumping capacity, the fishes instead of fishing boats etc. The fossil fuel stocks have enabled the industrial system to proceed with a throughput paradigm, i.e. from raw

materials to products to wastes. With these regards principle of roundput can be defined as the recycling of matter and cascading of energy between the actors. 2.2. Diversity Ecosystem survival is based on diversity, diversity in species, in organisms, in interdependency, in cooperation and information [17]. So, the long-term survival strategy of ecosystems as a consequence of permanently changing environmental conditions. But also in the unchanged environmental conditions, some resource constraints exist. Understanding the system under one single denominator, i.e. monetary value, the diversity is reduced. Diversity is also reduced through the ideal of mass production, focusing on maximizing the rapid increase of homogenized industrial output products. The ecosystem principle of diversity, when considered in industrial environmental policy and management, could then mean diversity in cooperation. Further, diversity analogy would promote diversity in industrial inputs and outputs. Power plant can use not only coal or oil inputs, but also wood wastes, recycled fuels from households etc. A case study on the IE of a regional energy supply system of the Jyvaslya region in Finland is a good example: CHP (coproduction of heat and power). In CHP, the waste energy from electricity production can be used in the production of district heat for households and industrial steam for local industry governments. Not only system inputs but also the system outputs are diverse. CHP: exists only in Finland, Denmark, and Netherlands [18-20]. 2.3. Locality Ecosystems need to respect the local natural limiting factors. Regional economic or industrial systems have been able to substitute the local natural limiting factors, of energy for example, with imported fossil fuels. Furthermore, the assumption prevails that natural capital can be substituted with technological innovation or with human manufactured capital. So sustainability is neglected. To achieve the ecosystem metaphor of locality, industrial systems would need to try and replace imported resources with local renewable and with local waste material and energy sources. Further, transportation should be reduced. 2.4. Gradual Change In cultural and industrial evolution, culture serves as the information storage medium [21]. Here lies, one of the fundamental problems of the environmental question, as a rapid increase in demand for a certain market good, can lead to extinction of the resource required for its production. In industrial environmental management, the gradual change metaphor could be interpreted as increasing the reliance on renewable flow resources not exceeding their renewal rate instead of using non-renewable stock resources. Finland example: Annual cuttings are lower than the annual growth of the forests [22]. The application of the ecosystem principle of gradual change to an industrial system would promote the use of renewable sources. 3. A vision of a perfect industrial system In the evaluation of a perfect industrial system there are two systems: the industrial subsystem and the mother ecosystem in which the industrial system is embedded. This “inter-system ecology” could be possible for example in some cases in forest industries. This idea could be illustrated with the Finnish forest industry carbon cycle [22]. The annual binding of CO2 in the forests of Finland exceeds the amount of carbon releases through forest industry cuttings. Here, nature is recycling the waste of industrial activity, which is practically impossible to “recycle” by man. Industrial system is also based on recycling and diverse interdependency and cooperation.

The goal of the vision should be what the industrial ecology community is calling type III ecology, i.e. an ecosystem that has evolved from linear and quasi-cyclic material flows into a situation where the resources of life are limited and therefore the system operates through almost complete cyclic nature of the material flows. The perfect IE would, when successful, be a business-environment or industry-environment win-win situation [23]. At this aim, environmental legislation costs can be reduced. Image costs can be reduced and possible green market potential is better utilized. There are also negative side-effects such as impacts of paper recovery in Finland. The capacity requirement, for example de-inking plants for paper recovery, can also create an economic barrier. Similarly, application of the ecosystem diversity principle to an industrial system may require the companies to extend their operation into areas unfamiliar to them, redesign processes and products and change their routines [17]. However, an industrial system which achieves advanced roundput, diversity, locality, and is in tune with the gradual change metaphor, can be argued to be more likely to fulfill the IE philosophy than an industrial system which does not follow these ecosystem principles. Each IE case is specific and must be evaluated in its special conditions due to the difficulty of a definition of a universal system. Let us consider the cooperation among the actors of a production chain. It can support the improvement of environmental performance of each actor as well as of the whole production chain. For instance, the recycle of wastes of an actor as primary inputs for another actor can result in a form of industrial symbiosis with a double benefit: the reduction of waste disposal and of primary inputs purchase. Both environmental impacts and related costs can then be mitigated if they cooperate. Moreover, cooperation may involve actors of different production chains resulting in joint production chains. In all cases, the mutual benefit as well as the cost of cooperation have to be considered. The share of the net benefit among the actors of the chains represents the incentive to explore the space of cooperation. In this research we propose to represent a production chain, whose wastes or by-products can be used as inputs of another chain, adopting an Enterprise Input-Output (EIO) approach. Such an approach has been used to model complex supply chains [24], to evaluate the effect of different coordination policies of materials flows on the logistics and environmental performance of an industrial district [25], or to minimize the waste and resource consumption of a manufacturing system [26]. In this research, an EIO model of N independent chains is developed to evaluate the cooperation opportunity in terms of both economic and environmental benefits. Operational aspects, such as the logistic one, are also considered since they may strongly affect the cooperative relationship and the rise of benefits. Models for joint production chains are built in the case of industrial symbiosis. This approach will be applied to some case examples. References [1] Baas, L., Bouman, J., Hafkamp, W. (1997) Kritische Akteure des Umweltmanagements in den Niederlanden. In: Birke M, Burschel C, Schwartz M, editors. Handbuch Umweltschutz und Organisation—Okologisierung—Organisationswandel—Mikropolitik (in German). Munchen/Wien: R. Oldenbourg Verlag, pp. 495–519. [2] Tibbs, H.B.C. (1992) Industrial ecology: an environmental agenda for industry. Whole Earth Review, Winter, pp. 4–19. [3] Kirschner, E. (1995) Eco-industrial parks find growing acceptance. Chemical and Engineering News, February, 20-15. [4] Ayres, R.U. (1989) Industrial metabolism. In: Ausubel, J.H., Sladovich, H.E. (editors). Technology and environment. National Academy Press, Washington, DC. pp. 23–49.

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