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1、 Study|January 2022 The Circular Economy and Digitalisation:Strategies for a digital-ecological industry transformation A study commissioned by Huawei Technologies Germany GmbH Dr.-Ing.Stephan Ramesohl Dr.Holger Berg Joscha Wirtz Circular Economy and Digitalisation 2 Publisher:Wuppertal Institute fo
2、r Climate,Environment and Energy Dppersberg 19 42103 Wuppertal www.wupperinst.org Authors:Dr.-Ing.Stephan Ramesohl E-mail:stephan.ramesohlwupperinst.org Dr.Holger Berg Joscha Wirtz The authors would like to thank Ren Arnold(Huawei)for the valuable comments and sug-gestions as well as Maike Jansen(Wu
3、ppertal Institute)for her contributions on Smart Waste Management.This study is a result of the“Shaping the Digital Transformation Digital solution Systems for the Sustainability Transition”project commissioned by Huawei Technologies Germany GmbH Hansaallee 205 40549 Dsseldorf The authors of this pu
4、blication are solely responsible for its content.Please quote the report as follows:Ramesohl,S.,Berg,H.,&Wirtz,J.(2022).The Circular Economy and Digitalisation Strategies for a digital-ecological industrial transformation,study within the project“Shap-ing the Digital Transformation”,Wuppertal Wupper
5、tal,January 2022 This work is licensed under“Creative Commons Attribution 4.0 International”(CC BY 4.0).The license text is available under:https:/creativecommons.org/licenses/by/4.0/Introduction Wuppertal Institute|3 Executive Summary A resource-efficient,circular economy will be needed before indu
6、strial climate neutrality and sustainability transformations can be achieved.It promises to decouple economic value crea-tion from material resource consumption and promotes an absolute reduction in physical ma-terial flows as well as their associated environmental effects.The circular economy,in tu
7、rn,will need digitalisation and data availability to be successful.Digital technologies and applications make it possible to improve current procedures,pro-cesses and structures(Improve)and take the first steps towards new business models and behaviours(Convert).Despite this,digitalisation itself mu
8、st be effective enough to facilitate a more far-reaching economic transformation and value creation and a complete ecological restructuring of society and lifestyles(Transform).These three levels of impact are inter-linked.The influence they have over each other means they must be addressed with a h
9、olistic approach.Improve Optimize processes and logistics in circular economy The number of new digital solutions that will become available for optimizing industrial pro-duction processes at all stages of production are expected to improve energy and resource ef-ficiency by at least 20%.Digital too
10、ls will make component and product design more efficient,while computerized manufacturing processes(computerized numerical control,CNC)and in-novative additive manufacturing processes such as 3D printing will make lightweight con-struction even more effective.Smart waste management will also dramati
11、cally increase efficiency in the waste and recycling industry.Sensor technologies and digital solutions will be able to enable real-time,demand-based route planning and waste collection.Digitally marked materials and packaging will be used to identify and track goods throughout the recycling process
12、(tracking and tracing).Ma-chine-readable codes on plastic packaging and sorting technologies,combined with artificial intelligence(AI),will improve the quality of recycling and digital trading platforms will offer new channels for marketing quality-tested and certified secondary materials(recyclates
13、).Convert-Restructure business models and user behaviour Digitalisation will enable new circular business models to meet customer demand for lower resource utilization and resource conservation services.In new usage-based business models(pay per use),products will remain the property of the manufact
14、urer,allowing them to be used multiple times.This incentivizes the creation of more robust and durable product offerings.The same concept applies to the sharing economy and the second-hand market,where devices,tools,and vehicles are shared by a large group of customers and thus used more intensively
15、 or for longer periods of time.With the support of digital platforms and smartphone apps,digital-isation will not only reduce transaction costs,it will also scale up and optimize industrial busi-ness models.Increasing the visibility of product information,for example in the form of a digital product
16、 passport(DPP)combined with corresponding assistance tools on smartphones,will make it easier for consumers to arrive at more informed decisions regarding their ecological and re-source impact.Transform-Create conditions for digital-ecological industrial transformation A complete digital and ecologi
17、cal transformation of our economy will only be successful if it is guided by a common agenda.This agenda requires changes at all economic levels:Circular Economy and Digitalisation 4 The role of data in the circular economy:The circular economy must be understood as a data economy.Data from multiple
18、 companies must be pooled together.Climate and resource protection must become an integral part of digital management systems through sustainabil-ity-oriented accounting.Systemic transformation for transparency:A successful circular economy requires a shift towards a culture of proactive data sharin
19、g.Meaningful data sharing,on the other hand,can only build on common data models and reference architectures to be effective.The trans-parency that results from such changes will enable individual solutions like DPPs.Infrastructures and data spaces for the digital circular economy:Reliable and se-cu
20、re infrastructures for data storage and processing(e.g.,like those built within the framework of GAIA-X),will require guidelines,fair rules,and trustworthy data governance,as well as standards and interfaces that enable efficient and flexible scaling of use cases to expand the scope of use through i
21、nteroperability with other systems.Being digital and circular means being systematic:A successful transition requests a new mind-set for future viability and a conscious self-understanding of ones role in the system transformation.That is to say,it will require a process within the process perspecti
22、ve com-bined with a culture of data sharing and collaboration.A strategy to act as the guardrail for transformation:A national strategy for the digital circular economy is long overdue.What is needed is an integrated approach that creates an overarching framework for a digital-ecological economic po
23、licy across all ministries and pro-vides all actors in the circular economy with a reliable orientation for their own actions.We are at the beginning of a historically decisive decade in which the plan for securing the worlds natural resources must be set together with the international community.Th
24、e devel-opment of a climate-neutral and resource-efficient circular economy will be a key part of this plan.The digital transformations we are seeing in all areas of life and the economy will con-tinue to open up new options for action and thus continuously expand the range for solutions.We must sei
25、ze these opportunities to harness the transformative power of digitalisation to rev-olutionize our economies and the way we live.It therefore falls upon the political community,and in particular the new German federal gov-ernment,to spend the next few years developing a coherent system of goals and
26、incentives for the digital and ecological transformation of our economy.They must create a reliable and stim-ulating regulative framework for private and corporate action.This will allow all actors and stakeholders to reach a common and comprehensive understanding of Germanys transfor-mation path to
27、wards a sustainable economic and social transformation as an industrialized nation.Introduction Wuppertal Institute|5 Table of Contents 1 Introduction 7 2 Challenge:Combining the Agendas for Digitalisation and the Circular Economy 9 3 Improve:Optimize the Processes and Logistics of the Circular Econ
28、omy 13 4 Convert:Realign business models and usage behaviour 16 5 Transform:Create conditions for a digital-ecological industry 21 5.1 The role of data in the circular economy 22 5.2 Whole system transparency for transparency 23 5.3 Infrastructures and data spaces for the digital circular economy 24
29、 5.4 Being digital and circular means being systematic 25 5.5 A strategy to act as the guardrail for transformation 26 6 Risks:Unsustainable and non-circular digital solutions 28 7 Conclusion 29 8 Bibliography 30 Circular Economy and Digitalisation 6 Acknowledgements The authors would like to thank
30、all whose who participated in the Shaping the Digital-Eco-logical Industrial Transformation Business Models and Political Framework for Climate and Resource Protection workshop.Their impulses and discussions served as a valuable basis for this report.Participants:Adriana Neligan(German Economic Inst
31、itute),Alexander Jasper-neite(Mercedes Benz),Christoph Epping(Federal Ministry for the Environment,Nature Con-servation,Nuclear Safety and Consumer Protection),Christoph Teusch(AFB Social&Green IT),Dieter Rehfeld(Institute for Labour and Technology),Ernst Stckl-Pukall(Federal Min-istry for Economic
32、Affairs and Climate Protection),Georg Kobiela(Germanwatch),Hanno Heitmann(Office of Bettina Hoffmann from Alliance 90/The Greens),Jean-Francois Renault(Project Management Jlich),Katarin Wagner(HSBC Germany),Klaus Ltzenkirchen(Sie-mens),Klaus Meyer(CirQuality OWL),Matthias Kuom(DG Connect),Moritz Nie
33、haus(IG Metall),Ole Wintermann(Bertelsmann Foundation),Paula Petersen(Project Together Cir-cular Futures),Rebecca Tauer(WWF Germany)and Ren Arnold(Huawei).From the Wup-pertal Institute:Stephan Ramesohl,Holger Berg and Joscha Wirtz(Research Area Digital Transformation).The authors of this publication
34、 are solely responsible for its content.Introduction Wuppertal Institute|7 1 Introduction Climate protection will be one of the most important challenges that German industry will have to tackle in the coming years.The establishment of the new German governments Min-istry for Economic Affairs and Cl
35、imate Action underscored this priority.Germanys 2045 greenhouse gas neutrality goal puts pressure on industrial sectors to update their production processes in order to drastically reduce their emissions in the short term and completely elim-inate them in the long term.And so,a growing number of com
36、panies from among the German“Mittelstand”as well as global corporations”have set their own climate neutrality goals and strategies and are calling for ambitious climate policy to support their initiatives.One example of these efforts is the implementation appeal of the 2 Foundation(Stiftung 2,2021).
37、Meanwhile,both the EU Commissions Green Deal with the Circular Economy Action Plan(European Commission,2020a)and the German resource efficiency program ProgRess III(BMU,2020a)have put resource conservation and the circular economy on their agenda.The broader business communitys exploration of the ci
38、rcular economys economic potential has also continued to accelerate in light of the global supply chain disruptions and raw material shortages caused by the pandemic.Cities such as Munich and Kiel have both announced their intention to become Zero Waste Cities a move that has been widely popular wit
39、h their resi-dents.The circular economy is also a priority for the coalition agreement and the new National Circular Economy Strategy is designed to bundle existing raw materials policy strategies.Both fields of action-climate protection and resource conservation-are cornerstones of global sustainab
40、le development that require us to fundamentally change our current private and pro-fessional routines.A profound ecological system change will be needed in all transformation arenas,or central areas of economic and social activities.Only then can the ambitious goals for climate,resource,and environm
41、ental protection can be achieved.Digitalisation will be one of the prerequisites for this ecological change.Digital technologies and applications make it possible to either improve current procedures,processes and struc-tures(Improve)or reorient existing business models or framework conditions(Conve
42、rt)(Figure 1).At the same time,digitalisation must also effectively reorient society towards more ecologically-sustainable lifestyles and contribute to a more far-reaching transformation of the economy and value creation(Transform).This last level of impact will be the decisive factor whether these
43、efforts will be effective and must therefore be put into focus of future debate.These three levels of impact are also interlinked and heavily influence each other,and so we must address them in a holistic manner.Quickly tapping into the potential short-term optimi-zation efforts will be essential as
44、 we simultaneously begin to create the prerequisites for a more profound transformation of the structural and framework conditions in the economy and so-ciety.Circular Economy and Digitalisation 8 Figure 1:1 Impact levels of digitalisation for sustainability transformation(Source:Own illustration)Th
45、is is where Huawei Technologies Germany hopes the Shaping Digitalisation:Enabling Transformation to Sustainability project can help the most.Within this project,we aim to highlight and discuss the opportunities that digitalisation can bring to Germany.In particular,we are discussing three stand-out
46、areas where action is most needed to achieve ecological transformation:mobility,the circular economy,and agriculture and food(Ramesohl et al.,2021).This report addresses the second area in need of action.1 Up until now,discussions on the cir-cular economy have been limited to recycling and the re-us
47、e of materials.We must expand the scope of these discussions to include new,resource-efficient business models and the compre-hensive transformation of value chains and industrial structures.Our analysis has found that digitalisation is indispensable for this transformation if used properly.We hope
48、this report will provide the impetus needed to kick-start a climate-and resource-friendly industrial transformation in Germany.Here,we have incorporated the findings of our interdisciplinary workshop on Shaping the Digital-Ecological Industrial Transformation-Business Models and Political Framework
49、Conditions for Climate and Resource Protection that was attended by experts from international research institutes,civil organizations,public authorities,and private companies(for a full list of participants,please see the acknowledge-ments).The workshop will be hosted again in the future once new r
50、esearch on technological,economic,and political development prospects and the implementation conditions for a cli-mate-friendly and resource-efficient circular economy is complete.1 In the following parts,we will use the comprehensive term circular economy to describe a systemic transformation acros
51、s all phases of the value chain,including the use phase.This perspective is thus broader than the understanding of the Law on Closed Cycle Management and Waste(KrWG),which equates circular economy with a functioning,effectively regulated waste and secondary raw materi-als management(Mller et al.,202
52、0).Challenge:Combining the Agendas for Digitalisation and the Circular Economy Wuppertal Institute|9 2 Challenge:Combining the Agendas for Digitalisation and the Circular Economy A resource-efficient circular economy is at the core of all strategies for industrial sustainability transformation and i
53、ndustrial climate neutrality.The goal of the circular economy is to decou-ple economic value creation from material resource consumption and to ultimately reduce physical material flows and their associated environmental impacts and greenhouse gas emis-sions.This will be one of Germanys central area
54、s of action over the coming decades.Like the energy transition,the resource and the industrial transition are two of the most important transformation arenas for the pursuit of sustainable development of the global economy and society.The circular economy has recently received much attention and,tog
55、ether with climate protection and the preservation of biodiversity,must be placed at the heart of sustainability-oriented policies.Climate protection is only viable with resource protection Germany has already set a climate protection target to become greenhouse gas neutral by 2045.If they hope to a
56、chieve this goal policymakers will need the support of the private sector to transform the German economy over the next decade.It is becoming increasingly apparent that a resource-efficient circular economy will significantly assist in greenhouse gas reduction.Thus,it will support the journey toward
57、s industrial climate neutrality(Kadner et al.,2021;Sun et al.,2021).For example,the International Resource Panel estimates that each G7 country can reduce GHG emissions from buildings and vehicles by up to 40%by 2050(Ekins&Hughes,2017).Other studies see the potential for cutting up to 60%of GHG emis
58、sions from the four most CO2-intensive material streams in European industry(steel,plastics,alumin-ium,and cement)is possible by 2050 through resource efficiency and circular strategies(Ma-terial Economics,2018).Despite this,the effect resource-saving can have on emissions reduc-tion has still not b
59、een sufficiently discussed.2 The potential is enormous,and still untapped There are a wide variety of places where we can reduce primary raw material use in our pro-duction processes and value chains by instead replacing them with reused materials(second-ary raw materials)or by increasing efficiency
60、.The Circular Economy Initiative Germany esti-mates that,when compared to the business-as-usual path,dedicated Circular Economy strat-egies can reduce resource consumption in Germany by around two-thirds by 2050(cf.Figure 2,Kadner et al.,2021).Figure 2:2 2 The study by the Federation of German Indus
61、tries(BDI)Climate Paths 2.0,for example,focuses on supplying industry with renewable energies and expanding a hydrogen system.The analysis only deals excursively with individual recycling options such as feedstock recycling of plastics,while fur-ther-reaching resource efficiency potentials and corre
62、sponding structural change effects in the basic materials industry are not taken into account(Burchardt et al.,2021).Circular Economy and Digitalisation 10 Figure 2:2 Comparison of the circular economy case with the business-as-usual case for resource con-sumption(RMC)in Germany (Source:Own illustra
63、tion according to(Kadner et al.,2021)However,we are still quite far from reaching that stage.Compared to other countries,Ger-many does have a very comprehensive,albeit cost-intensive,system for waste disposal and recycling.It has also traditionally had a very strong environmental technology sector.H
64、ow-ever,when it comes to the actual circular economy performance indicators,Germany lags be-hind many other countries.In Germany,secondary raw material use currently only replaces around 13%of resource consumption.Even when taking global upstream savings into account,this figure barely reaches 18%(S
65、teger et al.,2019).When compared with other European nations,Germany is in the middle of the pack when it comes to the use of secondary materials,while other countries such as the Netherlands or Bel-gium already show significantly higher rates of recovered raw material use,replacing almost 30%and 25
66、%of resource consumption,respectively(Bahn-Walkowiak et al.,2021).The same trends apply to resource productivity,for example the added value per consumed material,where Germanys performance hovers around the European average(EEA,2020).Recycling is important,but it isnt enough on its own A circular e
67、conomy is predicated on the idea of circularity and reuse of resources through re-cycling.There is still great untapped potential in this area.Currently,only about 40%of plastic waste from private households is recycled(Lindner et al.,2020).And yet there are clear limits to recycling:100%collection
68、and reuse of all raw materials is not achievable.Its neither eco-logically effective nor economically viable.There will always be some loss of material in the conversion process and,depending on the composition of the material,degradation cannot be avoided during recycling.When the structure of a ma
69、terial changes,its performance invariably deteriorates to some degree.In addition,recycling processes themselves consume energy,cause emissions,and pollute the environment.Sometimes,the ecological expenses of recycling simply outweigh the benefits.Therefore,preventing resource consumption in the fir
70、st place when providing goods,services,and infrastructure is more critical that increasing recycling.This is particularly true in areas Challenge:Combining the Agendas for Digitalisation and the Circular Economy Wuppertal Institute|11 where new production demand is significantly higher than the gene
71、ration of waste and resid-ual materials.3 Industry transformation through resource-efficient value creation The challenges that must be overcome to realize a circular economy are urgent and enormous.An important first step that we must take is the continuous improvement of industrial produc-tion pro
72、cesses and the optimization of individual technologies.This step alone however will not be enough to enable globally sustainable development.We must rethink the structure and logic of our industrial value chains and move way from energy-and raw-material-based mod-els to better align with climate pro
73、tection and resource conservation targets.We must reduce resource consumption starting from the ground up and make sure the resources we do use retain their value for as long as possible.This allows them to generate as much added value as possible through new business models with as few physical pro
74、ducts as possible.A circular economy thus also requires a change in demand and an increase in more sustainable lifestyles that replace energy-and material-intensive products and services with the satisfaction of non-material needs.The extent to which the virtualisation of our everyday lives and cons
75、umption will contribute to this is still unclear.Concepts such as the metaverse,which is intended to be a digital parallel world,are still in their infancy,and so their attractiveness and influence over society and our environment cannot yet be assessed.A joint agenda on digitalisation and the circu
76、lar economy The central challenge facing the circular economy is figuring out how to manage material flows and resource use across all industry,i.e.within the individual links of a value chain as well as between different industries and sectors.In a circular economy,a value chain becomes a value net
77、work in which decisions at each process stage affect the options for action of the other play-ers.The materials and design of components chosen by one link determine the durability and reparability of the final products.The type and quality of recycling processes determine the usability of secondary
78、 materials in new manufacturing processes and in product design.The circular economy therefore requires a systematic approach that goes beyond the actions of individual companies.A necessary,but not sufficient on its own,prerequisite for action in the circular economy is therefore access to informat
79、ion on upstream steps and a mutual un-derstanding of the impact of ones entrepreneurial actions on the downstream stages of the value chain.This information,combined with individual entrepreneurial drives,social moti-vation,and political incentives,can promote a willingness and ability to act.Thus,l
80、inking physical material flows with digital data flows is a key part of many measures and strategies used to pursue a circular economy.This linking requires resources and the prod-ucts created from them to be labelled.Information on their quantity,location,and condition at the various points in the
81、system(tracking)must be recorded so that their life cycle and material flows can be traced throughout the value creation chain(tracing).Only with this data is it possible to analyse and ultimately optimize material flows.3 In 2019,around 5 million metric tons of post-consumer plastic waste was gener
82、ated in Germany,of which around 1 million metric ton could be reused as recyclate.In addition,there was industrial pro-duction waste of the same magnitude.However,plastics processing in the same year was a good 14 million tons,and so recyclates thus covered only one seventh of the raw materials requ
83、ired,and over 12 million tons of virgin,petroleum-based materials were consumed(Lindner et al.,2020).Circular Economy and Digitalisation 12 Therefore,there is no circular economy without data.Only digitalisation can lay the founda-tions for a comprehensive ecological transformation of our economy.Lu
84、ckily,a window of op-portunity has opened up here in recent years.With the help of Industry 4.0 and the Internet of Things(IoT),the digital transformation of the economy has already begun accelerating and offers multiple starting points for an ecological transformation.The foundation is provided by
85、the interplay of digital solutions in four central functional areas:n Data collection and connection n Data merging and sharing n Data authentication and security n Data analysis Digital solutions combine a wide variety of key digital technologies such as connected sensors,IoT,and edge and cloud com
86、puting,as well as digital platforms,distributed ledger technolo-gies(DLT)such as blockchain,and analytical methods such as big data and artificial intelli-gence(AI).In addition,digitalisation is increasingly changing production processes,value chains,com-petitive positions as well as relationships w
87、ith customers and partners.Companies are build-ing data ecosystems,and industrial competitiveness and technology leadership are increas-ingly defined by the ability to coordinate and shape data relationships.This is where strategies for the development of the circular economy can and must start.Digi
88、talisation and sustaina-bility must be thought of and acted on together as part of the Twin Transition.The next chapters will go into these aspects in greater depth:Chapter 3(Improve)will outline the broad spectrum of options for optimizing the existing economy.The digital solutions required for thi
89、s are already available and being used,and must therefore be systematically developed further and used more intensively.Chapter 4(Convert)will go one step further and examine how digital solutions can help realign value creation,business models,and our usage behaviour.This will be indispensable for
90、achieving the objectives of a circular economy.There is a need for action here,and these ap-proaches must be quickly scaled up and out.Chapter 5(Transform)will identify five key starting points to create the conditions for this scaling-up and the profound digital-ecological transformation the econom
91、y must undergo to achieve a circular economy.Chapter 6(Prerequisites)will highlight the environmental impact of digital end-devices and hardware components,and why the circular economy must also apply to digitalisation.Improve:Optimize the Processes and Logistics of the Circular Economy Wuppertal In
92、stitute|13 3 Improve:Optimize the Processes and Logistics of the Circular Economy The broad portfolio of digital solutions available today creates new opportunities to optimize industrial processes at all production stages,waste management and collection logistics,as well as sorting and recycling fa
93、cilities(H.Berg et al.,2021).All actors along the entire value chain can contribute to resource efficiency by improving individual processing steps and ma-terial flows.This chapter outlines several starting points from which digitalisation can make a real difference for sustainability.Making product
94、s more resource-efficient with circularity by design Digital solutions can already help minimize the use of resources in the product design process.The digital tools and processes used to design components and products can make them more lightweight and optimize their material use before production
95、even begins.By assessing the actual quality of material flows,usage patterns and recycling processes,we can gather im-portant information that can be used to help prioritize resource conservation during product design(Circularity by Design,also cf.(EEA,2017).For example,the recycling business mod-el
96、s we describe in chapter 4,as well as future reparability and even disassembly are already considered during design and can be simulated using digital twins.Two aspects of product design should be highlighted here:Fehler!Verweisquelle konnte nicht gefunden wer-den.First,digital processes such as com
97、puter-aided design(CAD),which enable digital design and 3D modelling of components and products,are the basis for established computer-aided(CNC)manufacturing processes as well as for newer additive manufacturing(ADM)ap-proaches,such as 3D printing or laser melting.They are characterized by a high d
98、egree of flex-ibility,allowing for even super small production runs with batch sizes of N=1.This makes effi-cient design and small-batch material production possible.Building Information Modelling(BIM),which creates a digital image of buildings,is also increasingly being used in construc-tion,reduci
99、ng energy and resource use throughout the buildings life cycle,from construction and use to subsequent deconstruction.4 Second,material choice is also a key factor in product design.In many areas such as packaging,it is important to further exploit the possibilities of recycling-friendly design,for
100、example,by abandoning composite materials and developing equivalent solutions based on homogeneous monomeric materials that can be better recycled.Material flow data from entire process chains can be used to model and balance recyclable alternatives,ultimately increasing the use of re-cycled seconda
101、ry materials.Examples of completely 100%recycled materials can already be found on our supermarket shelves in the packaging of cleaning agents and detergents,while the first 100%recycled sports shoes illustrate opportunities to the sports and fashion indus-tries.Improving production to increase effi
102、ciency and reduce environmental impact Digital technologies are increasingly being used to control and optimize manufacturing meth-ods and production processes.Within the Industry 4.0 framework,a toolbox of digital solu-tions that can make new contributions to energy and resource efficiency is emerg
103、ing.Machines and systems are increasingly controlled with greater precision and operated with more flexibly 4 In some cases,BIM is also defined as Building Information Management.Circular Economy and Digitalisation 14(Plattform Industrie 4.0,2020),and depending on the application,an efficiency poten
104、tial of 20%or more can be achieved(Schebek et al.,n.d).Digitalisation not only reduces energy and material use and the associated CO2 emissions,but also reduces the consumption of auxiliary and operating materials while guaranteeing quality,thus reducing incorrect production and scrap.Ultimately,thi
105、s also reduces production costs and strengthens competitiveness.Planning ahead to optimize sales and logistics and avoid returns Data analytics can be used to better plan and forecast material requirements,production vol-umes,and shipping capacity.AI-based processes improve demand forecasting and fa
106、cilitate demand-driven,just-in-time deliveries to retailers and consumers to reduce stockpiling.By better matching the actual supply of goods to actual customer demand,these tools can also help to avoid or reduce return shipments.Particularly in online retail,digital tools such as recommender system
107、s or virtual try-ons that use VR/AR technologies can help customers to make better choices on their first try,particularly with textile products.Machine-readable codes for products also help to further automate tracking and monitoring goods flows across all stages of retailing and distribution.New s
108、olutions are continuing to emerge to track the use and whereabouts of goods,thus limiting the-sometimes illegal-de-struction of still-usable goods.Optimizing waste management and recycling to keep raw materials in the system The insights provided by data analyses are crucial for effective and sustai
109、nable waste manage-ment.At the end of a products use phase,all waste should be collected and sent for recycling.Digitalisation solutions,and in particular the extensive IoT solutions designed for so-called smart waste management,offer many optimization opportunities for waste and recycling man-ageme
110、nt(Piel et al.,2018).Existing use cases include digital applications for optimizing waste collection logistics through daily or real-time data-based route planning,and the use of smart(i.e.sensor-equipped)waste and collection containers,which detect when they need to be emptied.5 Overall,these telem
111、atics and logistics solutions can reduce the number of collection vehicles needed by an estimated 5-10%and the number of collection vehicles by 25%(H.Berg et al.,2020).Other examples include autonomous street sweepers or(partially)autonomous collec-tion vehicles,which can be used in increasingly den
112、se street spaces.Robotics solutions im-prove vehicle and treatment plant operations,which will in turn help cope with the increasing pressure caused by demographic changes and predicted worker shortages in the waste man-agement industry.The above-mentioned digital information on materials and packag
113、ing facilitates the tracking and tracing of material flows in the recycling industry.For example,machine-readable codes on plastic packaging make it possible to recognize different types of packaging in mixed waste streams so that they can be sorted out selectively.This will increase the yield and q
114、uality of the material recovery at recycling and reclamation centres.5 A challenge here is how to use personal waste management data in accordance with the privacy re-quirements of the GDPR.Data anonymization enables data owners(e.g.waste management compa-nies)and(external)data consumers(e.g.statist
115、ical offices,cities and municipalities)to ensure data protection while guaranteeing an appropriate level of residual data utility and insight.Various ap-proaches to data anonymization are available,such as k-anonymity and Differential Privacy(Dwork,2006;Sweeney,2002).Improve:Optimize the Processes a
116、nd Logistics of the Circular Economy Wuppertal Institute|15 AI-based sorting technologies have also improved the quality of recycling and work conditions.Image recognition technologies can be used to automatically detect certain packages or prod-ucts after they are scanned,and advanced plant control
117、s and robotics can improve the perfor-mance and accuracy of sorting plants(EU Recycling,2021;Flemming&Balthasar,n.d.;Hayes,2021;RECYCLING Magazine,2019).When it comes to preparing and further treating recycled materials,digital control and opti-mization of process technologies are also opening up ne
118、w opportunities for transparent and reliable documentation of process parameters such as residence time,temperature,and pres-sure.Proof of these process parameters is necessary for many functions,including the certifi-cation of certain recycled materials.This information about the upstream recycling
119、 process makes marketing recovered material easier,as they can be advertised as quality-checked recy-clables.Finally,functional and scalable markets for marketing quality-tested and certified secondary materials(recyclates)must be established to replace the highest possible share of the natural reso
120、urces used with recycled secondary materials.Quality secondary materials must be avail-able in sufficient quantity and appropriately distributed to meet demand.Digital trading plat-forms offer new channels for these materials which are,in turn,gaining in importance and helping to overcome previous b
121、arriers.They bundle what is still often highly fragmented and regional supplies,thus enabling the recycling industry to network with producers and scale up.However,new quality standards,such as DIN SPEC 91446 which classifies plastic recycla-bles through data quality levels for use and(internet-base
122、d)trade,still need to be developed for these digital markets to reach their full potential.To this end,policymakers can make im-portant contributions to the development of these markets and close-loop material cycles by setting product-specific minimum quotas for the use of recyclates and secondary
123、raw materials-as envisaged in the coalition agreement.Circular Economy and Digitalisation 16 4 Convert:Realign business models and usage behaviour Digital technologies can help improve resource efficiency throughout many aspects of the cir-cular economy.However,such improvements alone will not be en
124、ough to alleviate the negative environmental impact of our raw material consumption or realise ambitious climate protec-tion goals.Both the ways in which industries use resources to create economic value and the ways consumers use products to satisfy their needs must change.This is where measures de
125、-rived from the Convert-Strategy come into play.These measures focus on starting points from which business models can be realigned and from which users,and their behaviour,can be more heavily involved in the circular economy.Figure 3:3 Strategies to increase value creation(Source:Own illustration)R
126、ethinking value creation Digitalisation opens new opportunities to circular business models that focus on serving cus-tomer requirements with minimal resource use,utilise products designed for durability,and have strong links to product-service systems(Engels et al.,2021).Currently,companies that ar
127、e committed to resource efficiency still focus on measures that can optimise the production processes or energy savings addressed in the previous chapter(Figure 4,cf.also(BCG&WBCSD,2018).This leaves a huge need for development,as less than half of these measures relate to product design,and very few
128、 companies are working on product-service systems.Convert:Realign business models and usage behaviour Wuppertal Institute|17 Figure 4:4 Expected increases in company resource efficiency,according to different measures(Source:Own illustration according to(Engels et al.,2021)Circular business models a
129、re those that can translate the so-called inner R-Strategies,such as Re-Think,Re-Use,Repair,or Re-Manufacturing,into entrepreneurial action and business opportunities(cf.Figure 5).The basic idea behind such models is simple:Decouple value cre-ation and the satisfaction of customer needs from the pos
130、session and consumption of raw ma-terials.Therefore,climate and resource protection can be seen as a catalyst for a paradigm shift in value creation and industrial production logic(Plattform Industrie 4.0,2021).Figure 5:5 10R strategy elements of the circular economy(Source:Own illustration accordin
131、g to Euro-pean Environment Agency et al.,2020)A number of different approaches exists for circular and resource-efficient business models:Circular Economy and Digitalisation 18 With the usage-based business model,providers charge only for the actual use of their products6.The product remains in the
132、possession of the manufacturer and can be made avail-able to customers for use when needed.This model gives manufacturers an incentive to pro-vide the most robust and durable products possible,in order to maximise revenue during the lifespan of their products.It is vital to constantly receive inform
133、ation during product use,es-pecially when dealing with high-value products or cost-intensive capital goods.Therefore,machines can be networked together through the application of sensors to assess the condition of any product at any time,quickly detect potential faults or malfunctions,always guarant
134、ee operational capability,and minimise follow-up costs through predictive maintenance.These strategies offer the German mechanical engineering industry the opportunity to expand its value creation via operator models,and strengthen its customer relationships.The sharing economy follows the same appr
135、oach.Equipment,tools,and vehicles are shared by customers and thus used more intensively.This makes it possible for the same amount of resources to create more value and satisfy needs to a higher degree.Digitalisation lowers transaction costs and enables organisations to scale new approaches through
136、 platforms and smartphone apps,both as private initiatives and commercial business models.However,the sharing economy is not limited to everyday life,and can also be applied to manufacturing plants in the sense of Shared Production or Production-as-a-Service.Within industry,espe-cially in SMEs,machi
137、nes often stand idle for considerable periods,when they could instead be used by other companies.Digitalisation makes it possible to define machine modules with spe-cific functions(such as drilling,milling,or cutting),and then offer and deploy them in net-worked systems(SmartFactoryKL,2021).Another
138、example,with over 60-years of history,are Maschinenringe associations in agriculture.In such associations,farms join together to share expensive agricultural machinery for short-term operations.A comprehensive digital ecosystem of services has developed alongside these associations,facilitating digi
139、tal document management,forecasting with agricultural weather data,and much more.New potential for value creation is also arising from the extension of the useful life of products during and after the initial use phase.Through careful repair and maintenance,users can continue using their products an
140、d goods for as long as possible.This is the starting point from which political action should be taken,such as obligating manufacturers to give users the right to repair,provide spare parts,and guarantee a minimum product life span(e.g.EU Eco-design Directive or the Sustainable Products Initiative(S
141、IP)of the EU announced for 2022).The digital availability of repair information and instructions,alongside required soft-ware downloads,are other examples of possible key requirements.Access to digital design data,in combination with technologies such as 3D printing,offer new ways to supply spare pa
142、rts and can contribute to the reparability,and thus longevity,of products.Digital-product information also supports the identification and proper handling of components and products during return and redevelopment.Another ideal area for a circular economy is the marketing of second-hand goods by pri
143、-vate individuals or commercial actors.Through re-use,products can be used for longer periods or even have new functions added.In the case of cars,this is an area with a long-standing tradition,and the same is true in industries where durable capital goods are reused for second-hand machinery and eq
144、uipment.In addition,everyday objects in our homes offer huge poten-tial in this regard.It is estimated that an average German household owns fully-functional but unused goods and objects worth almost 1,300 euros(Figure 6,(Schwilling et al.,2021).This 6 Chemical leasing is a special field for the app
145、lication of this model.Here,washing agents or solvents are used on a rental basis,then returned to the manufacturer and reprocessed to be used again(the German Environment Agency,2021).Convert:Realign business models and usage behaviour Wuppertal Institute|19 equates to a total value of over 50 bill
146、ion euros in Germany alone.Therefore,it would be ben-eficial for these goods which are also considered raw materials-to at least partially flow back into a circular economy through second-hand use.In support of this,digital platforms and smartphone apps can facilitate direct sales between private in
147、dividuals and enable virtual flea markets or exchange platforms.Figure 6:6 Estimated total value of unused products in Germany(Source:Own illustration according to(Schwilling et al.,2021)Changing usage behaviour The use phase is becoming increasingly essential to a circular economy.Consumers now inf
148、lu-ence the selection,use,and disposal of products,which is enhancing the influence of individual behaviour on resource consumption.Accessible product information,such as that seen in the form of a digital product passport(DPP),makes it easier for consumers to make decisions related to climate and r
149、esource pro-tection.This primarily affects the selection and evaluation of ecologically-advantageous alter-natives during purchase decisions.Information from a DPP,in combination with assistance tools,gives consumers the opportunity to take many more ecological criteria into account,and weigh up all
150、 relevant interactions or conflicting goals according to their own individual pref-erences.Such information can also be used to verify the ecological footprint of a product,ac-cording to emissions incurred in the upstream chain or indicators of durability,reparability,and recyclability.Similarly,dec
151、isions made based on waste prevention can be facilitated.To maximize the impact of these elements,information on the correct operation,care,and repair of products can be easily provided or given as reminders through smartphone apps and net-worked with service providers in the vicinity.Therefore,comp
152、lex information and contexts can be illustrated during and integrated into everyday life.Ultimately,this will empower con-sumers in their ability to make decisions and take action.Digital technologies can also offer us guidance towards the end of a products lifetime and sup-port the correct collecti
153、on and separation of waste.Sensors and image recognition technolo-gies in bins,containers,and collection vehicles can provide data on waste composition and quantities,and thus also identify misdirected waste.Based on this,users can be offered new incentives for correct waste disposal,as well as new
154、options for related feedback and learning,ultimately helping to avoid unnecessary waste through the application of approaches like Circular Economy and Digitalisation 20 nudging or gamification.Such behavioural strategies complement the solutions for the logis-tical and technical optimisation of was
155、te collection and disposal outlined in the previous chap-ter.However,it is not only private consumers who need to change their behaviour to achieve more sustainable consumption and lifestyles.With a total purchasing volume of 500 billion euros,public procurement in Germany is a key factor in demand
156、and represents the largest customer group in many markets(Fischer&Kper,2021).Therefore,this group has a huge responsibil-ity due to its enormous impact on climate protection and the development of a circular econ-omy.Digital solutions can support the implementation of sustainability-oriented procure
157、ment by public institutions(Green Public Procurement)in numerous ways.For example,through the creation of central user-friendly platforms that facilitate searches for legally-compliant,pre-qualified,and ecologically-oriented suppliers during procurement procedures.The foundation is laid,scaling is n
158、eeded In recent years,more and more initiatives for circular,resource-efficient business models have emerged.However,these initiatives are always opposed by emerging trends,such as fast fash-ion.This trend has fuelled increasing clothing and resource consumption due to constantly changing fashion co
159、llections.Clothing production doubled from 2000 to 2014,to more than 100 billion garments,and annual production is expected to reach 200 billion by 2030.On average,German consumers buy 60 items of clothing per year-but wear them for only half as long as they did 15 years ago(Kopp et al.,2021).This s
160、hows that the creation of a circular economy is by no means an organic process.The key to success lies in the large-scale expansion and dissemination of the business models and be-havioural changes outlined in this chapter.This requires political action to define ambitious and binding targets,consis
161、tent incentive systems and regulatory frameworks to trigger and guide the transformation processes needed.We must move beyond individual,fragmented approaches and trigger broad,self-reinforcing and dynamic scaling.At the same time,the many opportunities for optimising individual pro-cess and materia
162、l flow management mentioned in the previous chapter must be constantly exploited and expanded through new and innovative technologies.The self-reinforcing scaling and technology-enabled exploitation and expansion closely influ-ence each other,and are key to a system change.Digitalisation can facilit
163、ate and drive this change if it is understood as an integral element of the ecological industrial transformation.The next chapter will discuss the pillars and prerequisites for this transformation.Transform:Create conditions for a digital-ecological industry Wuppertal Institute|21 5 Transform:Create
164、 conditions for a digital-ecological industry Digitalisation and sustainability have set the framework for the coming decade.They place similar demands on all involved entities:It is necessary to adapt to an increasingly networked world and to develop a systemic way of thinking and acting.We must be
165、 adaptable to a dy-namic range of innovations,rapid changes in the environment,and major challenges.Possible solutions are also required.In both digitalisation and sustainability,life and actions are em-bedded in higher-level change processes and Change Management is set to become a perma-nent key t
166、ask,while neither area has a fixed end point.The digital and ecological transformation of our economy will only lead to success if it is un-derstood as a joint task.The transformation requires change at a number of different levels:Companies must reposition themselves internally,develop further,and
167、build new capabilities;relationships between companies within value chains or sectors are changing,and partner-ships and cooperation are becoming increasingly important,meaning new structures must be created to support digital interactions and data flows between actors;and political framework condit
168、ions and incentive systems must adapt to new challenges and tasks.The framework for a successful digital and ecological transformation can be established through the following five pillars and action fields.These must be at the very heart of the agenda over the coming years(Figure 7).Figure 7:7 Prer
169、equisites for the digital-ecological industrial transformation(Source:Own illustration)Circular Economy and Digitalisation 22 5.1 The role of data in the circular economy The ability of any company to optimise resource use is related to its degree of digitalisation,which,in the sense of a circular e
170、conomy,is the ability to fully exploit the potential of data.Empirical studies give us a clear picture(Engels et al.,2021):The more digitalised a company is,the more successfully it can save materials(Figure 8).Figure 8:8 Material savings in German companies according to degree of digitalisation(Sou
171、rce:Own illustration according to(Engels et al.,2021)The degree of digitalisation within companies must be continuously increased.Data and digi-tal processes must be used more consistently during internal actions,decisions,and interac-tions with external parties.It is not enough to simply collect da
172、ta.Data must also be merged and integrated for further analyses(Figure 9).Raw data and measured values originating from smart sensors or other data sources can be processed as knowledge and unlock new possibili-ties.The highest level of knowledge,so-called digital wisdom,allows the understanding of
173、the past to provide insights into the future.Transform:Create conditions for a digital-ecological industry Wuppertal Institute|23 Figure 9:9 Smart circular economy framework(Source:Own illustration according to(Kristoffersen et al.,2020)Within the context of digital wisdom,the sustainable use of res
174、ources within a company can be gradually increased.The first step in this process involves understanding and describing the current status and patterns of resources used in a company and its business areas.Based on this,companies can conduct diagnoses,obtain explanations,and discover optimisation po
175、-tential.In addition,learning systems can be utilised to model future developments and derive predictions.These actions will strengthen a companys ability to act and react within complex,dynamic environments.Today,many companies still see themselves as latecomers in this area(A.Berg,2021).Therefore,
176、they must expand and strengthen their digital capabilities over the coming years.New production processes,accelerated innovation and production cycles,more platform-based business relationships,and growing customer demands are all driving digitalisation and data orientation in businesses.However,com
177、panies cannot focus solely on these factors,as they must also assume more responsibility for greenhouse gas emissions and environmental protection.Therefore,data centricity,climate-protection requirements,and resource conser-vation must be thought of collectively from the very outset of a transforma
178、tion to a circular economy,which must also be understood as a data strategy.The different dimensions of data in a company must grow as one.Sustainability-related data and potential actions will then become an integral part of digital management systems in the sense of a Sustainability Ledger,alongsi
179、de classic methods for overseeing financial and pro-duction(Plattform Industrie 4.0,2020).The demand for such sustainability-related infor-mation is currently on the rise.Therefore,over the coming years,the capital market and insti-tutional investors are expected to increase pressure to be able to e
180、valuate the sustainability impacts of companies in their portfolios,in order to reduce ecological risks.5.2 Whole system transparency for transparency A data-based circular economy requires data to be available throughout every step of the entire cycle.This means breaking down existing data silos,re
181、ducing boundaries between involved actors,and establishing a mutually-beneficial,data-sharing culture.The concept of a DPP centres on tools effectively exchanging data within the circular economy.Information about a product and its environmental impact is made available across company Circular Econo
182、my and Digitalisation 24 boundaries throughout that products entire life cycle.This serves as the prerequisite for a number of the strategies and measures discussed above.Following EU initiatives(European Commission,2020a;Gtz et al.,2021),numerous concepts,implementation modules,and pi-lot projects
183、are being developed for various use cases.In support of this,it will be crucial to work with relevant stakeholders,such as industry stakeholders,to find a pragmatic and flexi-ble approach that enables easy entry to this challenging process and applies learned experi-ences to achieve continuous impro
184、vement and development.Such an approach is already be-ing piloted for ongoing activities under the EU Battery Regulation,related to a product pass-port for electric-vehicle batteries(Kadner et al.,2021).Policymakers must define a framework that considers the goals of DPPs,supports the ecolog-ical ef
185、fectiveness of a circular economy,and ensures companies implementation efforts can be managed effectively.In this context,it is important that interfaces with existing or emerging information systems or databases7 are defined and synergised,and free from redundancies or inconsistencies.We see this a
186、s a core element of resource and economic policy for the coming years.The new federal government must play a more proactive and formative role within these processes at the European level.5.3 Infrastructures and data spaces for the digital circular economy The fundamental idea of the digital circula
187、r economy is that companies and actors share and pool data,feed it into relevant tools,such as DPPs,and then develop circular business models based on the pooled data.To achieve this,the following goals must be realised:n Reliable and secure infrastructure for data storage and processing that preser
188、ves the sovereignty of users n Clear guidelines,fair rules,and trustworthy governance for differentiated data access and use according to the respective roles of stakeholders n Standards and interfaces that enable efficient and flexible scaling in different use cases,as well as the expansion of the
189、application field through interoperability with other systems Achieving these goals will require diverse stakeholders to take coordinated,collective,and con-centrated action in order to avoid a patchwork of individual and fragmented stand-alone solu-tions.Examples of such action can already be seen
190、in the development of next-generation cloud infrastructures and services in Europe,within the Important Project of Common Euro-pean Interest(IPCEI-CIS),and the ongoing international initiative GAIA-X and its applica-tion-specific project CATENA-X for the automotive industry8.7 Examples at EU level a
191、re the SCIP database on critical substances(Substances of very high concern(SVHC)in products)of the European Chemicals Agency(ECHA),and the EU Product Registration database for Energy Labelling(EPREL),cf.(Gtz et al.,2021;Sipka&Hedberg,2021)8 https:/www.bmwi.de/Redaktion/DE/Artikel/Industrie/ipcei-ci
192、s.html,https:/www.gaia-x.eu/,https:/catena- conditions for a digital-ecological industry Wuppertal Institute|25 This concept has recently been gathering steam and a number of the most important prereq-uisites are being realised.We must now further develop these prerequisites into fully-fledged requi
193、rements,with consideration for the idea of a European data space for the circular econ-omy.Over the next few years,horizontal structures will gradually become available and oper-able in vertical application fields.For example,the CATENA-X initiative targets companies in the automotive value chain an
194、d pursues a vision of creating the most user-friendly environ-ment for the establishment,operation,and collaborative use of end-to-end data chains along the entire automotive value chain.Such building blocks are essential to the circular economy,and material flow management and resource efficiency m
195、ust therefore be carefully considered within the emerging data ecosystem.However,other application fields are still lacking when it comes to such concepts,structures,and initiatives.Therefore,a roadmap must be created to ensure their systematic development over the coming years.Individual companies
196、cannot develop the necessary horizontal structures and ecosystems as self-owned,separate solutions.Openness to technology,flexibility and individuality during application,widespread trust,and acceptance of governance and regulatory frameworks are all prerequisites for success.In addition,the dissemi
197、nation of large-scale investment and high-quality technical know-how will be required to develop efficient solutions.According to the principle of industry-led,politically framed,pioneer-driven,we have achieved the broad and effective coordination of stakeholders from science,industry,and pol-itics.
198、The development of the reference architecture model of Industry 4.0(RAMI 4.0,cf.(Ar-nold&Liebe,2018)and AUTOSAR(AUTomotive Open System ARchitecture)serves as a framework for software development in cars,and displays the true value of collaborative ap-proaches.Through such approaches,substantial scal
199、e can be reached quickly,while parallel developments and repeated costs can be avoided.Science and industry must take on the challenging task of designing viable and future-proof solutions.Meanwhile,politics is responsible for initiating processes,(co-)funding develop-ment and set-up costs,especiall
200、y during initial phases,defining overarching social and politi-cal goals,and ensuring ecological quality standards are upheld.5.4 Being digital and circular means being systematic Digital transformation and the circular economy are reshaping the roles of companies and stakeholders.These actors are b
201、ecoming more interconnected than ever before in regards to value creation,material flow,interactions,and data relationships.Data is gaining new value within the exchange of services and laying the foundation for data-driven business models,such as when machine or building data is analysed to provide
202、 better services,optimise opera-tions,and increase user satisfaction.Traditional boundaries between companies,and even within company divisions,are steadily dissolving,with company activities increasingly becoming part of larger,digitally-organised ecosystems.Such ecosystems may be based on partners
203、hips and collaboration,or created through the strategic expansion of a companys business activities.We have observed that both companies and industries are placing greater strategic importance on access to recycling ca-pabilities and high-quality secondary materials.Leading companies in the retail s
204、ector are heavily involved in the collection,sorting,and recycling of packaging waste and are expanding these activities to every part of a circular economy.In the automotive industry,the switch to electro-mobility is bringing vehicle batteries and the related raw materials into strategic focus.Thro
205、ugh corporate commitments or strategic partnerships in both battery production and re-cycling,manufacturers are strengthening their competitive advantage and securing access to valuable raw materials and competencies.Circular Economy and Digitalisation 26 Consequently,this development demands that e
206、nterprises rethink their individual role within the system,and adopt a mindset of consolidation for maximum optimization that promotes a culture of data sharing and collaboration.Traditionally,fragmented data silos-especially within organisations need to be broken up and rendered usable for the comm
207、on good.Pro-gressive digitalisation requires actors in society,administrations,and the economy to develop new competencies,as well as a systemic understanding.Transformation skills are a universal prerequisite for both shaping digital transformation and effectively meeting the challenges of climate
208、change and resource conservation.Sustainability and digitalisation demand the en-gagement of all actors,and should be understood as a single,common transformation task rather than being treated as separate elements.We must create an agenda for building digital-ecological transformation competence in
209、 both business and society.It is vitally important to support the political promotion of information offers,digital innovations,and the development of technical competence,especially for SMEs.In addition,market trends,such as software-as-a-service solutions,can significantly reduce the costs and qua
210、lification requirements for the use of complex tools and AI solutions,and thus facilitate their widespread use.It is crucial that the development of digital competence is properly oriented towards simultaneously tackling climate and resource problems,and is em-bedded within strategies of the circula
211、r economy from the outset.5.5 A strategy to act as the guardrail for transformation When we carefully consider the challenges described at the beginning of chapter 2,and the need to build a climate-neutral and resource-efficient economy,it quickly becomes clear that the goal is not simply a green,cl
212、ean economy,but a different economy.Unlike the substitu-tion of fossil fuels with renewable energies,the decoupling of value creation and need satisfac-tion from resource use will cause structural changes within sectors,in the form of circular business models and customer behaviour.Upstream stages o
213、f material provisioning and pro-cessing will become less important,while providers of use-related,often digitally-supported services to increase resource efficiency will grow in importance.With an increased attention on digital transformation,climate protection,and resource effi-ciency,a profound tr
214、ansformation to a digital-ecological industry lies ahead.This transfor-mation must show us the way to climate neutrality,while contributing to the robustness of global supply chains and resilience against raw material crises.None of this will be possible without proactivity and political leadership.
215、We need an overarch-ing circular economy strategy that outlines the transformation path for the coming decades.The complexity of material flows and(international)industrial interdependencies certainly make this a daunting task.Fortunately,the German resource efficiency programme Pro-gRessIII already
216、 offers a broad spectrum of starting points and required actions,and it is al-ready clear that small-scale and specific measures must be carefully thought out in order to improve their effectiveness.However,tasks must no longer be fragmented into individual ministerial responsibilities.The time is m
217、ore than ripe for an integrated approach that creates an overarching framework for a digital-ecological economic policy across all ministries.Similar to climate policy,the ambition of such a policy should be to define to the extent possible-targets and timeframes,specify sectoral contributions,and d
218、etermine intermediate steps in conjunction with the EU frame-work.This will create common guidelines for the elaboration,coordination,and implementa-tion of sector-specific tasks across the various ministries and action fields involved.Transform:Create conditions for a digital-ecological industry Wu
219、ppertal Institute|27 These guidelines help all actors within a circular economy to gain a reliable orientation,better position themselves according to their potential and responsibilities in regards to the upcom-ing transformation,develop roadmaps,and establish success-critical partnerships and ecos
220、ys-tems for the implementation of their circular economy strategies.After readjusting and strengthening its climate policy,the new German government,alongside all stakeholders,will have the opportunity to comprehensively combine the two core topics of digitalisation and sustainable economy to develo
221、p an outlook for an internationally-competi-tive,sustainable,and digital future economy.Circular Economy and Digitalisation 28 6 Risks:Unsustainable and non-circular digital solutions The previous sections have outlined the key role that digitalisation will play in economic trans-formation towards a
222、 climate-and resource-friendly circular economy.It is crucial that these opportunities are seized.At the same time,it must be remembered that digitalisation itself can negatively impact the environment.These negative environmental impacts arise primarily from energy consumption and the associated gr
223、eenhouse gas emissions during the operation of devices,systems,and infra-structures.Various private and political initiatives related to the digital economy are aiming to achieve climate neutrality in the coming years9.Starting points are the use of new,more efficient technologies,intelligent energy
224、 management(e.g.through the use of AI processes)and,above all,the switch to a renewable energy supply(Bieser et al.,2020;Grger et al.,2021;Hintemann et al.,2020a,2020b;Masanet et al.,2020).In addition,extracting and processing the raw materials needed to manufacture physical end devices,facilities,a
225、nd infrastructure have numerous social and environmental im-pacts.At the same time,disposal issues are being exacerbated worldwide by mounting elec-tronic waste.The recycling rates of end-of-life devices remain inadequate(less than 20%(glob-ally)or 45%(Germany)(Bald et al.,2020;Forti et al.,2020;Umw
226、eltbundesamt,2020).The principles and strategies of a circular economy outlined above must therefore be consistently applied to all digital products and end devices.In the case of private households,the increasing number of digital end devices with typically short service lives is a significant driv
227、er for the increased resource consumption of digitalisa-tion,even if offering a range of functions on one end device can partially compensate.Focus must be placed on extending the useful life of raw materials through improved durability,re-pairability,and recyclability of end devices.This will requi
228、re increased modular construction and more refined interchangeability of individual components.Key starting points include the development of strategies for software updates,in order to avoid software-related obsoles-cence or the potentially time-delayed release of hardware licences,as well as softw
229、are codes(open source)for alternative providers of repair solutions and update offers.Within the industrial IoT environment,the number of electronic components and digital tech-nologies is increasing faster than ever.In stark contrast to private use,complex ecosystems of diverse hardware components
230、and software modules,from a wide range of providers,are emerging from production plants and logistics systems.Approaches for IT governance,lifecy-cle management,and the ecological optimisation of system architectures still need to be dis-covered(Wurm et al.,2021).A new action field is represented by
231、 the increasing use of sensors and networked digital technologies in everyday life,for example,RFID chips in products or microelectronics in textiles(smart textiles)and wearables.However,this mixing with other material flow makes the proper disposal and recovery of electronic materials difficult(Khl
232、er et al.,2018).9 For example,the EU Digital Strategy(European Commission,2020b),the BMUs Environmental Digital Agenda(BMU,2020b),and the European Green Digital Coalition(EGDC,(European Com-mission,2021).Conclusion Wuppertal Institute|29 7 Conclusion Germany as a highly-industrialised country facing
233、 a historically-important decade.Together with the international community,we must set a course to secure the natural resources that are fundamental to life.In the coming years,businesses and society must create the conditions for effective climate,environmental,and resource protection,as well as fo
234、r the preservation of biodiversity.In pursuit of these goals,the development of a climate-neutral and resource-effi-cient circular economy is key.A holistic digital transformation is occurring,constantly presenting options for new actions and continuously expanding the scope for possible solutions.W
235、e now have the opportunity to utilise the unique advantages of digitalisation to transform our economies and lifestyles.This is possible through key actions:n The permanent improvement and optimisation of individual processes and activities at all stages of the economic cycle,which is essential to d
236、ecrease costs,increase effi-ciency,and reduce environmental pollution.n A reduction in the overall demand for raw materials through circular,material-effi-cient business models and more sustainable consumption behaviour,which will serve as the foundation for climate neutrality and sustainable,future
237、-oriented re-sources.The interplay of digital solutions and the mutual reinforcement of the aforementioned actions will lead the German economy and society towards a digital-ecological future.A comprehensive digital transformation is possible if companies and actors develop a new awareness of their
238、roles within changing,increasingly networked value-creation systems.Alongside this,it is vital that an understanding of the importance of open,collaborative data relationships develops and that a culture of data sharing and collaborative data use emerges.Powerful and trustworthy infrastructures,wide
239、ly-accepted rules,and institutions for data re-lationship governance are all prerequisites for effectively scaling and implementing a data-based circular economy.Much has already been set in motion,and the ongoing development of data spaces,cloud infrastructures,and cross-industry information system
240、s must now be promoted and consistently applied to tasks related to climate protection and resource effi-ciency.Throughout this report,it is clear that both the development of digitalisation and tasks to build a circular economy are moving in the same direction.However,in most cases,these two ele-me
241、nts run parallel but lack sufficient connections,and this must change.Therefore,politicians must take responsibility for formulating ambitious goals and corresponding incentives sys-tems for the digital and ecological transformation of the German economy over the coming years.It is also essential th
242、at they create a reliable and ambitious regulative framework that incites private and entrepreneurial action.Ultimately,all actors and stakeholders must share a common overarching understanding of the transformation path towards a sustainable future for the economy and society of Germany.Circular Ec
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