Introduction to Circular Economy

Enel Circular Economy school, IV edition

08/06/2021
Agenda

Overview on the concept

Focus on other sectors

Focus on Enel

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 Environmental impacts

 Current economical model has provided Planet Boundaries

unsustainable prosperity (linear approach)
 Industrial revolution: end XVIII century Climate Novel
 Oil adoption: end XIX century change entities
 Plastic adoption: second half XX century Biosphere integrity
Ozone
depletion

 Growing awareness that planet environmental

challenges are strongly correlated and Land system change Aerosol
decarbonization implies reconsidering economical loading
model
Fresh water use Ocean acidification
 Circular Economy developed as an ‘umbrella Bio geochemical
concept’ during end XX – beginning XXI century flows
around ‘cradle to cradle’, life extension, Planet
Critical level Safe level
boundaries
remanufacturing, ‘performance economy’
Source: Rockstrom, 2017

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Driver of Circular Economy

ENVIRONMENTAL NEW INNOVATION INSTITUTIONAL

AWARENESS BUSINESS FOCUS
MODELS
Environmental Perfomance Innovation Strong
impact as economy, Cradle enables Institutional
fundamental to cradle, circularity focus
driver Upcycling, acceleration worldwide
Subscription
economy, etc

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 Circular Economy
Life Magazine – August 1955

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 Circular Economy
Enel’s vision and approach
How we decline the Circular Economy: the 5 pillars

Circular Design Sustainable inputs: from renewable, reuse,

recycle
Increased product life: Extending life
through design, maintenance and repair
Sharing: increase utilization rate through
shared use/access/ownership
New life Product as a service: sell to clients a
cycles
Value service instead of a product
Recovery New life cycles: maintain value through
upcycling, reuse and recycling

Optimal use

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 Circular Economy
Recycling without design is often (almost) useless

100% material to recycling

Reverse compound principle

 I cycle: 25 %
 II cycle: ~ 6,3% (25 % of 25%)
Recycling efficiency =  III cycle: ~ 1,6 % (25 % of 25% of 25%)
25%

25% material recovered

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Other causes of wasted life
performance

Potential life

1 2 3 time
Wasted life Wasted life

1 Early disposal scenario

 Marginal upgrades
 New aspirations
2 Planned obsolescence scenario

3 Potential life
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 Circular Economy
Institutional focus

Global Institutions
 Growing integration between decarbonization and circular economy

European Union
 After Circular Package 2015, EC as pillar of the New Green Deal

Governments
 Definition of national strategies on CE

Cities and communities

 EC as a framework vision within which to define all initiatives

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Circular Economy opportunities

 Lower exposure to  New technologies as

commodities price enablers of circular
solutions
 Lower exposure to  New business model to
environmental risks créate value from use
vs. sale

 Keeping material value  Minimize environmental

impact
 Value not from sales but  Maintenance + services
from services instead of resources
extraction+ automation

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Papel de la economia circular para la descarbonizacon…

Studies foresee a circular economy For utilities, the contribution of value

contribution of up to 45% to chain emissions will be increasingly
decarbonisation targets by the end relevant
of the century.

t CO2/y

45% 55% Direct emissions

Value chain
emissions
Other circular
Renewable, energy
Economy
efficiency, forestry
aapplications

year

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Source: Completing the picture: how the Circular Economy can tackles climate change (Ellen MacArthur Foundation, 2019)
…in all its dimensions

 Clean technologies need more critical materials vs. the traditional ones
Transport (kg/vehicle) Power Generation /kg/MW)
0 200 0 16000
Electric vehicle Wind
PV
Conventional car
CCGT

Copper Lithium Rare earths Cobalt Manganese Nickel Silicon

 Reaching the decarbonization goals could cause strong environmental, social,

and geopolitical impacts.
Extraction increase (2050 vs 2020) % aggregated of three main producing Countries
[extraction; processing]
Lithium: x 58 veces Lithium: [85% ; 95%]
Cobalt: x 15 veces Cobalt: [78% ; 80%]
Rare earth: x 4 -12 veces Rare earth: [82%; ~ 100%]
As a benchmark, oil: [40% ; 45% ]
Source: Critical Raw Materials for Strategic Technologies and Sectors in the EU, UE 2020; The Role of Critical Minerals in Clean Energy Transitions, IEA 2021;
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Social impacts: job shifts due to circular economy

Indicative job impact estimation

∆ jobs Global base Local base Examples

 Design Shift of focus

 Input RES/local loops

 Production
 Life extension Repair/ maintenance
 Sharing Part time share

 PaaS Services
 Reuse Second life
 Remanufacture Reverse logistic/ remanufacturing

 Recycle Reverse logistic/ remanufacturing

* More than job, income opportunity 12
 Circular Economy
Covid impacts – preliminary considerations

Local loop (remanufacturing, recycle, etc)

In the short term for resilience, in
Renewable/recycled inputs
mid term for overall environmental
Closing loop sustainability
Life extension

Sharing
Only short term, as long as
PaaS personal contact is limited
Reuse

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Agenda

Overview on the concept

Institutional focus

Focus on other sectors

Focus on Enel

14
European Union growing focus
From a focus on waster in Circular
Economy Package 2015…
 Waste Framework Directive;
 Landfill Directive
 Packaging Directive
 Directives on end-of-life vehicles,
 Actions to reduce food waste
 A strategy on plastics
…to a Strategic focus in Green New Deal
and Circular Economy action Plan 2020
 A sustainable product policy framework
 Key product value chains
 Less waste, more value
 Circularity as a prerequisite for climate
neutrality
 Finance: getting the economics right
 Driving the transition through research,
innovation and digitalisation
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 Countries engagement in Europe…

Germany Finland
Resource efficiency program for the Sustainable Finnish roadmap to a Circular
use and conservation of national resources Economy (2016-2025)
It is the world’s first national roadmap
FINLAND
Netherlands Scotland towards a Circular Economy
Circular Economy in the Circular Economy SWEDEN

Netherlands by 2050 Strategy for Scotland

ESTONIA Slovenia
DENMARK
Luxembourg LATVIA Roadmap towards the Circular
IRELAND LITHUANIA
National waste and UNITEDNETHERLANDS Economy
KINGDOM
resource management plan BELGIUMGERMANY POLAND
Austria
LUX.
France CZECH REP First country to measure the circularity
FRANCE SLOVAKIA
French law against waste AUSTRIA
HUNGARY gap
and for a Circular Economy PORTUGAL
SLOVENI ROMANIA
A
SPAIN
CROATIA
ITALY
Greece
Portugal BULGARIA
National Action Plan on Circular
Leading the transition: a Economy
GREECE
Circular Economy Action CYPRUS
plan for Portugal Legend:
MALTA
Spain Italy National strategy
España Circular 2030, a national Declaration of intent with Declaration intent or regional activities
strategy for Circular Economy until 2030 the Italian Green New Deal Neither strategy nor regional activities
Source: The European House – Ambrosetti and Enel Foundation elaboration on European Commission and European Circular Economy Stakeholder Platform, 2020 16
…and outside Europe: Latin America

National strategic approcach

Sectorial strategic approach
Focus on waste management
Costarica
National Policy on Sustainable Production Colombia
and Consumption 2018–30 National Strategy for the Circular Economy

Ecuador
Circular Economy Pact (2019)

Perù
Circular Economy Roadmap for Industry Uruguay
(2020 Circular Economy Action Plan (2019)

Chile
National Circular Economy route uned
consultation

Source: Chatham House 2020 and internal analysis 17

Agenda

Overview on the concept

Institutional focus

Focus on other sectors

Focus on Enel

18
 Circular Economy
Circular inputs and life extension

Nike Circular design guidelines

Material & Waste

Ciclability Refurbishment Versatility Durability
energy avoidance
choices

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 Circular Economy
Circular inputs and life extension

IKEA Circular Product Design Guide 2019

Design for standardization

 Design for riciclability Design for adaptability

 Design for care

 Design for repair Design for renewable & recycled
 Design for disassembly Design for remanufacturing
and reassembly

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 Circular Economy
New life cycles

Caterpillar strategy on remanufacturing

Product life cycle

Replace
Life cycle begins Perform Maintenance Maturation
Before failure

Test and back

Assemble Salvage Disassemble Reverse logistic
to life cycle

Remanufacturing Process

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 Circular Economy
Sharing – not all platformization is sharing

 Busines as usual on platforms  Sharing on platforms

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 Circular Economy
Products as a service

From ‘product selling’ to relationship management and product life management

 Car sales: business as usual

 Use still ‘Business as usual’

 Fleet management:  Life extension  End of life recovery

 Use in ‘Product as a service’

 Fleet management:  Life extension  End of life recovery
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Agenda

Overview on the concept

Institutional focus

Focus on other sectors

Focus on Enel

24
 Circular Economy
Enel’s vision and approach
How we are implementing Circular Economy

Our journey towards Circular Economy

Group targets
1 Title under definition
Pilot phase Scaling up Business driver with AFC
 Leveraging on  Define company’s  CE as a business
existing projects CE strategy opportunity

 Engagement and  Group-wide approach  Develop cross

value assessment and KPIs divisional CE
activities

 First external  Further strengthen  Driving the

positioning Enel’s positioning at ecosystem
Global level
2016 2017 - ongoing 2018 - ongoing
 2

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 Enel approach
Europe

 Organizational units within the GBL and GP to share skills, identify business opportunities
and support implementation

Infrastructure Power Digital

Enel X Procurement
& Network Generation Solutions

 Organizational units within Countries to guide the ecosystem transition (Institutions,

companies, NGOs, etc.)

Italy Iberia Chile Perù Brasil Argentina Colombia USA

 Community, to involve those interested in the topic and collect opportunities through
ideas and ideas
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 Main focus of the business lines

SUPPLIERS ASSET CLIENTS CITIES

CIRCULAR VALUE LOOPS ACCELERATOR CIRCULAR CITIES

PROCUREMENT New life cycles for assets Improve client circularity Develop and position an
PROJECT
and material, circular through products, metrics overall Enel vision for the
Measure, improve and design, natural based and new business models cities of tomorrow
coinnovate solutions

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 Circular Economy
Circularity data flow – Company wide

Enel X Clients

Services
Suppliers Procurement

Products

Asset
Works,
operation, … Thermal I&N Renewable

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 Circular Economy
Circulability model

Five pillars declined through specific metrics…

Material + energy

Input Business models Closing the loop

New life
cycles

% renewable % to upcycling

% from reuse % to reuse

% from recycle % to recycle

Load factor Life
% not renewable increase extension % to waste

References https://corporate.enel.it/content/dam/enel-it/azienda/circular/KPI-Model_3.2018_en.pdf
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Focus: Alleanza per l’Economia Circolare

 Nov 2017
Firma del Manifesto per l’Alleanza
Circolare

 Ottobre 2018
Definizione Position Paper: proposte per il
Governo

 2019
Interazione tra aziende per definire
iniziative e progettualità comuni

Fatturato aggregato: ~ 120 B€

Dipendenti ~ 220.000 30