Caroline Kötter, Raphael Röcken and Patrick Moloney

September 7, 2023

Why circularity is key to a sustainable energy transition

There can be no circular economy without clean energy and no energy transition without a circular economy. The two are intrinsically linked and depend on one another. We call this relationship the energy-circular economy nexus.

While wind is a renewable energy source, the materials used to produce the turbines are finite.
While wind is a renewable energy source, the materials used to produce the turbines are finite.

By Caroline Kötter, Associate Manager, Raphael Röcken Senior Consultant, and Patrick Moloney, Director, Ramboll

Both the energy transition and the transition to a circular economy are fundamental to a sustainable future.

Yet, how they depend on each other has so far not received the attention and spotlight that it probably warrants. In essence, we argue you cannot have one without the other.

In this article we explain how the energy transition and the transition to a circular economy are linked and what businesses and policymakers should consider managing this relationship successfully.

What is the energy transition-circular economy nexus?

With over two decades of experience supporting large companies to navigate both the clean energy transition and the shift to a circular economy, we see a two-fold connection between the energy sector and circular economy, which we have dubbed the ‘energy-circular economy nexus’.

On the one hand, the circular economy transition does not eliminate the need for energy. Rather, it prompts us to use energy efficiently, reduce primary energy consumption and utilise waste heat and renewable energy.

On the other hand, the energy transition is dependent on the transition to a circular economy – with the rapid expansion of renewable energy infrastructure the demand for various critical minerals is predicted to increase tremendously. Supply shortages are deemed likely in the next years. Therefore, the energy sector cannot afford to use scarce materials only once.

The interdependencies of circular economy and energy transition (Source: Ramboll)

What to consider when managing energy in the circular economy?

Energy efficiency and appropriate, circular, energy sources are the key considerations when managing energy in the circular economy.

  1. Energy efficiency: Global energy demand is constantly growing and is expected to continue to grow. To reduce the primary energy demand, there is a continued need to gradually improve the energy efficiency of industrial processes with the aim of consuming as little energy as possible. This is likely to require both technology upgrades and process innovation to save energy by operating in a smarter way. The most suitable energy sources to fuel the remaining energy demand are sources which are aligned with the circular economy’s fundamental principles of reducing waste and consumption of finite resources. The good news is that several existing energy sources align with these principles.
  2. Renewable energy: Renewable energy should be the prioritised energy source for every company striving for circularity or circular products. Renewable energy includes both energy that can be generated from natural forces, such as solar and wind as well as energy from biomass, such as agricultural or forestry residues.These energy sources are circular because no finite resources are consumed when energy is produced from them. Both wind and solar are virtually infinite, and they are only used but not consumed during energy generation, i.e. the sun does not stop to shine because it shines on a solar panel. In contrast, the capacity of biological residues (such as biomass) is limited as they are consumed during the process of energy generation. Yet, with some time and effort biomass can be cultivated again and again.
  3. Waste heat and industrial symbiosis: Another way of producing ‘circular energy’ is from industrial processes that produce waste heat. For example, the IT equipment in data centres generates heat that require cooling. Instead of using additional electricity to cool data centres the waste heat can be used either internally or as heat sources in district heating systems to cover residential or industrial heat demand.However, focusing on energy efficiency and energy sources alone is not sufficient to solve the sustainability challenges of our current energy system which include resource scarcity, waste, and carbon emissions. Hence, the energy-circular economy nexus has a second dimension focused on circular solutions for the energy sector.

Why is energy a key consideration in the circular economy?

The circular economy favours activities that preserve value in the form of energy and materials. Nevertheless, energy will always be required in the circular economy. Many of the products available today are not yet suitable for circulation because they are not long-lasting, repairable, recyclable etc. Products suitable for long-term circulation first need to be designed and manufactured which requires energy input.

Even activities that are circular, by definition, such as remanufacturing and recycling typically require large amounts of energy. Imagine you build an offshore wind turbine or a large building – even with a circular design you will need to dismantle the infrastructure after some decades. Some of the parts or materials you might be able to reuse 1:1 (depending on the specific design and materials). Most materials, such as the foundation, will likely need to be disassembled, crushed, shredded and/or melted to a secondary raw material before they can be used in new products at a later stage. While keeping materials in the loop every single step in the process requires energy.

No product can claim to be circular if it is manufactured or recirculated by consuming large amounts of finite and non-renewable energy sources, such as natural gas. Hence, it is crucial to prioritise energy efficiency and circular energy sources, such as renewable energy or waste heat.

Why is circular economy a key consideration for the energy sector?

Because we are at risk to experience shortages of rare and finite minerals would be the short answer. While reducing the demand for fossil energy sources, the increase in renewable energy infrastructure comes with new resource scarcity problems due to its high demand for minerals. Building solar photovoltaic (PV) plants or wind farms generally requires more minerals than establishing their fossil fuel-based counterparts. One study estimates that 1 kilowatt-hour (kWh) of renewable energy could require ten times more metals than 1 kWh of fossil fuel energy.

As the ‘first wave’ of renewable energy infrastructure, such as wind turbines and renewables reach the end of its service life, new waste fractions that are difficult to recycle pose a challenge. One of the best known examples are wind turbine blades. While most wind turbine components, such as steel, copper wire, electronics and gearing can – at least in theory – be recycled or reused, the bulky fiberglass blades remain difficult to dispose of. Tens of thousands of aging blades are coming down from steel towers around the world over the next years. Estimates refer to about 8,000 blades per year in the US and about 3,800 blades per year in Europe. Only recently turbine manufacturers, wind farm operators and recyclers have started to focus on solving the issue.

What to consider when managing circularity in the energy sector?

A holistic approach to circularity in the energy sector is required to tackle some of the sector’s burning sustainability challenges. This entails broadening the focus from energy efficiency and energy sources to aligning products and materials, technologies, and processes as well as strategies with circular principles:

  1. Circular products, parts, and materials: Solar panels, wind turbines, batteries etc. should live up to circular principles. In practise, this means making products long-lasting, reusable, repairable, recyclable etc. However, this is only part of the solution. It must also be ensured that products actually re-enter the loop. This typically requires reverse logistics models including take-back schemes to provide manufacturers with access to existing products and components or at minimum secondary raw material.
  2. Circular technologies and processes: The energy sector also needs to develop and implement additional technologies and processes that allow for products, parts, and materials to re-enter the loop. An example is the wind turbine wings piling up in landfills because adequate reuse processes or recycling technologies do not yet exist at scale. Using existing knowledge and technologies from the energy sector and applying them in a new context can make a significant contribution towards increasing circularity.Another example is the innovative recycling companies that apply pyrolysis technology to recycle plastics. The largest fraction of the end product is earmarked raw material for new plastics. However, many of the current attempts to apply energy technology in a more circular context are still at early stages of development which leaves further opportunities for development and innovation.
  3. Circular strategies: Transforming the energy sector towards the much-needed circular model entails systemic change on a broad level from the choice of raw materials to design decisions, manufacturing processes, maintenance programs to recirculation at end-of-life. The list of issues to address is so long that many organisations find it difficult to figure out where to start. At the same time, they need to prioritise how to invest their resources which is why they need to develop targeted circular strategies.How to get started on circular strategies is explained in more detail in our previous article about circular materiality assessments.

While the energy sector has been late in recognising the need for circularity, this is now starting to change.

Moving forward

The need to transition to a low carbon energy economy while securing our energy supply has never been so acute.

Yet, both the energy transition and security of supply are heavily reliant on finite materials. Circular solutions, therefore, are highly important to ensure that the energy transition can be sustained with the reliance on finite materials being controlled.

The high demand for scarce and finite resources to enable the energy transition will also have a significant impact on resource availability across other sectors. To ensure the energy transition is indeed sustainable the transition of the energy sector to a circular economy is of paramount importance.

Energy Authorities across the EU are now recognising the nexus and are now taking the first steps in integrating the core principles of the circular economy into the energy transition. One example we are currently working on is identifying circularity strategies for the wind industry and how these can be manifested in tender criteria, product design, re-application of materials, bids etc.

The energy sector itself is also evolving to both transition to a circular economy – we see transmission system operators and utilities transitioning to a circular economy and we also see energy companies exploring disruptive circular technologies and solutions such as Waste-to-X.

Developments like these are an important first step to harvesting the benefits that awareness of the energy-circular economy nexus entails.

Want to know more?

  • Caroline Kötter

    Associate Manager

    +45 51 61 07 09

  • Raphael Röcken

    Senior Consultant

    +45 51 61 10 16

  • Patrick Moloney

    Director, Sustainability Consulting

    +45 51 61 66 46