Transcript of episode 2: circular economy | edp.com

We are all agents of change. And together we can transform the world. It is now or never! An EDP podcast that discusses the present and seeks solutions for a more sustainable future.

Catarina Barreiros: Welcome to another episode of the podcast 'It's Now or Never. Today we will talk about the circular economy. My name is Catarina Barreiros and I have two very special guests with me to talk about this topic. I have Ana Júlia Pinto and Paulo Ferrão. Ana Júlia Pinto graduated in Territory Engineering from Instituto Superior Técnico, where she also worked as a researcher for 10 years. She has been at EDP for 6 years, in the area of sustainability, in the area of Climate and Environment of the Department of Sustainability. She holds a PhD in Urbanism from the University of Barcelona and specialises in sustainable mobility and circular economy which is the theme of this podcast. Paulo Ferrão also holds a PhD and has a degree from Técnico. He got his PhD later in another college. He is currently the president of COST, a European organization that aims to implement funding and communication in the field of science and technology. He was the founder, or co-founder of IN+, worked at the head of the Foundation for Science and Technology and he also was director of the MIT Portugal program. I might start with Paul since he is so connected here with the Academy to understand a little bit what is this about circular economy and what the Academy says about the circular economy, there are benefits, there are no benefits. What is to be said about this subject?

Paulo Ferrão: Circular economy is a fascinating theme and it is a theme that has dominated people's attention in the last 10 years essentially with the Ellen MacArthur Foundation, but obviously the Academy has been looking at this topic for many years now. For example, I can say that since 1980 I have been working in similar areas, namely the one they called Industrial Ecology and it was already logic to bring back to the industry the principles of the ecosystems, which are basically that all the products we eat, the ones that are natural, the plants, when people and animals die they become decomposed, they will again feed such products and then we close the cycles. Therefore, that is the logic of the ecosystem, and that works only with energy that comes from the sun. In fact, this was called Industrial Ecology and this had all the foundations for the circular economy. So it's probably the easiest name to realize circular economy because, in fact, what you're saying is that instead of extracting the raw materials from the land and consuming the products and throwing them away on the other side, which we call the linear economy, we're actually taking the products that we used to consume and recycling them, let's say, reusing them and putting them back into the economy. So the concept is identical and it is something that has actually been worked on for many years. We will certainly also have the opportunity to discuss that it is a concept that needs to be seized with some care.

Catarina Barreiros: Ok. 

Paulo Ferrão: Because, in short, it is not enough to be circular to be environmentally friendly.

Catarina Barreiros: Exactly.

Paulo Ferrão: So, of course, we can be recycling a product and, for example, let's recycle a... I don't know, for example, we can try to recycle a glass bottle at home, if we go and put it in the bottle bank, which is 10 km away by car, it's clear that it was much worse and it hasn't stopped being circular. So, here there is a whole set of aspects that the Academy is dealing with and has been dealing with over the past few decades and that are critical, but the message of the circular economy is strong and welcome. 

Catarina Barreiros: Good. You have said that the Academy has been dealing with this subject and you have already discovered some new things here, namely not everything that is circulating is good. This also seems to be important to stress. Is there any area in which - and perhaps in the part of the energy we can be here... - in which circularity is more and more present? I do not even say the future, but the present. I don't know. Energy probably, we have been talking about circularity, renewable things probably, haven't we?

Ana Júlia Pinto: Yes. I mean, in the energy sector, I think this is the main role, isn't it? In other words, the main role of the energy sector is that we consume renewable energy sources, because they exist on our planet and we do not have to extract or transform them. So, basically, what we do is consume the natural resource, that exists and that will exist on our planet to produce energy. And this is particularly interesting because when we produce energy, we will make other sectors of activity also they can consume energy that comes from renewable sources. So basically, what we are doing in the energy sector is leveraging that other businesses, other sectors, on the edge, the final consumer, he himself is also sustainable, because he consumes energy from more sustainable [00:05: 00] sources, right? So this is the... I would say that this is our great challenge in this sector and it is our added value. What we can add value to society is actually this.

Catarina Barreiros: Perhaps taking up one of the things you both said because you mentioned an important issue here, which is: the energy sector has to be well consolidated in terms of circularity of renewable energies so that companies can then implement circularity, right? A company that transforms, for example, recycled plastic into other materials will only be truly sustainable if it does so with renewable energy, or circularity will be more interesting to the environment if it is done. And this brings me in handy to my second question that is related to sustainable development goal number 9 which is industry and technology. How can industry and technology complement each other? And now perhaps more here in the research part. In what research allows industry to move forward, or in what industry is pushing for research and going back and asking people to "please investigate this", how does this work?

Paulo Ferrão: Yes lady. Firstly, let me say one thing that I think is important, that is: This subject of the circular economy is not a technological issue. It is above all a question of society and the way we are organized. The technologies exist. And, if you allow me, you gave here a historical perspective of what has happened in this...

Catarina Barreiros: Perfect.

Paulo Ferrão: In recent decades. Since I've been working in these areas, roughly since the 1980s, a very famous case began to appear in Denmark, called Kalundborg, which was the first case in which several industries were located in the same physical space, in the same area. The area that is Kalundborg and in which some industries used as raw materials the waste of others and then joined the industries that did this. And here we have a good example of the industries that started doing this because they had two major advantages, an environmental advantage, but also an economic advantage. And this began to be studied by the Academy. And so was born the concept of industrial eco-parks. Therefore, the industrial eco-park is the first major industrial manifestation of the circular economy at a time when the circular economy wasn't even talked about. And that was very important for the Academy, in particular for me who worked a lot on this area of Industrial Ecology, to realize one thing - and let me give another name here - that is the metabolism of economies. Therefore, it is an area in which I also work and which is fundamental to this matter, which is to realize that we, as a society, as an economy, have, in short, some analogy with the human body. The economy consumes materials, processes them in its different organs, which in the economy are the different economic sectors.

Catarina Barreiros: Ok. 

Paulo Ferrão: And then... and the different industries. They trade with each other and, in the end, discharge them, usually resulting in environmental impacts. And, therefore, the economy was then able to develop systems much more than technologies that have contributed to solving this problem. The first major contribution I studied - and then we were studying this naturally - appeared in 1992 which was the by-products stock exchange in Catalonia. So for the first time an organization appeared that had the idea of saying so "well, so if I want to promote those industrial eco-parks, but in industries that are not co-located, what I can do is give the opportunity to those who have a waste, a by-product...". so, because then the conversation about waste is another more complicated talk. But, therefore, it has a by-product, a residue that I can see as a by-product. A by-product in the sense that it can come to be used by another, it can communicate this to the world through a stock exchange, as a stock exchange, and then there may be another company that says, "Oh yes, I can use that." And they transact that product on the Catalan by-product exchange.

Catarina Barreiros: As a raw material?

Paulo Ferrão: As a raw material. And in fact, it was the first great thing that happened in those times. Then, in 2003, in the United Kingdom, another logic of the industry appeared, which was the NISP that was the national core for the promotion of industrial symbioses, which is when one industry uses the waste of another as raw material and what it does is basically playing the role of a facilitator... instead of being a stock exchange, it was a facilitator. Therefore, it was an institution that was looking for this and was trying to promote it in its field. I say with great pride today that, in 2004, in Portugal, we developed the first project of industrial eco-park. And I can tell you in a short minute what happened. At the time, the Mayor of Chamusca following a presentation I made, came to me and said: "Hey man, that sounds like a good idea. This idea of industrial symbioses. It's a bit... but it can be a good idea. And why can it be a good idea? Because in Chamusca I wanted to attract industry and so this can be a way to boost industry in the territory of Chamusca.” They were already going to install something there, which were the CIRVER’s, at the time. And around this, and then, developed the concept of eco-park that was the "Eco Parque of Relvão". [00:10:00] And this is important to say because Portugal was then in the front. Therefore, the NISP was established in 2003 and developed in 2004. We started creating an eco-park based on this logic that some industries consumed, in the background, the wastes of others as raw material. There is a whole record here. I think Portugal has to be proud of its achievements and the effective conjunction with the Academy. And this then has many issues, obviously, technological, namely knowing when an industry can use a certain by-product, but in fact, there has been… it's an area where I say with satisfaction that there has been a good marriage between the industry and the Academy and that it has been known to find new solutions.

Catarina Barreiros: Hum-hum. And at the moment in Portugal are there eco-parks of these operating?

Paulo Ferrão: The Eco Parque of Relvão is still working. Then, anyway, I have not followed so much. But that is to say, today we have, in a different way, something that works the same way. Therefore, I was also fortunate, because I was the one who was working in this area, for many years, having designed, let's say, conceived the societies that today recycle end-of-life products. 

Catarina Barreiros: Ok. 

Paulo Ferrão: Therefore, I worked on Valorcar's design that recycles cars. And then in the drawing of ValorPneu.

Catarina Barreiros: Ok. More specific. 

Paulo Ferrão: Therefore, more specifically. And then in the design of what is now the Electron that recycles electrical and electronic products. And these societies that are end-of-life product management societies actually promote these ecosystems today, let us say so, but in a distributed way. Therefore, that is, they have an obligation to ensure that, that product which is placed on the market and that is about very laws... at last, powerful, say, somehow. For example, a car has to be recycled and valued at 95%, otherwise, it cannot be sold. And Valorcar, for example, has to ensure that this happens. And in fact, this is a form of... it is a form of eco-park, but it is virtual. That is, it has a network spread across the country of industries that will feed.

Catarina Barreiros: Ok. 

Paulo Ferrão: And this obviously, in economic terms, not so much in the automobile, because it is so rich in metals that this operation pays for itself, but in tires, obviously, what this happens is that these societies arise to collect, in the end, the money from the start, therefore, it is the eco-values.

Catarina Barreiros: When it is put on the market. Hum-hum.

Paulo Ferrão: When it is put on the market. And then finance the operations that need to be financed for this to happen. Therefore, it is possible to say that there is, in fact, a lot of this practice already in Portugal, that there is experience, that much more needs to be done than what we are doing today. Therefore, in fact, it is now, or all or nothing, so we are in fact at a time when we cannot fail. We cannot fail! But the message that I think is important to discuss is that we are not going to fail for lack of technologies, we will fail… I hope we did not fail, but if we did, it was for lack of context, it was for lack of a system of this holistic view that all this … which is actually environment and sustainability requires. So...

Catarina Barreiros: Yes. Lack of information sharing and desire for social collaboration, isn't it?

Paulo Ferrão: And the right incentives. 

Catarina Barreiros: And of the right incentives, OK.

Paulo Ferrão: For example, we cannot have misaligned incentives. Therefore, if we want, for example, to recover a certain material from a given product, this product cannot go to the landfill. Therefore, and consequently, the landfill rate cannot be cheap, it cannot compensate. 

Catarina Barreiros: Of course. 

Paulo Ferrão: Therefore, that is, it is all very aligned, or in fact, we give contradictory signs and things do not happen.

Catarina Barreiros: This is very curious because we talked about companies, we talked briefly about consumption and how the circular economy cannot be the endgame in itself either, but it has to be the solution for what needs to be done in terms of consumption and impact and, effectively, the ODS2… 12 sorry. Moving from 9 to 12 is about responsible consumption and a little while ago we were talking, even before entering here, about… it is not because it comes from a renewable source that we are going to leave the light on all the time at home, right?

Ana Júlia Pinto: Exactly.

Catarina Barreiros: Therefore, we have this component of the systems that need to be created, that government action is necessary and that education for responsible consumption is necessary, and I believe that you might also feel that a lot at EDP.

Ana Júlia Pinto: Yes. And, Catarina, let me go back a little bit and take a little bit of what Prof. Paulo Ferrão was talking about, this idea of ​​a system, which is, in the end, something that is fundamental in this concept of circular economy, to talk a little bit about what is the role of companies and going a little further to SDG9. In other words, what happens is that all companies have to collaborate, or the different sectors have to collaborate with each other so that these symbioses can happen, right? For example, in the case of a company in the electricity sector, we have several by-products, whether ashes, slag, which come from thermal power stations, so demonized nowadays, but which deep down [00:15:00] they… many people are unaware that we have appreciation rates of around 90%. Above 90%. Because effectively those... CO2 emissions are indisputable of course, but actually there are many by-products that come out of those industries and feed others, such as the cement industry, or even the steel gases that are reused. This is only to say that companies effectively have a decisive role in building these interconnections with each other, so that there can effectively exist a more circular economy. Because I can't think that I produce energy, that I have residues from my activity and that later I'll be able to recycle everything I produce and, therefore, effectively, this is something that has to happen and, therefore, I fully agree that, if we talk about it – which I also hope not – it will be because this whole circle has not formed. And going a little bit to what you were talking about and consumption, I think we are a population… I think that this perception is not very present, the world population is growing in a way… an exponential growth, right? So, last year, for example – just to give an example – last year, we had consumed in August the entire consumption budget that we could have in order to reach the goal of limiting…

Catarina Barreiros: Emissions. The increase in temperature.

Ana Júlia Pinto: ... the temperature rise. So, in August we had already consumed all that we could consume. Therefore, we cannot think that we will achieve a circular economy, if we continue to consume in the way we consume and not changing anything in about it. And thinking that it is in the end of our lives that we will solve all the problems. So, basically, this role of sustainable consumption that you were talking about is something that takes on a decisive role, because companies also have to work on what is upstream of their activity. In other words, the challenge is not only in what is waste management, or even of by-products, therefore, what is at the end of my value chain is also what is upstream of my value chain. Therefore, deep down, in all the products I have to buy from other suppliers, in what I can leverage among these other suppliers. And then, this will all have an impact on the product I'm going to produce and that end consumers will consume. So, I think that the circular economy is very much this perspective that - and I think that's why it's also called economy, isn't it? - that the whole cycle has to closed, but it's not just in one... a company itself won't be able to do it alone, will it?

Catarina Barreiros: It's together, isn't it?

Ana Júlia Pinto: Neither you, as a consumer, will be able to do it alone. We have to work together on this systemic idea.

Catarina Barreiros: That is… this structure of thought is very interesting, because, deep down, what we are saying – and correct me if I'm wrong – is: we need the incentives for this to happen, we need companies to organize themselves and communicate with each other, and then we obviously need more demand from the consumer and, above all, availability for change – right? - that you were talking about changing consumption, the way people consume. Even in the part of companies, what they decide to produce, perhaps, one must review quantities, review methods, review plenty... marketing, review communication. Review everything, right? This is...

Ana Júlia Pinto: Yes. And, in addition to that, I think so, Catarina, but I would add something else that is a priori, which is: it is really necessary to change the mindset in the companies themselves. Meaning, when I said that you have to change the way you manage your supply chain, for example, right? That's a whole mindset shift in companies. You stop focusing specifically on just the cost, benefit, financial profit, but we have to introduce another set of criteria into these purchases that we ourselves do - right? - for our activity that will also have a benefit in the medium/long term. So, it's a lot on the companies' side, a mindset change about how to create your entire value chain. And that is essential.

Catarina Barreiros: And what good examples are there of this already happening? Because I think that as consumers - perhaps putting myself here merely in the consumer role - sometimes we believe that there are no companies doing well, basically. We think, no, that everything is failing. There it is, there is no such systematic change, there isn't this... and there are good examples, aren't there? There are good cases. I don't know. Perhaps Paulo knows many due to his professional activity, but...

Paulo Ferrão: There are many good cases and let me tell you this: This work that is being done here is indeed fascinating, because it is in fact now or never. I usually say that we have the unique privilege of living a new revolution. Perhaps if you asked me, from this point of view, at what time I wished to live, it was right now. As I said, the energy sector, how can you not face with great enthusiasm an energy sector, [00:20:00] in an Europe that has as its main objective to be climatically neutral by 2050.

Catarina Barreiros: Effectively, climate neutral.

Paulo Ferrão: Effectively. Therefore, the business of an energy company will change completely.

Ana Júlia Pinto: Completely

Paulo Ferrão: There is no chance it's in any other way. The business of an energy company will have to be completely different and the question is: If the energy company does not change, change is made for it anyway. Therefore, in a paradigm - and now a good example - in a paradigm in which we are having cheap photo voltaic panels, in which it begins to economically compensate the citizen to install their own photo voltaic panel.

Catarina Barreiros: Um-hum. And there are benefits for those who want to install it as well. 

Paulo Ferrão: And they get benefits. It is clear that an oligarchic company, let us say, as it was before, which is no longer, clearly has to change. I appreciate the change that companies in Portugal are making. It is indeed remarkable. And deepening the question of good examples. We often ask ourselves, "Ah, but now we install a photo voltaic panel, then I have to install a battery at home to be self-sufficient." But it doesn't have to be self-sufficient! Conditions just need to be given...

Catarina Barreiros: Because there is a network, isn't there?

Paulo Ferrão: Because there is a network. Conditions just need to be given to the person, for her to be able to use that network. And I am glad to realize that today we are talking about energy communities that deal with it. There is a good innovation there. Therefore, in which I can manage my energy, not just look at myself, but look at the people who are around me. And this storage problem ceases to be a technological problem in the first place, to again be a system problem. A system that in this case is the smart grid, a system that in this case is what is called today, the internet of things, which is to have the house with sensors and turn it on and off. I have a son who is still studying at Técnico, already has the whole house with instruments.

Catarina Barreiros: I also have it.

Paulo Ferrão: Therefore, I already turn on and off everything at the same time. I almost no longer have a switch at home. And this is very important, because it is the only way to signal it from the outside and inside when I can turn on or off. And then storage, strange as it may seem, should be done in the dams. And that is where we are in fact completely changing.

Ana Júlia Pinto: Completely.

Paulo Ferrão: Completely, changing the paradigm. Portuguese companies are in fact keeping up with this, which is a fantastic revolution. And it is an even a more beautiful revolution for another reason, because it allows each of us to be the protagonist of a revolution that we never thought to be the protagonist of.

Catarina Barreiros: We all matter, don't we?

Paulo Ferrão: We all matter. And we all produce. 

Catarina Barreiros: We are all part of the network.

Paulo Ferrão: We all produce electricity. We are all part of it, we can all take action and we all benefit from it. Which is one thing, that apart from being very democratic, it's very innovative and very interesting, with huge challenges for regulation, with huge challenges for dispatch.

Ana Júlia Pinto: For the networks themselves.

Paulo Ferrão: For the networks themselves.

Catarina Barreiros: Yes, because there will inevitably be peaks in energy use, won't it? 

Ana Júlia Pinto: And because the networks themselves have to be prepared, so that you can - you as a final consumer - produce energy and inject into the network, right?

Catarina Barreiros: Right.

Ana Júlia Pinto: And this is a challenge for the networks themselves.

Catarina Barreiros: Yes, yes. 

Ana Júlia Pinto: But this role of companies, and this necessary adaptation that companies are undertaking, is also very interesting, because it leads to another pillar, so to speak, of the circular economy, which is urgent today, which is this creation of new business models. Creation of new business models for the companies themselves. For example, one of the best practices that may also be interesting for us here, to share, is that several companies, in the energy sector, but also other companies from other sectors, promote this idea a lot now, of "as a service". In other words, maybe you can buy a solar panel to install in your home, but you can also have a solar panel that is not yours, and in the end, there is a company that is providing the service and that service includes the solar panel. And that if you have a problem, it can be fixed and if in 1 or 2 years you don't want it anymore, it can be repaired, retreaded, so to speak, and placed in someone else's house. And so this also eliminates and reduces the production of new products, doesn't it?

Paulo Ferrão: Exactly.

Catarina Barreiros: Right.

Ana Júlia Pinto: And so, we are entering here that idea of circularity. For example, in this case, Paul spoke of batteries and storage, another great revolution that is taking place, also because of the question of lithium and the great impact it has, is precisely in this area of batteries. It is you having this idea of second life for batteries and you can reuse them, for example, from cars to energy storage. 

Catarina Barreiros: For lighting.

Ana Júlia Pinto: Exactly. So, here there is a whole revolution happening in companies, to reinvent themselves. Even creating new, different business models, which are effectively good practices that promote the circular economy, because they reduce production. So the circular economy is also this, isn't it? [00:25:00] It is to reduce the consumption of raw materials and therefore, deep down, producing less. Produce less goods because you can... 

Catarina Barreiros: Because you communicate with other sectors.

Ana Júlia Pinto: Exactly.

Catarina Barreiros: So, deep down, we are always talking about it, it is communication, interconnection, network, community and it is very funny in an era where there is much talk of social networks bringing things together, but also exclude, and people being increasingly more isolated. We are talking here about the opposite, which is: In reality, society, the future of society or the present of society is in connection and conversation between all. A conversation that might be more technologically automated, but a conversation between all, isn't it? And when you were talking about car batteries, I remember seeing that, for example, at São Carlos it is already used… car batteries are used to light shows. Or in the Netherlands, football stadiums already use these... so deep down what it is... what is considered to be one of the great problems of lithium is its disposal, is being solved through this conversation, through this dialogue. And I think that the network also turns out to be especially interesting – correct me if I'm wrong also – when we're talking about having night in one place, day in another, we're always balancing it. 

Paulo Ferrão: [Overlay of voices]

Catarina Barreiros: Of course. It's a completely… much larger scale, but, there it is, if we have excess production during the energy day… I see that, maybe… my parents have solar panels, so it's actually easy to already have them at home. And perhaps, they produced immense energy there and at the end of the day, there is less energy, but there is still enough to charge an electric car. And at night you can take advantage of the energy that was generated and that was generated as an excess. So we also don't want to have excess energy stored, that's not the goal, right? The idea is to distribute it, to make it efficient. That is...

Paulo Ferrão: But there is... can I point out what Julia said?

Catarina Barreiros: Yes, of course. 

Paulo Ferrão: That's too important. That is indeed to look at services and not at products. And here there is also a dialogue of values. Therefore, I, as you can imagine, I am a mechanical engineer, when I graduated from Técnico, I wanted to have a car. It was the most natural thing...

Catarina Barreiros: Only one?

Paulo Ferrão: Well, maybe more even, exactly. And I would like to give here a figure that is interesting. We, when we talk about circular economy - and this is one of the things I dedicate myself to - is to calculate the flow of materials through societies. Each Portuguese, nowadays, on average, consumes about 20 tons of materials per year. So, in short, this is everything. It is what is necessary for construction - immense! - this is what is needed for cars, it is what is needed for fuels, for food. For everything! So 20 tons! And what returns as recyclable is 2% of this. 2%! That is what we are talking about. Now we are also talking about this and we are not going to demonize this, because half of it is in stock in the economy.

Catarina Barreiros: OK.

Paulo Ferrão: And what are stocks? For example, cars. Well, today I look back and say “well, in fact if someone can provide me with a car every time I need it”, what do I need a car for?

Ana Júlia Pinto: Exactly.

Paulo Ferrão: That is stopped 90 or 95% of the time. So what I am contributing to is stock and I am spending a lot of money. So, this idea of service is absolutely key and I think it's the idea that will spread the most, because it actually avoids a huge consumption of materials in this stock, which is the majority. And so, today, for example, I work on projects… even knowing that there's a background in architecture, I am now a half-architect mechanical engineer already, I have… I work a lot with architects and what the city of the future should be. And one of the things is... for example, because the house in which the person lives... what is normal is that the person has a family and then, at last, the children go away and they are left alone. And they stay in a big house. Why? Therefore, the house is also, maybe, if it is designed otherwise, it can be flexible.

Catarina Barreiros: Modular.

Paulo Ferrão: Modular. So this... that's a keyword, it's modularity. Therefore, modularity is also in industries, what will facilitate recycling and reuse. Because if I have a certain product, if it is modular, there is a part of the product that is not good, I change that part. If the product is not modular, I have to change the entire product.

Catarina Barreiros: And now there is already a mobile phone that is like this, with modular parts. Incidentally, I was talking about stopped cars and I immediately remembered two examples. In Portugal, we don't have it yet. But in Australia there is a car-sharing service that is consumer to consumer, where I can park my car and I have an application available, someone, while I don't need my car, it's right next door, take it and then bring it back, and takes it to another place and the car returns to that place. Of course the service here depends on the consumer, but this already exists in Lisbon on a range of services provided by an external, doesn't it? If you want to, in Lisbon today, I have cars stopped in a lot of places, I pick up a car, I park it elsewhere. Someone will need the car elsewhere, so it is… and it ends up… I think that in Portugal we have a lot of this tradition of having a car. Nothing against it, I know mechanical engineers are very fond of cars.

Paulo Ferrão: They used to like them more. 

Catarina Barreiros: They used to like them more. 

Paulo Ferrão: I confirm it with my students, they no longer have that ambition.

Catarina Barreiros: No longer. They are already more in the...

Paulo Ferrão: They are already more in sustainability.

Catarina Barreiros: Focused on sustainability.

Paulo Ferrão: Clearly. 

Catarina Barreiros: Yes. Of course. It has to be that way. And if not mechanical engineers, who then, right? Because they have...

Paulo Ferrão: Exactly. Well.

Catarina Barreiros: Yes, I can clearly see that flexibility, [00:30:00] but in Portugal people are too dependent on cars. Having a car is very important. For instance, we have a car and most of our friends think this is weird, because they have two cars. You are two. You need two. But no, we have a car and we can manage with public transport, and often the car isn't even used. And it's funny thing here is - did we actually need a car? With all the costs of having a car, which we don't even think about, but which... A renting service clearly pays off. A car is one of those things that immediately lose value.

Paulo Ferrão: I made a very interesting exercise many years ago during a more philosophical lecture... You see, it's not difficult to show that from January till April, an average Portuguese citizen spends all their income on the car. So this means that if this person did not have a car...

Catarina Barreiros: They would live comfortably for an extra quarter of the year.

Paulo Ferrão: An extra 4 months. Right.

Ana Júlia Pinto: Exactly. 

Catarina Barreiros: Right. 

Ana Júlia Pinto: And there is another very interesting thing here, which is... Paulo was talking about modularity, which is something of... it's a buzzword, isn't it? But, well, it's very important in order to make what we've been discussing here, the circular economy, possible. And this leads us to another buzzword, which is product longevity, which basically means to extend… What you want is to extend the life of a given product, isn't it? Right. Maybe you're using your car and then another model comes out, or maybe it has too much mileage, I don't know. You're going to sell it, isn't it? It can be reused by someone else, or maybe it can't, right? So, what we want is for products to have this… to be designed in a modular way so that if there's something wrong with my car - like the battery, let's focus on electric cars – I can replace the battery and the car will be usable for another 10 years. And this applies to mobile phones, right? Mobile phones have an even shorter lifetime and they all have a bit of heavy lithium, which has a very significant impact here. 

Catarina Barreiros: And we keep buying new mobile phones.

Ana Júlia Pinto: Right. And every 2 years, maybe every 3 or 4 years, people who are not into technology get a new phone. So it's very important that we introduce this idea that products, when they are manufactured, should be designed to facilitate this whole circular economy process, so that you can extend the lifetime of that product. For instance, we have talked a lot about cars here and I think... Sustainable mobility is a fashionable topic. But we can also talk about things that may be a little more disruptive in terms of our mindset, because we Portuguese want to have a car, but we all have a lot of home appliances and that's something... I mean, for us, buying appliances from a store is even more normal than buying a car. Right. 

Catarina Barreiros: And we have a washing machine. Yes. We don't go to a laundry.

Ana Júlia Pinto: Right. We have a washing machine, we have a microwave, we have an oven, we have a water heater or a hot water tank. We have all these things.

Catarina Barreiros: Right.

Ana Júlia Pinto: But there are also – to give you another example of a good practice – services in which you do not own your appliances. You buy a service from a company that brings you the appliances to your house, and, after 3 months, if you're not happy, they can go to somebody else's home, right?

Catarina Barreiros: Ok. 

Ana Júlia Pinto: And they can go on being useful. So basically there is... I think there's a whole mindset which is a bit disruptive, but which is becoming part of our everyday lives. So there are many good practices out there.

Paulo Ferrão: I can...

Catarina Barreiros: Yes. Sure. Sure. 

Paulo Ferrão: …buttress what you said by playing an interesting game with Júlia. I can highlight an important point you've made, which is that this requires a completely different business model.

Catarina Barreiros: Services again, right?

Paulo Ferrão: But why? A car company, for instance, is interested in selling cars. If it stops selling cars, it can't survive. When that company realizes that this economic model goes against the current grain, because there is this sustainability logic, it will adapt and stop selling cars, and start providing a mobility service instead. This is clearly what happened with xerox machines. Companies stopped selling xerox machines. And this is a very good thing, because when a company stops selling cars or xerox machines and starts providing a service instead, it's in its interest that the products last a long time.

Catarina Barreiros: Of course.

Paulo Ferrão: Which is something that would not happen if it...

Catarina Barreiros: And to make it repairable.

Paulo Ferrão: And to make it repairable. 

Ana Júlia Pinto: Exactly.

Paulo Ferrão: This changes everything, and it's the only truly sustainable way to drive ecodesign, because otherwise it is almost unnatural for a manufacturer to promote ecodesign. So, it's the beauty of making all this work together, together with these business model changes, that results in this sustainability logic, and hence this [00:35:00] systemic vision. 

Catarina Barreiros: That's very interesting, because it forces us to go beyond our individual sphere. We have to stop having... to stop thinking of consumption as an individual act, right? And perhaps ride this shared services and rental services wave. Interesting. I don't… I'm thinking about my case, about not having a washing machine at home. I would go to the laundry once a week, maybe I would bring more clothes... The machines are probably more efficient there, because have greater load capacity. I have no idea. I would have to find out. But it's very interesting. And we focus on the source of the problem, which is the disposal of products. We extend their lifespan, right? Because the most carbonic products are technology products, right? Not only phone batteries with lithium, but all copper and steel components. 

Ana Júlia Pinto: Everything! Exactly.

Catarina Barreiros: And often gold, too. We are talking about non-renewable ores, right? 

Ana Júlia Pinto: Rare materials.

Catarina Barreiros: Rare materials. Exactly. This is very interesting. And maybe we could conclude with a question for both of you... Whoever wants to answer first. What is the future of the circular economy? We are talking about the present. It's very interesting, we are already talking about the present. This is a golden age to live in, but what about the future? What's the next step?

Paulo Ferrão: What's the...?

Ana Júlia Pinto: Yes. If Paulo wants to go first.

Paulo Ferrão: So... yes. Well, what is the future? It has to be more of this, but there's an element here which we haven't discussed sufficiently - the individual. That is, the consumer. And I think that giving individuals the information they need to make the right choices is absolutely critical. In my opinion, that's the future of… And I would like to suggest an idea. And this is also a challenge for companies. It is very interesting that when you buy an appliance, it comes with manuals and all that, but when you buy a car or a building, it often comes with little information. And to do what Catarina was suggesting, which I found very interesting - the idea that I could go from one place to the other -, we are pushing for the implementation of a product passport. Products should have a passport that shows their ecological footprint, their components, but also how they should be handled in subsequent phases. And all this information can be included in a passport, which does not need to be a material thing. Nowadays it's easy to scan a QR Code and get this information on the phone. So we don't even need more paper. This will enable me to choose an environmentally correct product. Because one of the big problems today is greenwashing. If I believe everything I am told, I will probably make a bad decision. It would be really important to have a product passport audited by a relevant authority which could force companies to do this.

Catarina Barreiros: Sometimes companies themselves don't know, they don't have...

Paulo Ferrão: They don't know... Exactly. 

Catarina Barreiros: Or they don't want to know. 

Paulo Ferrão: But it improves transparency...

Catarina Barreiros: Right.

Paulo Ferrão: And individuals will feel like they have an important role to play here. I don't think change will be possible if consumers don't feel that they have an important role to play. And in order for consumers to feel that they have an important role to play, they need this information, which I metaphorically call a product passport.

Catarina Barreiros: It is not a coincidence that education is one of the mainstays of sustainability, right? 

Paulo Ferrão: That's right.

Catarina Barreiros: It is one of the gestures with the greatest impact on climate change.

Ana Júlia Pinto: Yes. Yes. I think that what Paulo just said is very interesting, and it is clearly one of the keys here. And I think this will also have an influence on companies. Many companies already have circular economy practices without knowing it, because they don't know the concept well enough. They often don't know the footprint of their own products, and this will force them to know it. And once they do, they will know how to improve. For instance, to give you some examples from our sector, we have been introducing as-a-service models because the whole sector is changing and we have to change with it. Many of these as-a-service models have a very positive footprint. So we have this... we have these products. We also have... we also promote renewable energies, so we consume fewer natural resources - in this case, fossil fuels. So this is another very positive example. We often promote sharing among consumers themselves. This also has a positive impact on the circular economy. We drive energy efficiency. You also consume less. I mean, I think that product labeling will be important so that companies can get to know their practices, their good practices, a little better. And this may help them do things differently. And there is a very important thing we haven't mentioned here, which is that the European Union believes that the circular economy is an opportunity worth about €3 trillion. €3 trillion! That's lot! 

Catarina Barreiros: And that it will create many jobs.

Ana Júlia Pinto: Exactly.

Catarina Barreiros: Most people think, "No, by reducing production, you will be killing jobs." 

Ana Júlia Pinto: Exactly. Exactly.

Catarina Barreiros: That's not true! [00:40:00] The circular economy creates jobs. 

Ana Júlia Pinto: And we're not talking about greenwashing, we're talking about actual…

Catarina Barreiros: Facts. 

Ana Júlia Pinto: Facts, right? So it's really an opportunity. And that leads me to a final remark regarding your question about the future. I think consumers will play a critical role in the future; they will bring about many changes, even within companies themselves. We have discussed the role of companies in depth, but regulators also play a very important role here. And that's the future... I would say that maybe it's not a medium-term future, it has to be a shorter-term future. Like now.

Paulo Ferrão: Now.

Catarina Barreiros: Maybe that's we are lacking now.

Paulo Ferrão: Because things like… like what Paulo mentioned, right? Basically, for a company, sending a certain material to a landfill is financially more attractive than recycling it. It can't be, right? Having something that makes my green energy more expensive, because I have to buy origin certificates and all that, than if you buy energy without this certificate - that can't happen either. You have a product which is certified as sustainable fishing or sustainable forestry, and it's more expensive - you have to pay more. If you are sustainable, you always have to pay more...

Catarina Barreiros: There's the cost of certification.

Ana Júlia Pinto: Exactly.

Catarina Barreiros: Because if it's sustainable, it has to be certified.

Ana Júlia Pinto: But we need to change that. 

Catarina Barreiros: Sure. 

Ana Júlia Pinto: And regulation plays a very important role here, and I would say...

Catarina Barreiros: Yes. Either everything that is available on the market will have to be certified... Or certificates will have to be paid for by government funds, by public funds.

Ana Júlia Pinto: Exactly. I would say this is a short-term future. One thing that has to change. 

Catarina Barreiros: Hopefully it will. I think this was interesting. This last question has sort of summarized all the key ideas we have discussed here, like the idea of community, of planning production ahead, of product maintenance and longevity, that the end of life of a given product can be the beginning of another product, all this under a logic of symbiosis and corporate ecosystems. And in fact, I think we can all agree that it's now or never. 

We are all agents of change. And together we can change the world. It is now or never! An EDP podcast that discusses the present and seeks solutions for a more sustainable future. Follow the "It's Now or Never" podcast on Spotify or at edp.com.