How are AI and circular economy related?

The Circular Economy is a model of production and consumption of goods and services. The concept of “Circular Economy” was first discussed in 1966 by economist Kenneth E. Boulding, in his article “The Economics of the Coming Spaceship Earth”. Boulding introduced the concept as an alternative to the traditional linear model of “extract, produce, use and throw away”, and to maximise the use of resources, minimise waste and reduce the environmental impact of human activities.

The model seeks to keep products and materials in use for as long as possible, thus reducing waste and pollution production and allowing natural systems to regenerate. It offers a response at the same time to the challenges of resource scarcity, environmental degradation and social inequality, which are associated with the conventional linear economy.

It is thus a powerful proposition, but despite its great potential, the transition to a Circular Economy requires a radical transformation in the way we design, produce, consume and dispose of goods and services, and this is where Artificial Intelligence (AI) can play a key role. While the Circular Economy seeks to optimise resource use and minimise waste, AI can provide innovative tools and solutions to achieve these goals more efficiently and effectively.

AI, with its ability to perform tasks that hitherto required only human intelligence, such as learning, reasoning and decision-making, can help us create more value from our resources, design more efficient and resilient products and systems, and thereby reduce waste and pollution.

So AI and the Circular Economy are two fields of work with enormous potential to work together. What can this collaboration consist of more concretely? Let’s look at some examples:

One of the ways in which AI can enable circularity is by improving the design process. AI can help designers create more durable, modular, repairable and recyclable products, as well as optimise the use of materials and energy. For example, AI can help design products that are tailored to user needs and preferences, reducing overproduction and overstock. One company using AI for this purpose is Adidas, which offers customised trainers that are made on demand, using 3D printing and recycled materials. Another company using AI for design is Autodesk, which provides software tools that help designers create products that use less material and energy, such as generative design and simulation. AI can also help design products that adapt to changing conditions and evolving user demands, extending their lifespan and functionality. An example of this is Google Nest Learning Thermostat, which is a smart thermostat that learns from the user’s behaviour and preferences, and adjusts the temperature accordingly, saving energy and money.

Another way in which AI can foster circularity is by enabling new business models based on access rather than ownership, such as sharing, leasing or subscription models. AI can help match supply and demand for products and services, optimise pricing and incentives, and provide personalised recommendations and information. For example, AI can help create platforms that connect users who want to share or rent their idle assets, such as cars, bikes or tools. One company doing this is Airbnb, which uses AI to match hosts and guests, suggest prices and locations, and improve customer service. Another company doing this is Uber, which uses AI to match drivers and passengers, optimise routes and fares, and improve safety and quality. AI can also help create services that provide maintenance, repair or upgrades to products, extending their value and reducing waste production. One example is Philips Lighting, which offers lighting as a service rather than a product, providing customers with high-quality LED lights that Philips monitors and maintains remotely. Another example is HP Instant Ink, which offers ink cartridges as a service rather than a product, delivering new cartridges to customers when they run out of ink.

A third way AI can support circularity is by streamlining the circulation of materials in the economy. AI can help track and trace the flow of materials through supply chains, identify opportunities for reuse or recycling, and optimise logistics and transportation. For example, AI can help monitor the condition and location of products and components, enabling predictive maintenance and timely recovery. One company using AI for this purpose is IBM Watson IoT Platform, which helps companies monitor their assets in real time using sensors and cloud computing. Another company using AI for this purpose is Maersk, which uses AI to track and optimise the movement of containers through its global network of ships, ports, trucks and trains. AI can also help sort and process waste streams, increasing the quality and quantity of recycled materials. One example is ZenRobotics, which uses AI to sort mixed waste into different fractions using robots and machine vision. Another example is Enevo, which uses AI to optimise waste collection routes and schedules using sensors and analytics.

These examples are just a few of those already on the market. In the coming years, AI is expected to significantly boost the circular economy in many different areas, helping us to design better products and services, create new value propositions for customers and stakeholders, and ultimately optimise the use of resources.

There is no doubt that the use of AI also poses some challenges that need to be addressed, such as those related to data privacy and security, or the environmental impact of digital infrastructures. It is imperative that we ensure that AI is aligned with principles and values such as transparency, inclusiveness, diversity and resilience, but also that we facilitate the possibility for it to drive much needed change such as the transition to a circular economy model. The European Green Deal implies a circularisation of the economy in the coming years. This is a huge challenge on which Europe’s environmental and social sustainability depends. The challenge requires businesses to have the best possible resources to help them in the transition process, and AI will certainly have a lot to contribute.

Examples of good practice:

Source: https://www.ellenmacarthurfoundation.org/artificial-intelligence-and-the-circular-economy