Exploratory Study on Circular Economy Approaches A Comparative Analysis of Theory and Practice

104 5 Result of Analysis and Interpretations

also cases from the parquet and office chair industries mentioned the topic as

negative impact on their business as well.

The use of recycled and circulatable resources is commercially not reasonable

for the organizations. Not only purchasing recycled resources is more expensive

than purchasing virgin resources (Case Alpha: “Well that recycled polyester still

costs more than the virgin polyester. So there is no economic benefit there is only a

cost to it now.”), but also production of circulatable material usually costs more

than conventional material, as stated by the interviewee of case Eta: “We have 10-15

percent higher costs due to the other material” (see Appendix: German Quote 53).

One attempt to explain the higher prices are missing governmental regulations,

which ensure the internalization of the total cost of ownership when extracting

virgin resources. As representative of case Alpha states: “The second solution is to

introduce policies that force the true costs of virgin polyester into the market and

those true costs of course include the costs to the planet of the petroleum that is used

in the polyester. As an example, if carbon taxes were to be implemented, they drive

up the cost of petroleum and increase the costs of virgin types of polyester, if carbon

is to the point where recycled polyester will be less expensive.” Another reason is seen

in the low production volumes. Circular economy products still tend to be sold in

a niche market. Only a limited group of customer is interested in these products.

Manufacturers have only small production batches. This means that demand for

the circulatable resources, which have often specifically been developed for one

specific product, is low. Especially when comparing this to the demand for material

such as polyester with multiple fields of application it is obvious that volumes for

circulatable resources are significantly lower and therefore more expensive. As

stated in the interview with case Delta : “Of course we try to get close to the prices

(of virgin resources) but it is impossible because the polymer we have found is only

produced for us in very small quantities, in 2015 approximately 200 tons. That in

comparison to 5 million tons of polyester, it is impossible to compete with that” (see

Appendix: German Quote 54).

As shown above, regarding the reason why recycled resources are more expen-

sive than virgin ones, divergent statements have been made, and it is probably a

combination of several aspects that lead to it. On the other hand, two examples

have been discovered in the study how circular economy can positively impact the

costs for resources.

First example is, when organizations use production waste to create new products.

Waste can be used in two different ways: putting the material back into the material

pool, e.g. granulating fabric to reuse it for the production of the same product, or

manufacturing a different, potentially smaller, product. Either way, by considering

this production waste as a valuable resource, more output with the same amount of