Closing the Loop

By sharing waste and resources -- participating in an ecosystem rather than a survival of the fittest -- companies can save money and drastically reduce their environmental footprints. But doing so requires subverting the traditional corporate mindset.

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It took a "spear to the chest" epiphany for carpet manufacturer Ray Anderson to recognize that the most efficient industrial system around was nature. "Nature recycles waste, nature operates on renewable energy," says Erin Meezan, vice president of sustainability at Anderson's carpet company, Interface, Inc. After reading the book that sparked his epiphany, Anderson convened an environmental task force and told them, "I want to come up with a new model for business. I want to figure out how a company would look if it respected nature's systems."

He sent carpet designers into the forest for inspiration. Engineers began using gas from a nearby landfill to power a manufacturing plant. By 1995, the company had saved $10 million in waste reduction. By 2008, these savings had reached $405 million and Interface had reduced energy use by 44 percent and switched to 24 percent recycled and bio-based raw materials.

In retrospective, such a strategy seems pretty obvious. Nature, like industry, is a complex, multi-level system that creates, powers, and eventually destroys goods. Whereas modern industry leaves a murky trail of gases, chemicals, and materials, nature reuses all it discards. Mimicking this closed-loop system could save industries huge amounts of money.

Yet this business approach, known by academics as industrial ecology, is far from widespread. While many companies -- GE, Dow Chemical, Ford, IBM -- have followed Ray Anderson's lead in looking to nature to reduce waste or streamline a particular product, few have made the conceptual leap to situating themselves within an industrial ecosystem. This reorientation is the next frontier of industrial ecology, one that requires a tweaking of the American corporate mentality.

The Danish town of Kalundborg hosts a group of businesses that stumbled onto the industrial ecosystem model. In the 1970s, the town housed an oil refinery, a pharmaceutical manufacturer, a coal-fired power plant, and other resource-intensive operations. As these businesses operated side by side year after year, they realized that one plant's waste was often another's fuel. The coal plant dumped huge quantities of water while the oil refinery fed equally huge amounts into its boilers. The refinery's desulfurization process produced inconvenient amounts of gypsum, which a nearby plant needed to manufacture plasterboard.

Without planning in advance or fully realizing what they were doing, Kalundborg's businesses started engaging in byproduct exchanges. The first collaborations began in the 1970s, and by 2007, participants had cut water consumption by 25 percent and were saving $12 million and exchanging 2.5 million tons of waste per year.  The town of Kalundborg also benefited, replacing an oil-based heating system with steam from the power plant.

The Kalundborg network is often held up as a model eco-industrial park: A group of commonly located businesses who collaborate on environmental and resource issues.
But industrial ecologist Ernest Lowe, who pioneered the term, does not think it applies. "There was no conscious development process," he says, "just one-on-one exchanges that developed over time. No one knew this was happening, collectively." According to Lowe, whose consulting group helps companies work together to identify collaboration opportunities, collective planning is vital to successful eco-industrial parks.

One such park in Devens, Massachusetts, started out as a decommissioned military base that was so environmentally damaged that the state designated it a Superfund site. An eco-minded steering committee, however, was able to turn it around by convincing a wide range of companies to set up high-efficiency and collaborative facilities on the former brownfields. Devens now hosts state and federal agencies as well as over 75 green technology, pharmaceutical, and construction companies who participate in small-scale waste exchanges and resource collaborations. The project has created more than 3,500 jobs and helped the participating companies conserve resources and save money.

Devens was largely funded by private investment; unlike England, China, Japan, and other countries, the U.S. does not provide a federal foundation for eco-industrial projects. National attention for these kinds of projects spiked during the 1990s, when Clinton's Council on Sustainable Development latched onto the eco-industrial park concept, but it has since trailed off. Lowe says that the momentum stalled after George W. Bush entered office and defunded the Environmental Protection Agency, giving positions "to people who would just as soon abolish EPA."

Another bureaucratic obstacle was the EPA's definition of waste, worded in a way that excluded the possibility of re-use. According to Joseph Fiksel, a senior research scientist in industrial and systems engineering at Ohio State University, this issue has not been resolved, although the current EPA has been generally supportive of industrial ecology.

Companies interested in setting up waste partnerships with other companies face not just bureaucratic roadblocks but legal stipulations that prevent them from sharing trade secrets with potential competitors. Andrew Mangan, executive director of the U.S. Business Council for Sustainable Development, helps companies that wouldn't normally interact identify and implement collaboration opportunities. One of the most important parts of the process, he says, is developing trust amongst participants. "We have them sign a legal agreement that covers confidentially, intellectual property, and antitrust issues, which are classic legal barriers," he says. "If you cover that base over the course of this process, you get people to reveal things to each other that they wouldn't normally reveal."

Mangan stresses that while regional EPA offices often support eco-industrial projects, "there hasn't been a focus at the national level since the Clinton initiative." He and his colleagues are currently working on municipal and regional levels "with the goal of getting critical mass around the country so we get federal attention." He is confident that escalating energy costs and climate change risks mean federal support for eco-industrial projects is just around the corner. "The great thing is that we have close to 15 years of data that shows this is a winner," he says. "Companies like it, cities like it."

Mangan hopes to convince the government to invest in something similar to an initiative the UK launched in 2005 that orchestrates by-product synergy projects among 8,000 different industrial participants. The National Industrial Symbiosis Programme, jointly operated by national and local agencies, has so far diverted over 6.3 million tons of waste from landfills, generated £159 million in new sales, reduced carbon emissions by over 5.9 million tons, and saved its members over £145 million.

"If the UK can do it, we can do it. If we were to extrapolate and apply the UK project here, even conservatively," Mangan says, the U.S. could take a giant step toward meeting emissions reduction goals as well as generating new jobs and stimulating the economy. "It's a great economic story, but you also get all this environmental value."