A Circular Economy Index to promote Innovation in Recycling

Europe has the highest net imports of resources per person and its economy heavily relies on imported raw materials and energy. Therefore secure access to resources has become an increasingly strategic economic issue.To address these issues and move towards sustainable development as well, it is necessary not only to minimize the use of materials in the design stage and to find new materials as alternatives to nonrenewable ones but also to reclaim as much as possible material value through effective recycling. Effective recycling can also provide new business opportunities for innovative companies, have positive impacts on the society and the environment and foster circular economy as well.In most developed countries, solid wastes are effectively collected into a variety of controlled bulk materials flows. However the recycling of raw materials is inadequate so that, as an example, material value recovered from waste represents a very small fraction of European GDP. The major issue is that policymakers do not have an effective key performance indicator for stimulating the recycling industry yet. Therefore it is necessary to radically change the metric used so far to measure the recycling rate. Currently the recycling rate is computed measuring the material which enters the recycling facilities. This approach has brought about an inaccurate indicator (the recycling rate) which contributed to wrong decision making and to poor innovation in the industry. In this article a new metric to compute the recycling rate is proposed. It considers the use of a Circular Economy Index as the ratio of the material value produced by the recycler (market value) by the intrinsic material value entering the recycling facility. It is argued that this index is related to strategic, economic and environmental aspects of recycling and it has very important implications as decision making tool.