Industrial Ecosystems: Developing Sustainable Industrial Structures

By Nicholas Gertler

 

Chapter 1. Ecosystems as Models for Industrial Development

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Sustainable development, a concept which has gained increasing prominence in recent years, faces a number of challenges from various aspects of human activity and demographics. Significant among them is the extract-and-dump nature of the current industrial system, in which materials and energy are extracted, processed, used, and 'dumped' in a linear flow into, through, and out of the economy. Simple consideration of the closed material system that is the earth reveals that finite stocks of resources cannot be used indefinitely in such a fashion. The capacity of the earth to assimilate garbage and pollution is similarly limited, such that the traditional model of industrial activity eventually (soon?) runs up against natural limits, with potentially catastrophic results. While the timing and extent of these disaster scenarios are open to question, there is growing agreement that sustainability requires a realignment of industrial activity in a manner that is more environmentally benign and imposes less of a burden on the limited resources of the earth [ See, e.g., Allenby and Cooper, Total Quality Environmental Management, Spring, 1994; Lowe, Corporate Environmental Management, Spring, 1994; Frosch, Physics Today, November, 1994; and Allenby, International Environmental Affairs, Winter, 1992.] . 

The discipline of industrial ecology has emerged over the past several years as a potential guide for that realignment. This new field promises to create opportunities to improve both environmental performance and business performance, while offering a paradigm for restructuring the industrial system in a fashion that is compatible with notions of sustainability. Where traditional approaches to environmental management focus on individual processes and industrial units, industrial ecology takes a more systemic approach, of broader scope and longer time-frame. A key aspect of this view is the analogy it draws between the human economy and natural ecosystems, which exhibit closed-loop materials and energy flows. 

The primary input to mature natural ecosystems is sunlight. The material ingredients of ecosystem function are neither added nor lost over time; instead they circulate within the system. Such flows are said to be 'closed-loop' in nature, because substances that are no longer used in one capacity are returned to the resource base to be available for other uses, instead of being discarded and lost. Industrial ecology is an approach to economic activity and development modeled on this cyclic structure of natural ecosystems, in which the flow of materials and energy into and out of the industrial system is greatly reduced. The ecosystem ideal involves complete loop-closing, such that only limited amounts of energy are required as inputs to the industrial system. While such complete closure may be difficult to achieve in practice, industrial ecology guides development in that direction. Even short of complete loop-closing, industrial activity based on such an ecological conception offers tremendous advantages in terms of greatly reduced harms associated with pollution and waste disposal, while easing the drain on finite strategic resources that are the raw materials for economic activity. 

Industrial processes convert inputs of energy and materials into desired products which are then sold on the market. These processes also result in outputs whose production is an undesirable side-effect of making the desired products. Traditionally, these 'secondary' outputs, which are in the form of pollution or waste streams, have had no economic value and have imposed a burden on the environment and/or on disposal space. Their material and energy content has been dissipated and lost. However, limits on disposal space, resource stocks, and the environment's assimilative capacity all point out the need to reconsider the fate of these flows. Accordingly, the closed-loop, ecosystem analogy redefines their nature, since in an ecosystem waste products are recycled as inputs to other organisms. 

Sustainability thus requires that human activity, which currently is largely dissipative in nature, be altered to more closely resemble the functioning of natural ecosystems. This goal, in turn, requires a redefinition of process byproducts, generally conceptualized in the past as waste. If materials are cycled through the industrial system as they are in mature ecosystems, then the byproducts of one process become the feedstock of another. Thus the concept of waste gives way to a more integrated, systemic view of material flows, where, in the limit, waste as such does not exist. This is an intuitively appealing result, since the notion of 'waste' is more descriptive of what is done with energy and materials then of the energy and materials themselves. 

Two lines of action flow from the industrial ecology analogy. One, which may be placed under the aegis of product policy, concerns itself with the life-cycle impacts of products and services as they move through the economy. In this view, the element of continuity that is intrinsic to the industrial ecology paradigm is one in which the focus is on the products. The processes that produce them are of course relevant, but the frame of reference remains the product, with the various stages of extraction, manufacturing, use, and post-consumer fate moving past that frame of reference. This approach to industrial ecology includes product policy, life-cycle assessment (LCA), and design for environment (DFE). 

A different approach to the above implementation/interpretation of the industrial ecology analogy is the notion of industrial symbiosis and its resulting industrial ecosystems. Here the goal is to develop integrated industrial complexes in which byproducts of materials and energy (which are results of inefficiencies in producing the desired products) are put to use as feedstocks instead of being wasted. In contrast to the product policy approach, industrial symbiosis focuses on the fixed production structures of the economy. The frame of reference is the manufacturing/production process; products move through the system but their exact nature is transparent. What is relevant under consideration here is the mix of process inputs and outputs in terms of material and energy flows. Products are relevant only to the extent that they determine, or at least strongly delimit, the possible combinations of the material and energy flows of interest. The element of continuity is the production system, and its flows of materials and energy. 

From the standpoint of sustainability, there is no readily apparent reason to prefer the product policy approach to the industrial symbiosis approach. More importantly, there is no readily apparent reason to believe that the two approaches compete with one-another. Yet most institutional attention under the aegis of industrial ecology has been paid to the product policy line of inquiry. This may be explained, in whole or in part, by the fact that, since product policy has a focus on products, its deliberations are transferable to any situation/location in which that product is made. That is, once you have a 'product policy' for product x, that policy can hold largely independently of the location of production and the mix of other products and processes. 

In contrast, while the general concepts of industrial symbiosis and industrial ecosystems can be developed, their implementation depends on the mix and location of processes within some system boundary. Thus, any implementation of industrial symbiosis will in general have to be a unique application of the generic concept, governed by the co-product/by-product availabilities and resource needs of the industries involved, as well as by management structures, institutional linkages, and the regulatory climate. In contrast to LCA and DFE, the development of industrial ecosystems must cross the firm boundary. 

This thesis is concerned with the development of industrial structures in which the use of materials and energy are integrated among different firms and processes, such that the material and energy byproducts of one process are put to use as feedstocks of another. The resulting network is defined below as an industrial ecosystem, and the concept of linking industries in such a way as industrial symbiosis. The Central Question that this thesis addresses is: 

What factors influence, hinder, and/or promote the development of symbiotic arrangements (and resulting industrial ecosystems) between and among industrial production structures and the businesses that operate them?

Industrial symbiosis is an application of industrial ecology which seeks to optimize the efficiency of material and energy flows through large-scale industrial processes. Fundamental to this approach is the cascading use of energy and the use of industrial byproducts as feedstocks for processes other than the ones that created them By creating linkages between formerly separate activities, the demand for resource inputs and the output of pollution and waste are both significantly reduced. 

Byproduct reuse centers on matching a process producing a given byproduct with another that uses that material as a feedstock. In such a case the virgin feedstock of the latter process is partially or completely supplanted by the byproduct of the former. Feedstock conditioning may be required to render a byproduct usable as a feedstock. Such conditioning may be the result of pollution control technologies, as is the case in the use of gypsum from scrubber sludge as wall-board. Energy cascading involves the use of the residual heat in liquids or steam from one process to provide heating, cooling, or pressure for another process [ Indigo Development, Fieldbook on the Development of Eco-Industrial Parks. Draft version, 1995. Energy has quality; electricity is usually the highest quality form. As energy is used, its form degrades towards lower and lower quality. One measure of the quality of energy is the difference between the temperature of an energy carrier and that of the surrounding environment. In the case of a power plant, a high temperature difference drives the turbines generating electricity, while lower temperature difference steam can be used for district heating and other process needs.] . For example, residual heat from an electric power plant can be used to heat surrounding buildings. 

The most advanced instance of industrial symbiosis can be found in the seaside industrial town of Kalundborg, Denmark. According to Valdemar Christensen, one of the main architects of the symbiosis at Kalundborg and originator of the phrase, industrial symbiosis is "a cooperation between different industries by which the presence of each...increases the viability of the other(s), and by which the demands [of] society for resource savings and environmental protection are considered (e.i.o.) [ Quoted in Holger Engberg, "Industrial Symbiosis in Denmark" Stern School of Business, New York University, 1993. ] " .Kalundborg's four main industries, Asnæs Power Station, a coal-fired power plant, Statoil refinery, Novo Nordisk, a maker of pharmaceuticals and enzymes, Gyproc, a plasterboard manufacturer, and the municipality trade and make use of waste streams and energy resources, and turn by-products into raw materials. The symbiosis in Kalundborg and the industrial ecosystem it has created have served as the single most significant model of the implementation of the concepts of industrial ecology. Accordingly, the chapter that follows contains a detailed case study of the development of the Kalundborg industrial ecosystem. 

By altering the traditional 'once-through' structure of materials and energy flows through industrial processes, industrial symbiosis reduces the strain on the surrounding environment as well as on resource stocks. In contrast to traditional pollution-control regulation, industrial symbiosis can be directly profitable for business. Despite these advantages, few examples of industrial symbiosis are found in practice. The Kalundborg example highlights a number of factors that impact on symbiosis development, and these are explored in detail in the Kalundborg case study as well as in Chapter 7, "The Development of Industrial Ecosystems." 

Industrial ecosystems 

An industrial ecosystem is what results from the repeated implementation of industrial symbiosis: 

An Industrial ecosystem is a community or network of companies and other organizations in a region who chose to interact by exchanging and making use of byproducts and/or energy in a way that provides one or more of the following benefits over traditional, non-linked operations: 

• reduction in the use of virgin materials as resource inputs; 

• reduction in pollution; 

• increased systemic energy efficiency leading to reduced systemic energy use; 

• reduction in the volume of waste products requiring disposal (with the added benefit of preventing disposal-related pollution); and 

• increase in the amount and types of process outputs that have market value. 

Participation in the industrial ecosystem requires more extensive informational linkages among companies and may render participants more co-dependent than traditional arrangements. However, the exchange of byproducts and cascades of energy use are not inherently different in most relevant respects from traditional supplier relationships. 

Participation in an industrial ecosystem has at least two further significant attributes. The cooperation required among companies that interact in such a fashion can be expected to transcend the exchange of material and energy byproducts to form more robust linkages. In the Kalundborg example, the companies also collaborate in the areas of worker training and workplace safety. Because industrial symbiosis requires interaction and trust among companies that goes well beyond normal business practice, such expanded collaboration is both a component and necessary precursor of industrial ecosystem development. Appropriately, Chapter 6 of this thesis is a survey of the similarly emergent field of Inter-Firm Collaboration and Flexible Networks, with applications to the development of industrial ecosystems. Results from that field indicate that the cooperation of firms in the exchange and reuse of byproducts and feedstocks should be examined through a wider lens of inter-firm collaboration, with significant attention paid to the institutional and social context in which cooperation is to take place. 

The other attribute is the notion of place-based development. Traditional approaches to industrial development and to environmental problems have focused on the individual process and firm as the locus of interest. In contrast, the development of industrial ecosystems requires a holistic view of firms as part of their surroundings, both natural and human-built. Place-based development is being advanced through the Eco-Industrial Park project being undertaken by the President's Council on Sustainable Development and through similar projects as a way to make use of local features and conditions and to better integrate industrial activity into both the natural and the man-made environment. This approach requires a heightened awareness and sensitivity to the interactions of a given process with its surroundings and therefore represents a fundamental shift towards ecological design. The Eco-Industrial Park project is discussed in detail in Chapter 4. For further information on place-based development, the reader is referred, e.g., to Fieldbook on the Development of Eco-Industrial Parks, forthcoming from Indigo Development, and to Designing and Operating Industrial Parks as Ecosystems, a product of Dalhousie University's School for Resource and Environmental Studies. 

Environmental Impact of Traditional Growth Versus Industrial Symbiosis 

Source: Valdemar Christensen 

The benefits of industrial ecosystems 

Kalundborg provides the prototype of an industrial ecosystem. There inter-firm linkages have reduced the material and energy through-put of the participating firms without hindering their production and expansion. It is such a systematic increase in the efficiency of materials and energy use which is called for by industrial ecology [ The Greening of Industrial Ecosystems Braden Allenby and Deanna Richards, editors. National Academy Press, Washington D.C. 1994. ] . And while the general public benefits from the symbiosis in the form of reduced environmental loading and better use of resource stock, this public benefit does not have a direct advocate among those managers responsible for bringing it about. Several of the symbiotic linkages developed, however, in response to environmental regulation. 

Industrial symbiosis, as explained by its architects, results in systemic pollution-reduction effects. Valdemar Christensen, production manager at Asnæs Power Station, describes a two-dimensional representation with environmental impact on one axis and number of firms on the other (see graph above). Normally, an industrial area's total environmental loading, in the form of pollution and waste disposal needs, has been a simple sum of the environmental loading of each industry.  

If, however, the industries cooperate by sharing waste products, then some of what used to be pollution is redirected as raw material to another process. Kalundborg has a number of such examples, which are explored in detail in the following chapter. In cases where such symbiotic linkages can be created, each industry's net environmental impact can be brought below that which it would be if it operated in isolation. Environmental impact thus becomes a downward sloping function of the number of cooperating firms [ Source: Valdemar Christensen, Production manager of Asnæs Power Station, Kalundborg, Denmark. Personal communication, July, 1994.] . 

This model is in fact applicable to describing the total materials and energy through-put of the participating industries, since linkages in an industrial ecosystem not only reduce pollution, but raw materials and energy use as well. Viewed incrementally, the addition of each firm that fits into the symbiosis would require less and less energy and virgin material inputs into the system, and would emit less and less pollution as its waste products would be put to use by another industry. This approaches a vision of an industrial ecosystem with limited inputs and limited waste outputs, in which materials and energy cycle to the full extent possible.  

From this vision follows the ideal of an industrial ecosystem: in the limit, all material inputs go into products, and all energy is used to do work. Such an arrangement ensures loop-closing at the processing and manufacturing stages of the economy. To achieve complete loop-closing, however, materials need to be recovered for reuse at the post-consumer stage of the economy as well [ Recovery may also be appropriate at the pre-industrial, mining, extraction, and harvesting stages.] . This is the activity that is commonly referred to as recycling. It is the return of materials to the resource stock when the products they embody have exceeded their useful lives. Such a goal is furthered by, among other things, the product policy aspect of industrial ecology.  

About this document 

This thesis represents the culmination of a year and a half of research as part of the M.I.T. Program on Technology, Business, and Environment, under the direction and sponsorship of Dr. John Ehrenfeld. I have endeavored to bring together what relevant information I could find on industrial ecosystems and their development. I have been helped along the way by the good offices of many people. As this is a new field, it is changing rapidly and, hopefully, expanding. I can thus make no claim of completeness. However, the issues identified and discussed in this document all promise to have a significant impact on the direction and extent of future progress in this area. These issues span a number of disciplines and in some cases are only related by their effects on ecosystem development. As a result, the chapters that follow are more akin to separate modules than to a progressively constructed argument. Not to fear; the final chapter applies what comes before to the area of concern. 

Chapter 2 contains a detailed case study of the development of the industrial ecosystem in Kalundborg, Denmark. It is based on five days of interviews during a visit by the author in July of 1994. Kalundborg is the birthplace of the study of industrial symbiosis as such, and represents by far the most advanced incarnation of an industrial ecosystem currently to be found. As a result, my visit and the ensuing case study have formed the cornerstone of this research effort. 

Chapter 3 introduces the Zero Emissions Research Initiative, an undertaking based at the United Nations University in Tokyo which is seeking to develop zero-emissions industrial clusters. This effort got underway in 1994 and, while not stemming from industrial ecology, represents a promising implementation of the industrial ecosystem concept. 

Chapter 4 is a discussion of the President's Council on Sustainable Development's Eco-Industrial Park Project, which is the first public-sector effort in the U.S. to promote the inter-firm application of industrial ecology on a large scale. 

A substantial body of environmental law regulates industrial activity in the United States, and Chapter 5 offers an examination of the effects of that regulatory structure on prospects for symbiosis development. Specifically, barriers to byproduct reuse caused by regulation under the Resource Conservation and Recovery Act are discussed, accompanied by proposed solutions. 

The exchange of byproducts as feedstocks takes place within a broader context of cooperation among businesses. Chapter 6 addresses the emergent field of Inter-Firm Collaboration (also known as Flexible Manufacturing Networks), which provides highly relevant insight into the development of industrial ecosystems. 

The foregoing experience is consolidated in Chapter 7, which endeavors to provide a holistic picture of the development of industrial ecosystems. This chapter is the forward-looking product of the one and one-half years of research upon which this thesis is based. It also offers some parting thoughts on the direction and prospects for future development. 

Those who are pressed for time and interest should focus their inattention on Chapters 3 through 6, as the remaining chapters (1, 2, and 7) form the heart of this thesis. 

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[Chapter 1] | [Chapter 2] | [Chapter 3] | [Chapter 4] | [Chapter 5] | [Chapter 6] | [Chapter 7] |