Accelerating the transition to Circular Economy: The development of a CE visibility evaluation framework for blockchain-enabled data pipeline solutions

Abstract

Humanity faces the challenge of dealing with resource exhaustion and environmental destruction. The root of these issues lies in the linear economic model established after the industrial revolution. This model relies on two fundamental principles, limitlessness and easily accessible resources and unlimited earth regenerative capacity. The economy thrives by consuming planetary resources to manufacture products and generating wastes by disposing of products in the landfills or incinerating them when they are no longer desirable. However, the growing planet’s population and the limited regenerative earth capacity make this model unsustainable. The circular economy (CE) represents an alternative to the current consumption pattern. It is an economic model aspiring to limit the use of virgin resources in the production systems and eliminate the waste streams by promoting a closed resource loop. The transition to CE is at the top of the agendas of both policymakers and companies (defined as CE auditing actors), which have initiated policy instruments to catalyze it. Such policy instruments could vary from regulations to additional taxes for eco-unfriendly goods. These policy instruments are prone to manipulations when there is a lot at stake. An indicative example is the case, in which plastic waste exported from the Netherlands to Turkey for recycling or reuse was illegally dumped. To prevent such adversities, the CE auditing actors need a monitoring system to control the implementation of their policy instruments and enforce compliance when necessary. Such a system should provide visibility in the flows of raw materials and products in the supply chain and detect frauds. The need for a monitoring system can be addressed by leveraging the research on the data pipeline concept. A data pipeline is an IT infrastructure capturing data at the source. It equips authorities with data shared by the businesses voluntarily and in real-time. This data pertains to the flows of goods from a seller in an exporting country to a buyer in an importing country. Traditionally, data pipelines have been used by customs to access information stored in the traders’ information systems willing to be transparent. The supply chain visibility currently captured by data pipelines is not sufficient to serve CE. They need to be extended to monitor the entire journey of materials and products in the CE context. Furthermore, to unleash the full potential of the shared data, the data recipients need to have trust in the data and its quality. This condition can be satisfied by using blockchain-enabled data pipelines. Blockchain is a technology that exceeds the capabilities of traditional information systems thanks to four characteristics, namely, decentralization, auditability, immutability, and smart contracts. The thesis dives into the research domain of blockchain-based data pipeline solutions by investigating their ability to support the CE transition. For that reason, it develops a framework that evaluates their ability to enforce compliance with CE policy instruments by acting as monitoring systems. The evaluation framework identifies the information requirements needed to be captured by such architectures to monitor the journey of materials and products in a closed-loop supply chain.