In recent years, there has been a bold increase in the consumption of “UCO” (Used Cooking Oil). This residue has started to be used as raw material, replacing fossil fuels and its derivatives, for example, as a source for “SAF” (Sustainable Aviation Fuel) and Biodiesel. It is based on renewable carbon, like palm oil, widely used in Asia, which is a byproduct of food processing. But UCO quickly became a victim of its own success: production and, primarily, the capacity to collect the product are limited. Demand and price soared, reaching higher levels than virgin oil. Soon, reports emerged that virgin oil was being “contaminated” to be sold as UCO.
This example illustrates the difficulty of controlling the development of Circular Economy and preventing greenwashing. In Circular Economy, post-consumer waste is reintegrated into the economy, being reused, recycled, or having its value recovered somehow. It is in these definitions, or the lack thereof, that numerous challenges arise. Continuing with the same example: after how many cycles of use can oil be considered “used”? How can one ensure that the collected material is, in fact, used? Is it possible to certify this process to control its origin? How can this accounting be done? The list of questions seems endless.
There are many other examples, such as electronics, aluminum cans, batteries, agrochemical packaging and lubricant oils. Last year, CNI (National Confederation of Industry) and FIESP (Federation of Industries of the State of São Paulo) published an e-book featuring over 40 real cases that are prominent in Brazil, across various industrial segments. In this collection, we observe that most of the solutions are effective but specific. They apply to a product, or a supplier, or a specific use, or a region.
These are great ideas, and it makes sense to think about scaling them up. Creating incentives and a legal framework to foster them is a huge temptation: turning a business initiative into a mandatory practice, enforcing the use of waste as feedstock, creating incentives, instituting penalties. But there are many actors, and no consensus to convince legislators to advocate for its implementation. And there comes analysis paralysis.
“The circular economy would have its circular legislation: living, iterative, and collaborative“
Brazil has made progress on the issue. A strategic umbrella has been created, based on the “ENEC” – National Strategy for Circular Economy (Decree 12082/24) – which defines guidelines for the transition to a Circular Economy, based on 4 pillars: public policies and regulation, training and education, innovation and investment, and infrastructure and market. Derived from ENEC, “PNEC” (National Circular Economy Plan) was developed, with objectives and actions such as tax incentives, sustainable public procurement, and support for innovation. Now, PL1874/2022 is being discussed in the National Congress, complementing the previous two with principles, economic instruments, and goals for waste reduction and material reuse. It is at this stage that “Agile” (Agile Methodology) can be a great ally.
Agile is an approach to innovation project management that emphasizes iteration and short cycles for developing and testing solutions. It was based on the “Agile Manifesto” of 2001, for software development. It advocates for rapid deliveries, recurring improvements, and a lot of collaboration. Through “sprints,” a solution is implemented within a small scope, tested, and repeatedly improved before being scaled. Always under the supervision of the “product owner,” and involving various stakeholders—those who participate in the process in some way and those who are affected by the current model’s pain points — forming the “scrum team.”
So, how can the Agile approach be applied to the legislative process? Now, with existing ENEC and PNEC, the desired Direction is set. The future developments can be divided into legislative “sprints”:
- Define an MVP (Minimum Viable Policy) regulatory framework with a reduced set of rules to run a pilot;
- Test in specific regions, sectors, or chains (can be based on real cases previously listed);
- Collect data, feedback, and results;
- Iterate, correct, and progressively expand the scope.
The “product owner” could be MMA (Ministry of Environment) or MDIC (Ministry of Development, Industry, and Commerce). The “scrum team” could include industry, NGOs, academia, and civil society.
Thus, circular economy would have its circular legislation: living, iterative, and collaborative. Agile Legislating is recognizing that knowledge and technologies change rapidly. The law, in this case, should be like software in beta version, evolving all the time, rather than as if it were carved in stone.
Edison Terra is an engineer, Senior Executive and Board Member, with over 30 years experience in Chemicals and Petrochemicals. During the last decade, he has lead several circular economy initiatives in the plastics industry.
(The opinions expressed in this article are the sole responsibility of the author and do not necessarily reflect the position of Brazil Stock Guide)