Industrial Ecology in Practice-The Evolution of Interdependence at Kalundborg

8/12/2019 Industrial Ecology in Practice-The Evolution of Interdependence at Kalundborg

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Industrial Ecology in PracticeThe Evolution of Interdependence

at Kalundborg

John Ehrenfeld Nicholas GertlerTechnology Business and Environment ProgramMassachusetts Institute of TechnologyCambridge, Massachusetts, USA

Keywords

eco -industrial parkgreen twinningindustrial e osystemsindustrial symbiosisislands of sustainabilityKalundborg

Summary

The exchange of wastes, by -products, and energy amongclosely situated firms is one of the distinctive features ofthe applications of industrial ecological principles This atticle examines the industrial district at Kalundborg, Den -mark, often labeled as an industrial ecosystem or

industrial symbiosis because ofthe many links among thefirms The forces that led to its evolution and to the inter -dependencies are described and analyzed. Key has been asequence o f independent, economically driven actions.Other potential forms of industrial linkages are criticallyreviewed in the light of the Kalundborg experience Theevolutionary pattern followed at Kalundborg may not beeasily transferable to greenfield developments.

Address correspondence to:John EhrenfeldTechnology Business 6 the Environment

ProgramMassachusetts Institute of TechnologyCTPID, E40 421Cambridge, MA 02139USA

[email protected]

Copyright 1997 by the MassachusettsInstitute of Technolcgy and Yale University

Volume 1, Number 1*NicholasGertler is currently at Harvard Law School, Cambri dge, Massa -chusetts, USA

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Introduction

Industrial ecology is a new concept emergingin the evolution of environmental management

paradigms (Ehrenfeld 1995),and springs from in -terests in integrating notions of sustainabilityinto environmental and economic systems(Allenby 1992; Jelinski et al. 1992; Allen andBehmanish 1994; Ehrenfeld 1995). Environmen -tal thinking has recently focused on a conscious -ness of the intimate and critical relationships

between human actions and the natural world,and reflects limits in the current reliance oncommand-and -control regulation in much of theindustrialized world. The critical problem is that,for the most part, the economy operates as anopen system, drawing raw materials from the en-vironment and returning vast amounts of unused by- products in the form of pollution and waste.The products that firms market are only a small

portion of what their processes turn out; a signifi-cant portion of their output eventually leavesthe economy as waste and returns to the envi -ronment in forms that may stress it unacceptably.As long as attention is limited to products and

processes viewed in isolation, larger systemic problems, such as the accumulation of persistenttoxic materials, will not be addressed.

Increased economic output will still cause in-creased environmental harm in such a frame ofanalysis. Strong links between environment anddevelopment emerged from the global consensusfollowing the 1992 Rio Earth Summit. For ex -ample, the recent report of the Presidents Coun-cil for Sustainable Development (PCSD) in theUnited States concludes, In the end, we foundagreement around the idea that to achieve our vi-sion of sustainability some things must grow-

jobs, productivity, wages, profits, capital andsavings, information, knowledge, education-and others- pollution, waste, poverty, energyand material use per unit of output- must not(PCSD 1996).

Accomplishing economic growth and envi-ronmental protection simultaneously requiresfundamentally new ways of examining and de-

signing socioeconomic systems. One way to get beyond the analytic limits of standard economictheory is to draw on an ecological metaphor as ameans to better understand energy and material

flows and as a guide to the design of industrialstructures and public policies (Daly 1991). RobertAyres has called systemwide material flows theindustrial metabolism of an economy (Ayres

1989;Ayres and Simonis 1994). Emerging modelsfor operationalizing industrial ecology suggestsimple principles for design, for example, closingmaterial loops, avoidance of upsets to the metabo-lism of the natural system (toxics elimination and

pollution prevention), dematerialization, andthermodynamically efficient energy utilization(Ehrenfeld 1995; Lowe 1994; Tibbs 1992). These

principles have the potential of moving societyaway from unsustainable development patterns bygreatly reducing the flows of energy and materialsinto and out of an economy.

Moving from linear throughput to closed-loopmaterial and energy use are key themes in indus-trial ecology. Industrial activity based on such anecological conception can greatly reduce harmfulimpacts associated with pollution and waste dis-

posal, while easing the drain on finite strategicresources. Familiar practices such as reuse,remanufacture, and recycling represent a move inthis direction. Industrial symbiosis is closely re -

lated and involves the creation of linkages be -tween firms to raise the efficiency, measured atthe scale of the system as a whole, of material andenergy flows through the en tire cluster of pro-cesses. Some of the firms, viewed independently,may appear to be inefficient compared to con-ventional measures of environmental perfor-mance. Yet environmental performance can besuperior in the overall group of firms because ofthe linkages. The cascading use of energy and theuse of industrial by - products as feedstocks for pro-cesses other than the ones that created them isfundamental to this approach. In such cases, by -

products can replace virgin materials as feed-stocks. Energy cascading involves the use of theresidual energy in liquids or steam emanatingfrom one process to provide heating, cooling, or

pressure for another process. The evolution of aset of interrelated symbiotic links among groupsof firms in an area gives rise to a complex that we(and others) call an industrial ecosystem. This ar-

ticle examines an example of the development ofsuch an industrial eccxystem and the context inwhich it emerged, identifying characteristics thatmay be useful in policy design.

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Stable ecological systems are steady -state, en -tropy -minimizing, highly interdependent collec -tions of producers and consumers (Prigogine1955). These characteristics are different fromthose of an economy modeled after standard(economic) premises quasi equilibrium systemsof essentially independent entities. Observationsof materials flows and energy consumption in in -dustrialized economies indicate highly dissipativeusage which translates into entropy -increasing

processes (Ayres 1994). Ayres notes that ecologi -cal systems are dissipative, also. At steady state,however, they correspond thermodynamically toconditions of minimum levels of entropy produc -tion (Prigogine 1955). Prigogine notes furtherthat such entropy -minimizing states in stable bio -logical systems are accompanied by increases inthe interdependence among the entities. The no -tion of food webs, including detritivores (thescavengers that consume the wastes of other spe -cies) as important members, highlights the ideaof closed or nearly closed material loops in suchstable systems.

The relationship between steady -state econo -mies and thermodynamics was first elaborated

by Georgescu-Roegen (197 1) and further used asone of the key foundations in Herman Dalyssteady -state economic framework (Daly 1991).Cloud (1977, 679) noted that, materials andenergy are the interdependent feedstocks of eco -nomic systems, and thermodynamics is theirmoderator. Interestingly, he refers to the in -dustrial ecosystem in the article, perhaps theearliest use of this term. The importance of en -tropy is that it is a measure related to the practi -cal availability of materials and energy in asystem (Daly 1991). Entropy, as a measure of dis -order in a system, always increases as energy ismade available from its chemical potential infossil fuels and wastes are dissipated in the envi -ronment. Regaining the utility of the energy andmaterials requires reversing the entropic flowswhich can be done only at the expense of usingeven more energy. Thus, economic arrange -ments that minimize the production of entropyhave some long -term advantages in the context

of sustainability, over and above arguments based solely on efficiency.

All of this is prelude to introducing industrialsymbiosis, another ecological metaphor used to

describe a practical economic arrangement.Symbiosis is a biological term referring to aclose sustained living together of two species orkinds of organisms (Encyclopaedia Britannica1992, 14: 1034). The term was used as early as1873 by a German botanist, H. A. De Bary, todescribe the intimate, mutually beneficial cou -

pling of fungi and algae in lichens. Symbiosis ineconomic systems is manifest in the exchange ofmaterials and energy between individual firmslocated in close proximity. It is a specific ex -ample of combining several generic industrialecological behavior patterns, for example, loopclosing and energy cascades (Ehrenfeld 1995).Although not a necessary condition for all loop -closing exchanges, in particular those for com -modity materials like scrap paper or steel,

proximity is a hallmark of industrial symbiosis.This article argues that symbioses are distinctand evolve through a different process fromthese more common market activities.

The Kalundborg IndustrialEcosystem

A highly evolved industrial ecosystem is lo -cated in the seaside industrial town of Kalundborg,Denmark (Gertler and Ehrenfeld 1996). Eleven

physical linkages comprise much of the tangibleaspect of industrial symbiosis in Kalundborg (seefigure 1) . The towns four main industries-Asnaes Power Station, a 1,500 -megawatt coal-fired power plant; a large oil refinery operated byStatoil; Novo Nordisk, a maker of pharmaceuti -cals and enzymes; and Gyproc, a plasterboardmanufacturer - and several users within the mu -nicipality trade and make use of waste streamsand energy resources, and turn by - products intoraw materials. Firms outside the area also partici -

pate as recipients of by-product-to-raw-materialexchanges. The symbioses evolved gradually (seetable 1) and without a grand design over the past25 years, as the firms sought to make economicuse of their by - products and to minimize the costof compliance with new, ever -stricter environ -mental regulations.

At the heart of this system of arrangements isthe Asnaes Power Station, the largest power

plant in Denmark. By exporting part of the for -merly wasted energy, Asnaes has reduced the

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KemiraAcid Plant(Jutland)

WasteHeaA Greenhouses(Discontinued)

SulfurStatoil Refinery

NeighboringFarms

Waste

DistrictHeating

I

~

GyprocWallboard

Plant

~

Steam Waste Fish FarmsHeatr

i

Novo Nordisk

Fertilizer

Figure I The industrial ecosystem at Kalundborg, Denmark

fraction of available energy directly discarded byabout 80%. Sinc e 1981, the town of Kalundborghas eliminate d th e use of 3,500 oil -fired residen -tial furnaces by distributing hea t from t he power

pla nt th ro ugh a network of underground pipes.Homeowners pay for the piping, but receivecheap, reliable hea t in return. The power plan talso supplies hea t t o its own fish farm, exploitinga n increase in growth rate from the warmer wa -ter. Sludge from the ponds is sold as fertilizer.

Asnaes also delivers process steam to itsneighbors , Novo Nordisk and Sta toi l . Th eStatoil refinery receives 40% of its steam re -quirements while Novo Nordisk receives all ofits steam requirements from Asnaes. Th e deci -sion to rely completely on Asnaes for steam was

made i n 1982 when N ovo Nordisk was facedwith the need to upgrade and renovate its boil -ers. Buying stea m from outsi de was seen as acheaper alternative. The two -mile-long steam

pipeline buil t for the in te rc hange paid for itselfin two years. In addition, thermal pollution ofthe nearby fjord from the former Asnaes dis -charge has be en reduced.

The power station also provides a gypsum -containin g feedstock to Gyproc, a neighboringwallboard maker. In 1993, Asnaes completed theinstallation of a $115 million sulfur dioxidescrubber that produces calcium sulfate, or indus -trial gypsum, as a by - pr oduc t a t a rate of 80-85,000 tons per year. Convenient ly, gypsum is the

primary ingredient of wallboard. Two -thirds ofGyproc s gypsum needs are met by Asnaes's scrub -

ber, while much of the rest comes from a scrubbera t a similar Germ an power plant. Gyproc for -merly obtained all its gypsum from Spanish open -

pi t mines which sti ll supply a small por tion of itsneeds. Fly ash and clinker, the remains of coal -

burning power generation, are sold by Asnaes forroad building and c emen t production.

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Table I Chronology of KalundboE development~~

Year Action

19591961

19721973

1976

1979

1981

1982

19871989

1990

1991

1992

1993

A s n a e ~ power station commissionedStatoil refinery commissioned; water

piped from Lake TissaGyproc A / S built; gas piped from StatoilAsnaes expands; draws water from

pipeline Novo Nordisk begins shipping sludge tofarmersAsnaes begins to sell fly ash to cement

producersAsnaes produces heat for KalundborgKommuneAsnaes delivers steam to Statoil and

Novo NordiskStatoil pipes cooling water to Asnaes Novo Nordisk switches from Lake issato wellsStatoil sells molten sulfur to Kemira inJutlandStatoil sends treated waste water toAsnaes for utility useStatoil sends desulfirized waste gas toAsnaesAsnaes supplies gypsum to Gyproc

The Norwegian -owned Statoil refinery, pro -ducing a range of petroleum products from lightgas to heavy fuel oil, is located across the roadfrom Asnaes. Since 1972, Statoil has been pip -ing the gas to Gyproc to fire wallboard dryingovens, all but eliminating the common practiceof flaring waste gases. This fuel gas supplies all ofGyprocs needs. For continuity, Gyproc installeda butane backup system for those periods whenStatoil shuts down for maintenance. In 1990,Statoil built a sour -gas desulfurization plant pro -ducing liquid sulfur that is promptly truckedabout 50 kilometers to Kemira where it is con -verted to sulfuric acid. With the sulfur removed,Statoils gas is clean enough to be burned byAsnaes as well.

Freshwater scarcity in Kalundborg has led towater reuse schemes. Since 1987, Statoil has

piped 700,000 cubic meters per year of coolingwater to Asnaes, where it is purified and used as

boiler feed -water. Statoil has also made treatedwaste water available to Asnaes, which usesabout 200,000 cubic meters a year for cleaning

purposes. Statoils investment in a biologicaltreatment facility produces an effluent suffi -ciently clean for Asnaess use. Symbiotic linkageshave reduced the water demand by around 25%.

A few miles from Asnaes and Statoil is Novo Nordisk, a world leader in the production of in -sulin, enzymes, and penicillin. The plant em -

ploys about 1,000 people, roughly 10% ofKalundborgs population. Novo Nordisk makesits product mix by fermentation, based on agri -cultural crops that are converted to valuable

products by microorganisms. A nutrient -richsludge remains after the products are harvested.Since 1976, Novo Nordisk has been distributingthe process sludge to about a thousand nearbyfarms where it is spread on the land as fertilizer.After heat treatment to kill remaining microor -ganisms, the sludge is distributed throughout thecountryside bya network of pipelines and tankertrucks. Novo Nordisk produces 3,000 cubicmeters of sludge per day, but can only store threedays worth. The sludge is given away instead of

being sold, reflecting the firms concerns for dis - posal security. Three full -time employees coordi -nate its delivery. Distributing the sludge as

fertilizer was the least -cost way to comply withregulations prohibiting Novo Nordisk from dis -charging the sludge directly into the sea.

Savings from more efficient utilization of re -sources and elimination of wastes are shown intable 2.

Symbiosis in Other Settings

Full utilization of by - products is a conceptthat has a long history in the petrochemical in -dustry (Nemerow 1995). The Houston ShipChannel is an oft -cited example of the applica -tion of industrial ecosystem concepts to such acomplex. The channel is lined with numerouschemical, petrochemical, and energy -generatingfacilities that have been using and exchanging

by-products for decades. In a typical exchange,vent gas from an Amoco plant is rerouted to aneighboring Chevron facility where it is com -

pressed and separated into its hydrogen and pro -

pylene components. Prior to this arrangement,the gas was burned in Amocos flare stack.

The availability of a by - product stream can be a major factor in site selection in the petro-

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Table 2 Waste and resource savings at Kalundborg

Annual resource savings through interchanges

Water savingsStatoil - 1.2 million cubic meters from Asnaes(Novo Nordisk is now producing 900,000 cubic meters of treated water that is available to replace

freshsupplies, bu t is being discarded at present.)Fuel savings

Asnaes - 30,000 tons of coal (about 2% of throughput) by using Statoil fuel gasAbout 19,000 tons of oil use by using fuel gas from Statoil in Novo Nordisks boilers and Gyproc

Community heating via steam from Asnaes

Fertilizer equivalent to Novo Nordisk sludge (about 800 tons nitrogen and 400 tons phosphorous)2,800 tons sulfur80,000 tons of gypsum

dryer fuel

Input chemicals

Wastes avoided through interchanges

200,000 tons fly ash and clinker from Asnaes (landfill)80,000 tons scrubber sludge from Asnaes (landfill)2,800 tons sulfur as hydrogen sulfide in flue gas from Statoil (air)1 million cubic meters of water treatment sludge from Novo Nordisk (landfill or sea)1,500 - 2,500 tons of sulfur dioxide avoided by substituting coal and oil (air)130,000 tons carbon dioxide avoided by substituting coal and oil (air)

chemical industry. The inherent flexibility of petrochemical processes to accept a broad rangeof feedstocks is an important factor leading towidespread over -the -fence arrangements. Mod-ern petrochemical plants can rearrange the mol -ecules in a large variety of feed compositions toobtain the desired product mix.

A Novo Nordisk plant in North Caro lina produces the same nutrient -rich sludge as itsDanish counterpart. As in Kalundborg, the

sludge is spread on farmland, providing fertilizerfor 5,000 acres. Gypsum from the scrubbers ofcoal -fired power plants is used as raw material forwallboard in a number of American states, in -cluding Texas and Florida. Wisconsin PublicService, a public utility, is building a cogenera-tion power plant next to a paper mill inRhinelander, Wisconsin. The power plant will

burn wastes from Rhinelander Paper Company,while providing all of the mills steam needs andelectricity for two local counties.

Industrial symbiosis is now receiving increas-ing attention worldwide. A major initiative hasarisen from the efforts of a Belgian economistand entrepreneur, Gunter Pauli. His recognition

of the limits of a single firm to reduce wastes tozero, even with substantial efforts in pollution

prevention, gave rise to Paulis zero emissionsvision: multi -industry symbiotic clusters of fac-tories. Pauli and others would extend the un -

planned evolution process at Kalundborg tocreate complexes of firms whose by - productstreams are linked. The Zero Emissions ResearchInitiative, or ZERI, is an outgrowth of thisthinking. Based at United Nations University in

Tokyo, ZERI seeks to reduce a firms emissionsdirectly to the environment to zero while im -

proving profitability. Based on t he notion thatcomplementary industries can form zero-emis-sions clusters, one ZERI project aims at coupling

beer brewing with the raising of fish, mush -rooms, and chickens. Through a carefully inte -grated coupling, ZERI predicts a sevenfoldincrease in the total amount of nutrients avail -able for human consumption and a fourfold in -crease in jobs, all on the basis of th e standardinputs to a beer brewery - cereals, yeast, and wa -ter (Pauli 1995).

One of the major policy thrusts of the reportof the U.S. Presidents Council for Sustainable

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Ehrenfeld and Gertler The Kalundborg Industrial Ecosystem 73

Development is the creation of eco -industrial parks where the firms would be closely linkedthrough waste and energy symbioses (PCSD1996). As defined in the report, Eco -industrial

parks are an environmentally efficient version ofindustrial parks. They follow a systems design inwhich one facilitys wastes becomes anotherfacilitys feedstock, and they ensure that raw ma -terials are recycled or disposed of efficiently andsafely. Specific projects are under way in Chat -tanooga, Tennessee, Brownsville, Texas/Matamoros, Mexico; Baltimore, Maryland, andCape Charles, Virginia. Each one has a differentset of objectives and planning process (Gertler1995). Chattanooga aims for the ZERl objectiveof zero emissions. Baltimore is planned aroundfour integrated strategies: loop closing and indus -trial ecology; network manufacturing; continu -ous improvement; and high - performanceworkplaces and union -management cooperation(ETI 1995). Several planning guidelines for eco-industrial parks have been recently published(Lowe et al. 1995; Cote et al. 1994).

Patterns of IndustrialEcosystem DevelopmentAlthough examples of closely linked or co -

located symbioses as at Kalundborg are few, ma -terial exchange is a standard part of business

practice. The basic exchange of materials be -tween manufacturers and their suppliers and cus -tomers could be considered a kind of loosesymbiosis with benefits accruing to all parties.The recovery of scrap metals in many economiesis another example of well-established industrial

symbiosis. Yet massive quantities of materials areroutinely discarded as wastes by industrial sys -tems throughout the world. This section dis -cusses a set of factors that both promote andinhibit the development of symbioses and indus -trial ecosystems.

The Pattern of Economic Developmentat Kalundbog

Many visitors come to Kalundborg lookingfor the master plan. Despite its impressive re -sults, Kalundborg was not explicitly designed todemonstrate the benefits of industrial symbiosis.

Each link in the system was negotiated, over a period of some 25 years (see table I), as an inde - pendent business deal and was established onlyif it was expected to be economically beneficial.Benefits are measured either as positive flows bymarketing a by - product (or obtaining feedstocksat prices below those for virgin materials) or assavings relative to standard pollution controlapproaches. This is the strength of theKalundborg approach: business leaders havedone the right thing for the environment inthe pursuit of rational business interests. Theevolutionary nature can be interpreted as point -ing to a need to have both positive technicaland economic factors appear simultaneously, a

condition that may be difficult or impossible torealize in a forward - planning process.Besides the basic chemical and other technicalcompatibility requirements of symbiotic part -ners, both need to recognize a net cost savingsrelative to their options. The floor for economicfeasibility occurs when the difference in cost ofthe by - product feed relative to virgin or otheralternatives is less per unit throughput than thecost of waste management to the producer. Theuser can offer more than enough to the producerto offset the costs of waste treatment or disposal.In practice the differential would also have to belarge enough to account for transaction costsand risks to both parties. Typical transactioncosts include regulatory, discovery, contracting,and monitoring costs. Discovery costs, the costsrequired to learn of the existence of an opportu -nity for exchange, can be high, and may be themajor impediment for material exchange of thetypes discussed below. Brokerages and markets

serve to reduce these costs to the point that ex -change is economically rational. Exchange ofmaterial recovered from municipal waste streams(e.g., paper, metals, plastics) is now increasinglymanaged through commodity exchanges andelectronic networks such as the Chicago Boardof Trade and the Global Recycling Network.The buyer of by - products in a symbiosis takessome risk by tying the firm to a single, outsidesupplier and to the vagaries of supply continuity.

The exchange of by - products and cascades of en -ergy use, however, is not inherently differentfrom traditional supplier -customer relationships.Differential financial implications may be insig


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nificant. Provisions for standby supplies will addcost. The seller also takes some risk given the pos -sibility of upsets at the buyers facility that couldinterrupt the outflow of the by - products. If thiswere to happen, the by - products would instantly

become wastes to the seller and would need to bedisposed of according to the relevant regulatoryrequirements.

Another economic factor is unrecognized en -vironmental management savings to the firmthat could be realized by an exchange of materi -als. The emergence of full-cost accounting, aform of activity-based accounting that more ac -curately identifies and allocates costs of comply -ing with regulations and otherwise protectingthe environment, should enlarge the opportuni -ties for symbioses and o ther forms of material ex -change (Ditz, Ranganathan, and Banks 1995).Future liability costs, for example, or the costs ofmaintaining a legal staff for regulatory compli,ance have been generally overlooked in evaluat -ing innovative opportunities.

Organizatio nal Arrangementsand Transaction Costs

In theory, symbioses can follow any of thecommon types of industr ial organization de -scribed, for example, by Williamson (1979) whosuggests that organizational arrangements be -tween firms are shaped by efforts t o minimizetransaction costs. Kalundborg is based on a com -

plex of contracts and alliances that have arisenwith little or no institutional intervention. Un -like a spot market such as is typical in handlingmetal scrap, this type of structure affords symbio -ses more certainty and continuity than ex -changes in pure markets can offer. Verticalintegration, t he common ownership of one ormore successive stages in the production process,would go even further and might arise if continu -ity in the movement of by - products becomes acritical factor. The cluster approach of ZERIap -

pears to be heading in this direction.Other forms of industrial organization more

common outside the United States have some

relevance to the emergence of symbiotic arrange -ments (Lenox 1995). The cross -ownership struc -ture of the Japanese keiretsu is a highly elaboratedform of integration in which the transaction

costs and risks could be spread among potential participants in an exchange of by - products. An -other possibility is centralized ownership, as isfound in Germany where banks may own sub -stantial equity in and participate actively in themanagement of a number of firms. Other finan -cial institutions could play a similar role. To re-duce the coordinative problems with ecoparksdiscussed above, some form of common owner-ship or institutional management power vestedin the developer of the park could improve thecontext for the emergence of symbiotic patterns.The eco-industrial park concept has many com-mon characteristics with the more general no-tion of the manufacturing network form of

industrial development presented by Piore andSabel (1984) in their analysis of the success ofthe artisan - based economy in the Emilia-Romagna region of Italy. Active trade associa -tions; shared services, such as purchasing andquality assurance; close family and communityties are among the factors that contribute to thesuccess of such industrial districts.

Impediments other than strictly economicones exist as well, although Williamson might

argue all can be represented in terms of transac-tions costs. Symbiosis requires exchange of in-formation about nearby industries and theirinputs and outputs that is often difficult or costlyto obtain. Kalundborgs small size of about12,000 residents and its relative isolation havemade for a tight-knit community in which em-

ployees and managers interact socially with thei rcounterparts on a regular basis. This cultural fea-ture leads to what a local leader calls a shortmental distance between firms (Christiansen1994). Cultural pressures are also important. Asin many Scandinavian settings, there is a back -drop of environmental awareness.

In Kalundborg, no deliberate institutionalmechanism was needed to promote conversa -tions among the potential partners. Interfirmtrust is important in establishing alliances orcontracts among participants (Gulati 1995). Anatmosphere of trust in Kalundborg existed evenin the absence of specific experience between

firms. In the United States, where there is astrong tradition of company privacy, such natu-ral communication is much more difficult tofind. The absence of a cultural context for ex-

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change can be mitigated through institutionalmechanisms such as brokers or planning agen -cies. Such a brokers role is played by VP Re -sources of Clearlake, Texas, which defines itsrole as more than a waste exchange (finding ahome for orphan chemicals) (Purcell 1995).Where typical waste exchanges merely list avail -able by - products, VP Resources performs everyfunction required to turn a by - product into afeedstock, including finding appropriate uses,dealing with regulatory agencies, brokering nec -essary agreements, and even transporting thematerials from the generator to the user.

TechnicalFactors

In general, symbiotic industrial facilitiesneed to be in close proximity in order to avoidlarge transportation costs and energy degrada -tion during transit. High -value by - products suchas pure sulfur from sour -gas treatment, such asthat at Statoil, are exceptions. Contrary to thenotion of pollution prevention and zero waste ata plant boundary, such as is, for example, theunderlying policy goal of the U.S. Pollution Pre -

vention Act of 1990, symbiosis may work bestwhen plants produce large quantities of waste.This situation seems to be contrary to the no -tion of eco -efficiency as applied to individualfirms. It is not always best for either the bottomline or the environment to reduce a single

plants waste to zero.The cluster notion of ZERI works best, if

not requires, plants with large, continuouswaste streams. Wastes that are largely organicin nature like the effluent from fermentation ofall sorts (e.g., pharmaceuticals or brewing), orraw agricultural or forestry wastes, are attrac -tive as it is the organic carbon that is useful asa feedstock. Supply security is important to theuser of the by - product stream exactly as would

be the reliability of an otherwise virgin feedsupply. Use of organic streams from fermenta -tion as feed or fertilizer requires li ttle or nomatching of chemical characteristics otherthan assuring that toxic components or organ -

isms are absent. Materials production, such asthe manufacture of wallboard, is more techni -cally challenging and requires much closermatching of compositions.

Early links at Kalundborg tended to involvethe sale of waste products without significant

pretreatment. This pattern includes the initialsale of Statoils flue gas, Asnaess sale of fly ash,clinker, waste heat and process steam, as well asthe use of cooling water to heat fish farm ponds.These arrangements simply involved reroutingof what was formerly waste, without any signifi -cant alteration. The more recent links, however,have been created by and depend on the appli -cation of pollution control technologies. Theselinks, which comprise just over half of the inter -connections, do not just move process by - prod -ucts around. The processes and disposal

practices are controlled to make them more en -vironmentally benign and, at the same time, torender them more attractive as feedstocks. Theinterposition of pollution control systems is im -

portant in an industrial ecosystem as these tech -nologies serve to concentrate dilute by - productsinto economically and technically attractiveforms. The symbiotic relationships that com -

prise these links would not be attractive in theabsence of such pollution control measures.

Regulatory Context

The manager of the Asnaes plant believesthat existing economic incentives alone weregenerally sufficient for much of the Kalundborgsymbiosis (Christiansen 1994). Further symbi -otic arrangements yielding environmental ben -efits are potentially available, but cost morethan conventional practices. Political impetus isnecessary to go further, for example, requiringemission reductions or adjusting prices to makesymbiosis economically attractive. Yet such ex -ternal signals alone are not sufficient, given thatinnovative and pioneering cooperation is re -quired among companies for symbiosis to occur.

The Danish regulatory framework has en -couraged the evolution of industrial symbiosis inKalundborg. Compared to the United States,the Danish regulatory system is consultative,open, and flexible. Instead of being put on thedefensive as is characteristic of a command-and-

control framework, firms are required to be pro -active by submitting plans to the overseeingcounty government detailing their efforts tocontinually reduce their environmental impact.

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A dialogue then ensues in which the regulatorsand the firm establish goals. A more flexible, co -operative relationship is fostered between gov -ernment and the regulated industries, and as aresult, firms tend to focus their energies on find -ing creative ways to become more environmen -tally benign instead of fighting with regulators.A key aspect of the flexibility is that regulatoryrequirements are mainly in the form of perfor -mance standards stating the degree of the de -sired decrease, instead of technology standardsas is common in the United States. Technologystandards assure that uniformly effective pollu-tion -control methods are adopted throughout agiven industry. They tend to hinder technologi -cal or infrastructural innovation, however(Banks and Heaton 1995; Porter and van derLinde 1995; Sparrow 1994). Many of the cre -ative arrangements found in Kalundborg areonly possible where firms have flexibility in theapproaches employed to meet pollution-reduc-tion targets. In the United States, little discre -tion is left to firms. There are disadvantages tothe Danish system, including potentially lowerlevels of technical compliance and high transac -

tion costs incurred in extensive consultationsaround permitting. Although U.S. technologystandards are inflexible, they ensure a certainminimum level of pollution control.

Regulatory requirements may preclude ex -change or serve as very strong disincentives. Inthe United States, for example, the ResourceConservation and Recovery Act (RCRA) regu -lates the treatment and disposal of industrialwaste, but inadvertently impedes one of its ob -

jectives - conservation and recovery of re -sources. The statute is primarily concerned withaverting risks stemming from the improper man -agement of hazardous waste. RCRA regulations

pursue this goal through a very extensive set ofspecific, inflexible, and often confusing rulesgoverning the treatment, storage, and disposal ofindustrial by - products (Hill 1991). RCRA regu -lations set forth specific detailed procedural andtechnical requirements for the management ofan exhaustive list of particular types of waste

streams. With by-products being matched to a particular, mandatory protocol, little room existsfor innovative schemes for their reuse as feed -stocks elsewhere. This inflexibility is based in

larie-part on a deep -seated fear of sham recy -cling, which is an undertaking where the genera -tor of a waste product makes a show of reusingthat by-product merely to escape treatment re -quirements (Comella 1993). Industrial symbiosismust be distinguished from such efforts if it is todevelop within the current regulatory system.

Barri ers and Limits to theDevelopment of SymbioticCorn m u nities

The current vision of eco -industrial parksclosing material loops needs to be examinedcarefully in light of the Kalundborg experience.Opportunities for symbioses or clusters in thesense of ZERI certainly exist, but not for morethan a small fraction of extant and planned in -dustrial development zones in older economieslike the United States. The cluster approach ap -

pears more fitted to and is being promoted forso -called greenfields or new initiatives in devel -oping economies. Symbiosis, as in Kalundborg,is not likely to become the main loop -closingform for such complexes as it requires the pres -

ence of two or more firms that produce and con -sume a continuous stream containing useful by - products. Such process industries are only asmall fraction of the typical manufacturing firmsthat comprise local industrial development ar -eas. Many are small companies making parts orassembling products, working metals and wood,molding plastics, or cutting textiles. Findingfirms to colocate at the site of existing primarysources of by - products, like breweries, would beanother form of this notion. Brownfields, asabandoned or decaying industrial districts aretermed, are also candidates for the clustermodel. At the Second Annual World Congresson Zero Emissions, Edgar Woolard, DuPonts re-cently retired CEO argued that such existingsites should be developed before new greenfieldsare taken out of their more natural uses (Krieger1996). Developing economies with few

brownfields might disagree.Companies that manufacture product com -

ponents or assemble products produce two kindsof wastes. One is essentially single materialwastes, such as unused or dirty solvents, paints,or plastic or metal scrap. Such wastes can be

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used directly by other companies. According toan informal survey done by MIT in 1994 (un -

published), waste exchanges acting as brokershandle a very small fraction of such wastes. Un -like the continuous and relatively reliable pro -duction of process -industry by - products, thesemanufacturing by - products have variable com -

positions and appear in small quantities. Thesecond waste type is mixed manufacturingwastes including off -specification products.Such wastes are similar to end -of -life durablegoods. To be useful, these materials must be ei -ther separated into their components or recycledinto an application that can use the bulk prop -erties of the composite waste. Electronic scrap

might, for example, contain precious metals thatcould be recovered and reused.

Exchanges of single material wastes lack thetechnical and economic appeal of continuoussources of feedstocks. Transaction costs for iden -tifying and transferring such wastes are very highand lot sizes are small. Loop closing by reusingmixed wastes is unlikely to be viable in a local -ized area such as an ecopark. There is notenough of any stream to provide for a freestand -

ing, economically viable recovery activity. Veryhigh -value components such as precious metalsmight lend themselves to closed loops, and theremight be opportunities for downcycling ofmixed plastics. Downcycling refers to materialrecycling in products tolerating lower perfor -mance specifications than the original use-

plastic lumber, for example.The critical missing factor is positive eco -

nomical linkages as at Kalundborg. Recovery ofmaterials from mixed process waste is no differentfrom recovery from end -of -life products. Exceptfor precious metals, such recovered materials aregenerally more expensive than virgin materials,reversing the economic calculus. It would takesome form of public intervention, such as impos -ing large disposal costs or subsidies, to recoveryfirms to create the favorable economics that ledto the evolution of Kalundborg. Taxes on pollu -tion, waste disposal, and virgin materials (ratherthan the current set of subsidies for many raw ma -

terials) would create incentives to keep more re-sources circulating in productive use, whilereducing the environmental impact of industrialactivity. But even with such policy intervention,

it may be difficult to produce conditions where positive economics and environmental factorsarise simultaneously among a large number offirms.

It was the arrival of such pa iring du bb ed bysome as green twinning4ver time that, argu -ably, produced the prerequisites for the develop -ment of the Kalundborg industrial ecosystem.Together with the institutional context thatraised environmental values and enabled a highinformation flow (and lower transaction costs),the emergence of individual arrangements is theexpected outcome of a rational decision making

process that should be reproduced in other simi -lar contexts. Designing an industrial ecosystem

from the ground up is different and cannot fol -low the evolutionary path that contributed sostrongly to Kalundborgs positive development.Simple probability suggests a very low chance offinding pairs of coexisting positive environmen -tal, technical, and economic factors among morethan one or two firms at any one time. If one as -signs a binary value of zero (nonpositive linkage)or one (positive linkage) to each of these threefactors with equal probability, basic combinato-

rial theory leads to an overall probability of only1 in 64 that all three factors for both parties arenonzero, such that the product is also nonzero,that is, favorable. Adding more firms reduces the

joint probability even further. Interventionist public or private initiatives can increase the probability of positive values for each term, butthe overall probability may remain small.

The evolutionary path, on the other hand,captures the opportunistic arrival of such jointconditions, one case at a time. In this sense, theevolution of a symbiotic industrial ecosystem islittle more than a special case of Williamsonstransaction cost model of the development of

patterns of industrial organization. Broad public policy initiatives can nudge the process along bycreating the overall conditions that promote theemergence of positive factors in individual casesover time, but may falter where the promoters ofan eco -industrial park are attempting to createall the linkages up front. An integrated and con -

tinuous planning process that explicitly seeks toidentify opportunities and barriers to symbioticdevelopment should increase the likelihood ofattracting firms willing to make the necessary ar-

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rangements. S uc h a middle -ground approach be -tween pure laissez -faire an d heavy -handed policyintervention would seem to offer the best c ha nc eof success to institutional developers.

A final barrier lies in the cognitive domain.Wastes have such a long history of being ignoredtha t i t is difficult for firms to integrate these out -

puts of their activities into their strategic pro-cesses. For firms to think strategically andsystematically about their entire productionchain, they must change the mind-set t hat oftensees the world beyond t he fence -line as only cus -tomers. This way of seeing the world is quicklychanging. New tools, such as life-cycle analysisand new codes of practi ce like the ResponsibleCare initiative of the chemical industry or t heIS0 14000 environmental management systemstandards, are slowly introducing more systematicand worldly models into the underlying con -sciousness of firms and reducing the rigidity of tra -ditional regulations (Freeman an d Belcamino1996). Together with new institutional ap -

proaches, these more deep -seated cultural changescan provide a foundation from which symbiosesand othe r forms of material exchange begin t o ac -

tually move economies toward sustainability.

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Documents

Industrial Ecology in Practice-The Evolution of Interdependence at Kalundborg