Why circular economy business models need LCA (part 2): Seven steps to conduct a circular economy and LCA study

By Elsa Valencia, Analyst at PRé Sustainability 

The circular economy (CE) is an inspiring strategy for creating value for the economy, society and business while minimising resource use and environmental impacts. Its tenets: reduce, re-use and recycle. In contrast, life cycle assessment (LCA) is a robust and science-based tool for measuring the environmental impacts of products, services and business models. Combining the robustness of LCA and the inspirational principles of CE gives you a holistic approach for business model innovation. In part 2 of our series on combining CE and LCA: how do you measure circular economy with LCA? A step-by-step guide to combining Circular Economy with LCA in SimaPro

Applying LCA to circular economy

As explained in the first part of this series, combining life cycle assessment (LCA) and circular economy (CE) is a great way for designers, innovators, consultants and consumers to look into matters they may not have considered before. LCA gives insight into the environmental performance of products or services along their supply chain, while CE helps to integrate systems and ‘close the loops’ in biological or technological cycles.

Luckily, the input data required for LCA is mostly also needed to calculate the Material Circularity Index (MCI), a common CE measurement. Below, I will give you a practical guide on how to combine MCI and LCA using SimaPro, to ensure that LCA helps choose the best CE business model or strategy for a specific case.


Combining CE and LCA in seven steps

Integration of Circular Economy and LCA
Figure 1: Step-by-step integration of CE and LCA

1. Base case: the first step is to create a model following the LCA guidelines. Set the goal and scope of the assessment, include relevant cycle stages and set appropriate boundaries. Ideally, data input should be based on direct knowledge of the product being assessed. If that is unavailable, select an appropriate database that closely represents the product’s case.

One useful way of understanding the model to be studied is to create a flow diagram of the production process. Then you can create a model in SimaPro that includes the most important inputs and outputs from the process.

2. CE strategies: select the most suitable circular strategies at the product level. For example: use of renewables, integration of recycled materials, extension of lifetime by maintenance and repair, re-use of components, refurbishing, re-manufacturing and recycling.

Once the best strategies are chosen, identify material flows in the biological or technological cycles and energy sources, and set the lifespan and usage factors present in the model.


This information is required to calculate the MCI. As mentioned last time, the MCI helps to measure which linear flow has been minimised and which restorative flow maximised for its component materials, and how long and intensively a product is used compared to a similar industry-average product (The Ellen MacArthur Foundation, et al., 2015).


The MCI will yield a score between 0 and 1, the closer the results are to 1 the better as this means the product is circular. The LFI, which is also a score between 0 and 1, is used to calculate the linearity of the materials used in the product as it takes into account the amount of virgin material and the waste generation during recycling or sent to landfill or incineration. In contrast, a LFI closer to 0 the better, as this means the product makes use of less materials in a linear way.


From the methodology of the MCI, the following parameters have to be set at the project level in SimaPro (Figure 2):


Combining CE and LCA 2 - Inputs for LCA calculation
Figure 2: Required inputs for MCI calculation (adapted from The Ellen MacArthur Foundation, et al., 2015


The inputs for the MCI can be integrated in SimaPro by adding them as project parameters – input or calculated – and using them throughout the model created in step 1.

Remember that the information in this step is something that you already know from information about your process (for example mass of the product, % of recycled content, etc.) or that can be approximated from references or average industry data (e.g. recycling efficiency, lifetime, etc.)

The calculations of the Linear Flow Index (LFI) and MCI (Table 1) can be done by adding the equations to the calculated parameters section of the model. Remember to add them at the process or project level, depending the way you have modelled your product.


Table 1: calculations for MCI and LFI (The Ellen MacArthur Foundation, et al., 2015)
Product flow V = mass of virgin material

M = mass of product

Fr = fraction of recycled content

Fu = fraction of re-used material

Waste flows  

no waste from re-use


W = total waste

W0 = waste to land fill and incineration

Wf = waste from processing recycled content

Wc = waste from recycling

Cr = fraction collected for recycling

Cu = fraction collected for re-use

Ec = efficiency of recycling

Ef = efficiency of processing of recycled materials

Utility factor X = utility fraction

L = lifetime

Lav = industry-average lifetime

U = use

Uav= industry-average use

F(x) = utility fraction

Material Circularity Index and Linear Flow Index LFI = Linear Flow Index

MCI = Material Circularity Index

3. Reference case: once the model is ready and the MCI calculation integrated in SimaPro, create the baseline scenario and calculate the MCI and the environmental impact of the model using the method of your preference.

4. Set objectives: from the results obtained in the base case, identify hotspots and positive results and determine objectives. E.g. improve the MCI by 10%, reduce the environmental impact in climate change, etc.

5. Scenarios: set intervals for those inputs and outputs which are related to the CE strategies to be assessed. Create a set of scenarios for different parameter combinations and perform the calculations for each scenario.

6. Analysis: evaluate the results for the MCI and LCA. Compare the results of the different scenarios to the base case and identify the limitations and benefits of each scenario. Determine which CE strategies yield negative or positive environmental impacts and find out at which life cycle stage these occur. If required, create new scenarios and perform the calculations again.

7. Select: based on the results and the objectives defined in step 4, select the scenarios that are best in terms of circularity and environmental impacts.


Achieving environmental and ‘circular’ benefits

With this iterative approach, we can measure the environmental impacts and circularity of our product, and thus select the strategies that work best in both worlds. This is one step forward to integrating the circular economy with LCA thinking, and will help designers, innovators, consultants and consumers to look into matters they may not have considered before.


Presentation at CILCA

I presented this work in CILCA, the International Conference on Life Analysis in Latin America. If you would like to know more about circular economy and how to combine it with LCA, or the work I presented at CILCA, please contact me. I would love to help you find the best way to implement circular economy and LCA.

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