Document ID: EPA-HQ-RCRA-2008-0329-0016
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2009-01-02T05:00Z

By-Product Synergy / Industrial Symbiosis

Analysis of US and UK Models

Introduction

In the mid-1990s, a new industrial strategy based on emulating natural
processes to achieve 100 percent product was begun at a steel mill
outside of Dallas, Texas. In the years since, the by-product synergy
(BPS) approach has been implemented in eight regions across North
America and exported to the United Kingdom. Companies in China and
Portugal are in line to adopt the approach. While the process has
continued to evolve and grow in the United States, it has been slowed by
developmental, political, economic and other challenges. Meanwhile, in
the United Kingdom, it has flourished. More than 6,000 companies have
participated in the UK’s National Industrial Symbiosis Program (NISP),
producing hundreds of millions of dollars in audited savings and new
revenue, tremendous energy and environmental savings and hundreds of new
jobs. 

Why has this approach worked so well in the UK?  What can be done to
carry the UK results back to the US to explore the potential here? Will
the next chapter in the evolution of this process be a merging of these
two programs to produce a powerful new hybrid? This paper is an analysis
of these two programs, their similarities, their differences, their
successes and failures, and the lessons and policy recommendations that
flow from them.

By-Product Synergy 

In the US, by-product synergy has been defined as “the synergy among
diverse industries, agriculture, and communities resulting in profitable
conversion of by-products and wastes to resources promoting
sustainability.”  The process involves creating a legally protected
forum of 10 to 30 enterprises in which process- knowledgeable experts
can safely explore reuse opportunities. These opportunities can involve
materials, energy, people, transport and other resources.  As one BPS
participant put it, the process establishes “a culture of
possibilities.”  In this give-and-take context of information and
process knowledge, BPS establishes an active framework to examine the
possibilities of by-product reuse. The process generally progresses as
follows: commitment, awareness, data collection, analysis,
implementation, and evaluation.

The By-Product Synergy process was developed and field tested in the
mid-1990s by the Business Council for Sustainable Development for the
Gulf of Mexico, precursor to the United States Business Council for
Sustainable Development (US BCSD). During the past 10 years, it has been
applied with varying degrees of success in the United States, Mexico and
Canada involving several hundred companies and producing tens of
millions of dollars in savings and new revenues. Support for the process
continues to grow. The most recent project is under way in the Chicago
region, where it is being supported by more than 25 companies, along
with local, state and federal economic development and environmental
agencies. 

Despite its potential benefits, the BPS concept can be a tough sell.
Competition among companies and concerns about confidentiality can
cripple synergy discussions, and environmental laws often favor disposal
over reuse. If BPS is to become widespread, industry must make reuse a
priority, and state and federal agencies must recognize and support
industry efforts.

Enter the United Kingdom 

In 1999, the UK BCSD invited Andrew Mangan, executive director of the US
Business Council, to introduce the BPS process to companies operating in
England and Scotland. After several years of gestation, a BPS-based
process was launched in the West Midlands of Central England in 2003 as
the National Industrial Symbiosis Program (NISP), with the aid of $1
million from the regional economic development agency. By 2006, the
program had become national in scope, receiving $17 million per year in
funding from the UK Treasury and regional economic development agencies
and was returning results that regularly beat expectations making it one
of the most productive government programs on the books. In 2008, NISP
is expected to receive $32 million in government funding.

The funding increase is based on the returns the program has generated. 
Between June 2005 and June 2006, NISP was responsible for the diversion
of more than 860,000 tons of waste from landfill sites across the UK. It
has also reduced carbon dioxide emissions by over one million tons and
the use of industrial water by 260 million liters. Peter Laybourn, the
program’s founder and director, was invited to testify before the
British House of Commons Environmental Audit Committee on the
program’s impressive results earlier this year and the European
Commission recently designated NISP as an exemplary environmental
program, the only program from the UK to receive this designation. 

With this success, NISP is initiating more strategic regional planning
initiatives relating to climate change, energy efficiency and waste
reduction. As part of this growth plan, NISP is interested in
establishing a formal partnership with the US BCSD to share best
practices, skill sets, and project opportunities relating to by-product
synergy.

US BCSD By-Product Synergy

Methodology

The core of a successful by-product synergy project is the recruitment
of 10 to 30 companies and local government departments
(water/wastewater, streets, ports, etc.) Participants are asked to pay a
fee for the year-long process, usually between $5,000 and $15,000 per
organization. Grant support is sought from local, state and federal
governments to fill out the budget needs for the projects, which cost
between $300,000 and $400,000. Convincing these parties to participate
and pay requires lengthy meetings and presentations, a process that
takes three to six months, roughly the amount of time needed to launch
the first wave of synergies once the project begins. Smaller companies
often can’t participate due to the costs involved. 

Once recruited, these business units are brought together for a series
of structured brainstorming sessions during a nine-month timeframe. 
Each participant will provide materials balance information for a
confidential database that will be analyzed by the project team and by
other participants. Together, the participants analyze the extent to
which the waste products or by-products of one industry can be used as
raw materials or ingredients by other industries. Regulatory and
operational agencies at the local, state and federal levels are invited
to participate as project sponsors and as regulatory reviewers of
possible synergies that may be blocked due to specific regulations.
Appropriate research institutions and community organizations may be
invited to participate..

In the working stages of a BPS project, participating company engineers
and operations staffs are exposed to the production processes, raw
material needs, and waste streams of one another’s businesses and
industries. Through extensive collaboration, these participating
companies come to know and trust one another, leading to integration
approaches that cut pollution and reduce material costs, improve
internal processes and boost bottom lines. My company’s waste problem
becomes our companies’ synergy search, as shown in the illustration
below.

Fig. 1 	The BPS process shifts thinking from looking at my company’s
materials to seeking synergies for our companies’ materials.

At the core are the participants. They are asked to commit to the
following:

Information.  Each participant provides all information reasonably
requested the project team pertaining to its industrial operations in
the project area.  All confidential information provided by the
participant and identified as such will not be disclosed to the other
participants (and then, only to the extent necessary to identify product
synergies) without the prior written consent of the participant. 

Synergy Identification.  The project team shall work with participants
to identify raw materials, products, and by-products that can be matched
to the needs of a particular industry in the project area.  The project
team shall organize and supervise the project, attempting to identify
and match by-product streams from the participant companies in order to
identify project opportunities.

Project Deliverables.  The project team shall provide the following to
participant companies:

Education and Awareness—Communicate the By-Product Synergy concept to
the company’s executives and operational managers in a series of
meetings.

Data Collection—Provide a uniform methodology and tools for the
collection of material balance information by the company. It is the
company’s responsibility to collect and submit data on schedule.  

Analysis—Evaluate the information submitted by the participants,
suggest potential synergies and offer guidance on other potential
synergies.  

Facilitated Working Sessions—Organize and conduct group working
sessions for the purpose of analyzing materials data, exploring
potential synergies and evaluating possibilities for implementation.

Evaluation—Assist participant companies and project sponsors with
suggestions for measuring the benefits of the synergies implemented.

Results

Since launching its first multi-company BPS project in 1997 in Tampico,
Mexico, the US BCSD has implemented seven additional projects across
North America, all with strong support from national, state and local
governments. The pace began accelerating in 2006, due in part to higher
energy costs, increasing global competition and greater emphasis by
cities and companies on ecoefficiency and action on climate change. BPS
projects are currently being developed in Chicago, Puget Sound, Central
Ohio, SE Michigan and Connecticut. Results have been mixed, but overall,
the process has continued to produce successes as it has evolved. The
following are summaries of three projects undertaken in the United
States during this time.

Dow Chemical Project

Forty business units from six of Dow Chemical’s US Gulf Coast
manufacturing facilities participated in a BPS project to find ways to
reuse non-chlorinated wastes within Dow by crossing the boundaries
between businesses, sites and plants. Dow provides chemical, plastic,
and agricultural products and services to a variety of consumer markets.

This project, the first phase of a long-term, two-phase project,
estimated that 155 million pounds (70 million kilos) per year of
non-chlorinated waste by-products could be reused by implementing
certain projects. The study also found that the group could save 264
gigawatt hours of energy per year. Total estimated monetary benefits
were $20 million per year for the top nine synergies identified, none of
which involved any significant capital costs. 

The US Department of Energy (DOE) cosponsored the assessment as part of
its promotion of ways industry is improving energy efficiency,
productivity, and global competitiveness, while reducing waste and
environmental emissions. In this case, DOE contributed $100,000 of the
total $205,000 assessment cost. 

 

Fig. 2 	Forty businesses from six Gulf Coast Dow Chemical production
facilities participated in the first phase of a BPS project.

Chicago 

Chicago Mayor Richard Daley publicly launched the Chicago Waste to
Profit network  in October 2006, urging companies and city departments
to join in an effort to find and implement synergies. Twenty-five
companies and five city departments took on the challenge and by
January, after their first meeting, more than a dozen synergies were
being tested for viability and several were moving toward
implementation. Subsequent meetings are expected to yield significantly
more opportunities. 

In Chicago, for the first time, the British version of the by-product
synergy approach was incorporated in a hybrid model designed to take
advantage of both methodologies. The hybrid approach has three spheres
of activity that allow for engagement of large companies, small and
mid-sized companies, and a bridge between the two. 

Large Company Sphere

The large companies are recruited to participate in a confidential,
facilitated process designed to allow them to understand one another’s
processes, material flows and operational needs. The goal is to bring
down barriers that hide valuable synergistic opportunities among the
companies. To do this, confidentiality and establishing trust among the
participants is vital. The facilitators guide participants as they
explore, identify and test potentially valuable synergies. Participants
pay a fee to join this group. Each participant signs an agreement that
spells out deliverables, confidentiality, intellectual property and
other important elements needed to create a safe zone for interaction
and collaboration.

SME Sphere

The second sphere involves 30 to 50 small and mid-sized enterprises
(SMEs) organized separately but concurrent with the large company
process. Companies chosen to join this sphere participate free of
charge. Participants are carefully selected using at least three
criteria sets in an effort to identify the best prospects for successful
synergies. They are selected to match the interests of the region in
both producer and receiver categories. Second, the needs of the large
company participants are taken into consideration. And third, successful
synergies from the United Kingdom’s National Industrial Symbiosis
Program (NISP), where similar industries are involved, are used to
choose which enterprises are invited to participate. 

Participants will be invited to join a workshop modeled after the NISP
approach, at which they will be asked to provide information on their
needs and their resources; things they can provide and things they want
or can take. This is the US model done in one day. The project team
assesses the results and determines the best opportunities based on
technical analysis and on experiences from US and UK synergy projects.
They aggressively engage with those companies identified as having
priority synergies to drive toward implementation. 

Bridged Sphere

The third sphere is coordinated by the project team and bridges the
first two, providing a means of communicating possible synergies from
the larger firms with the smaller, more nimble SME group. The targeted
and planned make-up of the SME group will play an important role in this
cross-over. The large firms will use the project team as their link to
the SMEs, shielding them from direct interaction and freeing them to
explore possible synergies with a greatly expanded potential solution
group through the trust relationship forged with the project team. 

The project’s first year report is due in late 2007.

3.2	New Jersey 

The Mid-Atlantic By-Product Synergy (BPS) Project was formally launched
in early 2002, with support from 14 participating companies and the
presiding commissioner of the New Jersey Department of Environmental
Protection (NJDEP).  The project sought to identify by-product synergies
in New Jersey and other Mid-Atlantic states and to implement the
most-feasible ones as pilot projects for potential replication
throughout the US.  

Initial project activities focused on gaining governmental and political
foundation support for the project, including a formal NJDEP
verification process that determined that the BPS process was a
scientifically and technically sound process for achieving reductions in
energy consumption and environmental impacts.  This verification
expanded the project’s reach within the Mid-Atlantic region. 
Partnerships were established with NJDEP, the US EPA, and environmental
agencies in other states. Overall, the BPS Process generated about 80
synergy ideas involving about 35 diverse by-products and 14 companies of
various types and sizes.  

After more than one year, none of these synergies had been implemented,
although the project created actual and potential intra-company
synergies. One company found its synergy idea sufficiently compelling
that it implemented similar synergies between company divisions within
one of its other U.S. facilities  Another company began exploring a
potential synergy within its facility, with an outside company providing
by-product processing.

Major conclusions and lessons learned from this project include the
following:

The BPS process facilitates the development and implementation of
synergies largely by providing a structure for companies to meet, to
exchange information, to develop trust, and to work towards synergy
development.. 

Third-party facilitation is helpful and likely necessary, for sustaining
the BPS process among numerous participating companies.

A BPS project with fewer participating companies is likely to implement
fewer synergies. This reflects the probable scarcity of harmonious
pairings between available by-products and end uses among the
participating companies.

Financial and human-resource constraints likely pose the greatest
barriers to the participation of small companies in synergy projects.

Lack of a synergy champion in each involved company can seriously impede
synergy development and implementation.  

Lack of political and regulatory support at the state level can impede
synergy development and implementation.

Because of their potential energy and environmental benefits, synergies
are worth attempting, even at the risk of failure, to learn to develop
and implement them better.

NISP Process

The National Industrial Symbiosis Programme is the first publicly-funded
national industrial symbiosis initiative in the world. It works by
facilitating links between industries from different sectors to create
sustainable commercial opportunities. Not only does it use one
company’s waste as another’s input material, it also considers
symbiosis through expertise, capacity, and logistics.

Services include: 

A free independent facilitation service to catalyze collaborative
opportunities, which is delivered through regional coordinators; 

Facilitated workshops that bring together diverse organizations with a
common theme in order to find symbiosis opportunities;

A web-based database of ‘stuff people have’ and ‘stuff people
want’ to allow searches for synergies;

Company visits from experts to identify opportunities; and 

One-day interactive training workshops to help consolidate
participants’ understanding of industrial symbiosis and use of the
NISP database.

Initiated by the Business Council for Sustainable Development - United
Kingdom, the National Industrial Symbiosis Programme is a well
established resource efficiency and waste minimization program with more
than 6,000 industry members nationally. The first year of Business
Resource Efficiency and Waste (BREW) funding allowed expansion of the
program from two active (English) Regional Development Agency regions to
what is now a fully national program. BREW funding in 2006 amounted to
$17.5 million. 

Becoming a member of NISP and gaining access to the database is free and
the opportunities for involvement are wide-ranging. 

Between April 2005 and June 2006 NISP has: 

diverted 1.6 million tons of waste from landfill  

eliminated 423,000 tons of hazardous waste 

reduced CO2 emissions by almost 1.3 million tons  

saved over 1.8 million tons of virgin materials  

reduced industrial water usage by 387,000 ton 

created 493 new jobs and safeguarded another 297 

been responsible for 15 new business start ups 

made cost savings to UK industry totaling over £145 million  

generated £65 million in additional sales for its members 

seen private investment of £32 million in reprocessing and recycling
plant 

been instrumental in the development of numerous brownfield sites

These figures have been independently verified by the British government
and relate to achievements made during the year allowing the fact that
many will persist for years.  

By-Product Synergy: A Good Investment?

The by-product synergy market is very complex. There are many examples
of company-to-company waste exchange (bilateral) as well as waste
exchange through the market place. Addressing technical and economic
barriers are critical considerations in achieving successful synergies.
Market segmentation can be based on these two barriers by using a matrix
with technical difficulty on one axis and potential economic return on
the other. High economic return is important to motivate companies to
pursue the waste reuse opportunities in spite of the regulatory
difficulties.

HIGH

	

Economic benefit(	

Low hanging fruit	

High risk high return

In-house solutions	

Not interesting

	LOW/EASY	Technical difficulty (	HARD

Each quadrant of the diagram represents a different market segment:

Waste reuse with low technical difficulty and low economic return is
typically not of interest to outside parties. The companies that produce
this waste either solve the issue themselves or don’t bother with
reuse of the waste stream and simply dispose of it. 

Waste reuse with high technical difficulty and low economical return is
not interesting for any party, although sometimes it can be found on
Internet sites, possibly intended as a long shot from a company that
would like to process the waste differently. 

High economical return combined with low technical difficulty (low
hanging fruit) is interesting for everyone, so any efforts in this area
will be characterised by low margins due to the competition. Scanning
through the reuse websites we see that metals, packaging waste, polymer
wastes, wastes suitable for fuel, sand, construction waste, etc are
characterised by both high supply and high demand: a lively and full
marketplace. Most Internet-based brokers are aiming for this type of
waste to drive their business. 

High technical difficulty combined with high economic potential (caused
by e.g. high disposal costs or a high intrinsic value) is a very
interesting category for knowledge-based processes, like BPS.
Competition will be limited, but in case of success considerable
brokerage fees can be justified. Of course, the risks of failure are in
line with these higher returns. 

An advantage of By-Product Synergy and collaboration among a regional
group of businesses is the potential for cross-industry breakthroughs.
What may pose a technological barrier to one business may be readily
addressed at lower cost by another industry with a particular expertise.
What one business may regard as a high- risk synergy may be a low- risk
synergy to another company if the risk is one that they address in the
ordinary course of their business. BPS permits the matrix to be viewed
both on an individual basis and on a collaborative basis.

Conclusion

The major differences in the UK and US programs are tied to the
financial model and its consequences. In the UK, the program is 100
percent funded by the national and regional governments while in the US
funding is developed project-by-project and is shared by both public and
private sectors. One major result is that in the UK, any company can
participate, which has attracted more than 6,000 participating firms –
90 percent of which are small and mid-sized enterprises (SMEs).  

In the US, SME participants are few and far between because they can not
afford to pay the project fees and so are locked out of the process and
its results. The potential exists for reproducing the UK program in the
US, but it will require exploring national or state-level funding
programs, which would allow greater participation from smaller companies
and likely lead to the kind of impressive results seen in the UK.  

One step in this exploration could be establishing a dialogue between US
BCSD and its partner, the US EPA, and NISP and its government partner,
the UK Environment Agency. NISP has expressed interest in designing a
means of linking the NISP and BPS programs for future growth. Such a
relationship could fit into the anticipated US BCSD – US EPA
memorandum of understanding to collaborate on sustainable development
initiatives, beginning in China. (In a similar development in the UK,
NISP has been invited by the UK Environment Agency to work with it on
sustainable development dialogues in China, India, Mexico, Brazil and
South Africa.) 

  US EPA and Business Council for Sustainable Development for the Gulf
of Mexico, 1997.

 The US BCSD is a non-profit association of businesses whose purpose is
to deliver highly focused, collaborative projects that help its members
and partners demonstrate leadership in the United States on sustainable
development and realize business value.

 The BREW Programme gives grants to projects helping businesses in
England increase their resource efficiency and improve their economic
performance. Funding for the BREW program is derived from a national
landfill tax.

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