Inside IT
Future Business: Circular Economy with IoT

We often say IoT will open an era of hyperconnectivity. Billions of objects will be connected to each other, creating a large scale form of data. How to utilize this data and draw meaningful insights are going to be amongst the most important tasks in the future.


IoT is also showing potential in completely different fields. One of them is that IoT can generate a circular economy to prevent waste of resources and pollution. Circular economies not only prevent pollution, but also create new chances for businesses, thanks to their high profitability.


If we stick with the existing production system which follows the course of taking, making, and disposing, eventually there won’t be any resources left to sustain the earth’s increasing population. A circular economy is a concept that aims for sustainability.

A circular economy rejects linear economies through which resources are taken, produced, and then disposed of. It supports a model in which reusable resources are reused, and non-reusable resources are recycled.


IoT significantly increases the possibility of reusing resources by connecting various objects. In this process, devices nearby as well as countless other hyperconnected devices will exchange data on the amount of resources needed for each other.

According to The Boston Consulting Group(BCG), the heightened effectiveness from IoT will reduce greenhouse gas emissions by 9 billion tons by 2020. This means greenhouse gas emissions will drop by 16.5% each year. McKinsey also predicted that water consumption and energy consumption will be cut by 80% and 50% respectively.

Circular economies also adopt a concept called “as a service”. This means we can use products for certain periods of time in the form of service instead of buying them as products.


The financial benefits we can gain from a circular economy are beyond our imagination. Once a circular economy is adopted, about $6 trillion will be saved from the money spent for products with medium lifespan such as electronics, and $7 trillion for those with short lifespan like groceries and clothing.


When the economy depends less on taking resources, the cost of raw materials no longer poses such a great threat, because the liquidity of raw material supplies will decrease. On the other hand, circular economies will not only create jobs as more creative solutions and labor power are required, but also increase GDP due to the heightened economic effectiveness.


There are endless possibilities when implementing a circular economy utilizing IoT. Right now, a system which connects all urban infrastructures such as energy generation at factories, streets, bridges, and buildings then manages them through IoT is being developed. It is also being used in various fields like agriculture and fishery, and can utilize natural resources in a circular manner.

① Energy

GE recently presented their “energy as a service” platform, which aims to lower their clients’ energy expenses by 10-20% using an IoT infrastructure. Nest Labs, which merged with Google, also has a smart thermostat that minimizes energy expenditure by checking users’ daily schedule and adjusting its heating schedule accordingly.


Source: Philips (

Philips CityTouch provides software which manages street lights and lamps in a city. This administrator can control energy expenditure according to natural light levels and other situations affecting the streets.

ENIT Systems from Germany has a special energy administration service for their corporate clients. ENIT’s device called ENIT AGENT analyzes how much energy is consumed by each machine. Businesses can improve transparency in energy expenditure, and manage their energy easily through visualized information.

② Primary Industry

The Spanish company Libelium uses cloud and open source platforms for a service that observes and measures environments and vermin. It’s easier to conserve pesticide, water, and fertilizer when this information is provided.

ThingWorx presents an IoT solution which is designed to solve the issues today’s agriculture is facing such as water and land shortage. With this solution, information can be gathered through IoT devices and farms can be managed remotely. It also provides API to a third party that provides hardware so the system can be merged with other various technologies.

There are companies working to solve fishery resource issues as well. Spire, for example, has developed a system to monitor the ocean in real time with a satellite detection system. This system is connected to the data on expected routes for fish and locations of past fishing spots in order to help authorities stop illegal operations.

③ Urban Management

Barcelona is one of the cities where IoT is being utilized most effectively. It is saving about $60 million each year by managing their water resources, and has also lowered 1/3 of their electricity cost with its city street lamp solution.

Helsinki provides mobility as a service. This is a service which helps people get to their destinations most effectively through various means such as bus, taxi, bicycle, and ferry. Thanks to this service, citizens can reconsider if they really need to own a car.


Bus in Helsinki

London spends half of its energy just on heating. Now the city connects different neighborhoods and promotes complementary energy consumption among them to conserve energy. It also saves energy by utilizing a smart grid and a distributed energy supply system.


As suggested so far, circular economies can be applied to various fields including manufacturing, agriculture, and fishery. It will soon be applied to factors that are more close to our daily lives such as urban management and planning as we also spend energy while living in cities.


Concern about pollution is growing every moment. A circular economy, therefore, is a new system we need to establish for human kind. With circular economies reviving the environment and developing both advanced and less developed countries without any side effects can be our future.

Thanks to the advancement of digital technology, it is becoming possible to imagine a future with circular economies. I look forward to seeing the world where technology not only creates new added values but also revives the environment.

Written by Daeun Lim, LG CNS Student Reporter

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