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The Philippines' Portal on Industrial Ecology

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IE Fast Facts

What Is Industrial Ecology (IE)? Industrial ecology is a new and innovative strategy for a sustainable industry. Achieving a sustainable industry means meeting a firm’s financial bottom line without compromising the state of its surrounding physical environment. Industrial ecology focuses on the interaction of industrial systems and the ecological systems. In the industrial setting, the process involves designing industrial systems to minimize waste and maximize cycling of materials and energy. As far as possible, production systems, instead of the conventional linear fashion, are closed. This is to prevent the loss of energy or useful materials. Industrial ecology seeks to optimize the total materials cycle from virgin materials to finished material product, and to ultimate disposal.

Industrial ecology proposes to close the production loop -- from a linear flow to a closed loop --to recover resources.

Making IE Your Business Strategy A company can use industrial ecology as a corporate tool in discovering opportunities to advance its competitive advantage. This can be done by analyzing a firm’s value chain or the activities within and outside the firm, entailed to produce its goods and services.

One way of doing this is to view competitive advantage in terms of innovation. Finding unexpected ways to lower the cost of producing goods or identifying ways to increase a product’s value are probable methods. These result in enhanced resource productivity which can make a company truly competitive.
There are three critical places to look for hidden resource productivity gains:
1. Within the Firm. A company can improve its resource productivity by identifying and eliminating waste, thereby lowering the costs of production. By merging the concepts of conserving mass and energy with the teachings of economics about efficiency, industrial ecology can go even further in helping a firm obtain maximum returns from a given set of inputs, that is, to optimize resource productivity. At the firm level, industrial ecology also spurs attention to opportunities for cost savings that would have otherwise gone unnoticed. In other cases, it has sparked creativity and innovation that has led to unanticipated benefits that go beyond waste minimization. Thinking in industrial ecology terms may also help improve resource productivity by enabling a firm to redefine a product and increase its value to customers.
2. Within the Value Chain. A firm can unearth hidden sources of opportunities by reducing costs up or down the chain of production. By looking at the interdependence between the production and distribution processes and their potential synergies, industrial ecology can help overcome obstacles to more efficient resource use.
3. Beyond the Chain of Production. Industrial ecology offers an opportunity to raise resource productivity. This is by closing loops in conjunction with other industrial facilities in close physical proximity but outside of one’s own production chain. "District heating" where one company’s waste stream is diverted as a source of heat to nearby businesses or residences, offers a well-known example of the sort of symbiosis that is possible.

Benefits of IE to the Company

1. Revenue Generation

Companies are sometimes unaware that their by-products have market value and can be sold rather than disposed of. Most manufacturing sectors have had little incentive to investigate by-product exchanges, or to invest in technologies that will facilitate such exchanges.

2. Cost savings

The sharing of materials, energy, and water can yield significant costs often with little or no capital investment. Cost savings can also be realized through the shared capital and operating costs of utilities which supply gas, water and other inputs to companies. By combining purchases of shared inputs, firms may also be able to negotiate better prices. Likewise, improved public image can increase market share and equity value. But even when environmental legislation is lax and public awareness is low, companies can still make a profit simply because they reduce the material input costs per unit of output.

3. Reduced liabilities

Both financial and legal liabilities can be minimized through industrial ecology. Environmental activities can reduce payments related to higher risk premiums and improve a firm’s credibility. Waste reduction may reduce liabilities related to environmental accidents or improper disposal. A firm implementing responsible environmental practices can also avoid penalties and closure orders from the government.

4. Cost savings through regulatory flexibility

In the United States, eco-industrial networking of industrial firms may eventually lead to combined permitting systems (e.g. Environmental Compliance Certificate or ECC), faster approvals and even pre-approvals of new industrial developments. This flexibility can lower the risk and costs of new industrial expansions and give facilities within eco-industrial networks a competitive edge.

5. Improved opportunities for new investment

Potential investors gain advantage if a strategic plan for an eco-industrial network is laid out. This plan consists of baseline information on material and energy flows among existing firms. Using this information, candidate industrial facilities can determine how much current suppliers are redundant, or how to reduce reliance on a single supply of a feed stock.

6. Enhanced public image

A company consciously employing environmental management in its systems gains an edge over its competitors. Practicing corporate environmentalism empowers a firm to recognize that this conviction can be compatible with good business.

7. Emergence of a firm as a market leader

A company may induce stringent environmental regulations and become a market leader. In many cases, regulations depend on technological improvements introduced by the private sector.

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