Breaking Down Information Barriers: Challenges and Strategies for Promoting Transparent Information Interaction in the Resource Recycling Industry

Breaking Down Information Barriers: Challenges and Strategies for Promoting Transparent Information Interaction in the Resource Recycling IndustryThe resource recycling industry, a core component of the circular economy, boasts a lengthy and complex supply chain with numerous participants. The efficiency of information sharing directly impacts the effective recycling and reuse of resources

Breaking Down Information Barriers: Challenges and Strategies for Promoting Transparent Information Interaction in the Resource Recycling Industry

The resource recycling industry, a core component of the circular economy, boasts a lengthy and complex supply chain with numerous participants. The efficiency of information sharing directly impacts the effective recycling and reuse of resources. The smooth operation of the closed-loop system"raw materialsproductsconsumptionrecyclingrecycled raw materials" hinges on the free flow of information. However, in reality, significant information barriers exist between upstream and downstream players in the industry chain, hindering the healthy development of the circular economy. This paper delves into the current state of information interaction in the resource recycling industry, explores the challenges, and proposes potential solutions. We aim to analyze, from technological, institutional, and regulatory perspectives, how to break down information barriers and achieve more transparent and efficient information sharing.

I. Information Barriers: Bottlenecks in the Development of the Resource Recycling Industry

The resource recycling industry in China remains relatively traditional, with low levels of digital and intelligent technology application. Taking solid waste recycling as an example, a large amount of waste recycling relies on small-scale recyclers operating on a door-to-door basis, before being concentrated in regional dismantling parks for processing. This model leads to complex recycling network pathways, significant information gaps, and poor information interaction between upstream and downstream participants, severely restricting improvements in resource recycling efficiency.

The challenges of information sharing are not merely technical. Questions regarding which product data needs to be disclosed, how this data should be regulated and used, and the lack of clear standards and regulations remain unanswered. This lack of unified standards leads to inconsistencies in data sharing, while data security and privacy protection also face numerous challenges. Currently, in the context of sustainable development, over-reliance on technology should be avoided. Instead, institutional design and thorough validation should precede technological application.

II. Digital Transformation: Building Transparent and Convenient Information Flow Paths

Improving the industry's digitalization level is a key pathway to achieving transparent and convenient information flow between upstream and downstream players in the circular economy supply chain. This includes building shared digital platforms and utilizing technologies such as blockchain to construct distributed databases.

Some resource recycling companies have actively explored digital transformation and attempted to establish information-sharing cooperation models between enterprises. For example, in April 2024, GEM Co., Ltd. signed strategic cooperation agreements with 21 companies, including SF Express, TCL Technology, Jingjin Equipment, and Suzhou Huichuan Technology, to jointly build a digital recycling platform, establish a reverse logistics supply chain service system, and upgrade and remanufacture equipment, constructing an online and offline exhibition and supply chain sales market system for remanufactured and second-hand equipment.

Compared to areas such as e-waste recycling and daily consumer goods recycling, the digital transformation of the new energy power battery recycling sector has seen particularly rapid development in recent years. The "Shanghai New Energy Vehicle Power Battery Traceability Management Platform," established in March 2021, tracks power batteries entering and leaving Shanghai throughout their lifecycle, covering production, sales, maintenance and replacement, recycling, decommissioning, cascade utilization, and regeneration. The platform integrates 2,494 vehicle models and a total of 1,546,200 vehicles, effectively improving the efficiency and transparency of battery recycling management.

Blockchain technology also plays a significant role in information traceability and sharing in the circular economy. Blockchain-based supply chain traceability can provide accurate information and help clarify the responsibilities of each link in the industry chain. Several domestic projects have used blockchain technology to achieve traceability in power energy storage and consumption systems. For example, the "State Grid Chain" platform, built by State Grid Corporation of China based on its blockchain information infrastructure, has been applied in the Haixi Multi-energy Complementary Demonstration Project in Qinghai Province and the 2022 Beijing Winter Olympics, enabling the recording of the entire process of green electricity production, trading, and consumption, and improving the transparency and efficiency of energy trading.

III. Reverse Logistics Systems: Building a Scalable Digitalized Recycling Network

Taking solid waste recycling as an example, the industry still relies on the door-to-door model of small-scale recyclers. This decentralized recycling model leads to a chaotic recycling network chain, with issues such as difficulty tracing waste and a lack of transparency in upstream and downstream information.

In recent years, some companies have attempted to promote the digitalization and scaling of reverse logistics through cooperation to improve waste recycling rates and drive the transformation and upgrading of the resource recycling industry. The cooperation between GEM and SF Express is an example of this effort, with both parties jointly building a digital recycling platform and constructing a reverse logistics and warehousing system to achieve "decentralized collection, centralized distribution, and standardized utilization," thereby improving overall efficiency.

However, digital transformation is not easy. The digital and intelligent level of the solid waste recycling industry remains relatively low, and the construction and application of information systems still face many challenges. For example, in practical applications, some applications designed to optimize waste recycling routes have struggled to fully realize their functions due to the scattered distribution of recycling points and the complexity of information registration. This reflects the high barriers to information interaction between upstream and downstream players in the circular economy.

IV. Blockchain Technology in the Circular Economy: Applications and Challenges

Blockchain technology has applications in various circular economy fields, including carbon markets, energy, green finance, and sustainable product supply chain traceability. Its advantages lie in its data and transaction attributes: firstly, by combining with other technologies, it provides transparency and traceability, building a decentralized multi-party collaboration model; secondly, it has a built-in distributed clearing and settlement transaction system, providing liquidity and pricing capabilities in tokenized application scenarios.

Applications of blockchain in the sustainability field are concentrated in the voluntary carbon offset market and the energy sector. In the voluntary carbon offset market, blockchain can address issues such as information asymmetry, inconsistent standards, duplicate certifications, and inconsistent project quality; in the energy sector, blockchain is primarily used for the clearing and settlement of distributed energy and the traceability of clean energy, reducing transaction costs and improving efficiency.

In product traceability, the immutable nature of blockchain ensures the transparency and traceability of supply chain data, and has been applied to product passports and other certificates. The Digital Product Passport (DPP) being progressively introduced by the EU is a product of this context, aiming to improve the transparency of product value chains. Some companies, such as the Norwegian aluminum producer Hydro, have begun exploring pilot projects based on blockchain-enabled DPPs.

However, the application of blockchain technology in China also faces many challenges, such as the regulatory compliance of the technology, its integration with existing industry rules, and the establishment of a consensus and trust system among participants. The lack of clear management standards for Web3 and the lack of legal enforceability of tokenization in China are hindering the broader development of blockchain technology in the circular economy.

V. Information Sharing and Trade Secrets: A Double-Edged Sword

Greater transparency in information interaction means that various participants in the supply chain need to disclose more information. However, in practice, companies often hesitate to share data due to concerns about protecting trade secrets. Furthermore, the mechanisms and regulations for information sharing are still in their infancy, lacking clear standards and consensus.

In the new energy power battery recycling industry, for example, disclosing battery usage data could reveal a company's business performance, so some battery manufacturers may be reluctant to share data with upstream and downstream players.

The EU's report on the Digital Product Passport also points out that issues such as the precise definition of DPP, the choice of technological elements, and its scope of application remain contentious, reflecting the international challenges of information sharing.

To resolve the conflict between information sharing and trade secrets, multiple measures need to be adopted, such as restricting access permissions for different participants, using different data interfaces to ensure that each participant only receives necessary information, and strengthening data access control, anonymity protection, and data anonymization.

VI. Institutional Design and Regulation: Building a Trustworthy and Transparent Ecosystem

Information interaction between upstream and downstream players in the circular and sustainable economy is not merely a technological issue, but a social systems issue involving conflicting interests. Technology itself is objectively neutral, but how it is applied to social systems requires careful and detailed institutional design and prudent validation.

An effective rule and trust system must be established to achieve more transparent information interaction. The choice of pathway for establishing rules for upstream and downstream players in the circular industry needs to be context-specific. If a centralized model can generate a sufficiently high level of trust, such as a large organization integrating data from various parties to build a digital platform, then blockchain technology may not be necessary.

In conclusion, breaking down information barriers in the resource recycling industry requires concerted efforts across technology, institutions, and regulation. Only by building a sound institutional framework, regulatory system, and trust mechanism can the potential of technology be fully unleashed to promote the development of the resource recycling industry towards greater transparency and efficiency. This requires continuous exploration and practice to ultimately achieve sustainable resource utilization and promote the healthy development of the circular economy.