walter stahel - circular economy webinar (feb. 2012
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Circular Economy
Webinar of 21 February 2012
Ellen MacArthur Foundation (EMF)
Walter R. Stahel
Visiting Professor, University of Surrey
Founder-Director, The Product-Life Institute, Geneva
www.product-life.org, [email protected]
Winsemius, Pieter (2002) One Thousand Shades of Green
Sustainability
développement durable – Nachhaltigkeit
Today’s linear industrial economy more growth means more throughput
resources materials manufacturing distrib. P.O.S. use waste
micro-economic profit optimisation P.O.S. CONSUMER STATE
The manufacturer’s liability for industrial goods concerns the manufacturing quality. Property and liability are transferred to the CONSUMER at the P.O.S. and the State BUT: asbestos, tobacco, GHG emissions class action suites
zero-life products
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1 Wealth preservation instead of wealth substitution,
Re-use is the prime strategy for markets near saturation
number of scrapped cars
1960 1995
new car registrations
destroyed stock flow
What has changed in the 21st century : 1
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Redefining
‘Quality’
as integrating
the
‘Factor Time’
into
corporate
strategy
physical asset management = managing performance over time
Industrial recycling processes
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ECONOMICS of a Circular Economy - managing stocks:
reusing and remanufacturing goods & components (loop 1)
Re-using molecules
Remanufacturing goods
Source: Stahel, Walter (EU report) 1976
X X
Less: energy-intensive activities and
less wasted resources
environmental impairment
Reuse goods, remarketing
EU waste directive 2008
Source: Stahel, Walter 1976
labour
Job creation: product-life extension is a strategy to
substitute manpower for energy (EU report 1976)
factory factory
labour
parts
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10 years 20 years 30 years
labour
The quality angle of the circular economy
The circular economy is
• regional, meaning less transport volumes and shorter distances in the processing chain,
• more labour-intensive than manufacturing because economies of scale are limited and component quality has to be established first,
• a high-quality world: Stradivari instruments and expensive watches do not live forever by design, but through periodic remanufacturing,
• the knowledge and know-how of past technologies are necessary for retrofitting infrastructure and equipment (i.e. employing silver workers).
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The economics of a Circular Economy
1 manage stock instead of flow optimisation, wealth preservation instead of substitution, utilisation value replaces exchange value as the central notion of economic value, wealth management replaces value added,
2 substitute labour for energy and material inputs,
3 create local jobs at all skill levels, quality, 4 reduce resource consumption and
environmental impairment, 5 foster caring (stock optimisation is based on
preserving existing values).
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Sustainable competitiveness:
material efficiency means profits
• A circular economy (better design and more efficient use of material) could save European manufacturers US$630bn a year by 2025, according to a report by the Ellen MacArthur Foundation, London.
• The report, produced by consultancy McKinsey, only covers five sectors that represent a little less than half of the GDP contribution of EU manufacturing, but still calculates that greater resource efficiency could deliver multi-billion Euro savings equivalent to 23 per cent of current spending on manufacturing inputs.
Sustainable competitiveness through re-use:
remanufacturing example ICE1-ReDesign
• The 59 ICE1 trains of the German Bundesbahn clocked up 15 million km each in the first 15 years of operation.
• The cost of the ReDesign was €3 million per train, procurement costs for a new train are €25 million.
• In addition, Re-Design saves social costs of €1 million on a global level (Stern report).
• ReDesign conserves 80 per cent of materials and embodied energy – a total of 16'500 tonnes of steel and 1180 tonnes of copper - and prevents 35'000 tonnes of CO2 emissions and 500'000 tonnes of mining waste (‚Rucksäcke‘).
• ReDesign includes a technologic upgrading of the trains and an increase in the number of seats. Each seat now offers individual power outlets and internet connection.
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Sustainable competitiveness through re-use
A 2004 sectoral study on restoring used automotive engines
compared to a like-new condition showed lower economic costs (30-53%) and much lower environmental costs compared to manufacturing engines:
• raw material consumption down by 26-90%, • waste generation down by 65-88%, • energy consumption down by 68-83%, • 73-78% fewer carbon dioxide (CO2), • 48-88% less CO, • 72-85% less NOx, • 71-84% less SOx, • 50-61% less non-methane hydrocarbons emissions.
Source: Smith, VM and Keolian, GA (2004) The value of remanufactured engines, life-cycle environmental and economic perspectives, Journal of Industrial Ecology, 8(1-2) 193-222
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900 mio t GHG emissions
Lifetime optimisation
Goods as services
Circular Economy (restorative)
Source: WRAP (2009)
GHG reductions
German EEG
feed-in tariff law
Stock management involves caring
– preserving manufactured capital (buildings, infrastructure, equipment, goods) preserves the embedded energy, water, GHG emissions,
– fostering people’s quality of life (skills, education and health services, knowledge),
– maintaining culture and cultural heritage capital (incl. technology), museums,
– making best use of natural capital (e.g. producing bio food from organic agriculture, wooden furniture, leather shoes, wool textiles),
– creating a new relationship with goods.
CARING, social innovations: a new relationship with goods
• is the most profitable and competitive business model of the Circular Economy,
• is sustainable and preventive as manufacturers internalise the cost of risk and of waste,
• leads to radical and rapid new product design for take-back and reuse of goods and components,
• achieves the highest resource efficiency and security as it maintains ownership of material,
• exploits sufficiency and prevention as profit strategies
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The Performance Economy -
selling / buying goods as services
What changed in the 21st century : 2
The shift from sinking to rising resource prices
Sustainable
taxation is a
booster to
increase:
resource
security,
and jobs
prevent
GHG
emissions
Copyright/author: Walter R. Stahel 2011
RESOURCE SECURITY
JOB
CREATION
GHG EMISSION REDUCTION
SUSTAINABLE
TAXATION
C
E
14/02/2012 The Performance Economy 20
Where to find more information: The Performance Economy Walter R. Stahel published by Palgrave Macmillan London March 2010 ISBN 978-0-230-58466-2 [email protected] http://product-life.org
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Thank you for your attention