Walter Stahel - Circular economy webinar (Feb. 2012
Circular Economy Webinar of 21 February 2012 Ellen MacArthur Foundation (EMF) Walter R. Stahel Visiting Professor, University of SurreyFounder-Director, The Product-Life Institute, Genevawww.product-life.org, email@example.com 1 1
Sustainability développement durable – NachhaltigkeitWinsemius, Pieter (2002) One Thousand Shades of Green
Today’s linear industrial economy more growth means more throughput zero-life productsresources materials manufacturing distrib. P.O.S. use wastemicro-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
1 Wealth preservation instead of wealth substitution, Re-use is the prime strategy for markets near saturation new car registrations flow destroyed stock number of scrapped cars What has changed in the 21st century : 11960 1995 4
ECONOMICS of a Circular Economy - managing stocks:reusing and remanufacturing goods & components (loop 1) Re-using moleculesLess: lessenergy-intensive wastedactivities and resources Xenvironmental Remanufacturing goods Reuse goods, remarketing Ximpairment EU waste directive 2008Source: Stahel, Walter (EU report) 1976 7
Job creation: product-life extension is a strategy to substitute manpower for energy (EU report 1976) 10 years 20 years 30 years labour labour factory factory parts labourSource: Stahel, Walter 1976 8
The quality angle of the circular economyThe 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). 9
The economics of a Circular Economy1 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). 10
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 16500 tonnes of steel and 1180 tonnes of copper - and prevents 35000 tonnes of CO2 emissions and 500000 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.
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-cycleenvironmental and economic perspectives, Journal of Industrial Ecology, 8(1-2) 193-222 13
GHG reductions 900 mio t GHG emissions Circular Economy (restorative) Lifetime optimisation Goods as services German EEG feed-in tariff lawSource: WRAP (2009) 14
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.
The Performance Economy -selling / buying goods as services• 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 17
What changed in the 21st century : 2The shift from sinking to rising resource prices
Sustainabletaxation is a RESOURCE SECURITYbooster toincrease:resource SUSTAINABLE JOB Csecurity,and jobs TAXATION E CREATIONpreventGHGemissions GHG EMISSION REDUCTIONCopyright/author:Walter R. Stahel2011
Where to find more information: The Performance Economy Walter R. Stahel published by Palgrave Macmillan London March 2010 ISBN 978-0-230-58466-2 firstname.lastname@example.org http://product-life.org14/02/2012 The Performance Economy 20