This document summarizes a webinar presented by Walter Stahel on the circular economy. It discusses how the current linear economy focuses on maximizing throughput and growth, while a circular economy aims to keep resources in use for longer through reuse, repair, and recycling. A circular economy preserves existing value by managing stocks and flows, substitutes labor for materials, creates local jobs, and reduces environmental impacts through greater efficiency. Remanufacturing products and selling goods as long-lasting services are highlighted as key strategies. Transitioning to a circular model could generate large cost savings for businesses and jobs while decreasing resource use and emissions.

1. 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, productlife.org@gmail.com
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2. Sustainability
développement durable – Nachhaltigkeit
Winsemius, Pieter (2002) One Thousand Shades of Green

3. Today’s linear industrial economy
more growth means more throughput
zero-life products
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

4. 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 : 1
1960 1995
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5. physical asset management = managing performance over time
Redefining
‘Quality’
as integrating
the
‘Factor Time’
into
corporate
strategy
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6. Industrial
recycling
processes

7. ECONOMICS of a Circular Economy - managing stocks:
reusing and remanufacturing goods & components (loop 1)
Re-using
molecules
Less: less
energy-intensive wasted
activities and resources
X
environmental
Remanufacturing
goods
Reuse goods,
remarketing
X
impairment
EU waste
directive
2008
Source: Stahel, Walter (EU report) 1976
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8. 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 labour
Source: Stahel, Walter 1976 8

9. 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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10. 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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11. 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.

12. 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.

13. 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 13

14. GHG reductions
900 mio t GHG emissions
Circular Economy
(restorative)
Lifetime
optimisation
Goods as
services
German EEG
feed-in tariff law
Source: WRAP (2009) 14

15. 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.

16. CARING,
social
innovations:
a new
relationship
with goods

17. 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
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18. What changed in the 21st century : 2
The shift from sinking to rising resource prices

19. Sustainable
taxation is a RESOURCE SECURITY
booster to
increase:
resource SUSTAINABLE JOB
C
security,
and jobs TAXATION E
CREATION
prevent
GHG
emissions GHG EMISSION REDUCTION
Copyright/author:
Walter R. Stahel
2011

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
productlife.org@gmail.com
http://product-life.org
14/02/2012 The Performance Economy 20

21. Thank you for your attention
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