A Pivotal Year for the Growth of Circular Economy
Image: © maxkolmeto / Adobe Stock
In the past month, we’ve done a lot of reflection on our 2019 performance: what has gone well? What hasn’t? What are the big areas of growth? What do we focus on in 2020?
An area where we have seen a remarkable growth of interest from our partners and customers is in the area of ‘Circular Economy’.
Circular economy is the concept of moving our established production and consumption model away from traditional, unsustainable, linear supply chains, focused on take, make, consume, and dispose, to modern, sustainable, closed loop supply chains, where products are reused, remanufactured and recycled, over multiple lifecycles with the goal of maximising the recovery and retention of value.
Owing much to the recent influence of key public proponents, such as Greta Thunberg, David Attenborough, Ellen MacArthur, and the Extinction Rebellion movement, coupled with an influx of viral circular product innovations propelled through social media (think Carlsberg’s beer can packaging), 2019 will be regarded as a pivotal year in which the concept of a circular economy was catapulted beyond an idealistic concept and into the mainstream media as a genuine (and necessary) antidote to our sustainability crisis.
As compelling as the environmental benefits are, it is the realisation of the economic benefits which have made many in industry wake up and take notice. These include:
– Raw material cost savings attributed to recapturing and reusing the existing stock of materials and parts from first life components to create second life equivalents instead of relying on new materials and parts
– Total lifecycle energy cost savings through displacing the reliance of energy intensive raw materials extraction and forming processes
– Enhancing the total cost of ownership of products for consumers through the life extension of parts.
– The avoidance of landfill tax through the displacement of EoL products directed to landfill
– The realisation of profits from opening up new business models and markets for repurposed, remanufactured and recycled products.
As a consequence, we have seen a global resurgence of interest in circular economy, driven not only at a grass roots, societal behavioural change level, but also at a business innovation and governmental policy development level. Few industries present as much of a compelling case for circular economy than the automotive industry.
Both government and industry are heavily focused on the development of new EV propulsion technologies, the upscaling of production capacities, and the mass roll out and adoption of electric vehicles. As the forward supply chain grows exponentially, it is critical that we develop the required infrastructure and competencies to enable End-of-Life EV components to be collected, returned and optimally recovered within a circular value network.
This has become an important theme across HSSMI’s R&D projects and the support we provide to businesses in the automotive industry (and indeed beyond). Over the last 5 years, we’ve led the exploration of opportunities and the development of solutions to facilitate the End-of-Life recovery of traction batteries, electric motors and drives, controllers and hydrogen fuel cells.
Our more recent work has led us to apply the same principles and thinking into other sectors, such as: energy & renewables, textiles, electronics and hospitality.
Through our research, we have developed a deep understanding of the most pertinent factors as to why manufacturers should embrace the circular economy, the dangers of not moving to a more sustainable production and consumption model, and what should be the focus in the future. These are insights which have stemmed from our principle work in the automotive industry, but which we have found are pervasive across multiple sectors. These are described below.
Circular economy is a solution for tackling resource security and future supply chain resilience
With the growth in EV production, both UK government and industry are beginning to realise that if we do not incorporate circular economy principles and practices into our EV value chains from their inception, then it is likely that there will be no UK supply chain for EV powertrains in the future, particularly for batteries. This is due to the presence of critical and valuable materials within the components, and the need to maintain these materials within the UK. In doing so, the UK supply chain will become less reliant on importing materials, such as copper, cobalt, neodymium, lithium and nickel, from other countries, and less at risk from fluctuating material costs and availability.
Circular economy isn’t just about redirecting waste, it is a solution for tackling emissions reduction
Moving the automotive industry towards net zero emissions is not just about displacing tailpipe emissions from the vehicles’ use phase. It requires a total lifecycle approach which seeks to reduce emissions at raw materials extraction, parts processing and forging, manufacture and assembly, transportation and End-of-Life recovery. In a recent report by the Ellen MacArthur Foundation (How the Circular Economy Tackles Climate Change, 2019), they find that the circular economy can help tackle the overlooked 45% of total green house gas emissions by transforming the way goods are made and used. The move towards circular economy therefore presents a massive opportunity for automotive OEMs to cut down on emissions and fulfil their commitments to reducing their total carbon impact
Moving forward, we need to work together to develop a robust circular economy infrastructure
Although 2nd life and recycling strategies exist for EV powertrains, the UK does not have a mature network of suppliers or a supply chain to implement EV powertrain reuse, remanufacture, re-purposing, recycling or responsible disposal. Moreover, there is a lack of developed technical operations and processes to enable robust diagnostics, disassembly, segregation and recovery. An increasing volume of EV powertrain components is emerging from the first generation of a now ageing EV fleet, and as such, has exacerbated the need for environmentally responsible and economically viable solutions in the UK.
Action is needed now to ensure that we build on the current momentum behind circular economy interest, and, particularly for new EV technologies, that we place as much emphasis on the development and optimisation of product designs, processes and supply chains for 2nd life, as we are for their first life.
In 2020, HSSMI is focused on supporting the global manufacturing sector towards delivering practical action in supporting the transition to a circular economy. As part of our ramped up activities, we have added to our circular economy team with a new manager, Savina Venkova, and will soon be publishing our roadmap for what projects, capabilities and services we will develop moving forward, as well as launching a Circular Economy Bootcamp.
If you would like to collaborate with us on any of the opportunities as discussed above, please get in touch with myself at firstname.lastname@example.org, or our newly appointed Circular Economy Manager, Savina Venkova at email@example.com.
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