The Rise of Circular Business Models in the Fight Against Climate Change
As part of the 26th UN Climate Change Conference of the Parties (COP26) hosted in Glasgow in November 2021, experts and world leaders were brought together to discuss progress towards combating climate change, set ambitious targets for climate action and agree coordinated efforts to reduce carbon emissions. While the COP is known for generating collaborative global solutions to serious global climate change challenges, this year’s COP was arguably one of the most underpinned by a sense of urgency. As businesses, communities, and people across the world grapple with more extreme events – droughts, floods, wildfires, and the Covid-19 pandemic – they do so with a collective understanding that we need more effective and drastic solutions. This year, a few months before the COP26, the Intergovernmental Panel on Climate Change issued warnings that signalled that climate changes are now inevitable and irreversible, and that temperatures are likely to rise more than 1.5C above pre-industrial levels, breaching the ambition of the 2015 Paris Climate Agreement. The aim of this COP was to ensure that governments, businesses, and other groups come to a consensus on achieving net zero – or a state of carbon neutrality that can limit any further human-caused climate change.
A key theme that emerged from COP has been the recognition that a move away from traditional linear supply chains, and towards closed loop supply chains, can unlock significant emissions savings within our products. This is underpinned by embracing a move towards a circular economy philosophy. The emissions savings are achieved by displacing the associated emissions involved in the early stages of a supply chain – raw material extraction and processing. These steps are typically the most energy and carbon intensive processes in the manufacture of any product. Circular economy recovery strategies such as reuse, remanufacture and recycling, cut out these early stages by redirecting end-of-life products from landfill, to come back into the supply chain, whereby their parts and materials are recovered and used as feedstock for equivalent new products.
Increasing Awareness of the Impact of Circular Economy
Since 2013, HSSMI has led the delivery of a number of important R&D and consultancy projects to support industries to embrace the opportunities of a circular economy by helping them to overcome challenges, barriers and pain points. While only a few years ago circular economy was perceived as a niche concept, it is increasingly being actively pursued by business leaders in these industries as the framework to build the new, more sustainable, economy of the future. Circular economy is now perceived as a key way of limiting negative human effects on the environment, including climate change. A landmark report by the Ellen MacArthur Foundation illustrates how applying the circular economy across 5 foundation industries (cement, plastics, steel, aluminium and food) can remove 9.3 billion tCO2e by 2050. This is the equivalent of eliminating all current emissions from transport worldwide.
Transport as an Emission-Intensive Sector
Transport is one of the sectors HSSMI works with. It accounts for 1/5 of global emissions and 27% of UK emissions. The transport sector is of such relevance to carbon emissions that it had a focus day at COP26. Worldwide, road travel accounts for 75% of transport emissions – 15% of total CO2 emissions. Aviation accounts for 11.6% of transport emissions – 2.5% of total emissions. International shipping accounts for 10.6% of transport emissions. In 2019, domestic transport was responsible for emitting 122 MtCO2 e (million tonnes of carbon dioxide equivalent).
The transport sector surpasses other carbon-intensive industries, such as energy, business, residential, waste, and agriculture in the UK. Often transport emissions are investigated in the context of how they are generated in the process of transporting goods from a range of industries from one place to another – i.e., scope 3 emissions or “tailpipe emissions” – but rarely are transport industries analysed and lauded for their carbon emission reductions in their own right. How are these industries contributing to the net zero agenda, and what innovations are driving this contribution forward?
HSSMI’s Research and Emissions Savings Calculations
In this thought piece, we will present some major developments and innovations in the automotive, aerospace, and marine sectors with special attention on how each is cutting emissions by adopting circular economy principles. From multiple-life electric vehicle batteries to aviation fuels made from novel sources, to innovations in traceability, these industries are providing exciting proof-of-concepts and fully developed business models for the circular economy which will in turn drive the transition to net zero.
From HSSMI’s own research, we calculate that significant savings can be unlocked when applying circular economy strategies to the most polluting transport sectors. Through the adoption of remanufacture, refurbishment and recycling strategies for end of life vehicles and their subcomponents, it is possible to displace a portion of the energy intensive processes involved in raw material extraction, processing and forming when producing equivalent as new components.
Based on SMMT sales forecasts, it is expected that 575k BEV and 1.2m ICE vehicles will be sold In the UK In 2025. If the equivalent number of vehicles were produced using remanufactured and recycled components, then we estimate that the emissions savings In lieu of new manufacture could be In excess of 40%. This equates to 16.9million tonnes CO2e in embedded carbon that can be displaced through circular economy approaches. If a greater portion Is remanufactured Instead of recycled, then this figure would be much higher.
This is representative of many other sectors in the UK and a significant opportunity to get one step closer to our net zero goals.
Send download link to:
Contact us today for a short initial conversation on how HSSMI can help your organisation achieve its strategic goals.