Steps towards a circular economy – What can we do?
01 May 2014
Imagine a television set fails in your house. To solve this problem you take two actions. Firstly, you buy and install a new television. Secondly, you dispose of (eventually) the failed television. These two steps, alongside the use of the bought product, are usually the only interactions that most people have with everyday products. What many may not consciously realise is that there is a long, complex, geographically dispersed supply chain which precedes the product purchase, and a process of disposal after discarding the failed product. Your part of the supply chain, the “Use”, is only one part.
Most if not all products we use today are part of a linear supply chain, represented by Figure 1. The issue with a linear supply chain is that there is a limit to how many resources the planet Earth can provide. Continuous extraction of materials with eventual incineration or landfilling will lead to resource exhaustion. Not only that, but the extraction/processing of those resources can have harmful effects on the health of both the environment and animals, including humans. Every step in Figure 1 leading up to “Use” requires energy and material inputs, and most have waste outputs. These wastes are seldom used (depending on the industry in question), and may become landfill, or are otherwise released into the environment, whether the atmosphere, land or waterways. Figure 1 is a simplification – in fact, each of the major steps shown could involve many different companies, each carrying out a small part of the process.
What is the antidote to the linear economy?
There are calls to move towards what is termed a circular economy. For example, the Ellen MacArthur Foundation was launched in 2010 to stimulate education and business to move towards a more sustainable economy. They are not alone – research is taking place world-wide, by academics and businesses, into the benefits of a circular economy.
What is a circular economy? It differs from a linear economy, because wastes are diverted from traditional waste management strategies (landfill, incineration) and are instead used again. This can take different forms, and in my organisation, these are referred to as the R’s. An illustration of some of the R’s is given in Figure 2.
- Reuse – the passing of a product from one user to another with few or no repairs. The product continues to be used for its originally intended purpose.
- Remanufacture – products are reclaimed, the quality returned to that of a new product and sold with an equal warranty.
- Recycling – the product is reclaimed and broken down to its component raw materials, which re-enter the supply chain, and used for other purposes, whether remaking the original product or not.
The effect of the R’s is to prevent materials from being wasted by putting them back into the supply chain, whether as viable products or as sources of material. These extra supply flows (reverse supply) reduce the amount of virgin resources requiring extraction from the Earth. An ideal circular economy, operating in a steady-state economy, would be one with no landfill, everything is used again, and nothing is extracted from the Earth, because we already have everything needed.
Clearly, the R’s cannot always be taken in isolation. For example, a microwave may be returned for remanufacturing, but the screws may not be of a sufficient quality to be re-used. These screws could be melted down (recycled) while the rest of the microwave could be reassembled with new screws and sold as a new product (remanufactured).
It can be difficult to adopt these practices using today’s products. Some products would suit a circular economy more if redesigned. Design features to aim for could be: modularity (e.g. for electronics) to ease replacement of single defective components; ease of disassembly; or greater durability, extending the length of time the product (or its parts) can participate in the supply chain. Referring to Figure 2, when a product reaches its end-of-life (EoL), we are presented with options. We can dispose of, reuse, remanufacture or recycle the product. But how do we choose the most appropriate?
The cost of being green
Each of the operations in Figure 2 has associated costs, linked to energy requirement, material requirement, quality of the EoL product, and other factors. The choice of EoL strategy may come down to the least expensive option.
Reuse differs slightly from the other options, because the goal is not to have a new or as-new item replacing the EoL product. The new owner accepts that they are receiving a second-hand item, and the cost of the “operation” may take the form of minor repairs or cleaning. The viability of reuse depends on the condition and age of the product. For the other possibilities, the aim is to replace the EoL product with a new or as-new product. Simplistically, the cost of each operation can be assessed by adding the costs of each step required to turn the old product into a “new” product. Costs, or monetary values, are assigned to each operation in Figure 2 as mv1, mv2… mvn. The value of each operation can therefore be defined as:
- Landfilling: mv4 + mv1 + mv2 + mv3
- Remanufacturing: mv5 + mv3
- Recycling: mv6 + mv2 + mv3
Of course, this is a very simple view of the costs incurred – in reality, a product would be disassembled after recovery, and some parts may be landfilled, others may be reused, recycled or remanufactured individually. However, if the goal is to restore/replace an EoL product with an identical (as-) new product, then this assessment would give a good indication of the cost.
A further complication is the question of who bears the burden of these costs – the government? The manufacturer? The consumer? There is currently no precedent or framework to decide this.
The implementation of reverse supply
The next question is how to encourage the uptake of these reverse-supply operations. The answer is to drive down the costs.
- The cost mv5 is dictated by: The cost of disassembly
- The quality of the EoL product
- The cost of procuring replacement parts
- The cost of fixing existing parts
The cost mv6 is dictated by the same factors, plus the cost of the recycling operation (returning parts of the product to their raw material state). Reducing these would incentivise engagement in a circular economy. For example, redesign could make disassembly easier; changing a material could improve product durability.
However, there is little incentive for manufacturers to invest in redesign work, since they may never see their product again, and the benefit might be only to an independent remanufacturer.
Government policy could help, by offering incentives such as tax breaks to companies who engage in design-for-remanufacture. The company benefits, as does the country, by using available resources rather than importing virgin resources from elsewhere.
The ideas given in this article are an attempt to adapt a circular economy to a world which has been built by a linear approach. The metrics of success, such as GDP, turnover, profit etc are all metrics belonging to a linear economy, and is a key reason why companies find it hard to embrace sustainability. To truly appreciate the value of a circular economy, we have to change both the way we manage our processes, and also the way we measure success.
By Callum Campbell and Dr Richard Court, Centre for Resource Efficient Manufacturing Systems, Teesside University, UK
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