ECO-INNOVATIONat the heart of European policies
Professor Walter Stahel is a longstanding advocate of adoption of circular economy ideas as the basis for a more sustainable society. His 1976 research report for the European Commission, “The Potential for Substituting Manpower for Energy,” found that energy consumption in manufacturing is mainly related to extraction and processing of resources, rather than actual manufacturing processes, and that by reusing products rather than producing new ones, labour would replace energy, leading to energy savings combined with job creation. The report was subsequently republished as a book, and Professor Stahel has since authored many publications on the circular economy.
Professor Stahel is Swiss, and is founder of the Geneva-based Product-Life Institute, which promotes reduced consumption of virgin resources and job creation in reuse. He is also a visiting professor at the University of Surrey, UK, and a member of international think tank the Club of Rome. In this interview, Professor Stahel argues that a true circular economy will prioritise reuse over recycling, and the two should not be confused.
If we define a circular economy as all economic activities to extend the service-life of goods, components and materials, through reuse and re-marketing, repair, re-manufacturing and technological updating of goods, it has always existed: reusable bottles, second-hand markets, repair and renovation of buildings and infrastructure. Among corporations, the repair and serial re-manufacturing of combustion engines and automotive components, of machine tools and jet turbines, railway rolling stock and aircraft has existed since the early days.
These activities have been perfected by operators in the performance economy, the most profitable form of the circular economy. They sell goods as services: for example, fleet managers, railway and shipping companies, hotels, airlines and public transport.
Among corporations selling goods as services there have been Interface's leasing of carpets, Xerox leasing business machines, and Eastman Kodak and Fuji 'selling' 'single-use' cameras, which in fact were re-marketed up to twelve times.
But politicians and the public did not perceive these activities as part of the circular economy. For many people, the circular economy has been identified with waste recycling. But recycling is the least sustainable of all the circular economy activities, in terms of profitability and resource efficiency.
I think the time has now arrived in the sense that the perception is changing about what the circular economy can contribute in areas such as job creation and reducing greenhouse gas emissions. Exterior factors promoting the circular economy are a paradigm shift in commodity prices and saturated markets for many consumer goods in the West.
Some issues dominate. A circular economy is predominantly a regional activity, which substitutes manpower for energy. The present focus on taxing labour and subsidising energy is therefore a major barrier. A sustainable taxation system of not taxing renewable resources including human labour, but taxing non-renewable resources instead, would lead to a broad shift towards a regional circular economy.
Know-how and knowledge of the circular economy today reside with repair workshops and fleet managers, not with academia. There exist half a dozen university chairs for re-manufacturing in the world, but hundreds for manufacturing technology, and none teaching the economics of the circular economy.
If we want SMEs in particular to shift to the circular economy, we have to educate students, giving them the economic and technological knowledge of these activities - the operation and maintenance of systems and goods of all kinds.
The missing technology is mostly linked to optimising the remaining service-life of used components, taking into account material fatigue.
In the performance economy, economic operators selling goods as services retain the ownership of goods and their embodied resources, and internalise all the costs for risk and waste over a product's lifetime. No disclosure is necessary.
In the circular economy of things, the key to enable the reuse of goods and components is the standardisation of components, interfaces and materials, and the non-destructive collection of used goods. One example is the standardised mobile phone recharger promoted by the European Commission.
In recycling, the circular economy of materials, standardisation and marking of materials - especially alloys - followed by dismantling instead of shredding at the end of a product's life, is key. Recycling mixed materials leads to secondary resources at the lowest quality level, be it metals or plastics.
Recycling is the least profitable and sustainable strategy of the circular economy. The 2008 EU Waste Framework Directive is the better approach, with priority for reuse followed by service-life extension and preparation for reuse before recycling.
What else can politicians do? They should not tax labour but tax non-renewable resources; should not levy VAT on the value-preservation activities of the circular economy; give carbon credits for the prevention of greenhouse gas emissions through the circular economy to the same extent as for greenhouse gas emission reductions in production - and economic operators will do things right to maximise their profit.
The work of the Ellen MacArthur Foundation since 2010 has catapulted the circular economy onto the political agenda of many countries and into the strategy boards of many companies, leading to rapid results which now become visible. The reports by WRAP in the UK have shown the substantial impact of the circular economy on a national level in the UK.
I am confident that these ideas have started to move into the mainstream, combining economic, job creation and waste prevention opportunities in a truly sustainable way. The fact that the World Economic Forum and several of the big management consultancies have adopted the circular economy is a sign of this on the corporate front.
With the Club of Rome, I am working on a study to show the labour intensity (job creation) aspect of the circular economy on a macro-economic (national) level, an issue that no university has been interested in studying despite the high unemployment in many European countries. The results of this study will hopefully convince policymakers to shift policies in favour of the circular economy, or at least to create a level playing field with manufacturing.