With the development of electric automobiles, connected self-driving cars, and a growing movement of self-governed transport systems mobility is on the brink of major change.
The conventional private car model is being replaced by a new shared car model, a system which is more flexible, less wasteful, and responds precisely to the needs of its user, namely reduced cost and responsibility. But in adopting a more holistic approach in all aspects of manufacturing and delivery, the key players in the mobility space are seeking the help of measurement tools that can help implement circular economy strategies and measure the innovation performance across design, business model and materials. Such a tool exists and is already being implemented.
A hidden opportunity
A circular economy rests on the premise that potential is being maximised. And in some respects, the vehicles of today are already more well-suited to a circular economy than your phone, television or computer. Cars are capable of being maintained, serviced, repaired or even upgraded, with documentation and replacement parts available in most cases. Under a functional economic model, vehicles of the future will be designed and produced for even greater long term durability, reliability and ease of maintenance, in order to withstand the rigours of more intensive use. To create a truly circular model, comprehensive and high-quality recyclability will be required at the point of disrepair. In Europe, certain recycling regulations impose the valorisation of end-of-life-vehicles (ELVs) with a recycling rate of 95%. 85% of the product is expected to be recycled entirely and 10% incinerated for energy recovery, leaving 5% of the original product to be shredded or sent to landfill. What could be perceived as a constraining regulation is in reality an opportunity for car manufacturers to establish new recycling industries which are more efficient and profitable both economically and environmentally.
Today, ferrous metals represent 75% of the average total car mass. These metals are, by themselves, easily recycled. The remaining 25% constitutes of plastic, wind-shield glass, fluids, tyres, and a diverse range of materials such as textiles, foam and insulation. And here lies the challenge: a call for innovative recycling methods, gained through the collaboration of stakeholders with different competencies to put into practice certain “short-loops”. A short-loop consists of a system that recycles a material to a quality equal to that of its origin, with recycled material being returned to its original use.
The potential to recycle in this way naturally depends on the properties of the material being recycled. Polypropylene is an interesting example. It represents 50 to 140 kg in a modern car and is theoretically recyclable, in that polypropylene can be remelted to make a new piece without its essential properties being affected. In practice, there are seven different types of this polymer found in an automobile and each are a different color. As a result, the sorting of such materials becomes very complex, often resulting in the recycled materials having inferior qualities to the original, if the adapted means are not put in place. For a short-loop to succeed, new industries thus need to be imagined.
Indicators needed to pilot new businesses
To support the development of these industries with more precision, it is necessary to be able to measure the performance of new circular economy models from a neutral and pragmatic perspective, one which is complementary to the traditional KPIs for linear models. Before the development of such tools, the first economic models did not comprehensively measure the outcomes and profitability of their circular initiatives. Tools capable of quantifying circular initiatives have since been developed to help identify strong and weak points of new models, allowing for more precise decision-making in both the design and manufacturing process. So how do these decision making tools work in practice?
Most tools split their quantification of circular economy potential into two main categories primary and secondary indicators. The primary circularity indicators of a product are measured by quantifying the efforts needed in the fabrication process such as its lifespan, usage, and the recycling process. They assist decision makers to assess the resource productivity of individual products and supply chains, whilst secondary indicators consider purely economic and environmental considerations such as profit or CO2 emissions. They also allow the user to take a step back and look at the overall circular strategy. The objective is after all, to increase profitability by reducing negative externalities.
The power of such tools and resulting metrics lies not only in the possibility to evaluate the profitability of looping materials or assets through additional use cycles – for instance remanufacturing or recycling a product – but also in the ability for users to run simulations for future business ventures and by doing so be able to estimate future business opportunities.
Simulations allow users to tweak single parameters, such as the price of some input material for example, and consider what affect that change would have on the overall circularity, environmental and economic impact of the decision.
The automotive sector is leading the development of such economic modelling tools. Renault is indeed a forerunner in the sector being the first car manufacturer who developed an indicator dedicated to circular economy.
For the plastic example, it is by going into partnership with Synova – France based plastic compounder – that Renault succeeded in elaborating grades of recycled polypropylene that strictly meet the required specifications. To do so, the big plastic parts like the bumpers and fenders are disassembled, cleaned, shredded and remelted into a pellet form. Synova brings its expertise by adding a small amount of virgin material in the compound in order to precisely adjust the properties of the material.
The result is a polypropylene with a quality equal to the one from the petro-chemical industry, with not only the advantage of being cheaper, but also less polluting. Economic indicators show that in this particular case, despite the price fall of commodities observed the last year, short loops are still more profitable than the virgin material alternative.
This approach is expected to be easily extendable to other manufacturers both within and external to the automotive sector. By laying the groundwork and formulating the general approach, Renault and others are illustrating the business and environmental opportunities associated with circular economy activities. By setting the scene, start-up business ventures will be able to build on and adapt this work to support their own decision-making, reducing their material footprint, asset productivity and general profitability.
There are still many challenges that need to be addressed in the future. For example, composites – high performance light materials made of resin and reinforced with fibers – are increasingly being used to lighten vehicles, therefore reducing fuel consumption. However, composites actually pose a problem due to the complexity of their recycling, and so far their profitable reuse or remanufacture has remained a challenge.
With car manufacturers and key actors in the mobility industry facing a period of new technologies, materials, business models and behaviours, making use of the right indicators will be crucial in identifying and unlocking untapped opportunities in the transition to a circular economy.
Our collective understanding of the circular economy has not yet been entirely explored and we can draw a parallel with ‘a 16th century map’ of the world, more than an exact account of the complete economic benefits. Whilst this map has certainly become more detailed in recent years, territories still need to be charted anew to foresee what a circular economy would look like and how it would function. In this Future Of… series, we aim to highlight the opportunities, challenges and impacts that widespread adoption of the circular economy framework could bring to different sectors, using insights from current trends, policy signals and technological advances.
Future of mobility image: trendscout:: / Flickr CC BY 2.0