Swiss architect and industrial analyst Walter R. Stahel is known as one of the Founding Fathers of Circular Economy and for coining the expression «cradle-to-cradle». On October 19th, he will share his vision and knowledge during the 7th edition of the Luxembourg Green Innovation Summit. BEAST met with Dr Stahel to discuss sustainable development strategies and his best practices.
For more than 40 years, you have been promoting circular economy, notably through repairing and remanufacturing. How did industry professionals first react to the change of mindset?
Circularity has been the functioning principle of nature since the Big Bang, and is as old as mankind, but for the first millennia it was one of poverty and scarcity. “Use it up, wear it out, make it do or do without”.
The modern circular economy for manufactured objects is industrial and one of abundance. The drivers now are personal motivation of people, not necessity. The existing example of reuse, buying and selling used goods are so integrated into society that we do not see them. Have you ever bought or exchanged a NEW banknote? All of them are second-hand objects, polluted with traces of drugs and bacteria.
The obstacles of change are not industry professionals but economists. They simply cannot imagine that used goods are cheaper and better than newly manufactured ones – because they only know manufacturing – remanufacturing is as well researched as the backside of the moon. Examples like Xerox, Caterpillar, Michelin and Rolls-Royce have shown that you need a holistic understanding of business to see the higher competitiveness of the circular economy, which breaking out of (the comfort of) silo-thinking. People also need good reasons why they should shift from optimising value chain process up to the Point of Sale, to optimising the use of stocks of objects over their full product-life. This implies a radical change of management objectives from flows to stocks, and from value added to value maintained!
From the first initiatives of companies to today’s sustainable development strategies, which strategies proved to be more efficient? And why?
The most efficient corporate strategy in shifting to more sustainable business models is selling performance, selling goods as a service. This business model enables companies to exploit sufficiency as well as efficiency strategies and develop new systems solutions, in addition to all circular economy options. In exchange for retaining the ownership of their goods and the embodied resources, they gain resource security with regard to the future availability and prices of resources. And these companies have to internalise all costs of future liabilities, risks and waste; as a result, societal sustainability increases because the companies have a strong financial incentive to take measures to prevent waste and losses by managing risks on systems level.
While some countries acknowledge the fact of reducing waste and carbon emission, others tend to keep a blindfold. How would you convince political leaders to engage and adapt in a sustainable-circular economy strategy?
Originally, economics has been the driver of the circular economy. Reuse, repair and remanufacturing helped owners of objects to reduce the costs of using them. Ever increasing waste volumes brought political leaders into the game for environmental protection reasons. The political solution was waste management, recycling, getting rid of the waste problem.
But the circular economy is about preserving resources, natural, human, cultural and manufactured assets, a holistic optimisation involving loops, people, economics and speed. Material recycling is only a sustainable option if we succeed in recovering atoms and molecules to the same purity as new resources.
The loop axiom says that the smaller the loops, the more profitable they are: reuse before repair before remanufacture before recycling; and local before regional before global.
People are a renewable resource, and the only one with a qualitative edge. The circular economy substitutes manpower for energy, on a micro- and macroeconomic scale. Introducing the circular economy on a national level would reduce GHG emissions by 66%, and increase employment by 4%, according to latest research reports.
Economics show that remanufactured objects are 40% cheaper and create considerably less externalised costs than similar new objects of the same quality.
The speed of loops directly reduces environmental impairment: doubling the service-life of objects halves resource extraction and waste volumes as well as production and sales volumes. In saturated markets, the speed of loops has no impact on stocks, only on GDP. In order to maintain their revenue base, companies will need to shift their business model from revenue in sales to revenue in utilisation services and object-take-back for reuse.
To promote sustainability, political leaders should develop a holistic view focused on changing framework conditions, such as non-taxation of human labour and non-subsidies for energy consumption. The circular economy is regional, labour-intensive and part of a general trend of intelligent decentralisation, like micro-breweries, 3-D-printing, urban farming and robotised manufacturing – Industry 4.0. The environmental and social advantages mentioned are a result of the circular economy, not its driver.
Can cradle-to-cradle models be applied to all sectors? Which elements are easily transferred from one field to another?
We can distinguish three fundamentally different types of objects.
Food, water and oil – resources which are consumed; sufficiency solutions and reuse cascades are the main business models available. These resources are used in an economic context but are not manufactured objects. Water use is especially important for there is no alternative resource.
Infrastructure and buildings – the built environment – are “sitting ducks”, of functional nature and with a long service-life. Increasingly, they are recognised as key part of resilient communities and cultural heritage.
Mobile manufactured objects are subject to fashion and technology changes. Publicity makes the difference between objects. There are tools – objects used to make money in a systems context – and toys of the consumer society – objects to satisfy emotions and status value, used as stand-alone.
For objects of the built environment and tools, service-life extension is a natural to preserve value and, like operation and maintenance services, is best done locally by professional fleet managers. OEMs selling performance, such as Xerox, Caterpillar, Michelin and Rolls-Royce, fleet managers, such as railways, airlines and armed forces and specialised SMEs today constitute the knowledge pool of the circular economy. To advance the circular economy rapidly, this economic and technical knowledge has to shift from fleet managers and SMEs to all classrooms and boardrooms, in order to ensure that all students leaving academic and vocational education are familiar with the opportunities offered by the circular economy.
What are the best practices regarding the creation of opportunities with a responsible approach you wish to share with the audience of the Luxembourg Green Innovation Summit?
The time is right and ripe for the circular economy: saturated markets for many objects, long-life technologies (electro instead of combustion engines), non-recyclability of high-tech objects (solar, wind, IT), rising commodity prices, trend to reusable technology (Space X’s Falcon 9 rockets).
Sustainable innovation in the circular economy encompasses numerous opportunities; techno-commercial strategies in the ‘era of R’ for goods, and opportunities of scientific and technologic innovation in the ‘era of D’ for materials, as well as new professions of ‘holistic skills’, such as restorers of vintage technical objects, antique furniture and other collection items which are part of our cultural capital.
The ‘era of R’ comprises techno-commercial strategies to re-use, repair, restore, remarket, remanufacture and re-programme objects as well as to re-refine and recycle catalytic chemicals, such as lubrication oils. Also needed is related innovation in marketing, policymaking and R-technologies: reuse options lead to innovation in equipment; banknotes or bottles, for instance, do not come in identical batches and need tolerant equipment (ATMs, bottling plants) to cope with qualitative variations.
At some point, the options of the ‘era of R’ come to an end. A few objects may become part of national heritage, but the majority will enter the ‘era of D’.
The ‘era of D’ comprises technologies and policies to de-link assemblies, de-polymerize, de-alloy, de-laminate, de-vulcanize, de-coat materials in order to recover atoms for reuse; and to de-construct infrastructure and high-rise buildings in order to reuse materials, and related innovation in D-technologies. Waste and secondary resources are a thing of the past if atoms or molecules can be recycled to the quality and purity of virgin material, such as sr-PET (self-reinforcing PET), which can be re-melted and reused indefinitely.
The highest competitiveness and profit potential of circular economy innovation may lie in the ‘Era of D’. Many new technologies and processes in chemical engineering and material sciences can be patented; corporate income then comes from licensing knowledge instead of selling materials. Mining countries are looking at these options— whoever is first wins. The Ana Intercontinental hotel in Tokyo was the first high-rise building to be sustainably deconstructed, disassembled top down in a closed room with minimal noise and dust emissions. Bringing items down efficiently from the top of a high-rise building enables to recover the energy spent on hoisting them up in construction, making deconstruction a low carbon activity.
The biggest societal benefits potential of circular economy innovation is the ‘era of R’—reuse, repair and remanufacture offer ample techno-economic opportunities in a skilled-labour intensive regional economy.
And society needs policy innovation: labour is the only renewable resource, which can be educated but will deteriorate if unused. Not taxing labour but taxing things society does not want, such as emissions, consumption of non-renewable resources and waste would create a landslide change of the economy.