Ellen MacArthur Foundation Towards The Circular Economy Vol.1 PDF
Ellen MacArthur Foundation Towards The Circular Economy Vol.1 PDF
Ellen MacArthur Foundation Towards The Circular Economy Vol.1 PDF
TOWARDS THE
CIRCULAR ECONOMY
Economic and business rationale
for an accelerated transition
Founding
Partners of the
Ellen MacArthur
Foundation
Acknowledgements
Foreword
Sincerely,
Janez Potocnik
European Commissoner for the Environment
Contents
Acknowledgements
Foreword
Report synopsis
Executive summary
13
21
35
63
77
85
Appendix
93
94
List of figures
The time is coming when it will no longer make economic sense for business as usual
and the circular economy will thrive. Our thinking is in its infancy but were taking steps
now to see what works in practice and to understand the implications of reworking
our business model. We are preparing to lead this change by rethinking the way we do
business because the reality is, it isnt a choice anymore.
B&Q Euan Sutherland, CEO of Kingfisher U.K. & Ireland
(Chairman of the B&Q Board)
The concept of the circular economy tallies completely with our thinking at BT about
the importance of providing goods and services sustainably. As a company, we feel
intimately involved with these ideas, because digital technology will play a crucial role in
providing the information needed to create iterative logistics and restorative systems.
BT Group Gavin Patterson, Chief Executive BT Retail
The Circular Economy is a blueprint for a new sustainable economy, one that has
innovation and efficiency at its heart and addresses the business challenges presented
by continued economic unpredictability, exponential population growth and our
escalating demand for the worlds natural resources. Pioneering work carried out by
the Ellen MacArthur Foundation presents an opportunity to fundamentally rethink how
we run our business and challenge all aspects of traditional operating models, from how
we use natural resources, to the way we design and manufacture products, through to
how we educate and train the next generation. We are delighted to be part of the Ellen
MacArthur Foundation and we are committed to exploring how Cisco, our customers,
partners and employees can benefit from the principles of the Circular Economy.
Cisco Chris Dedicoat, President, EMEA
This is an extremely important time for the energy industry with challenges around
sustainability, security and affordability. At National Grid, over the next 9 years, we
are looking to recruit in the region of 2,500 engineers and scientists, a mixture of
experienced engineers and development programme trainees; all vital to the future of
our business. That means we need young people with science, technology, engineering
and mathematics skills, with creative minds and a passion to make a difference. The
circular economy provides a positive, coherent, innovation challenge through which
young people see the relevance and opportunity of these subjects in terms of rethinking and redesigning their future.
National Grid Steve Holliday, Chief Executive
Renault believes that innovation favours progress only if the greatest number stand to
benefit from it. Renault believes that the optimisation of existing solutions will not be
enough to realise the vision of sustainable mobility for all. The launch of Renaults new
game changing fleet of electric vehicles demonstrates that this is possible. A growing
population and increasingly volatile resource market will challenge businesses working
in a business as usual model. Renault is working in partnership with the Ellen MacArthur
Foundation to realise the opportunities of redesigning the future through the vision of a
regenerative, circular economy.
Renault Carlos Tavares, Chief Operating Officer for Renault
Report synopsis
1
2
3
Executive summary
Executive summary
Continued
Executive summary
Continued
Executive summary
Continued
FIGURE 1
Global resource extraction is expected to grow to 82 billion tonnes in 2020
% change,
1980-2020
82
CAGR:
+1.8%
55
6
40
Metal ores
Fossil energy carriers
Biomass
Non-metallic
minerals
Per capita
TONNES
4
8
11
200
15
81
20
67
36
116
65
8
12
11
16
16
12
16
22
27
1980
2002
2010E2
2020E
9.1
8.7
9.5
10.6
1 Resource used: amount of extracted resources that enters the economic system for further processing or direct consumption. All materials used are
transformed within the economic system, incl. material used to generate energy and other material used in the production process
2 Forecasted from 2002 OECD figures and OECD extraction scenario for 2020
SOURCE: OECD; Behrens (2007); WMM Global Insight; Ellen MacArthur Foundation circular economy team
8 Materialsflows.net
9 J. Gustavsson, C. Cederberg,
U. Sonesson, R. van Otterdijk,
A. Meybeck. Global food losses
and food waste Extent, causes
and prevention. Food And
Agriculture Organization Of The
United Nations, Rome, 2011
10 UNEP International Resource
Panel Recycling Rates of Metals
a status report. 2011
FIGURE 2
We are still losing enormous tonnages of material
Million tonnes, EU27, 2010E
2,670
Other1
211
Energy
production
93
Water collection
treatment &
supply2
170
Households
226
Industrial
350
Mining &
quarrying
Construction
60%
of total
waste not
recycled,
composted
or reused
1,116
742
878
104
Other3
20
65
68
76
Metals
783
Minerals
Total
end-of-life
streams
Recycled,
composted,
and reused
materials
FIGURE 3
Construction and demolition (C&D): A noteworthy opportunity
US C&D waste 2008
C&D is a significant
waste stream
100% =
615 mn tonnes
100% =
160 mn tonnes
Recycled
or reused
74
26
30%
C&D
Discarded
C&D waste as
a share of total
20%
Potential
applications
Other
14%
Gypsum board
10%
Fertilizer additive
Concrete/rock/brick
11%
Soil/fines
11%
Reuse of soil
after treatment
Asphalt products
14%
Lumber
40%
Wood flooring
construction material
70%
80%
End-of-life
treatment of
C&D waste
Composition of
discarded C&D waste
SOURCE: Buildings and their Impact on the Environment: A Statistical Summary; revised April 22,
2009 EPA; Journal of Environmental Engineering; Ellen MacArthur Foundation circular economy team
FIGURE 4
Sharp price increases in commodities since 2000 have
erased all the real price declines of the 20th century
McKinsey Commodity Price Index (years 1999-2001 = 100)1
260
240
World War I
220
1970s
oil shock
200
180
World War II
140
120
100
80
60
40
1900
Post-war
Depression
1910
1920
160
Turning point
in price trend
Great
Depression
1930
1940
1950
1960
1970
1980
1990
2000
2010
1 Based on arithmetic average of 4 commodity sub-indices: food, non-food agricultural items, metals, and energy;
2011 prices based on average of first eight months of 2011.
SOURCE: Grilli and Yang; Pfaffenzeller; World Bank; International Monetary Fund; Organisation for
Economic Co-operation and Development statistics; UN Food and Agriculture Organization; UN Comtrade;
Ellen MacArthur Foundation circular economy team
FIGURE 5
Price volatility has risen above long-term trends in recent decades
Price volatility1, in %, 10-year average ending at start of year cited2
Food
Metals
Agricultural materials
35
Volatility increases
across commodities
in 2000s
30
25
20
15
10
5
0
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2011
1 Calculated as the standard deviation of the commodity sub-index divided by the average of the sub-index over
the time frame
2 2000-2011: 11-year average
SOURCE: Grilli and Yang; Pfaffenzeller; World Bank; International Monetary Fund; Organisation for
Economic Co-operation and Development statistics; UN Food and Agriculture Organization; UN Comtrade;
Ellen MacArthur Foundation circular economy team
35 Climate Change
Indicators: Snow and Ice,
from: Climate Change
Indicators Report, U.S.
Environmental Protection
Agency, 2010, p. 54
36 McKinsey and
Company: Transforming
the Water Economy
Seven Ways to Ensure
Resources for Growth;
January 2011
Rather than using eco-efficiency to try and minimise material flows, eco-effectiveness
transforms products and related material flows to support a workable relationship
between ecological systems and economic growth. Instead of reducing or delaying
the cradle-to-grave flow of materials, eco-effectiveness creates metabolisms where
materials are used over and over again at a high level of quality. Michael Braungart
Mining/materials manufacturing
Farming/collection1
Parts manufacturer
Biological nutrients
Biochemical
feedstock
Restoration
Technical nutrients
Product manufacturer
Recycle
Biosphere
Service provider
Refurbish/
remanufacture
Reuse/redistribute
Biogas
Maintenance
Cascades
6 2803 0006 9
Anaerobic
digestion/
composting
Extraction of
biochemical
feedstock2
Consumer
User
Collection
Collection
Energy recovery
Leakage to be minimised
Landfill
Terminology39
Reuse of goods
The use of a product again for the same
purpose in its original form or with little
enhancement or change. This can also apply to
what Walter Stahel calls catalytic goods, e.g.,
water used as a cooling medium or in process
technology.
Product refurbishment
A process of returning a product to good
working condition by replacing or repairing
major components that are faulty or close
to failure, and making cosmetic changes
to update the appearance of a product,
such as cleaning, changing fabric, painting
or refinishing. Any subsequent warranty is
generally less than issued for a new or a
remanufactured product, but the warranty
is likely to cover the whole product (unlike
repair). Accordingly, the performance may be
less than as-new.
Component remanufacturing
A process of disassembly and recovery at the
subassembly or component level. Functioning,
reusable parts are taken out of a used product
and rebuilt into a new one. This process
includes quality assurance and potential
enhancements or changes to the components.
Anaerobic digestion
A process in which microorganisms break
down organic materials, such as food scraps,
manure, and sewage sludge, in the absence
of oxygen. Anaerobic digestion produces
biogas and a solid residual. Biogas, made
primarily of methane and carbon dioxide,
can be used as a source of energy similar
to natural gas. The solid residual can be
applied on the land or composted and used
as a soil amendment.
Energy recovery
The conversion of non-recyclable waste
materials into useable heat, electricity, or
fuel through a variety of so-called wasteto-energy processes, including combustion,
gasification, pyrolysis, anaerobic digestion,
and landfill gas recovery.
Material recycling
Functional recycling. A process of recovering
materials for the original purpose or for other
purposes, excluding energy recovery.40
Landfilling
Disposing of waste in a site used for the
controlled deposit of solid waste onto or
into land.
Materials
manufacturer
Parts
manufacturer
Product
manufacturer
Sales
company
Materials
supplier
Reuse of parts
Reuse of products
Long use
Product
recovery
center
Maintenance
company
User
Collection
center
Closed loop
materials
recycling Materials
recovery
company
Open loop
materials
recycling
Thermal
energy Energy recovery
Disassembly oil collection (Energy, CO2)
company
Sorting and
disassembly
Recycling
center
1994 RICOH
Parts
recovery
center
User of
recycling
materials
Final
disposal
company
Shredder
company
Crushing of products
Shredder dust
Landfill
Farming/collection
Restoration
Biosphere
Parts
manufacturer
Biochemical Products
feedstock manufacturer
Biogas
Service provider
Insulation
Furniture
Garment
Fibre
Stuffing
Yarn, cloth
Insulation
material
Furniture
Apparel
Insulation
material sales
Furniture
sales
Apparel
sales
6 2803 0006 9
Anaerobic
digestion/
composting
6 2803 0006 9
6 2803 0006 9
Consumer
Consumer
Consumer
Collection
Collection
Collection
Extraction of
biochemical
feedstock
Yarn
recycling
Reuse2
Energy recovery
Leakage to be minimised
Landfill
1 Furniture stuffing material can be reused several times
2 Examples of reuse include donation, exchange, resale
Source: Ellen MacArthur Foundation circular economy team
FIGURE 10
A circular economy would not just buy time it would reduce the amount
of material consumed to a lower set point
ILLUSTRATIVE
Demand, BAU2
Virgin material
substituted by
circular material
Demand under
circular system
2010
2015
2020
2025
2030
2035
2040
Material stock
Material landfilled
In use
BAU2
Circular
system
2015
2020
2025
2030
2035
2040
1 Assumptions: Widgets have a 5-year product life; demand for widgets assumed to grow at 3% p.a.; collection
rate rises from 0% in 2010 to 90% in 2040; reuse and refurbishment rates scale up over time, from 0% to 40%
each; all collected material that is not reused or refurbished is recycled
2 Business as usual
SOURCE: Ellen MacArthur Foundation circular economy team
61 European Commission,
Proposal for a Directive of the
European Parliament and of the
Council on Waste Electrical and
Electronic Equipment (WEEE),
Proposal for a directive, COD
2008/0241, December 2008
FIGURE 11A
Mobile phones: Reuse and remanufacturing as a viable alternative to recycling
ESTIMATES
Status quo
Transition scenario
Mining
Mining
Parts manufacturer
Parts manufacturer
Product manufacturer
Service provider
Recycle
Remanufacture1
Product manufacturer
15
85
21
Service provider
Reuse
19
Maintenance
User
Maintenance
User
50 50
Collection
Collection
Unaccounted
and landfill
10
Unaccounted
and landfill
1 Remanufacturing, here refers to the reuse of certain components and the recycling of residual materials
SOURCE: Gartner; EPA; Eurostat; UNEP; Ellen MacArthur Foundation circular economy team
Recycle
Remanufacture1
Reuse
FIGURE 11B
Mobile phones: Design changes and investments in reverse infrastructure
could greatly improve the circular business case
ESTIMATES
Transition
scenario1
Improvement
Status quo
22.8
Cost improvement
Value improvement
16.6
Reuse
6.2
6.9
0
0.7
1.3
Remanufacture
0.6
5.0
0.7
2.5
2.6
6.4
-1.4
0.9
Recycle materials
0.3 0.6
3.1
3.0
Recoverable Treatment
value
costs
0.1
Net benefit
status quo
0.3
Circular
design
Treatment
process
1.3
Net benefit
improved
1 Transition scenario: Conservative assumptions on improvements in circular design and the reverse cycle,
within todays technical boundaries
SOURCE: Geyer & Doctori Blass (2008); Neto & Bloemhof-Ruwaard (2009); Neira et al. (2006); EPA; Umicore;
LME; Metal Bulletin; recellular.com; amazon.com; recyclemobilephones.co.uk; Ellen MacArthur Foundation circular
economy team
FIGURE 12A
Light commercial vehicles: Refurbishmenta profitable alternative
ESTIMATES
Transition scenario
Status quo
Mining
Mining
Parts manufacturer
Parts manufacturer
Product manufacturer
63
Service provider
Product manufacturer
Recycle1
Remanufacture1
44
Service provider
Refurbish
26
Recycle1
Remanufacture1
Refurbish
User
User
75
71
14
14
Non-EU
export3
15
Collection in EU
Non-EU
export3
Unaccounted
and landfill
Collection in EU
11
Unaccounted
and landfill
1 Today, recycling and remanufacturing take place in single treatment process as spare parts are taken from end-of-life vehicles (split
here for better visibility)
2 Analysis focuses on end-of-life products (post de-registration), frequent resales of light commercial vehicles during intra-EU lifespan
are not considered due to lack of data
3 Light commercial vehicles exported from EU with unknown intended usage or treatment
SOURCE: Eurostat; ANFAC; ko-Institut; EIU; Ellen MacArthur Foundation circular economy team
ESTIMATES
FIGURE 12B
Light commercial vehicles: Refurbishment
is attractive for a large range of cases despite
demand substitution of 50%
24
15
6
2 Profit on
primary
sales
-3
-11
100
75
50
25
FIGURE 13
Washing machines: Leasing durable
machines can be beneficial for both parties
Customers net present costs1 of washing
machine usage over time2
USD per customer
-38%
-26%
-32%
1,714
1,227
935
5 years
1,158
905
582
10 years
26% - 38%
customer
cost savings
through
leasing
schemes
20 years
970
660
+35%
173
Sales price
(pre-VAT
and retail)
COGS
OPEX
137
186
Profit
NVP from
leasing2
35% increase
in producer
profits through
leasing
arrangements
86 Company website
(http://www.boschhome.com/de/produkte.
html)
FIGURE 14
Biological nutrients: Diverting organics from the landfill to create more value
Farming/
collection
Biological nutrients
Restoration
Revenues
(compost)
0 0 10-25
Biochemical
feedstock
Revenues
0 0 ?
Biosphere
Parts manufacturer
Product manufacturer
Service provider/distributor
Biogas
Revenues
0 20 20
Cascades
6 2803 0006 9
Anaerobic
digestion/
composting
Costs
(0) (30)-(50) (30)-(50)
Consumer
Collection
Extraction of
biochemical
feedstock1
Costs
(0) (0) (?)
Status quo
Transition
scenario
Advanced
scenario
Total cost
(80) - (130)
(55) - (75)
Total revenue
20
> 30 - 45
(80) - (130)
(35) - (55)
- (0) - ?
Landfill/sewage
Costs
(80)-(130) (25) 0
Rethinking agricultural
production systems
In natural ecosystems, essential
nutrients such as nitrogen and
phosphorous return to the land after
they have been absorbed by plants
and digested by animals, maintaining a
healthy balance. In todays agricultural
production systems, however, it is
common practice to remove most
above-ground biomass from the land
and to disrupt the animal-to-soil loop as
well by keeping animals penned rather
than letting them out to pasture. As a
consequence, it has become necessary
to sustain the yield of nutrient-depleted
soils with mineral fertilisersa practice
that is affordable only so long as the
energy to extract and process those
minerals is cheap and the minerals
remain available. Western Europe
depends on imports for more than
80% of its phosphate requirements,89
which is not without risk given the
real limits to economically accessible
phosphate rock reservesone of the
most important sources of mineral
fertilisersand the high concentration
of those reserves in only a few
countries, as discussed earlier.
94 PlasticsEurope: Eco-profiles
of the European Plastics Industry:
Polyurethane Flexible Foam,
Brussels, 2005
95 We analysed the cascade
of cotton textiles transformed
to furniture stuffing, then
transformed to housing insulation,
and finally anaerobically digested
(with the resulting biogas
converted into electricity and
the digestion residue landfilled).
Economic viability was assessed
through comparison of wholesale
price of conventional product
with its reused cotton substitute.
Cotton-derived products turned
out to be highly competitive. For
this comparison, adjustments
due to differences in weight and
insulation efficiency were applied.
The base cotton volume entering
the cascade is defined as 50% of
todays recycled textiles. Here,
further potential exists as the
collection rate for textiles in the
U.K. is low at 22% and recycling
only accounts for 6% of collected
volumes (Oakdene Hollins:
Recycling of Low Grade Clothing
Waste, September 2006;
McKinsey analysis). For the
following steps in the cascade, it
was assumed that 50% of material
enters the next cascading step
Harnessing innovation
Material and technological innovation
is a core enabler for fast-tracking
transformation from a linear into a
circular economy. While many of the
proposed alterations on the journey
to a circular economy will be gradual,
innovation could likely lead to a more
disruptive and accelerated arrival.
Also, while the analysis provided in
this report is based on materials and
processes known today, a focusing of
innovative forces on the restorative
circular economy model may lead
to opportunities that are currently
unknown to the economy.
Changing the efficiency of production
processes, for instance, by moving
towards 3D printing instead of
milling, could dramatically reduce
the production-induced waste of
resources while enabling more flexible
design and variations of produced
components, for example, the specific
fitting of missing spare parts to extend
the life of a product such as a van,
and hence drive down inventory and
obsolescence risks.
The introduction of alternative
materials could reduce input scarcity
and potentially lower costs of material
FIGURE 15
Building blocks of a circular economywhats needed to win
EXAMPLES
6 2803 0006 9
B
Collection
Collection
C
D
Enablers to improve
cross-cycle and crosssector performance
Material choice
optimised for
circular setup
Design to last
More modularisation/
standardisation
Easier disassembly
Production process
efficiency
Consumer as user
Performance
contracts
Products become
services
Collection systems:
User-friendly,
cost-effective,
quality-preserving
Treatment/extraction
technology: optimising
volume and quality
4. Education
Awareness raising in
general public and
business community
Integration of circular
concepts in university
curricula
ILLUSTRATIVE
Mobile phone
Washing machine
From...
To...
From...
To...
From...
To...
Product
design
Highly integrated
product designs
and low degree
of component
standardisation
Component
standardisation
(e.g., displays)
and design for
disassembly
(e.g., clip-hold
assembly)
Limited degree
of modularisation
(e.g., bolted
connections in
LCV engine bay)
Design for
disassembly
wider design
of engine bay
and use of quick
fasteners
Efficiency
gains in energy
and water
consumption
drive economic
obsolescence
and limit lifetimes
Regular software
updates and
upgrades of
electronics and
sensor systems
post sale
Business
models
Low customer
incentives to
return devices
after usage
Deposit
payment
or leasing
models
Customer
concerns about
quality of refurbished vehicles
Warranty offered
on refurbished
vehicles
Customer
concerns about
alternative
business models
Creation of
transparent,
win-win leasing
contracts
and effective
marketing
Reverse
cycle skills
Limited
development
and choice of
circular options
Automated
disassembly and
efficient technologies (e.g.,
fault-tracking
software)
Sub-scale
refurbishing
facilities
Centralised
refurbishment
plants with optimised workflows,
allowing for economies of scale
Quality losses
within inappropriate collection
channels
Manufacturercontrolled
collection,
enabled by
leasing models
Cross-cycle
and crosssector collaboration
High damage/
loss rate along
all reverse value
chain steps
Industry-wide
efforts to
establish
comprehensive
collection and
treatment system
University
curricula for
engineers still
focused on
linear system
OEM/sector
initiatives to
foster R&D
of circular
production
methods
Diverging
incentives of
customers
and producers
in context of
new ownership
models
Specialised
intermediaries
enable
alternative
ownership models
on larger scale
FIGURE 17
Increasing circular activities is a promising business
opportunity for a variety of products
ILLUSTRATIVE
Circular activities
as promising
business
opportunity
High
Potential
for circular
business
practices1
Low
Low
High
FIGURE 19
A small reduction in demand would put downward
pressure on both iron ore prices and volatility
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
ILLUSTRATIVE
AND ROUGH
ESTIMATES
Sample
reduction
in quantity
of iron ore
demanded
Potential savings
Production
Million
Tonnes
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
3,250
1 Note: this is not a projection of iron ore demand in 2025; rather it is an illustration of the impact of a demand reduction;
see footnote 105 for more details.
SOURCE: McKinsey iron ore cost curve
FIGURE 20
Employment effects vary across primary, secondary, and tertiary sectors of a circular economy
Effect on
employment
activity
(directional)
Primary sector
Mining/materials manufacturing
Farming/collection
Recycle
Secondary sector
Parts manufacturer
Restoration
Biosphere
Biochemical
feedstock
Refurbish/
remanufacture
Product manufacturer
Service provider/
distributor
Tertiary sector
Reuse/redistribute
Biogas
Maintenance
Cascades
6 2803 0006 9
Anaerobic
digestion/
composting
Consumer
User
Collection
Collection
Extraction of
biochemical
feedstock
Energy recovery
Leakage to be minimised
Landfill
FIGURE 21
Revamping industry, reducing material bottlenecks, and creating tertiary sector opportunities
would benefit labour, capital, and innovation
Labour intensity
Labour spending per unit of GDP output,
EU-27 economies
Innovation index1
IBM/Melbourne Institute Index
0.30
Capital intensity
Total expenditures/labour expenditures,
EU-27 economies
4.07
321
274
2.97
180
0.16
0.14
Primary
1.87
Secondary
Tertiary
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary
1 Components of index include: R&D intensity; patent, trademark & design intensity; organization/Managerial innovation; and productivity
SOURCE: Labour intensity calculated using data taken from Eurostat Input-Output tables for EU-27; Innovation data from IBM/Melbourne Institute
Innovation Index (covering Australian Industry), 2010
ILLUSTRATIVE
FIGURE 22
Refurbishment helps to overcome a dynamic where weakest-link components
define a products life example light commercial vehicle
Proposal for improved state
Selected
components1
Original part
1st replacement
2nd replacement
Expected residual
lifetime of
component at time
of refurbishment
Engine
Replaced every
refurbishment
Suspension
Gearbox
Replaced
every second
refurbishment
Clutch
Catalytic
converter
Reused on
aftermarket
after end of
vehicle life
Expected
lifetime (km)
Steering
1st
refurbishment
2nd
refurbishment
End of
product life
FIGURE 23
The circular economy is creating a new reverse sector
Secondary market
Collection
Tomra
+20% pa
Tomra produces reverse
vending machines that
collect and sort empty
beverage containers
0.47
0.19
2005
Remanufacturing
Caterpillar
Remanufacturing
division
Cat Reman remanufactures
engines that are resold with
same-as-when-new
performance and reliability
Amazon
Amazon marketplace
allows third-party sellers
to use Amazon's
platform, giving them
access to more than
121 million users in 60
countries
1.15
0.36
2010
Recycling
Remondis
+9% pa
+10% pa
70
45
2005
+26% pa
2005
2010
Thousand tonnes of
remanufactured products
2010
Remondis provides
recycling infrastructure
and expertise in Europe,
Asia, and Australia
7.02
4.38
2005
2010
SOURCE: Tomra annual reports (2005, 2010); Ixtens research (based on Amazon SEC filings, Forrester analysis); Caterpillar annual reports (2005, 2010);
Remondis annual reports (2005, 2010)
122
Knowing what is included in
a product is vital information
to ensure proper treatment
or even completely avoid
complex separating procedures
altogether, especially for
plastics, which are extremely
hard to distinguish without
labelling due to similar product
density and chemical and
physical properties.
123
McKinsey research on sludge
monetisation
Appendix
Appendix
FIGURE 24 Driver tree: Factors affecting net material cost savings as a percentage of total input costs
Refurbishment/
reuse
Refurbishing/
reuse rate1
Net material
cost savings per
product
Remanufacturing
Weighted net
material cost
savings per
product
Remanufacturing
rate1
Net material
cost savings per
product
Recycling
X
Recycling rate
Net material
cost savings as
percentage of
total input costs in
market p.a
Net material
cost savings per
product
Collection rate
Collected endof-life
products p.a.
X
Number of
end-of-life
products p.a.
Number of products
put on market p.a.
X
Number of end-oflife products p.a.
Key drivers in
circular business
practices
Appendix
FIGURE 25 Scenarios for more collection and circular treatment rates in Europe
Scenario End-of-life
products
million p.a.
Mobile
phone
Smartphone
(B2B)
Light
commercial
vehicle3
Washing
machine
Status quo
190
Collected
Percent
Reused
Percent1
15
38
Refurbished
Percent 1
Remanufactured
Percent 1
Recycled
Percent1
62
Transition
190
50
38
41
21
Advanced
190
95
50
50
Status quo
13
20
38
62
Transition
13
50
60
40
Advanced
13
95
50
50
Status quo
1.5
86
100
Transition
1.5
86
30
70
Advanced
1.5
86
50
50
Status quo
2.34
40
10
90
Transition
2.34
65
50
50
Advanced
2.34
95
50
50
Appendix
Mobile phone1
Smartphone1
Washing machine1
USD
Percent
USD
Percent
USD
Percent
USD
Percent
Price2
36
100%
400
100%
41,400
100%
970
100%
Input costs3
27
75%
228
57%
39,730
96%
832
86%
Material
16
44%
128
32%
22,760
55%
437
45%
Labour
6%
29
7%
4,140
10%
223
23%
Energy
6%
1%
680
2%
18
2%
Other4
19%
69
17%
12,150
29%
155
16%
Appendix
Reuse
Remanufacture
Recycle
Status quo
Transition
Status quo
Transition
Status quo
Transition
22.8
22.8
5.0
5.6
3.1
3.6
1.0
0.8
1.0
0.8
1.0
0.8
Buy-back
9.1
9.1
0.0
0.0
0.0
0.0
Screening
1.9
1.4
1.9
1.4
1.9
1.4
0.0
0.0
3.5
1.0
0.2
0.2
2.0
2.0
0.0
0.0
0.0
0.0
Other
2.6
2.6
0.0
0.0
0.0
0.0
Material costs
0.0
0.0
0.0
0.0
0.0
0.0
Profit
6.2
6.9
-1.4
2.5
0.1
1.2
16.0
16.0
7.0
7.6
3.1
3.6
Recoverable value
Treatment costs
130 seconds efficiency gains and yield improvement to 95% (from 70%) in
disassembly process through standardised size of displays and cameras and
clip hold assembly
Contributing to recycling yield improvement from 80% to 95% for metals,
through standardised material choice and improved recycling technology
(e.g., pre-shredder separation)
60% time savings in pre-processing through semi-automated preprocessing (screening)
25% cost savings in transportation through optimised collection point
locations and bundled transport to processing facilities
1 Basic mobile phones selling at USD 30 to 80 before VAT with average lifetimes of around 2.5 years
SOURCE: Roland Geyer and Vered Doctori Blass, The economics of cell phone reuse and recycling, International Journal of Advanced Manufacturing Technology, 2010,
Volume 47, pp. 515-525; Joaquin Neira et al., End-of-Life Management of Cell Phones in the United States, dissertation University of California at Santa Barbara, April
2006; J. Quariguasi Frota Neto et al., From closed-loop to sustainable supply chains: the WEEE case, International Journal of Production Research, 2010, Volume 48, pp.
4463-4481; Ellen MacArthur Foundation circular economy team
Appendix
Recycle
Refurbish
Status quo
Transition
Status quo
Transition
218.2
218.2
5.3
6.3
1.2
1.2
1.2
1.2
Buy back2
21.8
21.8
0.0
0.0
Screening
4.0
3.0
4.0
3.0
Recoverable value
Treatment costs
Collection and transport
14.9
10.4
0.2
1.2
1.2
0.0
25.1
25.1
0.0
0.2
Cleaning and quality
0.0
Other3
0.0
Material costs
Profit
Net material cost savings
Improvements in product design
and reverse cycle skills
45.1
42.9
0.0
0.0
126.7
112.6
0.0
2.0
83.0
85.0
5.3
6.3
1 B2B smartphones selling at USD 300 to 600 before VAT with average lifetimes of up to 3.5 years
2 Introduction of buy-back scheme is a lever to increase collection and refurbishment rates. On a strict product level it is associated with additional costs
3 Other includes remarketing and selling costs, which are driven by recoverable value
SOURCE: Credit Suisse, Smartphone report, broker report, August 2009; Bloomberg financial data; Roland Geyer and Vered Doctori Blass, The economics
of cell phone reuse and recycling, International Journal of Advanced Manufacturing Technology, 2010, Volume 47, pp. 515-525; Joaquin Neira et al., End-ofLife Management of Cell Phones in the United States, dissertation University of California at Santa Barbara, April 2006; J. Quariguasi Frota Neto et al., From
closed-loop to sustainable supply chains: the WEEE case, International Journal of Production Research, 2010, Volume 48, pp. 4463-4481; Ellen MacArthur
Foundation circular economy team
Appendix
Recycle
Refurbish
Status quo
Transition
Status quo
Transition
13,796
13,796
1,174
1,174
426
Buy-back
7,366
7,366
Screening
13
13
13
Depollution
42
42
42
1,044
3193
472
472
Other4
2,070
2,070
Material costs
4,150
2,448
-889
1,167
648
648
18,613
20,316
1,174
1,174
Recoverable value
Treatment costs
Collection and transport2
Profit
Net material cost savings
Improvements in product design
and reverse cycle skills
1 Representative light commercial vehicle with an average lifetime of around 8 years in the EU (500-700 thousand kilometres)
2 Collection and transport costs only in transition state for refurbishment as this includes the transport to centralised refurbishment facilities
3 Includes costs for screening and depollution
4 Other includes SG&A costs, which are driven by recoverable value
SOURCE: Georg Mehlhart er al., European second-hand car market analysis, ko-Institut working paper, February 2011; Eurostat, ELV
waste database, 2011; GHK, A study to examine the benefits of the End of Life Vehicles Directive and the costs and benefits of a revision
of the 2015 targets for recycling, reuse and recovery under the ELV Directive, GHK report, May 2006; Ellen MacArthur Foundation circular
economy team
Appendix
Recycle
Refurbish
Recoverable value
Status quo
Transition
Status quo
Transition
560
560
38
38
12
12
12
12
80
80
14
14
80
80
297
161
93
228
12
12
140
275
38
38
Treatment costs
Collection and transport
Activity specific process
(refurbishment or recycling)
2
Other
Material costs
Profit
Net material cost savings
Improvements in product design
and reverse cycle skills
1 Premium washing machine selling above USD 900 before VAT with average lifetime of 10,000 washing cycles
2 Other includes SG&A and other operating expenses
SOURCE: Adrian Chapman et al., Remanufacturing in the U.K. A snapshot of the U.K. remanufacturing industry; Centre for
Remanufacturing & Reuse report, August 2010; Erik Sundin, Product and process design for successful remanufacturing, Linkping
Studies in Science and Technology, Dissertation No. 906, 2004; Ina Rdenauer and Carl-Otto Gensch, Eco-Efficiency Analysis of
Washing Machines , ko-Institut working paper, June 2008; Ellen MacArthur Foundation circular economy team
Corporate experts
B&Q
Matt Sexton
Director of Corporate Social Responsibility
Roy Miller
Sustainability Manager Products
Caterpillar
Greg Folley
Vice President with responsibility for the
Remanufacturing and Components division
Cisco
Neil Harris
Head of Sustainability, Europe
Ian Redfern
Development Director
Conrad Price
Product Manager Voice
Technology Group
Alastair Borissow
General Manager EMEA Remarketing
John Malian
Product Environmental Sustainability Program
Manager
Cyberpac
John Hensley
Founder
Claire Black
Sales & Production Manager
Desso
Stef Kranendijk
CEO
Rudi Daelmans
Sustainability Director
Foresight Group
Andrew Page
Partner
ISE Appliances
John Hopwood
Managing Director
Marks & Spencer
Carmel Mcquaid
Climate Change Manager
Dr Mark Sumner
Sustainable Raw Materials Specialist
Additionally, a number of
experts and practitioners
from various sectors (e.g.,
consumer goods and
retail; financial sector;
logistics; motor vehicles;
other transport; public
sector; radio, TV, and
communication; textiles;
waste management) have
been interviewed.
National Grid
Steve Wallace
Head of Climate Change and Environment
Craig Dikeman
Director of Inventory Management & Investment
Recovery
Marcus Stewart
Future Distribution Networks Manager
Roger Aspin
Head of Logistics
Renault
Jean-Philippe Hermine
VP Strategic Environmental Planning
Ricoh Europe
Olivier Vriesendorp
Director, Product Marketing
Zhanna Serdyukova
Environmental Sustainability Consultant
Yasunori Naito
Manager, Environmental Management
OPAI
Douwe Jan Joustra
Managing Partner
Turntoo
Sabine Oberhuber
Managing Partner
Turntoo and RAU
Thomas Rau
Founder Director Architect
Vestas
Rob Sauven
Managing Director Vestas Technology UK ltd
Academic experts
Advanced Sustainability LLP
Chris Tuppen
Founder and Senior Partner
Biomimicry 3.8
Chris Allen
CEO
Collaborative Consumption
Lauren Anderson
Innovation Director
EPEA
Michael Braungart & Douglas Mulhall
Representatives of the Academic Chair,
Cradle to Cradle for Innovation and Quality
Rotterdam School of Management, Erasmus
University, as well as EPEA Internationale
Umweltforschung
Product-Life Institute
Walter R. Stahel
Founder-Director
Rochester Institute of Technology
Nabil Z. Nasr
Assistant Provost for Academic
Affairs & Director
University of Cambridge
Peter Guthrie OBE
Professor & Director for Sustainable
Development and Head of the Centre for
Sustainable Development
University of Surrey
International Society for Industrial Ecology
Roland Clift CBE, FREng
Professor of Environmental Technology
and Founding Director of the Centre for
Environmental Strategy
Executive Director
University of York
James Clark
Professor and Director of the Green
Chemistry Centre of Excellence for Industry
List of figures
The Ellen MacArthur Foundation was established in 2010 with the aim of inspiring
a generation to rethink, redesign, and build a positive future through the vision of
a circular economy, and focuses on three areas to help accelerate the transition
towards it.
EducationCurriculum development and in-service teacher training
Science, technology, engineering, maths, and design (STEM) are subjects that will
be at the heart of any transition to a circular economy. Equally crucial will be the
development of systems thinkingthe skill of understanding how individual activities
interact within a bigger, interconnected world.
The Foundation is building a portfolio of stimulus resources to help develop these
skills, supporting teachers and establishing a network of education delivery partners
to enable scalable training and mentoring. A parallel development programme for
Higher Education has been established with a focus on supporting European business
and engineering institutions and linking them to best-practice business case studies
around the world. Currently, the Foundation is working to pilot, trial, and disseminate
a comprehensive education programme across the U.K. with a view to this being a
flexible, scalable model for use around the world. For more information, please visit the
Foundations website www.ellenmacarthurfoundation.org.
CommunicationThe opportunity for a redesign revolution
The Foundation works to communicate the ideas and opportunities around a circular
economy to key target audiences educational institutions, business, and in the
public sector using creative and social media. It believes that focusing on designing
a restorative model for the future offers a unique opportunity to engage an entire
generation when fused with the ability to transfer knowledge, co-create ideas and
connect people through digital media.
BusinessCatalysing and connecting businesses
From its launch in September 2010, the Foundation has placed an importance on the
real-world relevance to its charitable programmes. Working with leading businesses in
key sectors of the economy provides a unique opportunity to make a difference.
B&Q, BT, Cisco, National Grid and Renault have supported the setup and development
of the new charity and continue to support its activities through a partnership
programme. In addition to working together with the Foundation to develop strategy
for a transition towards a circular economy business model, partners are also actively
supporting the Foundations work in education and communication.
In 2011, the Founding Partners supported Project ReDesign, a series of innovation
challenge workshops with 17-to-18 year old students across the U.K. The students were
asked to try their hand at designing products by intention to fit within a system and
were able to interview Partners as business experts in their respective sectors. Winning
students have gone on to a series of internships within the businesses to learn more
about real-world design solutions for a circular economy.
Cross-sector collaboration will accelerate transition. To encourage this, the Foundation
has established a Knowledge Transfer Network for businesses, experts, consultants,
and academics. To register your interest and get connected please visit
www.thecirculareconomy.org