Walter Stahel of the Product Life Institute on a new vision of resources and the supply chain.
The circular economy today is relatively omnipresent but people don’t relate to it as such. Take buying a product on eBay, where products get reused for a second or third time. Or how about renting a car or staying in an apartment for a holiday.
Anything rental has always been part of the circular economy, but people don’t realise it. So it’s not something new and basically it comes down to re-using goods, remanufacturing goods, remarketing used goods or selling goods as services.
In the future I see selling goods as services becoming much stronger, particularly if commodity prices continue to rise. Simply because it means you retain ownership of the embodied energy, water and materials. You assure your own future resource supply in the form of goods in the market. At the end of each service-life, it’s your choice if you want to recycle goods as materials or remanufacture them or reuse the components. It’s a new economy where you can exploit the highest possible value. It’s about value preservation.
Another idea is that instead of selling raw materials we lease raw materials. Anyone using raw materials would pay a rent to use them. The whole supply chain is based on a lease model and each stage has an obligation to know where the raw materials are and what is happening to them and return them after use.
"Another idea is that instead of selling raw materials we lease raw materials. Anyone using raw materials would pay a rent to use them. The whole supply chain is based on a lease model and each stage has an obligation to know where the raw materials are and what is happening to them and return them after use."
A performance economy is perhaps a better term. Everyone does all they can to prevent waste and losses and design goods to reuse components or the materials.
There’s a real opportunity for entrepreneurs to exploit the potential of the circular economy in offering new ways of doing things. But they may meet resistance from traditional manufacturers which may see their market share under threat.
It’s the same for small businesses that want to realise the benefits a circular economy can bring. Swiss company Stadler Rail has become the leading manufacturer of city and regional trains, producing lighter trains that are easier for people to get into. It broke with tradition and designed a different carriage that makes it much easier for travellers to use.
The transfer of knowledge is key and essential to achieve faster results. This economic and technical knowledge has to move into the universities so students learn about the circular economy, the opportunities, the structure and function. At the moment many university students haven’t heard about the circular economy – it’s the biggest organisational change we need to deal with.
Governments should accept that it’s a different economy from the industrial throughput economy. It greatly reduces greenhouse gas emissions. It employs more labour. It consumes much less resource and produces less waste. If governments no longer tax renewable sources, such as labour, but tax non-renewable resources instead then many companies would switch to a circular economy as it would be cheaper for their operation.
It’s the same with VAT. I propose that government should not levy VAT on reused and remanufacturing activities of the circular economy because it’s not value added, but value preserved.
Walter Stahel, is founder/ director of the Product Life Institute, Geneva, and was a speaker at the Circular Economy Connect conference, part of this week’s RWM Exhibition
