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The limits of the “sustainable” economy

June 19, 2021
Borderless Future

Faced with compelling evidence that the world is approaching climate and ecologic tipping points, urgent solutions and actions are a priority. Transitioning to a so-called “circular economy” (CE) has been put forward as a possible solution, and enthusiastically seized upon by both industry and policy makers.

The concept gained attention in the late eighties, after researchers at General Motors first envisioned a “closed loop” approach to production processes. In 2009, Dame Ellen MacArthur (the famous round-the-world solo sailor) launched the Ellen MacArthur Foundation, which has very successfully popularized the CE manifesto. Today the foundation has an impressive list of around 180 partner and member organizations, and regulators in some regions of the world, particularly the EU, are actively implementing CE agendas.

CE presents an enticing idea based on three core principles: design out waste and pollution, keep products and materials in use, and regenerate natural systems by using renewable materials and energy. Industry is invited to rip up the rule book by moving away from the linear make-use-dispose tradition to an idealized and more sustainable approach where products are made more durable, continually repaired, remanufactured, reused, and finally recycled. The proposition is compelling: as CE endeavors tend to be labor intensive, and therefore aim to ensure resource efficiency, it is argued that their adoption will help to create employment and increase economic growth (for example, the EU estimates 700,000 new jobs and an increase in GDP of 0.5%).

But CE is not without its critics. While praising the objectives promoted by CE, many question its core premises, its effectiveness, and its practicability. In particular, the ability of recycling, designing for durability, use of renewable production inputs, and adoption of alternative usage models to limit society’s consumption of raw materials and energy is not guaranteed, given practical and environmental constraints and people’s economic and quality-of-life expectations.

The Limits of Recyclability
All materials degrade and disperse over time and with use. Textile and paper fibers, for example, are shortened by recycling; trace copper in steel prevents it being used in sheet metal; silicon in aluminum limits its use in cast alloys; and so on. Consequently, it is important to understand that materials can never progress through life purely in “lines” or “circles.” Instead, they move through highly complex supply networks, and the popularly conceived repeating circular motion of reuse and recycling is in fact a downward spiral.

What’s more, collecting end-of-life products and materials and restoring them to a re-usable state itself requires energy inputs and new materials. In some cases, recycling and reuse can have even greater environmental impacts than production using virgin resources. For example, the use of recycled crushed concrete in cement can be better or worse for the environment, depending on the specifics of each situation (including where the materials are produced and where they are used).

Given the limitless variety of products and materials in waste, scaling-up collection and recycling operations to deliver materials back for their original use and purpose can involve insurmountable complexity. The EU alone has identified 650 different types of waste, many of which themselves are complex mixes of different products from hundreds of producers, as in, for example, electronic equipment.

This complexity does not decrease if greater volumes are diverted to recycling. Consequently, closed-loop approaches tend to be limited to commonly used and simple materials such as aluminum beverage cans, PET bottles, and lead-acid batteries. Key obstacles are:

Consumers: The number of different types of waste materials consumers can reasonably be expected to separate for collection, or at drop-off points (for example, one borough in the UK, Newcastle-under-Lyme, has provided residents with no less than nine separate waste bins).
Collection: The number of different waste materials that can be collected separately. Collection points have limited space, few safeguards against cross-contamination, and, of course, waste needs to be bulked-up for efficient and cost-effective transport.
Sorting: Separating waste for specific manufacturers or even specific technical applications during recycling is often impractical and unaffordable since the desired waste materials arise over wide geographic areas globally, and perhaps many years after they were produced.
Transportation: For many industries, adopting the closed-loop approach to recycling preferred under a CE approach would involve returning materials to original factories as far away as China. This can lead to greater environmental impacts than recycling materials for lower grade applications, or even than by using virgin materials.
The effect of these factors is that waste materials are inevitably commingled and processed mechanically in bulk. If any link in the recycling chain becomes too complex or expensive, or simply not viable, there is a danger that the whole flow will divert to landfill.

The Limits of Durability
In order to reduce the overall energy and materials required for original production, CE advocates argue that products should be designed to be longer-lasting, and that they should be reused and repaired wherever possible, with recycling being seen only as a last resort. But these solutions can have unintended adverse consequences.

Making products more durable is intended to prolong their life, thus reducing the total number manufactured over their working lifetime. However, consumers can be fashion conscious and tire of a product long before its end of life; new technology can make perfectly functioning products obsolete (music and film streaming services, wirelessly connected smart speakers, connected home systems, and so forth); consumer demand can dictate size and or weight considerations that preclude more efficient design. In fact, to meet climate targets it will be necessary to replace products entirely where new technology is more efficient or is part of a renewable energy infrastructure (such as electric cars and solar panels).

What’s more, durability can be difficult to estimate. EU policy makers are considering requiring producers to provide information on the expected average lifetime of electrical and electronic goods to consumers — for example, through product labels or instructions. This approach certainly can be useful in some cases (mechanical devices and foodstuffs, for example). But there is no way to accurately predict or collect any statistics on the lifetime of newly-designed complex electronic products such as TVs or computers in advance — the failure rate of electronic circuitry is truly random, and such products cannot be subjected to accelerated testing.

CE advocates argue that “upgradeable” modular product designs could allow for technology development, as used for complex manufactured systems like computers. However, this can have severe limitations with consumer products. New technology often needs an entirely different architecture (for example, it is not possible to fit a flat screen to an old CRT TV). In addition, components are becoming more integrated rather than modular in order to reduce power demands (for example, mobile phone circuitry and “system on a chip” computer processors). Modular designs can also require additional materials to allow easy and safe interchange of modules (for example, providing battery compartments in electronic products).

Manufacturing more durable products typically requires additional and/or different materials. These materials will be wasted if consumers insist on taking advantage of new design features, for example, ice makers in refrigerators, the latest fashions in clothing, eco-cycles in dishwashers, and the latest large LED screens in TVs, and so discard their less up-to-date products anyway. Consumer behavior issues cannot simply or easily be resolved through incentives, education, or even legislation: for example, most consumers buying “bags for life” forget to reuse them despite information campaigns and bag charges.

It is true that manufacturing new products typically has higher environmental impacts than repair or reuse of existing ones. However, repair and reuse do not always substitute for new product sales. Consumers who would not otherwise buy a new item may only buy a second-hand one because it is cheap. In this situation no resources have been “saved.” Furthermore, the seller may then use the proceeds towards buying a new product (a “rebound effect”), with the net result that more products are then in circulation. For products that depend on materials and energy to operate, such as printers, cars, or dishwashers, increased ownership means even more resources and energy will be consumed as the products are used.

Another challenge with repair and remanufacturing is that manufacturing low volumes of highly technical parts on demand is unfeasible, so the quantity of parts that will eventually be needed must be predicted, manufactured in advance, and stored in warehouses (all energy consuming processes). Overestimates may be highly costly and lead to waste, and underestimates to otherwise repairable products reaching end of life prematurely. Alternative CE-type approaches may be more effective: spare parts can be recovered when needed from unrepairable or discarded and unwanted equipment or produced using 3D printing for more simple parts.

The Limits of Renewable Inputs
CE advocates claim the approach will regenerate nature by preserving and enhancing renewable resources in place of non-renewables. However, renewable resources can result in substantial environmental impacts of their own, and so should be used judiciously.

For example, the use of nutrients from waste in agriculture or in nature regeneration also will cause ecological damage if used in excess, such as fish-killing green algae blooms (eutrophication); some renewable materials can degrade into harmful by-products as waste (such as oxy-degradable bio-plastics which are soon to be banned by the EU); and the burning of wood fuel is a major cause of air pollution (responsible for an estimated 38% of air pollution in the UK).

Furthermore, using renewables in place of non-renewables can have substantial knock-on effects. For example, substituting bamboo for plastic has been criticized for issues such as intensive chemicals usage; although the movement to ban plastic bags is certainly a good step towards reducing littering and pollution and protecting marine bio-diversity, replacing plastic bags entirely with paper bags can actually increase overall environmental impact. Such complicated trade-offs must be given proper consideration.

Regeneration of ecosystems is a complex issue which cannot be solved by renewables alone. Addressing the decline in the earth’s natural systems and biodiversity requires careful stewardship, conservation, and the protection of vast areas of land and natural forest in perpetuity.

The Limits of Alternative Usage Models
An important feature of the CE approach is the trend away from physical ownership towards pay-per-use services. Examples include, leasing products rather than buying them (as with automobiles and photocopiers) and sharing through platforms (such as bike and ride sharing). The assumptions behind these ideas are that because businesses would be responsible for the entire life-cycle costs of products, they would act to design more durable, repairable, and recyclable products, take-back products efficiently at end-of-use, and regard them as valuable assets to be utilized to the maximum extent. However, these solutions come with problems.

To begin with, even a quick look at the automobile market casts a dubious searchlight on the environmental benefits of leasing. The car manufacturer sells the car to the leasing company and then loses interest. The leasing company customer uses the car for 2-4 years, and hands it back in exchange for a new model. The car is then passed to auction, and eventually sold on the used car market, and demand and consumption are increased — more cars on the road consuming more fuel. In some cases, leasing services (which are a form of “pay per use”) actually drive-up demand for new products. Indeed, leasing can be viewed as another approach to selling – a form of credit agreement that gives access to otherwise unaffordable goods.

Sharing schemes, as opposed to individual ownership, such as for city bicycles or garden and DIY tools, can help lower demand for new products and consequently reduce materials consumption. However, due to lower cost and increased convenience, they can also have perverse effects. As an example, the use of ride-hail services as a substitute for public transport can increase car usage. In addition, recent research has found bike sharing schemes come with an unexpected carbon impact vs individual ownership as vans are used to bring bikes back to busy transport hubs at peak times.

***

As noted in an HBR article in the July/August 2021 issue, there is no doubt whatsoever of the substantial potential that product life extension, re-use, repair, and recycling can have for improving resource efficiency when used appropriately. Unfortunately, contemporary research has revealed that the CE manifesto can lead to unintended and counter-productive outcomes if not properly assessed in terms of environmental impacts and practical feasibility. As Gifford Pinchot, a founding conservationist, explained over a century ago: “Conservation means the wise use of the earth and its resources for the lasting good.”

The total mass of human made materials is now estimated to outweigh all natural biomass on the planet, and the total amount of waste disposed of each year is simply dwarfed by the quantities consumed for new production. Focusing entirely on product end-of-life management without also addressing the greater and growing problem of over-consumption would be to miss the point entirely. Greater wisdom can help us plot a course towards a more sustainable industrial ecology. To be sure, we should build on the momentum of the CE movement but let us also be fully aware of its limitations.

by Kieren Mayers, Tom Davis, and Luk N. Van Wassenhove

Source: hbr.org

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