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Why is circularity crucial in manufacturing?

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The circular economy is crucial to a more sustainable economy with manufacturing at the centerpiece of the narrative.

The United Nations Industrial Development Organization (UNIDO) states that the demand for materials and energy has continued to increase. This is because developed countries improve their living conditions, look to support their expanding populations, and grow their economies. In response, the manufacturing sector’s raw material needs are expected to double by 2050 to 180 billion tons.

According to the European Parliamentary Research Service (EPRS), a circular economy in manufacturing can be achieved by 2030 through the use of disruptive business models and technologies that will improve resource productivity by 30 per cent. Using secondary materials will secure raw materials supply and reduce import dependency and vulnerability to price volatility.

Developing a circular economy in manufacturing would make it less necessary to extract new resources. This would result in biodiversity protection, reduced pollution, less marine littering, and mitigation of climate change. The EPRS also predicts that circularity in manufacturing can create two million jobs in the EU and increase the GDP by 0.8 per cent.

In this article, we’ll see how the manufacturing industry can adopt more circular practices and become more sustainable in the process.

What are the circular economy principles?

The circular economy aims to reduce material use by preventing losses in the product lifecycle. It focuses on integrating end-of-life products to close technological and biological cycles in production and consumption, thereby keeping materials in circulation longer.

Circular economy manufacturing can contribute to a sustainable future by decoupling growth from environmental degradation and resource depletion while providing socioeconomic benefits. It uses secondary materials from end-of-life products or by-products instead of raw materials, reducing waste accumulation and extraction of new resources.

Manufacturers find reducing waste by going circular attractive. Because waste disposal is costly in several regions, like the EU, due to regulations. The circular model is an alternative to the traditional ‘take-make-consume-throw’ method of manufacturing and consumption, which leads to the over-exploitation of natural resources. Manufacturing by continuing these practices may be cheaper at present but isn’t viable in the long term. Moreover, the growing mountains of waste cause pollution and impact the climate.

Four circular economy principles can usher in a change in manufacturing by minimising waste. They are: Reduce, Refurbish/Reuse, Recycle, and Recover.

Figure 1: Circular manufacturing creates value sustainably by designing new durable products from secondary materials obtained from waste by following the 4Rs. United Nations Industrial Development Agency

What are the 4Rs in circular manufacturing?

The 4Rs in circular manufacturing are derived from the general waste management hierarchy that aims to reduce environmental impact and increase materials’ long-term value retention.

Application of the 4Rs starts by rethinking product design to integrate secondary materials in environmentally friendly production processes along with efficient waste management. The relevance and application of each of the 4Rs will vary and is industry-specific.

1. Reduce

Reducing material use is the first step, where the quantity of materials per production unit is lowered. According to Morseletto (2019), innovative design can increase manufacturing efficiency and reduce material consumption. Reducing materials can limit resource extraction and generation of waste at the end of the product’s lifecycle. The global material footprint needs to decrease by 80 per cent by 2050, according to Morseletto. Targets can be set for each material or energy type.

A PwC report found that in Germany, materials form 45 per cent of production costs and energy less than 5 per cent. However, limiting energy use is crucial if the source is fossil-fuel based. Several examples can demonstrate how manufacturing can reduce consumption and become sustainable.

The most striking example is the reduction of materials used for packaging.

2. Reuse/Refurbish

Reuse is the second use of a product or part that is in good condition and fully functional to produce new products. The old product is used for the original function, and reusing can extend the product’s lifespan and limit the production of new items. Refurbishing restores a product or components to upgrade or modernise it to achieve the desired quality and performance, according to Morseletto.

The PwC report considers reusing and refurbishing to have a potentially huge, and complex, impact on manufacturing. Reusing/refurbishing on a large scale will require consumer cooperation and changes to the supply chain, like reverse logistics and capacity building, to collect the used product. Disassembly, storage sites, and reintegration of parts will also need planning and further infrastructure.

An example of refurbishing is converting a combustion car to an electric one by changing the engine.

3. Recycle

Recycling involves converting end-of-life products or their parts into new secondary materials. It reduces waste, and the secondary materials are used to manufacture new original products in a closed-loop system or used in other industry sectors in an open-loop system.

Recycling is a fast-developing field in the world. It can have negative environmental impacts as the process involves transportation and energy use. Also, recycling composite materials can be challenging. Recycling is less complex than reusing and refurbishing. And it is fast becoming a valuable method of achieving sustainability when used to close the loop in manufacturing the same product.

According to Morseletto, countries like China, Japan, and Korea want to recycle 85 to 95 per cent of automotive parts, and the EU wants at least 85 per cent recycled or reused parts by weight in a vehicle.

Contec’s pyrolysis process of using chemcycling to turn end-of-life tires into valuable materials that can be used to make new tires, like recovered Carbon Black, oil, and steel, is a great example of recycling.

4. Recover

After exhausting all other possibilities for reducing waste, manufacturers can recover energy from the manufacturing process by incinerating end-of-life products. Recovery has the disadvantage of destroying the materials and requires abundant and cheap waste to be feasible.

Incinerating mixed plastic waste is a typical form of energy recovery since some kinds of plastic are challenging to recycle or reuse.

Why adopt the circular economy in manufacturing?

The top reasons to adopt the circular economy in manufacturing are cost savings, increased sales, gaining a competitive edge, and Environmental, Social, and Governance (ESG) compliance.

1. Cost savings

The resource reduction immediately translates into cost savings, regardless of which circularity principle a company uses. A manufacturer can save up to 60 per cent of the total material costs by reusing or refurbishing products, according to the PwC report.

According to EPRS,

  • EU companies can anticipate 12 to 23 per cent of savings in their material cost. For the regional economy, that is an annual savings worth €250 to €465 billion.
  • Using secondary raw materials instead of primary raw materials can result in 20-90 per cent energy savings and considerable water savings. Both are huge wins for the environment and society.

2. Creates additional value

Consumer awareness of the negative impact of manufacturing and fast consumption is increasing. So any circular product that can prove its sustainability through reputable ecological certification and labels gets a competitive edge. It can help companies reach and retain new market segments.

A 2021 Business Wire report says that a third of consumers are willing to pay more for sustainable products. The younger millennials and the Z-generation, whose segment of the economy is increasing, are willing to pay double that of older generations.

An average of 60 per cent of consumers consider sustainability a criterion for choosing a product. The preference is industry-specific and varies from 44 per cent for financial services, 61 per cent for automotive, and 74 per cent for energy utilities.

Sustainability is fast becoming an expectation, not an exception, according to Business Wire, and any company that is not sustainable risks losing its market segment.

3. ESG compliance

Countries worldwide are making ESG compliance stricter, and regulations require detailed information from companies.

Many companies fail to meet these obligations because they either assign ESG compliance to a separate department or each department has different policies. Instead of this silo method, using a holistic approach where sustainable circular economy principles are integrated into the business model can help. This will empower companies to be aware of their industry-specific environmental impact.

Circular business principles will be able to guide corporate governance and provide the necessary detailed information. Because ecological protection and social concerns are central to the manufacturing process.

Contec’s contribution to the circular economy

Contec uses circular economy principles in its production process. We tackle a major global waste problem created by landfilling or piling end-of-life tires (ELTs) by recycling them into new products.

Contec collects ELTs and shreds the tires to produce rubber granulates that can be used for rubber production, civil engineering, and pyrolysis. Using pyrolysis, a patented chemcycling process, Contec recycles 85 per cent of the ELTs it collects to produce recovered Carbon Black (ConBlack), recovered oil (ConPyro), and recovered steel (ConWire).

The remaining 15 per cent of ELTs provides gas that Contec uses to power the pyrolysis process as an alternative to fossil fuel energy.

  • ConBlack is a medium-grade Carbon black that can be a sustainable alternative for virgin Carbon Black (vCB) produced from fossil fuels and would allow several industries to close their material loop. The primary sector is tire manufacturing for the automotive industry, which wants to make circular cars. The other sectors are chemical, plastic, and rubber manufacturing.
  • ConPyro is a high-quality oil with 70 per cent of aromatic hydrocarbons and is 40 per cent biological in origin since truck tires use a high proportion of natural rubber. The oil can produce fine-grade vCB for tire and plastic manufacturing.
  • ConWire is a high-quality steel cord and wire in the tires, 95 per cent of which is removed before pyrolysis and the rest after.

In the current situation, the manufacturing sector is expected to cut fossil fuel use due to supply disruptions and high prices. Contec’s products can support manufacturers in driving circularity and providing low-impact environmental-friendly commodities to replace carbon-intensive products.

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