One of worldsteel's aims is to act as the focal point for the steel industry providing global leadership on all major strategic issues impacting the industry. Within this context, understanding megatrends is a crucial area of our work. This is leading us to look very carefully at the implications for the steel industry of the circular economy.
While the concept of circular economy itself has been around for some time and already sounds familiar to most of us, there have been renewed initiatives to accelerate the transition toward a circular economy such as those promoted by the Ellen MacArthur Foundation and the EU manifesto for a resource-efficient Europe (December 2012).
Nowadays circular economy thinking is emerging as mainstream and is encompassing all aspects of the society. If earlier circular economy thinking focused primarily on waste management and recycling, the new generation circular economy ideas encompass all aspects of resource efficiency from production to consumption.
Borrowing from Ellen MacArthur Foundation’s publication (“Towards the circular economy”, 2013), The term ‘circular economy’ denotes an industrial system that is restorative or regenerative by intention and design. In a circular economy, products are designed for ease of reuse, disassembly and refurbishment, or recycling. The circular economy will prompt decoupling of economic growth and materials inputs.
What does this mean for the use of steel in our main steel using sectors?
Let's start with a few examples. If construction beams from an existing building can be reused in new building projects, this will reduce demand for newly produced steel beams. For reuse practices to be more commonly implemented, ‘circular design’ intended for reuse of construction materials and supporting logistics systems will be required. This is a trend the avant-garde construction sector is already focusing on.
In manufacturing, there are already quite a few well-established business cases of remanufacturing. WABCO and Renault in the automotive and Caterpillar in the machinery sectors provide good examples. Another example that stands out is Maersk, world’s largest shipping company, which can reuse 95% of the materials from their triple-E ships through a material passporting system. In the consumer products sector, remanufacturing faces more challenges because of the complexity and range of products, variation in design/disassembly properties, and associated cost-benefits. While there is a huge potential for remanufacturing, currently it is estimated that remanufactured products account for a mere 2% of total manufacturing output in Europe.
Ultimately the scaling of the circular economy practices will require enhanced social awareness and a regulatory environment that supports the economic viability of the circular economy business models.
Digitalisation is also expected to support the transition to a circular economy. Big data, for example, can improve traceability of materials, and in turn has the potential to manage the whole life cycle of a product.
Regulation will be a key factor?
Today, circular economy regulation is still in its infancy, and at various stages of development in different regions. The ‘’EU Action Plan for the Circular Economy’’ which covers a diverse set of activities helped to establish the concept of circular economy and provides a solid foundation from which to accelerate the shift towards a circular economy and sustainable growth. In China, circular economy thinking has been a part of the legislative agenda for at least 10 years and regulations (Circular Economy Promotion Law, 2008). In other regions, such as Brazil, Japan and Korea, the circular economy principles are gaining traction and driving the changes in business legislation.
Acceleration of circular economy transition expected
The transition of our societies toward a circular economy is only at a beginning stage. However, it is likely that this shift will start to accelerate in light of the trends we observe; mainstreaming of the circular economy thinking, changes in government regulations and the introduction of numerous innovate circular economy business models. While steel is recognised as one of the most circular materials particularly due to its infinitely recyclable properties, a broader implementation of circular economy principles (such as reduce, reuse and remanufacturing) will have a far-reaching impact on the steel industry through its impact on demand for steel containing goods and the transformation of steel using sectors in their efforts to apply the circular economy principles. It is also possible that it will create new opportunities for steel use.
worldsteel circular economy conference
It is in this context that worldsteel has decided to hold a conference on “The circular economy’s impact on the steel industry” on 10 September 2018 in Brussels to increase the industry’s awareness of circular economy thinking.
As this conference is exclusively intended for steel industry member companies along with some invited members of the media, we plan to produce a sequel to this blog summarising the main topics discussed.
So, expect more from us on this subject in the coming weeks.