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Closed Loop Economy: A More Sustainable Future for the Automotive Industry

Dr Paul Nieuwenhuis, Automotive Philosopher at Sustainable Automobility, explores the closed loop economy. He emphasises sustaining livable conditions on Earth and delves into reusing and recycling materials within our economy.


Closed Loop Economy: A More Sustainable Future for the Automotive Industry soc
Dr Paul Nieuwenhuis

Sustainability is not about ‘saving the planet’; it is more about preserving the conditions that allow us to live on the planet. In this sense, then, it is primarily selfish. And yet, most current human activity appears to be blissfully ignorant of what needs to be done. As a starting principle, it is about considering the impact on future generations of whatever decisions we make; taking the long view in all our decisions.

But what can we, at our scale of individuals and individual businesses, actually do about it? This is where we have to break things down into smaller chunks of action. One relevant area in our case is the ‘closed loop’ concept. In theory, this is quite an elegant idea, and it has picked up many proponents over the past couple of decades. One of the most prominent is the Ellen McArthur Foundation, launched by the yachtswoman of the same name. She found, on her sailing trips around the world, the oceans afloat with plastic waste and felt something needed to be done. By finding a use for used plastic, such waste could be prevented, as the waste suddenly became valuable, she thought.

Closed loop thinking is based on the idea that all materials in our economy should be reused or recycled in some way, ultimately leading to a situation where no new materials need to be added to the system. In many cases, materials can be effectively ‘leased’ for use in products and then returned to the leaseholder to be processed for lease to the next producer. In the context of supply chains, this gave rise to the field of ‘reverse logistics’, whereby the supply chain is seen not merely as unidirectional, i.e. from the supplier to the customer, but circular, i.e. also from the market back to the supplier – a closed loop. In the car and truck industry, we have long been familiar with the system whereby an engine, at the end of its first useful life, is returned for rebuilding and re-use. In many cases, this is done by independent operators, but it is also often carried out by the original manufacturer. The same has long been the case for transmissions, axles and other major components, while other parts, such as batteries, have long been routinely recycled. These are classic examples of reverse logistics and provide a solid platform for the concept of the closed loop.

Whilst this sounds like a great idea, there are inevitably flaws in this elegant concept. More recently, some have suggested that extended lifespans and re-use should also play a role, and yet, ‘closed loop’ (CL) is often presented in a much simpler form, whereby the current input into the economy remains much as it is today, but at the end of life, products are dismantled and their materials re-used for new inputs into the economy. I can therefore see a number of problems in conventional CL thinking:

1.) The main focus is on reuse and recycle, while often overlooking reduce.

2.) CL carries with it a danger of creating a static system whereby material innovations are discouraged.

3.) CL tends to be vague as to whether the loop should be closed within a single product type (e.g. mobile phones, computers, cars), within one sector (e.g. construction), or within one
economy and, if so, is that a local, regional, or national economy?

Some governments, such as Sweden, have now adopted the move to a closed loop economy, but it is still not clear how some of these issues are to be addressed. For example, with the transition from internal combustion to electric cars, some older waste streams may not have a clear future use, while new materials are introduced to the waste stream for which a new use and new processing systems have to be quickly created. EV battery reuse and recycling are examples. There is also the danger of ‘environmental dumping’ as materials we cannot use are offloaded onto less developed countries. Progress may generally be good, but such transitions do need to be carefully considered and managed.

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