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REDEFINING VALUE

THE MANUFACTURING REVOLUTION

Remanufacturing, refurbishment, repair

and direct reuse in the circular economy

UN Environment promotes

environmentally sound practices

globally and in its own activities. This

publication is printed on 100% recycled

paper, using vegetable - based inks

and other eco-friendly practices. Our

distribution policy aims to reduce UN

Environment’s carbon footprint.

The full report should be referenced as follows: IRP (2018). Re-dening Value – The Manufacturing

Revolution. Remanufacturing, Refurbishment, Repair and Direct Reuse in the Circular Economy.

Nabil Nasr, Jennifer Russell, Stefan Bringezu, Stefanie Hellweg, Brian Hilton, Cory Kreiss, and Nadia

von Gries. A Report of the International Resource Panel. United Nations Environment Programme,

Nairobi, Kenya.

Design and layout: UNESCO

Printed by: UNESCO

Cover design: Alex Tong

This publication may be reproduced in whole or in part and in any form for educational or non-prot

purposes without special permission from the copyright holder, provided acknowledgement of the

source is made. United Nations Environment Programme would appreciate receiving a copy of any

publication that uses this publication as a source. No use of this publication may be made for resale

or for any other commercial purpose whatsoever without prior permission in writing from the United

Nations Environment Programme.

Disclaimer

The designations employed and the presentation of the material

in this publication do not imply the expression of any opinion

whatsoever on the part of the United Nations Environment

Programme concerning the legal status of any country,

territory, city or area or of its authorities, or concerning

delimitation of its frontiers or boundaries. Moreover, the views

expressed do not necessarily represent the decision or the

stated policy of the United Nations Environment Programme,

nor does citing of trade names or commercial processes

constitute endorsement.

Job Number: DTI/2200/PA

ISBN: 978-92-807-3720-2

Acknowledgements

Lead Author: N.Z. Nasr; Authors: Prof. N.Z. Nasr (Rochester Institute of Technology, US), J.D. Russell

(Rochester Institute of Technology, US).

Contributors: C. Kreiss (Rochester Institute of Technology, US), B. Hilton (Rochester Institute of

Technology,US), S. Hellweg (ETH Zurich, Switzerland), S. Bringezu (University of Kassel, Germany), and

N. von Gries (Wuppertal Institute, Germany). The authors of this report thank the following additional

individuals for their contributions and/or expert perspectives: M. Thurston (Rochester Institute of

Technology, US), M. Haselkorn (Rochester Institute of Technology, US), K. Parnell (Rochester Institute of

Technology, US), H. Schewtschenko (Rochester Institute of Technology, US), A. Yoder (Rochester Institute

of Technology, US), Y. Umeda (University of Tokyo, Japan), S. Yang (Advanced Remanufacturing and

Technology Centre, Singapore) and E. Hertwich (Yale University).

The leadership provided by the Golisano Institute for Sustainability was an essential factor in the successful

completion of this research. Signiﬁcant contribution to this effort was supported by data collection and the

US workshops conducted as part of ﬁnancial assistance award #70NANB15H072 from the US Department

of Commerce, National Institute of Standards and Technology (NIST), part of a grant program for Advanced

Manufacturing Technology Consortia (AMTech), entitled Technology Roadmap for Remanufacturing in the

Circular Economy (Nasr et al., 2017).

Workshops conducted in Germany and China provided incredible value to the development of this report

and would not have been possible without the support and collaboration provided by Z. Nukusheva, B.

Zhu, M. Jiang, L. Templar, S. Butzer, and R. Steinhilper. Additional sincere thanks are extended to all

participants who traveled to Berlin and Beijing to offer perspective, insight and expertise on the current

state of industry, and the barriers to growth and acceleration. In addition, this work was strengthened by

the contributions of participants at the workshop “Promoting Remanufacturing, Refurbishment, Repair and

Direct Reuse as a contribution to the G7 Alliance on Resource Efﬁciency” (February 2017) in Brussels,

which was co-organized by the European Commission and the International Resource Panel, with the

support of the 2017 Italian Presidency of the G7.

Helpful data, insight, collaboration and comments were received from several industry members during the

data collection and analysis processes conducted by J.D. Russell and C.C. Kreiss, together with oversight

from N.Z. Nasr. The preparation of this report also beneﬁtted from discussions with several colleagues,

although the main responsibility for report content and conclusions will remain with the authors. This report

contains and represents a signiﬁcant contribution from J.D. Russell’s dissertation under the supervision of

Prof. Nabil Nasr., for which this assessment work was a primary sponsor.

This report was written under the auspices of the International Resource Panel (IRP) of the United

Nations Environment Programme. We are very grateful to the Peer-review coordinator Ester van der Voet

and reviewers who provided valuable comments to the report: Aldert Hanemaaijer (PBL Netherlands

Environmental Assessment Agency, The Netherlands), Amel Akremi (Ministry of Local Affairs and

Environment, Tunisia), Arnold Tukker (Leiden University-CML, The Netherlands), Conny Bakker (TU Delft,

The Netherlands), Christoph Velte (Bayreuth University, Germany), Darya Gerasimenko (Samara (State

Aerospace) University (SSAU), École Polytechnique Fédérale de Lausanne (EPFL), Switzerland), David

Lazarevic (Finnish Environment Institute (SYKE), Finland), Geoffrey P. Hammond (University of Bath, UK),

Göran Finnveden (KTH Royal Institute of Technology, Sweden), Ken Webster (Ellen MacArthur Foundation,

UK), Levent Kurnaz (Bogazici University, Turkey), Markus A. Reuter (Helmholtz Association, Germany),

Philippe Bihouix (Momentum Institute, France), Rolf Steinhilper (Bayreuth University, Germany), Sana

Essaber Jouini (ISCAE-University of Manouba, Tunisia), Sanjeevan Bajaj (Federation of Indian Chambers

of Commerce and Industry, India), Steve Evans (University of Cambridge, UK), Valerie Thomas (Georgia

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REDEFININGVALUETHEMANUFACTURINGREVOLUTIONRemanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyUNEnvironmentpromotesenvironmentallysoundpracticesgloballyandinitsownactivities.Thispublicationisprintedon100%recycledpaper,usingvegetable-basedinksandothereco-friendlypractices.OurdistributionpolicyaimstoreduceUNEnvironment’scarbonfootprint.Thefullreportshouldbereferencedasfollows:IRP(2018).Re-definingValue–TheManufacturingRevolution.Remanufacturing,Refurbishment,RepairandDirectReuseintheCircularEconomy.NabilNasr,JenniferRussell,StefanBringezu,StefanieHellweg,BrianHilton,CoryKreiss,andNadiavonGries.AReportoftheInternationalResourcePanel.UnitedNationsEnvironmentProgramme,Nairobi,Kenya.Designandlayout:UNESCOPrintedby:UNESCOCoverdesign:AlexTongCopyright©UnitedNationsEnvironmentProgramme,2018.Thispublicationmaybereproducedinwholeorinpartandinanyformforeducationalornon-profitpurposeswithoutspecialpermissionfromthecopyrightholder,providedacknowledgementofthesourceismade.UnitedNationsEnvironmentProgrammewouldappreciatereceivingacopyofanypublicationthatusesthispublicationasasource.NouseofthispublicationmaybemadeforresaleorforanyothercommercialpurposewhatsoeverwithoutpriorpermissioninwritingfromtheUnitedNationsEnvironmentProgramme.DisclaimerThedesignationsemployedandthepresentationofthematerialinthispublicationdonotimplytheexpressionofanyopinionwhatsoeveronthepartoftheUnitedNationsEnvironmentProgrammeconcerningthelegalstatusofanycountry,territory,cityorareaorofitsauthorities,orconcerningdelimitationofitsfrontiersorboundaries.Moreover,theviewsexpresseddonotnecessarilyrepresentthedecisionorthestatedpolicyoftheUnitedNationsEnvironmentProgramme,nordoescitingoftradenamesorcommercialprocessesconstituteendorsement.JobNumber:DTI/2200/PAISBN:978-92-807-3720-21AcknowledgementsLeadAuthor:N.Z.Nasr;Authors:Prof.N.Z.Nasr(RochesterInstituteofTechnology,US),J.D.Russell(RochesterInstituteofTechnology,US).Contributors:C.Kreiss(RochesterInstituteofTechnology,US),B.Hilton(RochesterInstituteofTechnology,US),S.Hellweg(ETHZurich,Switzerland),S.Bringezu(UniversityofKassel,Germany),andN.vonGries(WuppertalInstitute,Germany).Theauthorsofthisreportthankthefollowingadditionalindividualsfortheircontributionsand/orexpertperspectives:M.Thurston(RochesterInstituteofTechnology,US),M.Haselkorn(RochesterInstituteofTechnology,US),K.Parnell(RochesterInstituteofTechnology,US),H.Schewtschenko(RochesterInstituteofTechnology,US),A.Yoder(RochesterInstituteofTechnology,US),Y.Umeda(UniversityofTokyo,Japan),S.Yang(AdvancedRemanufacturingandTechnologyCentre,Singapore)andE.Hertwich(YaleUniversity).TheleadershipprovidedbytheGolisanoInstituteforSustainabilitywasanessentialfactorinthesuccessfulcompletionofthisresearch.SignificantcontributiontothiseffortwassupportedbydatacollectionandtheUSworkshopsconductedaspartoffinancialassistanceaward#70NANB15H072fromtheUSDepartmentofCommerce,NationalInstituteofStandardsandTechnology(NIST),partofagrantprogramforAdvancedManufacturingTechnologyConsortia(AMTech),entitledTechnologyRoadmapforRemanufacturingintheCircularEconomy(Nasretal.,2017).WorkshopsconductedinGermanyandChinaprovidedincrediblevaluetothedevelopmentofthisreportandwouldnothavebeenpossiblewithoutthesupportandcollaborationprovidedbyZ.Nukusheva,B.Zhu,M.Jiang,L.Templar,S.Butzer,andR.Steinhilper.AdditionalsincerethanksareextendedtoallparticipantswhotraveledtoBerlinandBeijingtoofferperspective,insightandexpertiseonthecurrentstateofindustry,andthebarrierstogrowthandacceleration.Inaddition,thisworkwasstrengthenedbythecontributionsofparticipantsattheworkshop“PromotingRemanufacturing,Refurbishment,RepairandDirectReuseasacontributiontotheG7AllianceonResourceEfficiency”(February2017)inBrussels,whichwasco-organizedbytheEuropeanCommissionandtheInternationalResourcePanel,withthesupportofthe2017ItalianPresidencyoftheG7.Helpfuldata,insight,collaborationandcommentswerereceivedfromseveralindustrymembersduringthedatacollectionandanalysisprocessesconductedbyJ.D.RussellandC.C.Kreiss,togetherwithoversightfromN.Z.Nasr.Thepreparationofthisreportalsobenefittedfromdiscussionswithseveralcolleagues,althoughthemainresponsibilityforreportcontentandconclusionswillremainwiththeauthors.ThisreportcontainsandrepresentsasignificantcontributionfromJ.D.Russell’sdissertationunderthesupervisionofProf.NabilNasr.,forwhichthisassessmentworkwasaprimarysponsor.ThisreportwaswrittenundertheauspicesoftheInternationalResourcePanel(IRP)oftheUnitedNationsEnvironmentProgramme.WeareverygratefultothePeer-reviewcoordinatorEstervanderVoetandreviewerswhoprovidedvaluablecommentstothereport:AldertHanemaaijer(PBLNetherlandsEnvironmentalAssessmentAgency,TheNetherlands),AmelAkremi(MinistryofLocalAffairsandEnvironment,Tunisia),ArnoldTukker(LeidenUniversity-CML,TheNetherlands),ConnyBakker(TUDelft,TheNetherlands),ChristophVelte(BayreuthUniversity,Germany),DaryaGerasimenko(Samara(StateAerospace)University(SSAU),ÉcolePolytechniqueFédéraledeLausanne(EPFL),Switzerland),DavidLazarevic(FinnishEnvironmentInstitute(SYKE),Finland),GeoffreyP.Hammond(UniversityofBath,UK),GöranFinnveden(KTHRoyalInstituteofTechnology,Sweden),KenWebster(EllenMacArthurFoundation,UK),LeventKurnaz(BogaziciUniversity,Turkey),MarkusA.Reuter(HelmholtzAssociation,Germany),PhilippeBihouix(MomentumInstitute,France),RolfSteinhilper(BayreuthUniversity,Germany),SanaEssaberJouini(ISCAE-UniversityofManouba,Tunisia),SanjeevanBajaj(FederationofIndianChambersofCommerceandIndustry,India),SteveEvans(UniversityofCambridge,UK),ValerieThomas(Georgia2Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyInstituteofTechnology,US),WilliHaas(InstituteofSocialEcology,Austria),ZhuSheng(NationalKeyLaboratoryforRemanufacturing,China).SpecialthankstoJanezPotočnikandIzabellaTeixeira,Co-chairsoftheIRPfortheirdedicationandcommitment,aswellastoallmembersoftheIRPanditsSteeringCommitteefortheirconstructivecomments.TheSecretariatoftheInternationalResourcePanelprovidedessentialcoordinationandsupport,especiallyPederJensen,ZuraNukushevaandAinhoaCarpinteroRogero.3AbouttheinternationalresourcepanelThisreportwaspreparedbytheWorkingGrouponCircularEconomyoftheInternationalResourcePanel(IRP).TheIRPwasestablishedtoprovideindependent,coherentandauthoritativescientificassessmentsontheuseofnaturalresourcesanditsenvironmentalimpactsoverthefulllifecycleandcontributetoabetterunderstandingofhowtodecoupleeconomicgrowthfromenvironmentaldegradation.Benefitingfromthebroadsupportofgovernmentsandscientificcommunities,thePanelisconstitutedofeminentscientistsandexpertsfromallpartsoftheworld,bringingtheirmultidisciplinaryexpertisetoaddressresourcemanagementissues.TheinformationcontainedintheInternationalResourcePanel’sreportsisintendedtobeevidencebasedandpolicyrelevant,informingpolicyframinganddevelopmentandsupportingevaluationandmonitoringofpolicyeffectiveness.TheSecretariatishostedbytheUnitedNationsEnvironmentProgramme(UNEnvironment).SincetheInternationalResourcePanel’slaunchin2007,twenty-fiveassessmentshavebeenpublished.Earlierreportscoveredbiofuels;sustainablelandmanagement;priorityeconomicsectorsandmaterialsforsustainableresourcemanagement;benefits,risksandtrade-offsofLow-CarbonTechnologiesforelectricityproduction;metalsstocksinsociety,theirenvironmentalrisksandchallenges,theirratesofrecyclingandrecyclingopportunities;wateraccountinganddecoupling;city-leveldecoupling;REDD+tosupportGreenEconomy;andtheuntappedpotentialfordecouplingresourceuseandrelatedenviron-mentalimpactsfromeconomicgrowth.TheassessmentsoftheIRPtodatedemonstratethenumerousopportunitiesforgovernmentsandbusinessestoworktogethertocreateandimplementpoliciestoencouragesustainableresourcemanagement,includingthroughbetterplanning,moreinvestment,technologicalinnovationandstrategicincentives.Followingitsestablishment,thePanelfirstdevotedmuchofitsresearchtoissuesrelatedtotheuse,stocksandscarcitiesofindividualresources,aswellastothedevelopmentandapplicationoftheperspectiveof‘decoupling’economicgrowthfromnaturalresourceuseandenvironmentaldegradation.Buildinguponthisknowledgebase,thePanelmovedintoexaminingsystematicapproachestoresourceuse.Theseincludethedirectandindirect(orembedded)impactsoftradeonnaturalresourceuseandflows;thecityasasocietal‘node’inwhichmuchofthecurrentunsustainableusageofnaturalresourcesissociallyandinstitutionallyembedded;theresourceuseandrequirementsofglobalfoodsystems,greentechnologychoices,materialflowsandresourceproductivity,resourceefficiencyanditspotentialandeconomicimplications,andtheassessmentofglobalresourceuse.UpcomingworkbytheIRPwillfocusongovernanceoftheextractivesectors,theimpactsoflandbasedactivitiesintothemarineandcoastalresources,landrestoration,scenariomodellingofintegratednaturalresourceuse,resourceefficiencyandclimatechange.REDEFININGVALUETHEMANUFACTURINGREVOLUTIONRemanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy6Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyPrefaceCircularEconomyisattheforefrontofcurrentglobaldiscussions.Thisisduetotheconcerningpacebywhichnaturalresourcesarebeingused,andtheconsequentriskofscarcityofsomeresources,butalsobecauseoftheenvironmental,socialandeconomicbenefitsofashiftintheeconomy.Transformationfromalineareconomy,whereproducts,onceused,arediscarded,toacircularone,whereproductsandmaterialscontinueinthesystemforaslongaspossible,willcontributetoamoresustainablefuture.ThisreportfromtheInternationalResourcePanel,entitledRedefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy,highlightsprocessesthatcontributetotheCircularEconomyshiftbyretainingthevalueoftheproductswithinthesystem,throughtheextensionoftheirusefullife.Thereportcallsforarevolutioninthewayofproducingandconsuming.Arevolutionwherewemoveawayfromresource-intensiveproductionandconsumptionmodels,towardslowcarbon,efficientprocesses,andwhereinnovationwillbethemotorofchange.ThismanufacturingrevolutionisessentialforachievingtheSustainableDevelopmentGoals,specificallyGoal12–SustainableConsumptionandProduction–aswellastheParisAgreement,giventhecontributionsofsuchprocessestoclimategoals.Thereportappliesthevalue-retentionprocessestoaseriesofproductswithinthreeindustrialsectors,soastoquantifythebenefitsrelativetotheoriginalmanufacturedproduct.Inthismanner,thematerialrequirement,theenergyused,thewaste,butalsothecostsandthegenerationofjobsaremeasuredthroughfirsthanddatafromselectedindustries.Italsohighlightsthedifferentbarriersfacedintheimplementationoftheprocesses,includingregulatory,market,technologyandinfrastructurebarriers,andhowtheycanbeovercomebyacollaborativeapproachandbychangingthemind-setofpolicymakers,industriesandconsumers.WewishtothanktheleadauthorNabilNasrandtherestoftheteam,forthisveryvaluablecontributiontoadvancingtowardsaCircularEconomyandhopethatitcaninfluencethepaceweareallmakingtowardsthistransition.JanezPotočnikCo-ChairInternationalResourcePanelIzabellaTeixeiraCo-ChairInternationalResourcePanel7ForewordIfwewanttochangetheworldwelivein,wewillneedtomakebigchangestothewaywedothings.Whetherit’sthewaywebuildhouses,produceelectricity,ordisposeofthewaste,weneedtore-thinkeveryaspectofwhatwedotomakesurewearedoingthebestthatwecanwithwhatwehave.Formoreequitable,sustainabledevelopment,wewillneedalsotore-thinktheglobaleconomy,andhowwevaluetheresourcessuppliedbynature.Thetraditionalmanufacturingmodel,wherewemake,use,andthendisposeofaproductisbothwastefulandpolluting.Ifwere-thinkthis,andmovetowardsamorecircularmodel,whereaproductisusedandthenre-used,weretainthevalueofthematerialsandresourcesusedtomakethatproduct.Understandingtheenvironmentalandeconomicbenefitsofacirculareconomy,thisreporthighlightsimportantwaysinwhichwecanretainthevalueofproductswithinthesystembyextendingtheirlife.Andtherearemanyexamplesofsuccess.Atrepaircafesin29differentcountriesallovertheworld,peoplecometogethertoextendthelifeoftheirproductsthroughrepair.TheREVISE-NetworkinFlanders,usesalabellingsystemtoguaranteethequalityofelectricalandelectronicequipmentwhicharesoldbyreuseshops.AsocialenterpriseFairphonedesignsproductsthatlast–bothintheiroriginaldesignandindesigningtheirrepairtobeaseasyaspossible.Itisclearthatweneedtoscaleupsuchinitiativesthatretainthevalueofproductstopreservetheplanetsresources,reducegreenhousegasemissionsandcontributetoclimategoals.Ibelievethisreportwillinspirepolicymakersandtheprivatesectortoadoptacirculareconomyapproachtoproduction,therebyguidingustoamoresustainableworldforall.ErikSolheimUnder-SecretaryGeneraloftheUnitedNationsandExecutiveDirector,UNEnvironment8Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyExecutivesummaryIntroductionandbackgroundThecirculareconomyproposesaframeworkinwhichoutputsfromeverystageofthelifecyclebecomeinputsintoanother,offsettingtheneedfornewmaterialsandenergy-intensivemanufacturingactivities,whilealsoreducingwaste.Thecirculareconomyhasbeenpositionedasanessentialsystemicperspectivethatcanhelptomitigatethelossofmaterial,function,andembodiedvaluecreatedbytraditionalconsumption(EllenMacArthurFoundation2013a).However,achievingthesebenefitsrequiresengagingvalue-chainstakeholdersinbehavioralandsocialsystemtransformation,anddesigningindustrialeconomicandproductionsystemstoenable,accept,andsupportsystemcircularity.Oneoftheobjectivesofacirculareconomyistheadoptionofpracticesthatseektodecoupletherateeconomicgrowthfromtherateofgrowthofenviron-FullServiceLifeVRPs(OccurwithinFactoryOperation)OEMNEW(MANUFACTURING)REMANUFACTURINGCOMPREHENSIVEREFURBISHMENTPartialServiceLifeVRPs(OccurwithinNon-FactoryOperation)ARRANGINGDIRECTREUSEREPAIRREFURBISHMENTThisonlyexistsforcertainsectorsandproducts.EOLEOUREMANUFACTURINGFullservicelifeCOMPREHENSIVEREFURBISHMENTARRANGINGDIRECTREUSEREPAIRREFURBISHMENTEXPECTEDEOLEXPECTEDEOUEXPECTEDEOUEXPECTEDEOLEXPECTEDEOLEXPECTEDEOLEOUMANUFACTUREDMANUFACTUREDMANUFACTUREDMANUFACTUREDMANUFACTUREDMANUFACTUREDEOLEOUAlmostfullservicelifeEOLEXPECTEDEOUFullservicelifeFigureA:Descriptionofvalue-retentionpotentialofVRPs9Executivesummarymentalimpact.Manycirculareconomypracticesseektoretainvaluewithintheeconomicsystem(value-retentionprocesses,orVRPs),andtheseprocessesinclude:arrangingdirectreuse,repair,refurbishmentorcomprehensiverefurbishment,andremanufacturing.ItisimportanttonotethatVRPsarenotequal:themagnitudeofimpactavoided,economicopportunitycreated,andultimatelythevalueretainedwithinthesystem,dependsuponthespecificVRPthatisemployed(refertoFigureA).Formanyproductsandsectors,VRPscanofferbenefitsthatincluderelativereducedenviron-mentalimpactandreducedcosts(vs.traditionalnewmanufacturing).Despitethesebenefits,currentadoptionofVRPsremainslow:Remanufacturingaccountsforonly~2percentofUSproduction,andonly~1.9percentofEUproduction(U.S.InternationalTradeCommission2012,EuropeanRemanufacturingNetwork2015).Opportunitiesandbenefitsofvalue-retentionprocessesThereisoftenaperceptionthatthepursuitofsustain-abilitymustcomeataneconomiccost.However,thisassessmentrevealsthatcirculareconomy,viaVRPs,canofferanopportunitytoachievesignificantvalue-retentionandenvironmentalimpactreduction,whilealsocreatingeconomicopportunitiesforcost-reductionandemploymentopportunity.RemanufacturingandcomprehensiverefurbishmentVRPsofferfull,oralmost-full,newservicelivestoproducts,andoffsetsignificantenvironmentalandeconomiccostsassociatedwithproduction.Arrangingdirectreuse,repair,andrefurbishmentVRPsofferadditionaloptionsforcustomerstoextendtheservicelivesofproductsatrelativelylowenvironmentalandeconomiccosts(refertoFigureA).ThisassessmentexaminedspecificenvironmentalandeconomicimpactsofeachVRPforninecasestudyproducts,acrossthreesectors(IndustrialDigitalPrinters,VehicleParts,andHeavy-DutyandOff-Road(HDOR)EquipmentParts),andinfoursampleeconomies(Brazil,China,Germany,andUS).Ingeneral,VRPsforthecasestudyproductsinthisreportenabledthefollowingbenefitsrelativetotheoriginalequipmentmanufacturer(OEM)Newproductoption:•newmaterialuse(kg/unit);•productionwastegeneration(kg/unit);•embodiedmaterialenergyuse(MJ/unit)andembodiedmaterialemissionsgeneration(kgCO2-eq./unit);•processenergyuse(MJ/unit)andprocessemissionsgeneration(kgCO2-eq./unit);and•costsassociatedwithVRPproduct($USD/unit).Productandsystem-designforVRPSandcirculareconomyCurrently,productdesignspecificationsareultimatelyresponsiblefor~75percentofaproduct’smanufacturingcosts,and~80percentoftheenvironmentalandsocialimpactsofaproduct:withoutanemphasisonovercomingwasteandretainingvaluewithinproduction-andproduct-systems,thepursuitofcirculareconomycanonlybeincremental,at-best.Thetransitiontocirculareconomyreliesonanewapproachtoproductandsystemdesign,foundedonthreerequirements:(1)Theabilitytocreatevalue;(2)Theabilitytoprotectandpreservevalue;and(3)Theabilitytoeasilyandcost-effectivelyrecovervalue.Thesethreesystemrequirementsalludetoessentialcircularityobjectivesthatcutacrossproduct-,process-,facility-,andsystem-per-spectives.Thesemayincludedesigningtheproductforlonglife,and/orkeepingtheproductinthesystem(retainingvalue)forlonger–inbothcases,slowingtheflowsofmaterialsintoandoutoftheeconomicsystem.Therearedifferentdesignapproachesthatcanbeemployedinpursuitoftheseobjectives,organizedaccordingtocircularityprioritiesandprinciples(refertoFigureB).10Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy•Designtointegratevalue•DesignforqualityDesigntocreatevalue•Designfordurability•Designforviability•DesignforserviceabilityDesigntopreservevalue•Designfordisassembly/separability•Designforassessability•DesignforrestorabilityDesigntorecovervalueDesignprinciplesDesignapproachesFigureB:ProductdevelopmentusingVRPdesignprinciplesVRPsmaynotalwaysbetheoptimalcirculareconomystrategyforafirmtopursue,andtheappropriatenessofVRPsmustbeassessedonaproduct-by-productbasis.Importantproduct-levelconsiderationsforVRPsinclude:thenatureofproductandsub-systemcomponents;theuse-phaseenergyrequirementandenergyefficiencyoftheproduct;theresidual/remainingvaluethatcanbecapturedifVRPswerein-place;andthematerialcompositionoftheproduct.Inmanymarkets,theavailabilityofVRPproductoptionscreatestargetedanddifferentiatedopportunitiestoopennewmarketsegments,increasetheeconomicparticipationofcustomerspreviouslyconstrainedwhereonlyOEMNewoptionsareavailable,andcanevencomplementOEMNewsalesthroughinnovativebusinessandservicemodels.Innovativebusinessmodelscancomplementdesignapproachesbyintegratingtheessentialsystems-perspectivethatseekstoreducethelossofvaluetothesystem.Inmanycases,thismayincludeimprovedand/oroptimizedproductdesignanddelivery,enhancedservicecontracts,and/orthird-partyoperatedreverse-logisticssystemstofacilitateVRPsattheproduct’sEnd-of-Use(EOU)/End-of-Life(EOL).Inothercases,creativebusinessmodelapproachescanfacilitatethetrackingofproductsthroughoutthedistributionsystem,toimprovemaintenance,servicing,andtake-backoftheproductfromtheuseronceithasreachedapredeterminedEOUorEOL(refertoFigureC).VRPsarenotintendedasreplacementsforOEMNewproducts,andifdifferentiatedandpositionedappropriately,VRPsmaysupportgrowthopportu-nitiesfortheentireproductsegmentbytargetingandengagingnew,previouslyuntapped,marketsegmentsthatareunderservedbyOEMNewproducts.11ExecutivesummaryVRPsandcirculareconomyrequiredifferentiatedapproachesNotallVRPsareappropriateforallproductsoralleconomies.Collaborativeinitiativesbetweendomesticindustrydecision-makersandpolicy-makerstoshareinformationandtoidentifyopportunitiesforimprovingcircularityisneeded:viaclosingloopsandmitigatingsystemlosses;andviaimplementingtheadoptionofVRPsandVRPproductsinamannerthatworkswithintheexistingproductionandcollectioninfrastructure.WhileeveryeconomyfacesdifferentchallengesandbarrierstoVRPs,eachalsohasanalreadyestablishedrelationshipwiththekeyaspectsoftheVRPsystemthatcaninformapolicyandimplemen-tationstrategy.•Economieswithcurrentdiversion,collectionandrecyclingsystems:Thesesystemscanbeadapted,formallyorinformally,toincludediversiontosecondarymarketsforreuseandVRPproduction.•Economieswithoutrecyclingorreverse-logisticsexpertise:Existingindustry-ledforward-logisticssystemscanbeleveragedtoimproveoveralllogisticssystemutilizationandproductivity,alongsidetheapplicationofBestPracticesthatmayhavealreadybeenestablishedforcollectionprogramsinotherjurisdictions.•EconomiesfacingtechnologicalVRPproducercapacitychallenges:TechnologytransferenabledthroughimprovedaccessandtradeinotherproductscategoriescanbeemployedtothebenefitofVRPproduction.Further,thevastbodyofknowledgeaboutconsumerbehavior,innovationdiffusion,andeffectivemarketingthathavebeenemployedinthepasttoguideconsumersawayfromlessbeneficialproducts(e.g.CFC-containingaerosols)canbeutilized.ThemechanismsbywhichanindustrializedeconomypursuescirculareconomyandVRPsmaynecessarilydifferfromthoseappropriateforanon-industrializedeconomy,largelybecauseofvariedtechnological,infrastructure,market,andregulatoryconditionsthatcanincreasethecostExportRecyclingmarketSecondarymarketRecyclingmarketDisposaltoenvironmentDisposaltoenvironmentRecyclingmarketDisposaltoenvironmentVirginmaterialsRecycledmaterialsVirginmaterialsDomesticcores/reuseImportedcores/reuseImports(Developed/industrializedeconomies)In-useproductstock(Installedbase)Maintenance&repairNewdemand(New,arrangeddirectreuse,refurbished,remanufactured)Domesticproduction(New,directreuse,refurbished,remanufactured)RecycledmaterialsImports(Developing/newlyindustrializedeconomies)Collection&diversion(New,arrangeddirectreuse,refurbished,remanufactured)DemandedproductCollectedEOUproductNewinputsReuseinputs/outputsRecyclinginputs/outputsGarbageConnectedrecyclingflowsConnectedreuseflowsFigureC:Descriptivecirculareconomysystemmodelincorporatingvalue-retentionprocesses12Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyandeffortrequiredtoachievethedesiredtransfor-mation.Inindustrializedeconomies,existingproduction,logisticsandcollectioninfrastructurearewellentrenched,andthebusinesscaseforoverhaulingthesesystemsinpursuitofmaximumVRPefficiencymaybedifficult,thusrequiringanincrementalapproach.Incontrast,manynon-in-dustrializedeconomiesfacethechallengeofstrategicallybuilding-upproduction,logisticsandcollectioninfrastructurewherenonecurrentlyexist.Whilethesetypesofsystemicchallengesfacebothindustrializedandnon-industrializedeconomiesalike,theoptimalstrategiesemployedtoovercomethemlikelydiffer.Forexample,whereanon-in-dustrializedeconomyhasastrongrelianceoninformalrepairactivitiesandalowlevelofformalindustrialcapacity,theoptimizedcirculareconomystrategywillnotseektodisplacerepairwithhigher-impactVRPsintheshort-term;insteaditwillfocusonimprovingandenhancingtheefficiencyandvalue-retentionabilitywithintheexistingrepairsystem,andpotentiallyexpandingthatsystemtoachievebetteroutcomesforindependentrepairentitiesandcustomersalike.Keyactionsforindustrymembersandpolicy-makersGovernmentpolicy-makershaveacentralandpivotalrolerelatedtothepresenceandalleviationofregulatory,accessandcollectioninfrastructurebarriers.Otherstakeholders,includingindustry,mayhaveanimportantroletoplayinthealleviationofbarriersrelatedtothecustomermarketandtechnologicalcapacity(refertoFigureD).OrderwithintheSystemStrategicPolicyOpportunities1.Demandforaproductoriginatesinthemarketwiththecustomer2.Economicopportunityofdemandwillbemetwithsupplyfromdomesticsupplyand/orimports3.AtEOUaproductwillbedirectedintoasecondarystreamthatwilldictatethemagnitudeofvalueandutilityretentionofthesystemEnableaccesstoVRPproductsEducateaboutVRPproductsSupportdistributionofVRPproductsEnabledomesticVRPproductionEnableimportoffinishedVRPproductsEnableimportofVRPinputsEnable&promoterecoveryofEOUproductsUpdatedwastehierarchythatreflectsvalueretentionofVRPsandmorecomprehensivereuseoptionsFigureD:InherentsystemorderenablesstrategicprioritiesforalleviationofbarrierstoVRPsForVRPstobepartofaneffectivecirculareconomysystem,acknowledgementoftheunderlyingorderwithinthesystemcanhelptoguidestrategicpolicyopportunities.AsimplifiedapproachtobarriersassessmentandtheroleofgovernmentandindustrymembersindevelopingstrategicresponsestobarrieralleviationisoutlinedinFigureE.13ExecutivesummaryPolicyinterventionstofacilitateVRPswithinacirculareconomymusttargetradicalsystemicchangecombinedwiththefacilitationofincremental(process-level)innovations.Inaddition,policiesneedtocombinesector-specificinsightswithcross-sectoralperspectives:manycirculareconomyandVRPopportunitiestendtobemorealignedwithanduniquetoproduct-type,butchangestothelargercirculareconomysystemcanprovideefficiencyopportunitiesacrosssectors(e.g.sharedreverse-logisticsand/orcollectionsysteminfrastructure).Thestyleofregulationalsoneedstobeinnovation-friendlyinordertoappropriatelyengagestakeholdersindialogueandconsensusviaopen,flexible,andreflectivemulti-stakeholdercollaborations.Apolicypriorityfortheeffectivetransitiontocirculareconomymustbetoovercomethecurrentpassivethrow-awaycultureexhibitedbybothconsumersandproducersineconomicsystemsaroundtheworld,withafirststepinestablishingeffectivebasicwastemanagementandrecyclinginfrastructure.EffectivepolicyapproachesforVRPsmustintegratetheinnovationandcomplexityofVRPprocessesandproductswithinstrategicinitiatives,viacollabo-rationwithindustrymembers,voluntaryagreements,industry-developedstandards,market-basedinstruments,andfinancialinstruments.Theseapproachesmustalsoconsidertheintegrationofproducerandconsumerperspectivesandshouldconsiderandincorporate:bothtechnologicalandenvironmentalfocus;theimportantroleofsmall-mediumenterprises(SMEs);strategicnichemanagementstrategiesandtools;andadoptionforward-lookingpublicprocurementpractices.Atoppriorityforindustrydecision-makersmustbetheadoptionofabroadsystems-perspectiveintobusinessmodelandproductdesign,andtheprioritizationofvalue-creation,value-preservation,andvalue-recoveryaskeyobjectiveswithinaproduct-servicesystem.AretherebarriersthatconstraincustomermarketaccesstofinishedVRPproducts?Aretherebarriersthatconstrainproductioncapacitybyrestrictingproductionactivities,accesstoVRPproductioninputsorprocessknow-howandskilledlabour?AretherebarriersthatconstrainEOUproductrecoverybyrestrictingactivitiestocollectanddivertforreuse,orthatpreventefficiencyintherecoveryinfrastructure?Aretherebarriersthatconstraincustomermarketdemandbypreventingdistri-butionof,perceptionof,interestin,orpositioningofVRPproducts?ArethereBarriersthatconstrainefﬁciency&optimizationofproductionbyinhibitingthelevelofskilledlabour,cost-effectiveproductioninputs,ororganiza-tionallearning?GovernmentstrategicVRPopportunityassessmentIndustrystrategicVRPopportunityassessmentWheremarketaccessbarriers:•constrainsbothcapacity&flow;•affectsproduction&customermarket;•slowsuptake,andknowledge&technologytransfer.Whereproductionconstraints:•limitsdomesticVRPcapacity;•inhibitscompetitivenessofdomesticVRPproducers;•maynecessitateimports;•maynecessitaterelianceonOEMNew.Wheremarketbarriers:•mayconstraindomesticdemand;•constrainsthebusinesscasefordomesticVRPproducers;•VRPproducts.Whereefﬁciencyconstraints:•mayrestrictallsystemaspects:access,production,andmarketdemand;•limitsthespeedandmagnitudeofVRPuptakeandadoption;•limitstheachievementofVRPbenefits.Establishingstrategicpriorities:FigureE:Roleofgovernmentandindustrydecision-makersinassessmentofVRPbarriersandstrategicpriorities14Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyConclusionAlleconomieshavethepotentialtooptimizetheroleofVRPswithintheircirculareconomystrategy.Thereisnoevidencethatthe‘developing/newlyindustrialized’statusofaneconomyaffectstheabilitytofullyengageinVRPs,andthereisconfir-mationthatthisisnotanissueof‘developed/industrializedvs.developing/newlyindustrialized’economicstanding.ItisthepresenceandnatureofthebarrierstoVRPswithintheeconomicandproductionsystemsthatdeterminethemagnitudeof,andspeedatwhichthebenefitsofVRPscanberealized.Regardlessofhowquickly,ortowhatextentVRPsincreasewithintheproductionmixand/ormarketdemand,thepotentialtooffsetnewmaterialrequirement,andretainvaluewithinthesystemisautomaticallyincreasedwiththealleviationofbarrierstoVRPs.Whiletheabsolutemagnitudesofnewmaterialoffset,energyrequirement,andemissionsgenerationaredependentuponthemagnitudeofthedomesticindustryandproductionlevel,theopeningofmarketsandalleviationofbarriersleadstonetpositiveimpactavoidance,andautomaticimprovementsinmaterialefficiency.ThereareinherentsystemicbarrierstoVRPswithinaneconomy’sproduction-consumptionsystemthat,ifnotappropriatelyaddressed,canseverelyinhibittheadoptionofVRPs,theachievementofassociatedenvironmentalimpactreduction,andthesuccessfulpursuitofcirculareconomy.Basedonthecasestudyproductsandeconomiesofthisassessment,regulatoryandaccessbarrierspresentedthemostsignificantconstraintontheadoptionofVRPs,preventingtheflowofVRPproductstopotentialcustomers,andeliminatingthebusiness-caseforproducerstoengageinVRPpractices.Atoppriorityforpolicy-makersmustbetheenablingofVRPproductionandtheconsumptionofVRPproductsifmaterialefficiencyandoptimizedenvironmentalimpactreductionaretobeachieved.Thereisanessentialneedforenhancedcoordi-nationandalignmentbetweenindustrydecision-makersandpolicy-makers.Forindustry,developingenhancedbusinessmodels,extendedcircularconsumption-productionsystems,voluntarystandards,andengagingandeducatingthecustomermarketplaceareessentialfunctions.Theseeffortsmustbeintegratedwiththeeffortsofpolicy-makerstoprotecteconomicandenviron-mentalinterests,andtofacilitatethetransitiontomoreresource-efficientcirculareconomiesinamannerthatisinformedby,alignswith,andreflectsactualindustrypractices,needs,andrequirements.Themovetowardsinternationalstandardsregardingthepractices,processes,andqualifi-cationsofVRPsmustincludeindustry,government,andmarketstakeholderperspectives.TheadoptionofVRPproductsaroundtheworldislow,butthroughtheadoptionofVRPsithasbeenshownthateconomicopportunity(e.g.viacostreductionandemploymentopportunity)andthereductionofimportantnegativeenvironmentalimpactsarepossible.VRPsprovidethemostviableandprovenapproachtoenablingindustrialcirculareconomies:Itisessentialthattheyformthefoundationofcirculareconomystrategiesofcompanies,industries,andeconomiesaroundtheworld.Despiteveryrealimplementationchallengesthatvaryacrosseachglobaleconomy,aboldandbravechangeisneededifthevalueofVRPsistoberealized,andthepursuitofcirculareconomiesmobilized.Thischangemustentailandembraceproductdevelopmentthatisfortheentireproduct-system;flowsofglobalforward-andreverse-logisticssystemsmustbeconnected,andtheefficiencyofthesesystemsmaximized.Tohelpspurnewlevelsofinterestandadoption,producersandcustomersalikemustbeabletohaveaccesstoagreaterrangeofvalue-retentionprocesstechnologyandproducts;andnewandinnovativebusinessmodelsmustbedeveloped,testedanddeployedtosupportmeaningfulmarkettransfor-mation.Thepursuitofcirculareconomyisavitalandtangiblestrategyforovercomingthesignificantenvironmentalandeconomicchallengesthatwearefacing.Itistimeforalldecisionmakerstoengagein,andtakeconsciousactionthatwillenable,supportandleadtothelarge-scaleadoptionofVRPsworldwide.15TableofContentsTableofContentsAcknowledgements1Abouttheinternationalresourcepanel3Preface6Foreword7Executivesummary8Glossaryofkeyterms231Introduction271.1Introductiontothisreport271.1.1Scopeofthestudy281.1.2ReportandStudyStructure311.2Introductiontothecirculareconomy321.2.1Theintersectionofsustainabilityandcirculareconomy341.2.2Sustainabilityandcirculareconomyinnon-industrializedeconomies351.2.3Interestsandinnovation:stakeholderswithinacirculareconomy361.3Introductiontovalue-retentionprocesseswithinacirculareconomy371.3.1Value-retentionprocessesasagatewaytomaterialrecycling372Clarificationanddifferentiationofvalue-retentionprocesses392.1Arrangingdirectreuse412.1.1Arrangingdirectreuseincasestudysectors422.2Repair422.2.1Repairincasestudysectors432.3Refurbishment432.3.1Refurbishmentincasestudysectors442.4Comprehensiverefurbishment442.4.2Comprehensiverefurbishmentincasestudysectors452.5Remanufacturing462.5.3Remanufacturingincasestudysectors473Retainingvaluethroughcircularproductionmodels493.1End-of-useandend-of-lifeinthecontextofvalue-retentionprocesses493.1.1Equivalentfullservice-lifeprocesses513.1.2Partialservicelifeprocesses513.1.3Fullservicelifeversuspartialservicelifevalueretention523.2Differentiatingvalue-retentionprocessesfromtraditionalrecyclingandreuse543.3Repairinthecontextofcirculareconomy553.3.1Envisionedeffectandrelevantsectorsforrepair553.3.2Currentgoodpractice,obstaclesandwaysofimprovement553.3.3Gettingdataonrepairofhouseholdgoods564Contextandmethodologyforthestudy594.1Conceptualframework594.2Bottom-upmodeling:empiricaldatacollectionandproduct-levelanalysis614.2.1Collectionofdataoncasestudyproductsandprocesses614.2.2Product-levelmodeldevelopmentandapproach624.3Top-downmodeling:macrodataandeconomy-levelanalysis644.3.1Demandandmarketsharemodeling664.3.2Modelingthesupplychain674.3.3Modelingproductionandproductionimpacts674.3.4Modelingend-of-useandcollection684.4Limitationsofthestudy684.4.1Impactconstraintsresultingfromcasestudydataavailability694.4.2Limitationsofthemodels6916Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy5Product-levelbenefitsofvalue-retentionprocesses715.1Modelingtheproduct-levelimpactsofvalue-retentionprocesses715.2Environmentalimpactsofvalue-retentionprocessesattheproduct-level735.2.1Industrialdigitalprinters745.2.2Vehicleparts755.2.5Heavy-dutyandoff-road(HDOR)equipmentparts785.3Economicadvantagesofvalue-retentionprocessesattheproduct-level815.3.1Productioncostadvantagesofvalue-retentionprocesses855.3.2Employmentopportunitiesthroughvalue-retentionprocesses855.3.3Productionwastereductionthroughvalue-retentionprocesses855.4Assessingproduct-levelopportunitiesinothersectors865.4.1Inkjetprintercartridges865.4.2Officefurnituresystems875.4.3Mobile(cellular)phones886Analysisofvalue-retentionprocessesatthesystems-level896.1Marketandsystemconditionsaffectingcurrentstateofvalue-retentionprocesses896.1.1Productionandsupplychaincomplexity926.1.2Regulatoryandsystemcomplexity926.1.3Marketcomplexity936.2Keystakeholders956.2.1Producers956.2.2Market-levelstakeholders956.2.3Collectionandrecoverynetworks967Value-retentionprocesseswithinmarkets977.1Modelingframework977.2Barrieralleviationscenarios987.2.1Regulatoryandaccessfactors997.2.2Marketfactors1007.2.3Technologicalfactors1007.2.4Importshare1007.3Analysisandopportunitiesviavalue-retentionprocesses1017.3.1Overviewofanalysisapproach1017.3.2Contextofanalysis1017.4AnalysisofIndustrialdigitalprinterssectors1027.4.1Industrialdigitalprinterproductionlevels1027.4.2Analysisofmaterial-levelimpactsfromindustrialdigitalprinterproduction1057.4.3Aggregationofimpactsfromindustrialdigitalprinterproduction1077.4.4Industrialdigitalprinterssector:impactsavoidedthroughvalue-retentionprocesses1097.5Analysisofvehiclepartssector1137.5.1Vehiclepartsproductionlevels1137.5.2Analysisofmaterial-levelimpactsfromvehiclepartsproduction1167.5.3Aggregationofimpactsfromvehiclepartsproduction1177.5.4Impacttradeoffsoflightweightdesigninvehiclepartssector1197.5.5Vehiclepartssector:impactsavoidedthroughvalue-retentionprocesses1217.6AnalysisofHDORequipmentpartssector1267.6.1HDORequipmentpartsproductionlevels1267.6.2Analysisofmaterial-levelimpactsfromHDORequipmentpartsproduction1297.6.3AggregationofimpactsfromHDORequipmentpartsproduction1307.6.4HDORequipmentpartssector:impactsavoidedthroughvalue-retentionprocesses1328Discussionofkeyinsights1378.1Value-retentionprocessescreatenet-positiveoutcomesforcirculareconomy1378.1.1Value-retentionprocessesarenotcreatedequal1378.1.2Product-levelefficiencygainsleadtoeconomy-levelefficiencygains1398.1.3Producttypeaffectspossiblegainsfromvalue-retentionprocesses1488.1.4Impactavoidancepotentialthroughbarrieralleviation1498.2Implicationsforindustrialdesignstrategyandpractice1518.2.1Integratingdesignandcirculareconomybusinessmodelinnovation152178.2.2Integratingproductcircularityintoproductdevelopment1548.2.3Designingforproductcircularity1568.2.4AppropriateuseofVRPs1648.2.5Designstrategyconclusions1678.3Themechanicsofasystemdesignedforvalue-retentionprocesses1688.3.1Value-retentionprocessesareagatewaytorecycling1688.3.2Reboundeffectandsystemicimplicationsofvalue-retentionprocesses1708.4Overcomingbarrierstovalue-retentionprocesses1748.4.1EconomicconditionsandaccesstoVRPproducts1758.4.2Environmentalandtechnologypolicyopportunities1768.4.3Integratedglobalresponsestobarrieralleviation1818.4.4Diversionandcollectioninfrastructure1818.5Thenecessityofaproduct-systemsapproach1828.5.1Productdesignsystemsrequireexpandedboundaries1838.5.2Alleconomiesrequireasystems-perspectiveforcirculareconomy1849Conclusions1919.1Value-retentionprocessescreateefficiencyopportunityattheproduct-level1919.2Adoptionofproduct-systemdesignapproachesiscritical1939.3Existingreverse-logisticsmustbeenhanced1949.4Markettransformationforvalue-retentionprocessesreliesongovernmentandindustry1959.5Finalwords197AppendixA–Overviewofcasestudyproductsandsectors199Industrialdigitalprinterssector199Vehiclepartssector200Heavy-dutyandoff-road(HDOR)equipmentpartssector202AppendixB–Assessmentmethodology203Conceptualframework203Bottom-upmodeling:empiricaldatacollectionandproduct-levelanalysis208Collectionofdataoncasestudyproductsandprocesses208Datacollectionmethodology208Product-levelmethodologyandmodel213CalculatingmaterialrequirementsforVRPs216Product-levelmodelassumptions217Simulationproduct-levelprogrammodel223Interpretingoutputsofthemodel223Methodologyforconnectingprocess-levelandeconomy-levelmodels224Process-levelproductionimpactandrequirementfactors224Process-levelselecteconomicimpacts227Top-downmodeling:macro-dataandeconomy-levelanalysis230Demandandmarketsharemodeling232Modelingthesupplychain233Modelingproductionandproductionimpacts234Modelingend-of-useandcollection234Economy-levelmethodology235Barrieralleviationscenarios236Economy-levelmodel238Factorsenablingacross-economyandacross-scenarioassessment24310Reportreferences25518Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyListoffiguresFIGUREA:Descriptionofvalue-retentionpotentialofVRPs8FIGUREB:ProductdevelopmentusingVRPdesignprinciples10FIGUREC:Descriptivecirculareconomysystemmodelincorporatingvalue-retentionprocesses11FIGURED:InherentsystemorderenablesstrategicprioritiesforalleviationofbarrierstoVRPs12FIGUREE:Roleofgovernmentandindustrydecision-makersinassessmentofVRPbarriersandstrategicpriorities13FIGURE1:Scopeofthisreportinbroadercontextofsustainabilityandcirculareconomy28FIGURE2:Overviewofthereportstructure31FIGURE3:Recyclingwithinacascadingmaterialvalue-retentionsystem38FIGURE4:Definitionsandstructureofvalue-retentionprocesseswithinthisreport40FIGURE5:DefinitionsrelevanttoVRPactivitiesasadoptedundertheBaselConvention41FIGURE6:Descriptivesummaryofarrangingdirectreuseprocess41FIGURE7:Descriptivesummaryofrepairprocess42FIGURE8:Descriptivesummaryofrefurbishmentprocess44FIGURE9:Descriptivesummaryofcomprehensiverefurbishmentprocess45FIGURE10:Descriptivesummaryofremanufacturingprocess46FIGURE11:Summaryofvalue-retentionprocessesdifferentiationwithinthecontextofEOUandEOL50FIGURE12:USindustrialdigitalprintingpress(#2)utilityandper-unitvalueviaarrangingdirectreuseovertime53FIGURE13:USTraditionalvehicleengineutilityandper-unitvalueviaarrangingdirectreuseovertime53FIGURE14:Overviewofconceptualassessmentframework59FIGURE15:Overviewofbarrieralleviationscenarios60FIGURE16:Keyfactorsaffectingvalue-retentionprocessesandproductionsystems61FIGURE17:Descriptiveeconomicsystemmodelutilizedfortop-downanalysis64FIGURE18:Overviewofcompreheniveanalyticalsystems-modelmechanicsforeconomy-levelassessment65FIGURE19:Product-levelsystemandflowsforvalue-retentionprocesses72FIGURE20:ExamplemodelforreutilizationofvehiclepartsproductsatEOUthroughvalue-retentionprocesses72FIGURE21:ComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessesforindustrialdigitalprinters75FIGURE22:ComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessesforvehiclepartsproductionwith100percentcastironengines78FIGURE23:Material-levelComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessforvehiclepartswith100percentlightweightengines78FIGURE24:ComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessesforHDORpartsproduction80FIGURE25:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyindustrialdigitalprinters81ListofboxesBOX1:GoodPracticeExample–Community-CenteredWorkshops57BOX2:GoodPracticeExample–ReuseandRepairNetworks57BOX3:ProductServiceSystemsinaCircularEconomy153BOX4:EstimatedcontributionofVRPstoglobalenvironmentalimpactavoidance19619ListoffiguresFIGURE26:Employmentopportunity,costadvantage,andproductionwastereductionviapartialservicelifeVRPsforcasestudyindustrialdigitalprinters82FIGURE27:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyvehicleparts83FIGURE28:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyvehicleparts83FIGURE29:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyHDORequipmentparts84FIGURE30:Employmentopportunity,costadvantage,andproductionwastereductionviapartialservicelifeVRPsforcasestudyHDORequipmentparts84FIGURE33:Spectrumofbarrier-conditionsandbarrier-alleviationscenarios97FIGURE34:Overviewofbarrieralleviationscenarios99FIGURE35:EstimatedUSproductionofindustrialdigitalprintersrelativetoestimateddemandinUSsimulatedover7yearscenarios103FIGURE36:EstimatedGermanyproductionofindustrialdigitalprintersrelativetoestimateddemandinGermanysimulatedover7yearscenarios104FIGURE37:EstimatedBrazilproductionofindustrialdigitalprintersrelativetoestimateddemandinBrazilsimulatedover7yearscenarios104FIGURE38:EstimatedChinaproductionofindustrialdigitalprintersrelativetoestimateddemandinChinasimulatedover7yearscenarios105FIGURE39:EstimatedaggregatednewmaterialusedandavoidedviaUSremanufacturingofindustrialdigitalprinterssimulatedover7yearscenarios106FIGURE40:EstimatedaggregatednewmaterialavoidedviaUSremanufacturingofindustrialdigitalprinterssimulatedover7yearscenarios106FIGURE41:ComparisonofnewmaterialusedandavoidedviaUSremanufacturingofindustrialdigitalprinters107FIGURE42:Estimatedaggregate7-yearembodiedandprocess-basedenergyforUSproductionofindustrialdigitalprinters108FIGURE43:Estimatedaggregate7-yearembodiedandprocess-basedemissionsforUSproductionofindustrialdigitalprinters108FIGURE44:Estimatedaggregate7-yearimpactsavoidedviaUSindustrialdigitalprinterproductionwithvalue-retentionprocesses109FIGURE45:Estimatedaggregate7-yearimpactsavoidedviaGermanyindustrialdigitalprinterproductionwithvalue-retentionprocess110FIGURE46:Estimatedaggregate7-yearimpactsavoidedviaBrazilindustrialdigitalprinterproductionwithvalue-retentionprocesses111FIGURE47:Estimatedaggregate7-yearimpactsavoidedviaChinaindustrialdigitalprinterproductionwithvalue-retentionprocess112FIGURE48:EstimatedUSproductionofvehiclepartsrelativetoestimateddemandinUSsimulatedover7yearscenario114FIGURE49:EstimatedGermanyproductionofvehiclepartsrelativetoestimateddemandinGermanyover7yearscenario114FIGURE50:EstimatedBrazilproductionofvehiclepartsrelativetoestimateddemandinBrazilover7yearscenario115FIGURE51:EstimatedChinaproductionofvehiclepartsrelativetoestimateddemandinChinaover7yearscenario115FIGURE52:EstimatedaggregatednewmaterialusedandavoidedviaUSremanufacturingofvehiclepartsover7yearscenario116FIGURE53:EstimatedaggregatednewmaterialavoidedviaUSremanufacturingofvehiclepartsover7yearscenario117FIGURE54:Comparisonofaggregate7-yearnewmaterialusedandavoidedviaUSremanufacturingofvehicleparts118FIGURE55:Estimatedaggregate7-yearembodiedmaterialenergyandprocessenergyuse,UScasestudyofvehiclepartswithtraditionalengine118FIGURE56:Estimatedaggregate7-yearembodiedmaterialemissionsandprocessemissions,UScasestudyofvehiclepartswithtraditionalengine119FIGURE57:USaggregate7-yearmaterialuseandavoidancecomparisonoftraditionalvs.lightweightenginemix120FIGURE58:USaggregate7-yearembodiedmaterialenergycomparisonoftraditionalvs.lightweightenginemix120FIGURE59:USaggregate7-yearembodiedmaterialemissionscomparisonoftraditionalvs.lightweightenginemix121FIGURE60:EstimatedaggregateimpactsavoidedviaUSvehiclepartsproductionwithvalue-retentionprocesses122FIGURE61:Estimatedaggregate7-yearimpactsavoidedviaGermanyvehiclepartsproductionwithvalue-retentionprocesses12320Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFIGURE62:Estimatedaggregate7-yearimpactsavoidedviaBrazilvehiclepartsproductionwithvalue-retentionprocesses124FIGURE63:Estimatedaggregate7-yearimpactsavoidedviaChinavehiclepartsproductionwithvalue-retentionprocesses125FIGURE64:EstimatedUSproductionofHDORequipmentpartsrelativetoestimateddemandinUS,simulatedover7yearscenarios127FIGURE65:EstimatedGermanyproductionofHDORequipmentpartsrelativetoestimateddemandinGermany,simulatedover7yearscenarios127FIGURE66:EstimatedBrazilproductionofHDORequipmentpartsrelativetoestimateddemandinBrazil,simulatedover7yearscenarios128FIGURE67:EstimatedChinaproductionofHDORequipmentpartsrelativetoestimateddemandinChina,simulatedover7yearscenarios128FIGURE68:EstimatedaggregatednewmaterialusedandavoidedviaUSremanufacturingofHDORequipmentparts,simulatedover7yearscenarios129FIGURE69:EstimatedaggregatenewmaterialavoidedviaUSremanufacturingofHDORequipmentparts,simulatedover7yearscenarios130FIGURE70:Comparisonofaggregate7-yearnewmaterialusedandavoidedviaUSremanufacturingofHDORequipmentparts131FIGURE71:Estimatedaggregate7-yearembodiedandprocess-basedenergyforUSproductionofHDORequipmentparts131FIGURE72:Estimatedaggregate7-yearembodiedandprocess-basedenergyforUSproductionofHDORequipmentparts132FIGURE73:Estimatedaggregate7-yearimpactsavoidedviaUSHDORequipmentpartsproductionwithvalue-retentionprocesses133FIGURE74:Estimatedaggregate7-yearimpactsavoidedviaGermanyHDORequipmentpartsproductionwithvalue-retentionprocesses134FIGURE75:Estimatedaggregate7-yearimpactsavoidedviaBrazilHDORequipmentpartsproductionwithvalue-retentionprocesses135FIGURE76:Estimatedaggregate7-yearimpactsavoidedviaChinaHDORequipmentpartsproductionwithvalue-retentionprocesses136FIGUREB-1:Overviewofconceptualassessmentframework203FIGUREB-2:Overviewofbarrieralleviationscenarios204FIGUREB-3:Keyfactorsaffectingvalue-retentionprocessesandproductionsystems205FIGUREB-4:Product-levelsystemandflowsforvalue-retentionprocesses210FIGUREB-5:ExamplemodelforreutilizationofvehiclepartsproductsatEOUthroughvalue-retentionprocesses211FIGUREB-6:Probabilityofarrangingdirectreusedistributionovertypicalservicelife214FIGUREB-7:Probabilityofrepairdistributionovertypicalservicelife215FIGUREB-8:MATLABprogramflowchart223FIGUREB-9:Descriptiveeconomicsystemmodelutilizedfortop-downanalysis231FIGUREB-10:Overviewofcompreheniveanalyticalsystems-modelmechanicsforeconomy-levelassessment232FIGUREB-11:Spectrumofbarrier-conditionsandbarrier-alleviationscenarios235FIGUREB-12:Overviewofbarrieralleviationscenarios237FIGUREB-13:Overviewofcompreheniveanalyticalsystems-modelmechanicsforeconomy-levelassessment23921ListofTablesListofTablesTABLE1:Casestudyproductsandsectors30TABLE2:Contrastedscope,stakeholderroles,andimpactemphasisofsustainabilityandcirculareconomy35TABLE3:EstimatedlifeandstockofhouseholdproductsinEurope58TABLE4:Summaryofcasestudyproductsandprocessesassessed71TABLE5:USproductionprinterproduct-levelmaterialefficiency,energyandemissionsimpacts74TABLE6:USindustrialdigitalprintingpress(#1)product-levelmaterialefficiency,energyandemissionsimpacts74TABLE7:USindustrialdigitalprintingpress(#2)product-levelmaterialefficiency,energyandemissionsimpacts75TABLE8:USvehiclealternatorproduct-levelmaterialefficiency,energyandemissionsimpacts76TABLE9:USvehiclestartermotorproduct-levelmaterialefficiency,energyandemissionsimpacts76TABLE10:UStraditionalvehicleengineproduct-levelmaterialefficiency,energyandemissionsimpacts77TABLE11:USlightweightvehicleengineproduct-levelmaterialefficiency,energyandemissionsimpacts77TABLE12:USHDORengineproduct-levelmaterialefficiency,energyandemissionsimpacts79TABLE13:USHDORalternatorproduct-levelmaterialefficiency,energyandemissionsimpacts79TABLE14:USHDORturbochargerproduct-levelmaterialefficiency,energyandemissionsimpacts80TABLE15:Summaryofkeybarriersinhibitingpracticeandscale-upofvalue-retentionprocesses91TABLE16:Summaryrangesofrelativepotentialproduct-levelmaterialvalueretentionviaVRPs139TABLE17:Summaryrangesofrelativepotentialproduct-levelembodiedmaterialenergyavoidanceviaVRPs140TABLE18:Summaryrangesofrelativepotentialproduct-levelembodiedmaterialemissionsavoidanceviaVRPs140TABLE19:Summaryrangesofrelativepotentialproduct-levelprocessenergyavoidanceviaVRPs141TABLE20:Summaryrangesofrelativepotentialproduct-levelprocessemissionsavoidanceviaVRPs141TABLE21:Summaryofremanufacturing-appropriateproductcategories167TABLEA-1:Estimated2013marketsizeforindustrialdigitalprinters204TABLEA-2:Estimated2013marketsizeforvehicleparts205TABLEA-3:Estimated2013marketshareofinternalcombusionsvehicleengines205TABLEA-4:Estimated2013marketsizeforHDORequipmentparts206TABLEB-1:Summaryofmodelnotation210TABLEB-2:Summaryofcasestudyproductsandprocessesassessed213TABLEB-3:Generalembodiedmaterialenergyandemissionsvaluesusedinproduct-levelmodel221TABLEB-4:ProductmodelparametersandVRPassumptionsforIndustrialDigitalProductionPrinter222TABLEB-5:ProductmodelparametersandVRPassumptionsforIndustrialPrintingPress#1222TABLEB-6:ProductmodelparametersandVRPassumptionsforIndustrialPrintingPress#2223TABLEB-7:ProductmodelparametersandassumptionsforcasestudyIndustrialDigitalPrinters223TABLEB-8:ProductmodelparametersandVRPassumptionsforVehicleEngines224TABLEB-9:ProductmodelparametersandVRPassumptionsforVehicleAlternators224TABLEB-10:ProductmodelparametersandVRPassumptionsforVehicleStarters224TABLEB-11:ProductmodelparametersandVRPassumptionsforVehicleParts225TABLEB-12:ProductmodelparametersandVRPassumptionsforHDOREngines225TABLEB-13:ProductmodelparametersandVRPassumptionsforHDORAlternators226TABLEB-14:ProductmodelparametersandVRPassumptionsforHDORStarters226TABLEB-15:ProductmodelparametersandassumptionsforHDOREquipmentParts226TABLEB-16:Per-unitprocessenergyandemissionsassumptionsforcasestudyindustrialdigitalprinters229TABLEB-17:Per-unitprocessenergyandemissionsassumptionsforcasestudyvehicleparts230TABLEB-18:Per-unitprocessenergyandemissionsassumptionsforcasestudyHDORequipmentparts231TABLEB-19:Selecteconomicassumptionsforcasestudyindustrialdigitalprinters232TABLEB-20:Selecteconomicassumptionsandimpactsforcasestudyvehicleparts25233TABLEB-21:SelecteconomicassumptionsandimpactsforCaseStudyHDOREquipmentParts3123422Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTABLEB-22:Summaryofnomenclatureforaggregatedimpactformulas246TABLEB-23:Productionprocessenergyfactorandefficiencycomparisonacrossscenarioeconomies248TABLEB-24:Productionprocessemissionsfactorandgenerationcomparisonacrossscenarioeconomies249TABLEB-25:Productionwastefactorcomparisonacrossscenarioeconomies249TABLEB-26:LaborRequirementfactorcomparisonacrossscenarioeconomies250TABLEB-27:Processimpactfactorsforimportedproducts251TABLEB-28:Overviewofrelativebarrierfactorsincurrentstate251TABLEB-29:OverviewofVRPbarrierfactorsforallVRPbarrieralleviationscenarios252TABLEB-30:OverivewoftechnologicalVRPbarrierfactorsandinputstocalculation47253TABLEB-31:OverviewofregulatoryandaccessVRPbarrierfactorsandinputstocalculation254TABLEB-32:Summaryofimportshareassumptionsacrossglobalbarrieralleviationscenarios255TABLEB-33:Importandexportfactorsheldconstantwithinmodelperiod25623GlossaryofkeytermsGlossaryofkeytermsThefollowingtermsareintendedforclarificationpurposesonly.Accepteddefinitionswereusedwhenavailable.Inthisreport,thefollowingtermsareusedaccordingly.Additionaldefinitionclarifi-cationisincludedinSection2.Arrangingdirectreuse:Thecollection,inspectionandtesting,cleaningandredistributionofaproductbackintothemarketundercontrolledconditions(e.g.aformalbusinessundertaking).Avoidedenvironmentalimpacts:Referstoascenario-baseddemonstrationoftheenvironmentalimpactsthatareavoidedbyaneconomyduetotheuseofvalue-retentionprocesses(VRPs)withintheproductionmix.(RefertotermsValue-RetentionProcess,andProductionMix,below).Thisapproachpresentsthedifferentialenvironmentalimpactsbetweenascenarioinwhichtotalsupplycomesfromoriginalequipmentmanufacturer(OEM)Newunits,andthescenarioinwhichtotalsupplyincorporatestheactualeconomy-specificproductionmixwhichincludesvalue-retentionprocesses(VRPs)tovaryingdegrees.Thisimpactdifferential,basedonactualproductionvolumes,presentstheenvironmentalimpactsthatareavoidedbecauseofeconomy-specificproductionmix.Component:Referstoaconstituentpartofabroaderdefinedsystem;anelementofalargerwholeobjectthatcouldbeapartand/oraproduct.Forthepurposesofthisreport,componentisusedtorefertotheconstituentpartsofthedefinedcasestudyproducts.Comprehensiverefurbishment:Referstotherefurbishmentofusedequipmentthattakesplacewithinindustrialorfactorysettings,withahighstandardandlevelofrefurbishment.Refurbishmentincreasesorrestorestheproduct’sperformanceand/orfunctionalityandenablestheproducttomeetapplicabletechnicalstandardsorregulatoryrequirements,withtheresultofmakingafullyfunctionalproducttobeusedforapurposethatisatleasttheonethatwasoriginallyintended(PleaserefertoRefurbishmenttermbelow).Core:Acoreisapreviouslysold,wornornon-func-tionalproductormodule,intendedfortheremanu-facturingprocess.Duringreverse-logistics,acoreisprotected,handledandidentifiedforremanufac-turingtoavoiddamageandtopreserveitsvalue.Acoreisusuallynotwasteorscrap,anditisnotintendedtobereusedforotherpurposesbeforecomprehensiverefurbishmentorremanufacturingtakesplace.Economicimpacts:Referstotheeconomicimpactmetricsaddressedwithinthisstudy,specif-ically:costadvantage($USD);andemploymentopportunity(Full-timeequivalentworker,orFTE).Embodiedmaterialemissions:ReferstothecarbondioxideandgreenhousegasequivalentemissionsemittedduringtheextractionandprimaryprocessingstagesofmaterialslaterusedasinputstoOEMNewandvalue-retentionprocessproductionactivities;‘cradle-to-gate’upuntilenteringtheproductionfacility‘gate’.Modelingofembodiedmaterialemissionsusesamateri-al-specificconversion(kgCO2-eq./unit),basedontheglobalaverageforeachmaterialtype,inaccordancewiththeInventoryofCarbonandEmissions(ICE)(HammondandJones2011).Embodiedmaterialenergy:ReferstotheenergyconsumedduringtheextractionandprimaryprocessesstagesofmaterialslaterusedasinputstoOEMNewandvalue-retentionprocessproductionactivities;‘cradle-to-gate’upuntilenteringtheproductionfacility‘gate’.Modelingofembodiedmaterialenergyusesamaterial-specificconversion(MJ/kg),basedontheglobalaverageforeachmaterialtype,inaccordancewiththeInventoryofCarbonandEmissions(ICE)(HammondandJones2011).End-of-life(EOL):Referstothepointintheproductorobject’sservicelifeatwhichtheproductorobjectisnolongerabletofunctionorperformasrequired,andforwhichtherearenootheroptionsfortheproductbuttoberecycledordisposedintotheenvironment.End-of-use(EOU):Referstothepointintheproductorobject’sservicelifeatwhichtheproductmaynotbeneededbythecurrentowner/user,orabletofunctionorperformasrequired,andforwhichthereareotheroptionsavailabletokeepthe24Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyproductand/oritscomponentswithinthemarket,viavalue-retentionprocesses(VRPs).ItisimportanttonotethatEOUmayoccurwithoutanyproductissueatall:Theownermaysimplynolongerwantorneedthefully-functioningproduct,eventhoughithasnotyetfulfilleditsentireexpectedservicelife.Thisincludesvariousformsofobsolescence,whichreferstotheprocessofbecomingobsolete,outdatedornolongerusedduetodefects(materialobsolescence),lackofinteroperabilityorincompat-ibilityofsoftware(functionalobsolescence),thedesireforanewversion(psychologicalobsolescence),orbecauserepair/maintenancetomaintainperformanceisexpensive(economicobsolescence).End-of-waste(EOW):Referstoconditionsunderwhichcertainspecifiedwasteshallceasetobewaste(perDirective2008/98/EC),specifically:whenithasundergonearecovery,includingrecycling;thesubstanceorobjectiscommonlyusedforspecificpurposes;amarketordemandexistsforsuchasubstanceorobject;thesubstanceorobjectfulfillsthetechnicalrequirementsforthespecificpurposesandmeetstheexistinglegislationandstandardapplicabletoproducts;andtheuseofthesubstanceorobjectwillnotleadtooveralladverseenvironmentalorhumanhealthimpacts.(Directive2008/98/EC)Environmentalimpacts:Referstotheenviron-mentalimpactmetricsaddressedwithinthisstudy,specifically:newmaterialoffset(avoided)(kg);embodiedmaterialenergy(MJ);embodiedmaterialemissions(kgCO2-eq.);processenergy(MJ);andprocessemissions(kgCO2-eq.).Expectedservicelife:Referstothemanufac-turer’sexpectationsaboutthetime-periodforwhichaproductcanbeused,usuallyspecifiedasamedian,andreflectingthetimethattheproductcanbeexpectedtobeserviceableand/orsupportedbyitsmanufacturer.Forward-logistics:Referstothetraditionalflowofproductsfromthepointofproductionthroughtotheconsumerandreflectsatraditionalsupplychainmanagementperspectivefocusedonproductdelivery.Fullservicelife:Referstovalue-retentionprocesses(VRPs)thatenablethefulfillmentofacompletenewlifeforeveryusagecycleoftheproduct,andincludesmanufacturing(OEMnew),comprehensiverefurbishment,andremanufac-turing.Theseprocessestakeplacewithinfactorysettingsandindustrialoperations.In-useproductstock:Referstoproductsin‘activeuse’,includingthosebeingrepairedforreturntotheoriginaluser.Differentfromtraditional‘stock’terminology,In-UseProductStockexcludesend-of-use(EOU)productsthathavebeenremovedfromthemarketplacetobeusedasinputtodirectreuse,refurbishment,comprehensiverefurbishment,orremanufacturing.Forpurposesofclarity,In-UseProductStockalsoexcludesend-of-life(EOL)productsthathaveenteredrecyclingordisposalstreams.Lifecycleassessment(LCA):AsdefinedbytheInternationalStandardsOrganization(ISO),referstoatechniquefortheassessmentofenvironmentalaspectsandpotentialimpactsassociatedwithaproductbycompilinganinventoryofrelevantinputsandoutputsofaproductsystem,evaluatingthepotentialenvironmentalimpactsassociatedwiththoseinputsandoutputs,andinterpretingtheresultsoftheinventoryanalysisandimpactassessmentphasesinrelationtotheobjectivesofthestudy.(ISO14040/44,2006).Module:Referstoaself-containedunitoritem,suchasanassemblyorsegmentofalargerproduct,whichitselfperformsadefinedtaskandcanbelinkedwithothersuchunitstoformalargersystem.Newmaterial:Referstothetotal‘new’(notreusedviavalue-retentionprocesses(VRPs))materialthatisrequiredasinputstocompleteeachOEMNewandValue-RetentionProcess.Newmaterialcanincludeamixtureofvirgin(primary)andrecycled(secondary)content,giventhatmostofmaterialsavailableforpurchaseintheglobaleconomyconsistofsomemixturethereof.Theassumedratioofvirginandrecycledcontentusedinmodelingisbasedontheglobalaverageforeachmaterialtype,inaccordancewiththeInventoryofCarbonandEmissions(ICE)(HammondandJones2011).Originalequipmentmanufacturer(OEM):Referstothemanufactureroftheoriginalpartsorequipment,includingtheitemsmanufactured,assembledandinstalledduringconstructionofanewproduct.TheOEMmayormaynotberesponsibleformarketingand/orsellingoftheproduct.25GlossaryofkeytermsOEMnew:Referstotraditionallinearmanufacturingproductionprocessactivitiesthatrelyon100percentnewmaterialinputs,andwhichareperformedbytheoriginalequipmentmanufacturer(OEM).Part:Referstoapieceorsegmentofanobject;mayalsobeacomponentofaproduct.Forthepurposesofthisreport,partisusedtoacknowledgethatthecasestudyproductmaybeacomponentofalargerdefinedproduct(e.g.vehicleparts,whicharecomponentsofavehicle).Partialservicelife:Referstovalue-retentionprocesses(VRPs)thatenablethecompletionof,and/orslightextensionof,theexpectedproductlife,througharrangingdirectreuseoftheproduct,repair,andrefurbishment.Theseprocessestakeplacewithinmaintenanceorintermediatemaintenanceoperations.Potentialreusability:ReferstotheextenttowhichaproductcomplieswithEnd-of-Wasteconditions,andthusqualifiesasaninputtovalue-retentionprocesses.Primarymaterial:Alsoreferredtoasvirginmaterial,referstoamaterialthathasnotbeenpreviouslyusedorconsumed,orsubjectedtoprocessingotherthanforitsoriginalproduction.Primarymaterialisassumedtocontainno(zero)recycledcontent.Processemissions:ReferstothecarbondioxideandgreenhousegasequivalentemissionsemittedduringtheOEMNewand/orvalue-retentionprocessproductionactivities.Modelingofprocessemissionsisbasedonprocessenergy(MJ/unit),convertedusingeconomyspecificGlobalWarmingPotential(GWP)100afactorstoaccountforgridmixoftheproducingeconomy(Ecoinvent3.32016).Processenergy:Referstodirectat-the-meterenergyconsumedduringtheOEMNewand/orvalue-retentionprocessproductionactivities,grossed-uptoaccountforeconomy-specificelectricitysupply-chainefficiencies.Scaledprocessenergyresultsincludedirectelectricityconsumption,aswellasaverageelectricitygeneration,transmission,anddistributionlossesspecifictotheproducingeconomy(WorldEnergyCouncil2015).Product:Referstoanarticle,objectorsubstancethatismanufacturedorrefinedforsale,thatisthefinaloutputofaprocess.Productlifetime:Referstotheperiodthatstartsatthemomentaproductcompletesoriginalmanufactureandendswhentheproductisbeyondanyreuseorrecoveryattheproduct-level.(denHollander,Bakker,andHultink2017)Productplatform:Referstoasetofcommonelements,includingunderlyingtechnicalcomponents,partsortechnologythataresharedacrossarangeofthecompany’sproducts.Newderivativeproductscanbedevelopedandlaunchedbythecompanybasedonacommonproductplatform.Productionmix:ReferstotheequivalentproductionsharesofOEMNewandValue-RetentionProcessesthatareadoptedwithinasampleeconomyunderdifferentscenarioconditions.Like‘marketshare’,thisreferstothepercentageoftotalproductionthatisaccountedforbyeachproductionprocess.Recycling:ReferstotherelevantoperationsspecifiedinAnnexIVBtotheBaselConvention.Recyclingoperationsusuallyinvolvesthereprocessingofwasteintoproducts,materialsorsubstances,thoughnotnecessarilyfortheoriginalpurpose,anddoesnotcoveroperationsthatrecoverenergyfromwaste.Refurbishment:Referstothemodificationofanobjectthatisawasteoraproductthattakesplacewithinmaintenanceorintermediatemaintenanceoperationstoincreaseorrestoreperformanceand/orfunctionalityortomeetapplicabletechnicalstandardsorregulatoryrequirements,withtheresultofmakingafullyfunctionalproducttobeusedforapurposethatisatleasttheonethatwasoriginallyintended.Therestorationoffunctionality,butnotvalue,enablesapartialnewservicelifefortheproduct.Remanufacturing:Referstoastandardizedindustrialprocessthattakesplacewithinindustrialorfactorysettings,inwhichcoresarerestoredtooriginalas-newconditionandperformance,orbetter.Theremanufacturingprocessisinlinewithspecifictechnicalspecifications,includingengineering,quality,andtestingstandards,andtypicallyyieldsfullywarrantedproducts.Firmsthatprovideremanufacturingservicestorestoreusedgoodstooriginalworkingconditionareconsideredproducersofremanufacturedgoods.Repair:Referstothefixingofaspecifiedfaultinanobjectthatisawasteoraproductand/orreplacing26Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomydefectivecomponents,inordertomakethewasteorproductafullyfunctionalproducttobeusedforitsoriginallyintendedpurpose.Reuse:Referstotheusingagainofaproduct,objectorsubstancethatisnotwaste,forthesamepurposeforwhichitwasconceived,withoutthenecessityofrepairorrefurbishment.Reverse-logistics:Referstoactivitiesengagedtorecapturethevalueofproducts,parts,andmaterialsoncetheyhavereachedend-of-useorend-of-life.AllVRPsmaybeconsideredtobepartofareverse-logisticssystem,andinadditionactivitiesincludingcollection,transportation,andsecondarymarketsprovideessentialmechanismsforfacilitatingreverse-logistics.Secondarymarket:Alsoreferredtoastheaftermarket,isamarketforusedgoodsorassets,oranalternativeuseforanexistingproductorassetwherethecustomerbaseisasecond,orderivative(related)market.ItemsonthesecondarymarketmayormaynotbemanufacturedbytheOEM.Secondarymaterial:Alsoreferredtoasrecycledmaterial,referstoanymaterialthathasbeenusedatleastoncebefore,isnottheprimaryproductofamanufacturingorcommercialprocess,andcanincludepost-consumermaterial,post-industrialmaterial,andscrap.Servicelife:Referstoaproduct’stotallifetimeduringwhichitcanbeusedeconomicallyorthetimeduringwhichitisusedbyoneowner,fromthepointofsaletothepointofdiversionforreuseviaVRPs,ortothepointofdisposal(Cooper1994).ThisisdifferentiatedfromExpectedServiceLifeasitreferstotheactualservicelifeandisnotnecessarilyassociatedwithmanufacturerexpectationsorcommitments.Technicalnutrients:Referstonon-toxic,highly-stablematerialsthathavenonegativeeffectsonthenaturalenvironment,thataredesignedtoberecoveredandreusedwithinproductionactivities,thatandcanbeusedincontinuouscycleswithoutlosingintegrityorquality.Upgrade:Referstotheactofraisingaproducttoahigherstandardwiththeobjectivetoimproveperformance,efficiency,and/orfunctionalitybyaddingorreplacingcomponents,includingelectronicand/orsoftware.Forthepurposesofthisreport,anupgradethatisperformedastheprimaryand/orsoleobjectiveofaVRPiscategorizedasa‘refurbishment’.Upgradesperformedasoneofseveralprocessstepsofcompre-hensiverefurbishmentorremanufacturingarenotdistinguished.Value-retentionprocesses(VRPs):Whilerecyclingisalsoanintegralpartofcirculareconomy,forthepurposesofthisstudytheexpressionValue-RetentionProcesses(VRPs)onlyreferstoactivities,typicallyproduction-typeactivities,thatenablethecompletionof,and/orpotentiallyextendaproduct’sservicelifebeyondtraditionalexpectedservicelife.Theseprocessesincludearrangingdirectreuse,repair,refurbishment,comprehensiverefurbishment,andremanufacturing.Theseprocesseshelptoretainvalueinthesystemviaenhancedmaterialefficiency,reducedenviron-mentalimpacts,andmaypotentiallyoffereconomicopportunitiesassociatedwithprimarymaterialproductionandtraditionallinearmanufacturing.Waste:Referstoanysubstanceorobjectwhichtheholderdiscardsorintendsorisrequiredtodiscard(Directive2008/98/EC).271Introduction1.1IntroductiontothisreportThereisagrowingawarenessoftheurgencytoaddresstheescalatingresourceuseandenvironmentaldegradationassociatedwithcontinuedeconomicgrowth.Theneedtotransitiontowardsmoresustainableeconomicsystems,andimprovedmaterialandresourceefficiencythroughacirculareconomyisclear.TheInternationalResourcePanel(IRP),anindependentscientificpaneloperatingunderitsparentorganization,theUnitedNationsEnvironmentProgramme(UNEP),haspublishedseveralreportsrelatedtometals,assessingcurrentavailablestocks,opportunitiesandissueswithrecycling,andtheenvironmentalandsocialrisksassociatedwithanthropogenicusepatterns(UNEP2017,2014,2011,2016b).Thereisalreadyrecognitionfortheimportanceofconsideringalternativeoptionsforthemanagementofproducts,theirmaterials,andtheircomponentsattheend-of-use(EOU)tofurtherdecoupleeconomicgrowthfromresourceconsumptionandenvironmentaldegradation(UNEP2017,2014,2011,2016b).Amongmanyproposedsustainabilitypriorities,thecirculareconomyhasbeenproposedasapromisingoptionfortransitioningindustrialeconomiestowardslonger-termsustainableeconomicsystems.Thepotentialvalueofthecirculareconomygoeswellbeyondtherecyclingofmaterialsintheirrawform;inthecirculareconomy,valueisultimatelyembeddedinourabilitytoretaintheembodiedandinherentvalueofproductmaterial,structuralform,andultimatefunction.Capturing,preserving,andre-employingthisvaluenotonlyservestooffsetvirginmaterialrequirements,butalsoreducesrequiredproductionactivitiesandenablesnewvaluealtogetherbyensuringthecompletionof,and/orpotentiallyextendingaproduct’sexpectedlife.However,toextendthisknowledgeandrenderitactionableinthecontemporaryindustrialeconomy,thereisaclearneedtoexplorethestrategiesbywhichthesebenefitsmaybeachieved.Inthisrespect,anexplorationofactivitiesthatservetoretaininherentvalueofaproductthrougharrangingdirectreuse,repair,refurbishment,andreman-ufacturing(hereaftercollectivelyreferredtoasvalue-retentionprocessesorVRPs)isnecessaryforidentifyingthemeanstoimproveindustrialsystemcircularity.AnexplorationofeachVRP,itsroleinthecurrentindustrialparadigm,anditspotentialtoimpactthefutureofthecirculareconomycanthusshedlightonthemosteffectivewaystoenhanceresourceefficiencyandreduceenvironmentalimpactsassociatedwithprimarymaterialproductionandtraditionallinearmanufacturing.Findingwaystoachievethis‘decoupling’isafocusoftheInternationalResourcePanelinthepursuitofaworldwidesystemofresourceusethatissociallyequitable,economicallyefficient,andenvironmentallyhealthy.ThroughthedeploymentandscalingofVRPsworldwide,theobjectivesofincreasedsystemcircularityintheindustrialeconomy,decouplingofeconomicgrowthfromenvironmentaldegradation,andresourceefficiencycanbesuccessfullypursued.Itiscritical,then,tounderstandthedifferentwaysinwhichtheseprocessesmayinteractwithin,andaffectcategorically,diverseeconomies.Aprimaryobjectiveofthisassessmentistoevaluatewhetherinnovationwithintheproductionprocesscanenablereducednegativeenvironmentalimpactsofproductionwithoutcompromisingeconomicopportunityandthesatisfactionofconsumerneeds.Quantificationofthecomparative28Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomybenefitsandimpactsacrossVRPs,isdeterminedforcasestudyproductsandsectors,andsampleeconomies.Inaddition,thisstudyhighlightsthatthereareimportantdistinctionsbetweenVRPs,bothintermsoftheactualactivityundertaken,aswellastheimpactandvalueofthatVRPactivityineconomicandenvironmentalmetrics.TheincreasedunderstandingandeducationregardingthecontributionofVRPstocirculareconomyandmaterialefficiencyarecomplementaryoutcomesthatofferqualitativesupportforthetransitiontomorecirculareconomiesandproductionprocesses.Thisstudyisofbenefittoarangeofstakeholders,includingOriginalEquipmentManufacturer’s(OEMs),VRPentities,industryassociations,policyanalysts,policy-makers,membersofthevalue-chain,andend-customers/usersalike.Thescalingof,andtransitiontomorecirculareconomiesandimprovedresourceefficiencyrequiresinitiativeandcoordinationacrosssector,regional,nationalandinternationalboundaries.Whilesomedecouplingtechnologiesandtechniques(e.g.VRPs)arealreadycommerciallyavailableandusedinbothdeveloping/newlyindustrializedanddeveloped/industrializedeconomies,increasingthedissemination,adoption,andeconomicviabilityoftheseapproachesremainsachallenge.1.1.1ScopeofthestudyThisreportacknowledgestheurgencyandmagnitudeofthesustainabilitychallenge,andthecomplexityofrespondingappropriately.AsdescribedinFigure1,thisreportfocusesonaspecificsubsetofconceptsandappliedoptions,necessarilydifferentiatingcirculareconomymotivationsandinterestsfrombroadersustainabilitymotivationsandinterests(refertoSection1.2.1).SUSTAINABILITYINDUSTRIALECONOMIESCIRCULARECONOMYTECHNICALNUTRIENTSPRODUCTIONPROCESSESVALUE-RETENTIONPROCESSES(VRPS)CASESTUDYPRODUCTSBRAZILCHINAGERMANYUNITEDSTATESFigure1:ScopeofthisreportinbroadercontextofsustainabilityandcirculareconomyChapter1–Introduction29Whilesustainabilityprioritiesarehighlyrelevantandpertinent,circulareconomyispositionedasoneofmanypotentialmechanismsforpursuingbroadersustainabilityobjectives,particularlyinthecontextofindustrialeconomies(refertoSection1.2.2).Theperspectives,challenges,andopportunitiesfornon-industrializedeconomiestoengageincirculareconomyarealsoincorporatedwhereverpossible.Inaddition,thenatureofcirculareconomynecessarilyemphasizesprimarystakeholdersthatincludegovernment,industry,andcustomers/userswithinproduction-consumptionsystems(refertoSection1.2.3).Thecirculareconomydifferentiatesbetweenbiologicalnutrient(organic)materialflowsandtechnologicalnutrient(inorganicorsynthetic)materialflows(McDonoughandBraungart2010,EllenMacArthurFoundation2013b).Unlikebiologicalnutrients,technicalnutrientscanbecycledthroughaproductionsystemmultipletimeswithoutalossinquality,andassucharearelevantfocusforthisassessmentofproductionandvalue-retentionprocesses.Thisemphasisontechnicalnutrientsguidedtheselectionofcasestudysectorsandproducts,whicharepredominatelymadeoftechnicalnutrients.Othersectorsthatareactivelyengagedincirculareconomyinitiatives,suchasthetextile/apparelindustry,produceproductsthatareamixtureofbiologicalandtechnicalnutrients.Inadditiontotraditional‘OEMNew’linearproduction,theVRPsthatarespecificallyassessedinthisstudyare:•Arrangingdirectreuse;•Repair;•Refurbishment;•Comprehensiverefurbishment;and•Remanufacturing.ThedefinitionsanddescriptionsoftheseVRPsarefurtherdescribedinSection2.ReflectinggeographicalscopeofsampleeconomiesBrazil,China,Germany,andtheUS,specificcasestudyassessmentswereperformeduponnineproductsthatrepresentedthreesectorsknowntoengageinVRPs(refertoTable1).TherationalebehindtheselectionofthesesectorsandproductsisfurtherdescribedinSection4.2.Theenvironmentalimpactsofindustrialactivitycanbemeasuredextensively.Typicallifecycleassessment(LCA)impactcategoriesareoftenusedtohelpavoidanarrowdefinitionandunderstandingofenvironmentalimpacts,andthesecommonlyconsider:climatechange;ozonedepletion;humantoxicity;photochemicaloxidantformation;particulatematterformation;ionizingradiation,terrestrialacidification;freshwatereutrophication;marineeutrophication;terrestrialecotoxicity;marineecotoxicity;agriculturallandoccupation;urbanlandoccupation;naturallandtransformation;waterdepletion;metaldepletion;andfossilfueldepletion(Guinée2002).Theapproachutilizedbythisassessmentreliesonmeasuresandmetricsthatwereavailableacrosstherangeofprocesses,facilities,andeconomiesofinterest,andasaresultwerenecessarilylimited.Assuch,theprimarycomparativeenvironmentalimpactmetrics(hereafterreferredtoas‘environmentalimpacts’)assessedandreportedinthisstudyinclude:•Newmaterialoffset(avoided)(kg);•Embodiedmaterialenergy(MJ);•Embodiedmaterialemissions(kgCO2-eq.);•Processenergy(MJ);and•Processemissions(kgCO2-eq.).Whileemissionsimpacts(kgCO2-eq.)reflectdirectenvironmentalimpacts,additionalmeasuresofnewmaterialuse,andenergyrequirement,areincludedtoaccountforindirectenvironmentalandsustainabilityimpacts.TheenvironmentalimpactsofVRPs(measuredasspecifiedabove)forthecasestudyproductsattheproduct-andprocess-levelsarepresentedinSection5.2.Similarly,theeconomicimpactsofindustrialactivitycanalsobemeasuredextensively:Forthepurposesofthisreport,theprimarycomparativeeconomicimpactmetrics(hereafterreferredtoas‘economicimpacts’)assessedandreportedinthisstudyinclude:•Costadvantage($USD);and•Employmentopportunity(Full-timeequivalentworker,orFTE).TheeconomicimpactsofVRPs(measuredasspecifiedabove)forthecasestudyproductsattheproduct-andprocess-levelsarepresentedinSection5.3.30Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTable1:CasestudyproductsandsectorsSectorCaseStudyProductsHS92InternationalTradeCodeReferenceVehicleParts1.Vehicleengine(Traditional,castironcylinderblock)840710-902.Vehiclealternator8409913.Vehiclestartermotor840991•Vehicleengine(Lightweight,aluminumcylinderblock)1n/aIndustrialDigitalPrinters1.Productionprinter8443192.Printingpress(#1)3.Printingpress(#2)Heavy-DutyandOff-Road(HDOR)EquipmentParts1.HDORengine8408202.HDORalternator8409993.HDORturbocharger8414801Thelightweightvehicleengineisnotconsideredtooneofthecasestudyproducts.Toreflectimplicationsofalternatesustainabledesignapproaches,thisadditionalproductexampleofalightweight(versustraditional)vehicleenginewasassessedatthematerial-andproduct-levelsonly(seeSection5.2.2.1)andisnotincludedasastandardpartoffurtheranalysisorresults.Specifically,thisreportwillcontributetotheliteratureacrossfivekeyareas:1.IncreasedunderstandingofthewiderangeofVRPsthatarealreadyprevalentaroundtheworld;2.EstimatedcurrentandpotentialimpactsandmaterialefficiencythatresultfromVRPsattheproduct,marketandinternationallevels;3.IdentifiedkeybarrierstoincreasedmarketpenetrationanduptakeofVRPswithindomesticeconomies;4.AssessedsensitivityofVRPimpactstothepresenceofkeybarriers,withtheobjectiveofinformingcorporateandgovernmentpolicyopportunities;and5.Examinedcorporate(designandprocess)andgovernment(trade,infrastructure,andincentives)policyoptionsinsupportofacceleratedtransitiontocirculareconomythroughVRPs.Thescopedfocusofthisreportisnotacommentaryonbroaderand/orpotentiallyconflictingsustainabilitymotivations;insteadthisreportoffersascopedassessmentofapotentialframeworkforevaluatingandrespondingtosustainabilitychallengeswithintheindustrialeconomy.Further,thisreportfocusesonadirectcomparisonofthetraditionallinearproductionsystemagainstalternativeVRPoptionsthatmayofferreducednegativeenvironmentalimpactsofproduction.Giventhisemphasisontheprocessinnovationwithintheproductionsystem,thereportacknowledges,butdoesnotgointoextendeddepthontheconsumption-sideofthecirculareconomy.ExpandingtheuseofVRPpracticescanoffersubstantialandverifiablebenefitsintermsofresourceefficiency,circulareconomy,andprotectionoftheglobalenvironment.However,theirintensitiesandadoptiongloballyhavebeenlimitedduetosignificanttechnological,market,collectioninfrastructure,andregulatory/policybarriers.ThisstudyseekstoquantifythevalueofeachdifferentVRPacrossarangeofmetricsrelatedtoresourceChapter1–Introduction31efficiencyandthecirculareconomy.Inaddition,barriersthathaveinhibitedthegrowthandscale-upofVRPactivitiesaroundtheworldareidentifiedanddiscussed.1.1.2ReportandStudyStructureTheoverarchingobjectiveofthisstudyistoassessandidentifysomeoftherelativeeconomic,andenvironmentalimpactsofeachVRPfromseveraldifferentperspectives.Subsequenttothenecessaryintroductionandbackgroundsectionsdescribingcontext,approachandimportantconsiderationsrelatedtoVRPswithinacirculareconomy,aspresentedinSections2and3,itshouldbenotedthatdiscussionofthestudyisstructuredtoalignwiththesummarizingvisualdescriptioninFigure2:•Casestudymethodology(Section4):Whatistheconceptualframeworkforassessingandmodelingproduct-levelandeconomy-levelinsightsabouttheimpactsofVRPs?Whatarethelimitationsofthesestudies?Sections2&3:IntroductiontoValue-RetentionProcessesWhatarevalue-retentionprocesses(VRPs)?Howdotheyﬁtwithincirculareconomyandsustainabilityagendas?HowdoVRPsretainvalueinthesystem?Section4:CaseStudyMethodologyHowwereproduct-levelVRPcasestudiesconducted?Howwereeconomy-levelsimulationsconducted?Whataresomeofthelimitationsofthisstudy?Section7:EconomyPerspectiveWhatarethecurrent&potentialmarketimpactreductionsachievedthroughVRPs?Section5:ProductPerspectiveAretheimpactsofoneunitreducedthroughValue-RetentionProcesses(VRPs)?Section6:BarriersPerspectiveWhatbarrierscurrentlyconstrainVRPgrowth,andcanenvironmentalimpactbeimprovedbyremovingthesebarriers?Section8(8.4&8.5):PolicyPerspectiveCanindustryandgovernmentpolicybeaneffectivetoolforimpactavoidance&barriermitigation?Section8(8.2):DesignPerspectiveCanproductdesigninnovationshelptoreduceimpacts&barrierstoVRPs?Figure2:Overviewofthereportstructure•Productperspective(Section5):Whataretheper-unitinputrequirements,by-products,andimplicationsoftraditionallinear(‘new’)production,ascomparedtothesameproductbroughtbacktothemarketthrougharrangingdirectreuse,repair,refurbishment,orremanufacturingprocesses.CouldquantificationoftheseVRPimpactadvantages/avoidancescreatenewfirmincentivestoswitchordiversifyawayfromstrictlylinearproductionactivities?TheimpactsandbenefitsofVRPsforthecasestudyproductsofthisassessment,attheproductunit-level,arepresentedinSection5acrosseachoftheenvironmentalandeconomicmetricsoffocus.32Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy•Barriersperspective(Section6):Lookingwithinandacrossmarkets,howdocurrentconditionsandbarriersimpedethegrowthofVRPs?Inthissense,howdothesebarrierscontributetoreducedmaterialefficiencyandslowthetransitiontocirculareconomy?•Economyperspective(Section7):Developed/industrializedanddeveloping/newlyindustrializedeconomiesalikearecurrentlyengaginginVRPsatvariedlevelsforeconomicandenvironmentalreasons;howdotheaggregatedbenefitsandimpactsofVRPscompareacrosskeymarkets,underdifferentconditions?TheimpactsandbenefitsofVRPsforthecasestudyproductsofthisassessment,aggregatedtothelevelofeachsampleeconomy,arepresentedinSection7acrosseachoftheenvironmentalmetricsoffocus.Aspartofatransitiontocirculareconomy,itisalsoessentialthatactionbetakentoimprovetheefficiencyandeaseofbothVRPproductproductionandexchange.Tocontributetoscalingofcirculareconomy,firm-levelandgovernment-levelresponsesmustbedeliberateandorganized.WhileVRPshighlightessentialprocessinnovationsthatcontributetocirculareconomy,therearetworesponseperspectivesderivedfromproducecasestudyandsampleeconomy-levelanalysesthatdeserveattention,ascoveredinSection8:•Designperspective(Section8.2):Whatnewefficienciesarepossiblethroughproductdesigninnovation(e.g.designfordisassembly)thatcouldincreasethecollection,application,anddemandforVRPproductsinthemarket?•Policy-anddecision-makerperspective(Sections8.4and8.5):Howcangovernmentandindustrydecision-makersfacilitategrowthofVRPswhileensuringuser/consumerprotection,throughinnovativepolicythatfacilitatessafepresenceofVRPproductsinthemarket?Somekeyhigh-levelinsights,implications,andopportunitiesthatmayhelpinformhigher-levelpolicy-makingandindustrydecision-makingconsiderationsbeyondcasestudyapplicationsarediscussedinextensivedetailSection8.1.2IntroductiontothecirculareconomyIntoday’sincreasinglyglobalizedandgrowingindustrialeconomy,traditionallinearmodelsofproductionandconsumption,oftenreferredtoas“take,make,useanddispose”,areinsufficient.Theyallowthematerials,components,andembodiedvalueofproductstobelostfromtheindustrialsystem,mostnotablyattheendoflife(SundinandLee2012,McDonoughandBraungart2010,Bockenetal.2016).Asaresult,theselinearproductionmodelsrequirecontinuouslyhighlevelsofnew(virgin-andrecycled-sources)resourceinputandproductionactivitytomeetongoingdemand,andthuscreatenegativeenvironmentalimpacts—emissions,wastegeneration,andwaterconsumption(EllenMacArthurFoundation2013a,WorldEconomicForumandEllenMacArthurFoundation2014).Itisbecomingincreasinglyclearthattake-make-use-disposemodelsofindustrialproductionareincompatiblewiththesustainabledevelopmenttowhichglobalcommunitiesaspire.Intheabsenceofmaterialandproductcollectionandreuse,growingpopulationsandincomesareexpectedtodrivedramaticallyincreasingdemandforrawmaterialinputstoproduction(UNEP2011,2014,2016a).Whileincreasedproductionactivitycanoffereconomicgrowthandlabormarketadvantages,itcanalsoleadtoincreasedconsumptionofrawmaterialsandfuels,andincreasedenvironmentaldegradationfromextractionactivitiesandtransportation,increasedassociatedemissionsandwastegeneration(UNEP2011,2016a).Thepursuitofsustainableeconomicsystemsmustbethelong-termobjective(UnitedNations2018);howeverintheshorttermeconomicgrowthremainsacentralpillarofnationalobjectivesandstrategiesAcceptingthetensionbetweentheseshort-termandlonger-termobjectives,short-termeffortsmustseekoutopportunitiesforincreasedmaterialefficiency,resourceefficiencyandproductivity,includingmarginalreductionintheenvironmentalimpactsofproduction(UNEP2016b).Thismustoccurinparallelwitheffortsfocusedonlonger-termsocialandsystemtransformationinpursuitofsustainableeconomicsystems,includingtheultimatedecouplingofproductionfromnegativeenvironmentalimpacts.TheInternationalResourcePanel(IRP),anindependentscientificpaneloperatingChapter1–Introduction33undertheUnitedNationsEnvironmentProgramme(UNEP)parentorganization,haspublishedextensivelyontheimplications,challenges,andpotentialtoachievesuchdecoupling,suggestingthatdecouplingstrategiesarenecessaryformeetingtheUnitedNations’SustainableDevelopmentGoals(UNEP2016a,2014,2011).Inthispursuit,industrialresearchers,policymakers,andeconomicexpertsalikearebeginningtoexploretheconceptofaCircularEconomy—aframeworkinwhichoutputsfromeverystageofthelifecyclebecomeinputsintoanother,partiallyoffsettingtheneedfornewmaterialsandenergy-intensivemanufacturingactivities,whilereducingwaste(Liuetal.2018).SomeexamplesofthisincreasinginterestincludetheEuropeanCommission’sCircularEconomyPackage(Bourguignon2016),TheNetherlands’Government-sideProgrammeforaCircularEconomy(GovernmentoftheNetherlands2016),andChina’s13thFive-YearPlan(Koleski2017).Currentunderstandingofcirculareconomyhasevolvedovertimetoincorporatearangeofperspectivesandconceptsthatrelatetotheclosingofmaterialandenergyflowloops.Relevanttheoreticalinfluencesoriginateintheconceptsofperformanceeconomy(Stahel2010),cradle-to-cradle(McDonoughandBraungart2010),industrialecology(GraedelandAllenby1995),andthelawsofecology(Commoner2014).Additionalkeyperspectiveshavecontributedtothefocusingofunderstandingaboutcirculareconomyevenfurther:Bockenetal.(2016)positiontheclosingofresourceloopsviacirculareconomywithindesignandbusinessmodelstrategies;Yuan,Bi,andMoriguichi(2006)focusoncircularorclosedflowsofmaterialsandenergy,andtheuseofmaterialsandenergyovermultiplephasesinthecontextofChina’simplementationoftheChineseCircularEconomyPromotionLaw;andtheEllenMacArthurFoundation(EllenMacArthurFoundation2013b,WorldEconomicForumandEllenMacArthurFoundation2014)highlightsandemphasizesthedifferencesbetweenbiologicalandtechnicalsystems,andtheirrolewithintheindustrialeconomy.Consideringtherangeandscopeofliteratureoncirculareconomy,Geissdoerferetal.(2017)proposeadefinitionfortheCircularEconomythatisparticularlyrelevantforthisstudy:“Aregenerativesysteminwhichresourceinputandwaste,emission,andenergyleakageareminimizedbyslowing,closing,andnarrowingmaterialandenergyloops.Thiscanbeachievedthroughlong-lastingdesign,maintenance,repair,reuse,remanufacturing,refurbishing,andrecycling.”Thecirculareconomyhasbeenpositionedasanessentialsystemicperspectivethatcanhelptomitigatethelossofmaterial,function,andembodiedvaluecreatedbytraditionalconsumption(EllenMacArthurFoundation2013a).However,achievingthesebenefitsrequiresengagingvalue-chainstakeholdersinbehavioralandsocialsystemtransformation,anddesigningindustrialeconomicandproductionsystemstoenable,accept,andsupportsystemcircularity.Inthispursuit,acceptingtheindustrialeconomyfocusofcirculareconomy,threecentralneedsareemergingaskeystrategiesforenablingincreasedsystemcircularity:1.maximizingcollectionandcaptureofmaterialsatthe‘gaps’betweenlifecyclestagesatwhichlosscouldoccur;2.retainingthehighestpossiblevalueofmaterials,oncerecovered;and3.remodelingthelinearsystemthroughinfrastructuredevelopment,processinnovation,andproductinnovationtoincreasetheuseofhigh-valuerecoveredmaterialsasinputsintotheproductionsystem,inplaceofrawinputs.Inherentinthesestrategiesisconsiderationofproductdesignthatcanbeemployedtofacilitatethepursueofcollection,capture,valueretentionandrecovery,andotheraspectsofthecirculareconomysystem.Thecollectionofmaterials,andthemethodsusedtore-employthosematerials,thusbecomeessentialtacticaldecisionsthatmustbeconsideredatbothpolicyandfirmlevels.Agrowingfocusoninnovationwithinexistingtraditionallinearproductionsystemscan,tothisend,beleveragedasakeydriverofthetransitiontocirculareconomy.Innovationinproductionprocesses,businessmodels,productdesignstrategies,andpolicyandtradeframeworkscanallbefocusedtoallowadaptationtowardssystemcircularity,andthereinthefoundationforacomprehensivelycirculareconomyinthefuturecanbelaid.Thisisparticularlyrelevantinthecaseoftechnicalnutrientsthatmustbecycledthroughacirculareconomy,whereemployingproductlifeextensionactivitiesandcircularrecovery-productionsystemsiscriticaltotheeconomicviabilityofexistinglinear34Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomysystems(whiletheyexist,andintransition)andfuturecirculareconomies.Intheabsenceofmaterialandproductcollectionandreuse,growingpopulationsandincomesareexpectedtodrivedramaticallyincreasingdemandforrawmaterialinputstoproduction.Whileincreasedproductionactivitycanoffereconomicgrowthandlabormarketadvantages,itcanalsoleadtoincreasedenvironmentaldegradationfromextractionactivitiesandtransportation,increasedassociatedemissionsandwastegeneration,andincreasedconsumptionofrawmaterialsandfuels.Tosucceedatsustainableandequitableeconomicdevelopmentacrossallcornersoftheplanet,wemustfigureouthowtodecoupleproductionfromtheseimpacts.1.2.1TheintersectionofsustainabilityandcirculareconomyDespiteitsmanyvarieddefinitions,sustainabilityinthecontextofenvironmentalsystemsandecologygenerallyreferstotheabilityofnaturalsystemstomaintain(orregenerate)themselvesatacertainrateorlevelovertime,giventhepresenceoflimitationsandimpactsofhumanactivity(Geissdoerferetal.2017,Bruntland1987,Ehrenfeld2005).Extended,currentunderstandingofsustainabilityincludestheacknowledgementofinterdependentandreinforcingsocial,economic,andenvironmentalsystems(UNGeneralAssembly2005),andtheexpectationof‘…thebalancedandsystemicintegrationofintraandintergenerationaleconomic,social,andenvironmentalperformance.”(Geissdoerferetal.2017).Discussionandconcept-developmentaroundsustainabilityhasoccurredforfarlongerthanhasthediscussiononcirculareconomy,andtheobjectivesofsustainabilityarefarbroader,aimingtobenefittheinterdependentstakeholdersandsystemsofenvironment,economy,andsociety(Elkington1997).Similaritiesbetweensustainabilityandcirculareconomyincludeanemphasisoftheimplicationsofplanetary-scaleproblems,aglobalperspectiveinformedbyawarenessofthenegativeenvironmentalimpactsofhumanactivity,andtheneedfortheengagementofmultiplestakeholdersinrespondingtothesechallenges(Geissdoerferetal.2017,Bruntland1987).However,importanttothisstudyaresomekeydifferencesbetweentheconceptsofsustainabilityandcirculareconomy(refertoTable2).Givenitsemphasisonindustrialsystems,circulareconomytendstofocusonthedirectbenefitsaccruedwithintheindustrialeconomyandtoeconomicstakeholders,acknowledgingthesecondary(and/ormarginal)benefitsthatmayalsoaccruetoenvironmentalandsocialsystemsandstakeholders(Geissdoerferetal.2017).ThisapproachissimilartoassumptionsusedbyCooperetal.(2017,1358),inwhichbehaviorchangesrequiredbytheconsumer(e.g.reducedconsumption)arenotcentraltothemodelsorthediscussion,andconsumerutility(e.g.expecteddemandlevels)aremaintained.Inaddition,whilesustainabilityacknowledgestheimportantinfluenceandrolethatallstakeholdersneedtoplay,thenatureofcirculareconomyparticularlyemphasizestherolesofgovernment(policy-makers)andindustry(businessdecision-makers)(Geissdoerferetal.2017).AsclarifiedinTable2,inalignmentwiththecurrentliteratureoncirculareconomy,andbasedontheavailabilityofresources,thescopeofthisassessmentinthecontextofcirculareconomythusonlycoverssomeaspectsoftraditionalsustainabilityperspective(refertoFigure1).Theindustrialeconomycontextofthepredominantcirculareconomyinterpretationshasconsequences:first,theallocationofprimaryresponsibilityfortransitiontocirculareconomytopolicy-makersandindustrynecessitatesafocusonthefinancialandeconomicopportunitiesthatcanbeenabledviacirculareconomy;attheveryleast,thefinancialopportunitiesarehighlightedalongsidetheopportunitytoreducenegativeenvironmentalimpacts.Thisemphasismaycreatetensionbetweensustainabilityobjectivesfocusedonthereductionofnegativeenvironmentalimpacts,andcirculareconomyobjectiveswhichmayconsiderenvironmentalimpactreductioninthecontextofeconomicprioritiesandneeds.Thistensionisaccountedforinthisreport,whereintheassessmentofenvironmentalimpactsaccompanies,andareoftendiscussedrelativeto,theassessmentofeconomicopportunities(refertoSections3,5,and7).Chapter1–Introduction35Table2:Contrastedscope,stakeholderroles,andimpactemphasisofsustainabilityandcirculareconomySustainabilityCircularEconomyScopeemphasis•Broadinterconnectedsocial,economicandenvironmentalsystems•IndustrialeconomicsystemsStakeholderrole&responsibilityemphasis•Allstakeholderstosocial,economic,and/orenvironmentalsystems•Differing,butequallyimportantrolesandresponsibilities•Governmentandindustry•OtherstakeholdersastheymayrelatetotheachievementofcirculareconomyobjectivesImpactemphasis•Broadenvironmental:Viewsenvironmentalsystemsasfoundationalandessentialtosustainablesocialandeconomicsystems•E.g.energyconsumption;environmentalfootprint;wastegeneration•Economicandenvironmental:thepursuitofnegativeenvironmentalimpactreduction,consideredincontextoftheeconomicimplications•E.g.resourceefficiency;materialefficiency;resourceproductivityModifiedfromGeissdoerferetal.2017Itmustbeacknowledgedthatanydiscussionofcirculareconomyemphasizingindustrialsystemsandeconomiesisatriskofexcludingnon-industrialeconomies,aswellasstakeholdersoutsideofgovernmentandindustryroles.Thesetopics,andtheirintegrationintothisreport,arediscussedfurtherinSections1.2.2and1.2.3,respectively.1.2.2Sustainabilityandcirculareconomyinnon-industrializedeconomiesIntermsofglobalpoliticaleconomy,economiesthatfallundertheterm‘non-industrial’refertothoseeconomiesthatdonothavehighlydevelopedmanufacturinginfrastructureorenterprise,andinwhichthecapitaltopursueindustrialactivitymaybeinshortsupply.Theseeconomiesareoftenreferredtoasthe“majoritysouth”,duetotheirrelativegeographiclocation,andarecontrastedwiththe“industrializednorth”(CranstonandHammond2012,CranstonandHammond2010,Hammond2006,AllenandThomas2000).The‘majoritysouth’accountsforthemajority80percentoftheworld’spopulationthatresidesinnon-industrialeconomies(CranstonandHammond2012,Hammond2006).Inthecontextofsustainabilityliterature,itismorecommontoemphasizethesocioeconomicandpoliticalconditionsofnon-industrializedeconomies.Thesetopicsarediscussedasanassumedprecursortosustainabilityinitiativesandpractices,withindustrialtransitionstrategiesoftenfocusedoneconomicdevelopment,andtheneedforsupportandtechnologytransferfromricher,moreindustrializedeconomies.Withthemajorityoftheworld’spopulationresidinginnon-industrializedeconomies,andtheoftenextensivecarbonfootprintsoftheseeconomies,itisclearthattheadoptionofmoresustainablepracticesiscritical(CranstonandHammond2012,Hammond2006).However,theapplicabilityofcirculareconomyanditsindustrialeconomyoriginstonon-industrializedeconomiesraisesseveralquestions:firstandforemost,thecirculareconomyemphasizesthetransformationofindustrialsystems;howthentoconstructcircularindustrialeconomieswhereindustrialsystemsmaynotcurrentlyexist?Inaddition,theabsenceofindustrialsystemsdoesnotimplytheabsenceofeconomicsystems–instead,non-industrialeconomiesmaytendtowardsagreateragriculturalbase,withlimitedstructureinmanufacturingandnon-farmingsectors(JohnstonandKilby1975,AllenandThomas2000).Attheveryleast,strategiesforpursuingandimplementingcirculareconomyrequireemphasis,resourceallocation,andprioritiesthatareappropriatefortheconditionsofdifferenteconomies;inotherwords,themechanismsbywhichanindustrializedeconomypursuescirculareconomymaynecessarilydifferfromthemechanismsbywhichanon-industrializedeconomypursuescirculareconomy.36Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyThecasestudyproductsandsampleeconomiesassessedingreaterdetailinSections5,6,7,and8.2aremostcloselyfocusedoncommercial/industrialproductsandactivitiesinindustrializedeconomies.Thelimitationsassociatedwiththeincorporationofnon-industrializedeconomiesintothecasestudiesofthisreportarediscussedingreaterdetailinSection4.4,andrelateprimarilytoissuesofdataavailabilityandlimitationsofthemodels.However,additionaldiscussionofthepotentialinsights,learningsandopportunityfornon-industrialeconomiestoengageincirculareconomypracticescanbefoundinthroughoutthediscussioninSection8.Theassessmentandstudyofcirculareconomyinitiativesandopportunitiesisrelativelyrecent;whilethereisgreaturgencyforstakeholdersofallnationstoactquicklytomitigateenvironmentaldamage,discussionofappropriatescope,framework,approach,metricsandindicators,andrelevanceofcirculareconomyareon-going.Itisalsoclearthatdifferentapproachestocirculareconomymaybeneededdependingontheuniqueconditionsfacedbyspecificsectorsandeconomies,someofwhicharediscussedinSection6.Whiletheemphasisofthisassessmentisnecessarilyuponcommercial/industrialproducts,commercial/industrialprocesses,andindustrializedeconomies,thisreportprovidesinsightsintotheproduct-,process-,andeconomy-levelimplicationsofpursuingdifferentcirculareconomystrategiesunderavarietyofsocioeconomicdevelopmentconditions.1.2.3Interestsandinnovation:stakeholderswithinacirculareconomyThebroadgoalofsustainabilityrequiresextensivetransformation,notjustoftheproductionsystemsthataretheemphasisofthisreport;theyalsorequiretransformationofconsumptionpatterns,disposalbehaviors,andsocietysub-systemsincludingpolitics,socialstructures,andphysicalinfrastructure.Fromthisperspective,itisunderstandablethatthetransformationforsustainabilityrequirestheengagementofeverystakeholderontheplanet.Thetermsocialinnovationhasbeenusedtodescribetheinnovativeactivities,behaviors,programsandorganizationsthatarisetohelpsocietyaddresssomeunmetneed(Mulganetal.2007).Inthecontextofsustainability,theseinnovationscanincludenewwaysofviewingandmanagingecosystemsandecosystemservices,newsystemsandinstitutionstohelpfacilitateimprovedenvironmentalperformanceofproducersandconsumersalike,andevenstakeholderengagementandeducation(CenterforSocialInnovation2018).Akeyexampleofsuchinnovationistheevolutionofthe‘collaborative’or‘sharing’economy,inwhichusersshareresourceswithreducedinterventionsfromindustry,intheinterestsofincreasingtheproductivityofresourcesandproducts(asmeasuredbyusagerate)(Richter,Kraus,andSyrjä2015,Milios2016).Theemphasisofthissocialinnovationisonutilityachievedthroughrentingorborrowinggoods,ratherthanowningthem,andplaceslessemphasisonthetraditionalcustomer-businessrelationship(Milios2016).Whilethesharingeconomymayofferinnovationthatcanleadtosustainabilityobjectivesofenhancedresourceefficiency,thetransitionawayfromtraditionalmarketsmaypresentconcernsfromtraditionally-organizedindustrystakeholdersandproducers.Alongsidesocialinnovations,businessmodelinnovationsarealsobeingdevelopedbyindustrystakeholders.Thesebusinessmodelinnovationsofferanewwayofintegratingsustainabilityinterestsintotheproduction-consumptionsystem,withoutdiminishingtheroleofindustry(Milios2016).Theproduct-servicesystem(PSS),discussedingreaterdetailinSection8.2.1,presentsabusinessmodelinnovationthatincorporatesmoreintegratedproductsandservicesthatconsiderbothcustomerneedsandproductlife-cycleconsiderations(Mont2002,Tan2010).AlthoughPSScanvaryintype,somecommonapproachesincludeproductsalesthatentailsadditionalmaintenanceservicesandtake-backagreements,user-orientedapproachesthatfocusonleasing,rental,sharing,orpooling,andresults-orientedservicesthatfocusontheprovisionofaserviceratherthanontheproduct(Tukker2015a,Milios2016).Differentiatedfromsustainability,stakeholderstocirculareconomyaretheoreticallybroad,butpracticallyconstrainedtothreeprimarygroupsmostdirectlyengagedineithertheproductionorconsumptionaspectsoftheindustrialeconomy:government,industry(includingdesigners),andcustomers/users.AshighlightedbyZinkandGeyer(2017),theadditionalinfluencesanddynamicsChapter1–Introduction37ofvariousmarketswithinacirculareconomycreatecomplexityandunpredictabilityrelatedtopreferences,behaviors,anddecisions.However,asdiscussedinSection6.2,theuniquenatureandperspectivesofkeystakeholderstotheindustrialsystemsofcirculareconomyareessentialconsiderationsofanystrategytopursuecirculareconomy.Thus,althoughthespectrumofstakeholdersisappropriatelylimitedforcirculareconomy,theresponsibilityforthenecessarysocialandsystemsinnovationneededtofacilitateatransitiontocirculareconomyishighlyrelevant.WhilethelimitationsofthecasestudiesinthisreportareoutlinedinSection4.4,significantdiscussionrelatedtostakeholderinterests,perspectives,resultingbarriers,andpotentialrolesandresponsibilitiesgoing-forward,areincorporatedintoSections6,7.2and8.Especiallypertinenttothisreport,theevolutionofbusinessmodelinnovationevolvingalongsidesocialinnovationisdiscussedingreaterdetailinSection8.2.1.3Introductiontovalue-retentionprocesseswithinacirculareconomyWithinthecirculareconomyframework,thecyclingoftechnicalnutrientsfallsacrossseveralessentialsystems:recyclingsystems,refurbishmentandremanufacturingsystems,arrangingdirectreusesystems,andrepair/maintenancesystems.Withtheexclusionofrecycling,inwhichallrecovereditemsarereducedtomaterial-level,Value-RetentionProcesses(VRPs)servetomaintainall,orpartoftheintegrityoftheoriginalproductorcomponentbykeepingtheoriginalstructuralformoftheproductorcomponent.TheVRPsspecificallystudiedinthisreportare:remanufacturing,refurbishment(includingcomprehensiverefurbishment),repair,andarrangingdirectreuse.2Forthepurposeofthisstudy,wehavedefinedvalue-retentionprocessesasthoseactivities,typicallyproduction-typeactivitiesthatenablethecompletionof,and/orpotentiallyextendaproduct’sservicelifebeyondtraditionalexpectedservicelife.Wethusdistinguishbetweenvalue-retentionprocessesandrecycling,whileinrealityrecyclingispartofacirculareconomy.Seealsotheglossaryofkeyterms.3AccordingtotheEuropeanCommission’sWasteFrameworkDirective(Directive2008/98/EC,Article4),thewastehierarchyisappliedasapriorityorderinwastepreventionandmanagementlegislationandpolicy:(a)prevention;(b)preparingforre-use;(c)recycling;(d)otherrecovery,e.g.energyrecovery;and(e)disposal.TheUnitedStates’EnvironmentalProtectionAgencyemploystheWasteManagementHierarchyasarankingapproachforsustainablematerialsmanagementstrategiesindecreasingorderfrommostenvironmentallypreferred:sourcereductionandreuse;recycling/composting;energyrecovery;andtreatmentanddisposal.Thepreservationofproductand/orcomponentintegrityservestofurtherincreasethemarginalbenefitsofVRPs:bymaintainingtheoriginalproductorcomponentstructuralform,fewerresourcesarerequiredforproduction(e.g.electricity),andfewerwastesaregenerated(e.g.emissions).1.3.1Value-retentionprocessesasagatewaytomaterialrecyclingRecyclingreferstothereprocessingofwasteintoproducts,materialsorsubstances;specifically,thereferencetorecyclingthroughoutthisreportreferstothereprocessingatthematerial-level(AnnexIVBtotheBaselConvention).Whilematerialrecycling(henceforthreferredtosimplyas‘recycling’)isnotafocusofthisstudy,itremainsanintegralandimportantaspectofanycirculareconomy.ThereisacommonmisperceptionthatVRPsmaydetractfrom,orcompeteagainstrecycling;infact,allVRPsandrecyclingareessentialwithinthecontextofacirculareconomy2.Fromthisperspective,andlikeacceptedwastemanagementhierarchies3,wherevalue-re-tentionprocessesensurethatmaterialvalueandfunctionalityareretainedwithintheproduct,oncefunctionalityhasdegradeditistherecyclingsystemthatensuresthatmaterialvalueisretainedwithinthebroadersystem.AsdescribedinFigure3,resourcesenterintoahorizontalproductionloopinwhichtheyareusedasinputstomaterialsand/orpartsthatarethenincorporated,viamanufacturing,intoaproduct;aftertheproduct-stage(e.g.end-of-useorEOU)thereisanopportunityfordisassemblyandreutilizationofparts,components,and/ormodulesincaseswheresufficientinfrastructureandsystemsexist.Inthesecases,theopportunitytofurtherdirectparts/components/modulesintoacascadingloopandbeintegratedintonewproductionandproduct-usephasesiscreatedviaVRPs.However,whenitisnolongerpossibletoretaintheseitemswithinthe38Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyproductionsystem,forfunctionaland/oreconomicreasons,theycanflowoutofthecascadingloopintorecyclingprocessesthatensuretherecaptureandretentionofassociatedmaterialvaluewithinthesystem.ImplicitinthecascadingsystemisthataproductcanreachEOUseveraltimessuccessivelybeforereachingend-of-life(EOL).ThisisdiscussedingreaterdetailinSection3.1.Acomplementaryperspectiveisthatallproductswilleventuallyreachapointatwhichtheynolongerqualifyforarrangingdirectreuse,repair,refurbishmentorremanufacturing–eitherbecauseoftheassociatedcost,orbecausetheirimplicitqualityandutilitypotentialhasbeendegraded.Atthatpoint,thereisstillanessentialneedforefficientandeffectiverecyclingsystemstorecoverthevalueofthematerialscontainedwithintheproduct,andtorecirculatethosematerialsbackintocircularmaterialseconomy.Material&partsManufactureProductMaterial&partsManufactureProductDisassembly/reutilizationDisassembly/reutilizationRecyclingResourcesHorizontalLoopCascadeLoopFigure3:Recyclingwithinacascadingmaterialvalue-retentionsystemRecycling,alongsidealltheVRPsassessedwithinthisreport,isfocusedonthemaximizationofvalueretentionundercomplexandvariedproductandinfrastructureconditions.Whilerecyclingisnotafocusofthisstudy,thisanalysishasassumedtheimperativepresenceofrecyclingsystemsasanimportantcomplementaryfunctionwithinthecirculareconomyforrecoveringmaterialvaluewhenaproducthasdegradedbelowtherequirementsofVRPs.392Clarificationanddifferentiationofvalue-retentionprocessesOneofthemainchallengesfacingVRPsaroundtheworld,ascorroboratedviainternationalmarketaccessnegotiations(WorldTradeOrganization2009)andtheUSInternationalTradeCommission(USITC)(2012),isthewiderangeofdefinitionsandinterpretationsofreuseandlifeextensionprocesses.Muchoftheregulationofthesegoverningdefinitionsandinterpretationsoriginatedoutofconcernfortheprotectionofhumanhealthandtheenvironment.Gharfalkar,Ali,andHillier(2016)showintheirsystematicanalysisofpeerreviewedliteraturetheinconsistenciesandlackofclaritythatexistbetweenthedefinitionsordescriptionsofrepair,reconditioning,refurbishmentandremanufacture.Thereareoftenmultipleissuesatstake,includingcommonterminologydifferentiationsmadewithinandacrosssectors,aswellasregulationsfocusedonprotectingconsumerinterestsincertaincountries.Forexample,whiletheVRPactivitycalled‘reconditioning’bythoseintheelectronicsindustry(aspreferredbytheProfessionalElectricalApparatusRecyclersLeague),‘rebuilding’bytheFederalTradeCommission,and‘remanufacturing’underadefinitionasacceptedbytheWorldTradeOrganization(WTO),theintentforeachofthesetermsisthesame:“…theprocessofreturningtheelectricalproducttosafe,reliablecondition…”.Alternately,themedicalsectortypicallyusestheterm‘refurbishment’forthesameVRPthattheaerospacesectorwouldusetheterm‘overhaul’.Infact,bothdefinitionsareclearlydescribingwhatwouldbeconsidered‘remanufacturing’inothersectors.Theconceptofwaste,asdefinedintheWasteFrameworkDirective(Directive2008/98/EC),offersanimportantstartingpointforthisdiscussion.As“…anysubstanceorobjectwhichtheholderdiscardsorintendsorisrequiredtodiscard”,theterm‘waste’mayapplytobothrecoveryanddisposalactivities,itmayhaveneutral,positiveornegativecommercialvalue,andtheactofdiscardcanbeintentional,unintentional,orcanoccurwithorwithoutknowledgeoftheholder(EuropeanCommission2012).Fromthisperspective,productsundergoingoneoftheVRPsassessedinthisstudymay,undercertainconditionsandinEUmemberstates,meetthedefinitionof‘waste’andfallundertheregulatorypurviewoftheWasteFrameworkDirective.Alsorelevanttothedefinitions,practice,andoversightofVRPsistheconceptof‘End-of-Waste’(EOW),whichreferstotheconditionsunderwhichcertainspecifiedwasteshallceasetobewasteundertheWasteFrameworkDirective.Theseinclusiveconditionsrequirethatthesubstanceorobjecthasundergonearecovery;thatthesubstanceorobjectiscommonlyusedforspecificpurposes;thatamarketordemandexistsforsuchasubstanceorobject;thatthesubstanceorobjectfulfillsthetechnicalrequirementsforthespecificpurposesandmeetstheexistinglegislationandstandardapplicabletoproducts;andthattheuseofthesubstanceorobjectwillnotleadtooveralladverseenvironmentalorhumanhealthimpacts(EuropeanCommission2012).Fromthisperspective,productsundergoingoneofseveraloftheVRPsassessedinthisstudymay,inEUmemberstates,haveEOWstatusundertheWasteFrameworkDirective.IncompatibilityofthedefinitionsofwhatconstituteswastebetweeneconomiesengagedinVRPsand/ortradecancreatesignificantcomplicationsforindustrymembersandpolicy-makersalike.40Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyGiventhepotentialconfusion,forthepurposesofthisstudyitisessentialtoidentifyandretainconsistentdefinitionstodifferentiatebetweeneachoftheVRPsunderexamination.ThisstudyadoptsVRPdefinitionsandterminologies,consistentwithinternationallyrecognizedsources(wherethey4(ConferenceofthePartiestotheBaselConventionontheControlofTransboundaryMovementsofHazardousWastesandTheirDisposal2017).5(EuropeanCommission2008).6(ConferenceofthePartiestotheBaselConventionontheControlofTransboundaryMovementsofHazardousWastesandTheirDisposal2014).exist)thatinclude,butarenotlimitedto,theBaselConventionGlossaryofTerms(DocumentUNEP/CHW.13/4/Add.2)4andtheWasteFrameworkDirective.5Theseprocessesaredistinguished,relativetooneanotherinFigure4anddiscussedinthefollowingsections.IncreasingProcessComplexityandValue-RetentionPotentialLifeExtension/Value-RetentionProcessesTraditionalOEMNewArrangingDirectReuseRepairRefurbishment/ComprehensiveRefurbishmentRemanufacturingFigure4:Definitionsandstructureofvalue-retentionprocesseswithinthisreportThefollowingdefinitionsforVRP’sarederivedlargelyfromterminologycontainedinaglossaryoftermsthathasbeenadoptedattheThirteenthmeetingoftheConferenceofthePartiestotheBaselConvention(COP13)inMay2017(DocumentUNEP/CHW.13/4/Add.2).Thesedefinitionsareincludedtodemonstratethecomplexityassociatedwithclearlydefining,andgarneringagreement,ontheappropriatedefinitionsfordifferentcircularandlifeextensionprocesses.WhiletheBaselConventionisaninternationalagreement,Partieschoosetoimplementthetermsoftheagreementintheirownway.GiventhegovernanceoftheBaselConventionoverarangeoftradeactivities,whereacircularorlifeextensionprocessisdefinedfortheBaselConventionasshowninFigure5,itisacceptedforthepurposesofthisreport.Itisnotedthatthe“Technicalguidelinesontransboundarymovementsofelectricalandelectronicwastesandusedelectricalandelectronicequipment,inparticularregardingthedistinctionbetweenwasteandnon-wasteundertheBaselConvention”,asadoptedbytheConferenceofthePartiestotheBaselConventionatitstwelfthmeetinginMay2015(DocumentUNEP/CHW.13/INF/7),6encompassesaterminologyspecifictoelectricalandelectronicequipment.Pleasenotethat,astheBaselConventiondefinitionsdonotincluderemanufacturing,itisnotincludedinFigure5.ItshouldbenotedthatterminologyanddefinitionsforVRPsremainoneofthemostsignificantissuesandchallengestoincreasedscaleanduptakeofVRPsineconomiesaroundtheworld.TherearenumerousinitiativestohelpreducethebarrierscreatedbylegaldefinitionsofVRPs,ofteninitiatedbyindustrytohelpeducateandinformthemarketstheyserve.Whereappropriateandinsightful,terminologyanddefinitionsfromthesenon-officialsourceshavealsobeenincludedtodemonstratetherangeandsignificanceofthedefinitionchallenge.ThisisdiscussedfurtherinSection6.Chapter2–Clarificationanddifferentiationofvalue-retentionprocesses41ReuseTheusingagainofaproduct,objectiveorsubstancethatisnotwasteforthesamepurposeforwhichitwasconceived,possiblyafterrepairorrefurbishment.(DocumentUNEP/CHW.13/4/Add.2)DirectreuseTheusingagainofaproduct,objectorsubstancethatisnotwasteforthesamepurposeforwhichitwasconceivedwithoutthenecessityofrepairorrefurbishment.(DocumentUNEP/CHW.13/4/Add.2)RepairFixingofaspecifiedfaultinanobjectthatisawasteoraproductand/orreplacingdefectivecomponents,inordertomakethewasteorproductafullyfunctionalproducttobeusedforitsoriginallyintendedpurpose.(DocumentUNEP/CHW.13/4/Add.2)RefurbishmentModificationofanobjectthatisawasteoraproducttoincreaseorrestoreitsperformanceand/orfunctionalityortomeetapplicabletechnicalstandardsorregulatoryrequirements,withtheresultofmakingafullyfunctionalproducttobeusedforapurposethatisatleasttheonethatwasoriginallyintended.(DocumentUNEP/CHW.13/4/Add.2)Figure5:DefinitionsrelevanttoVRPactivitiesasadoptedundertheBaselConvention2.1ArrangingdirectreuseAsindicated,forthepurposesofthisstudythedefinitionof“Arrangingdirectreuse”,assetoutinDocumentUNEP/CHW.13/4/Add.2isutilized:Arrangingdirectreuse:Thecollection,inspectionandtesting,cleaning,andredistributionofaproductbackintothemarketundercontrolledconditions(e.g.aformalbusinessundertaking).Arrangingdirectreusedoesnotincludereusethatoccursmostlythroughtheundocumentedtransferofaproductfromonecustomertoanother.Underarrangingdirectreuse,nodisassembly,removalofparts,oradditionofpartsoccurs.ThesignificanceofthisValue-RetentionProcessisthatonlythoseproductsthatareinsufficientworkingcondition,notrequiringanycomponentreplacementorrepair,andtowhichquickandeasyaesthetictouch-upscanbeperformed,qualifyasarrangingdirectreuseproducts.Theseproductsarenotguaranteedtomeetoriginalspecificationsandaretypicallyofferedtothemarketatasignificantpricediscount,withno,oratleastamuch-modifiedproductwarranty.PleaserefertoFigure6forahigh-leveldescriptionofkeyarrangingdirectreuseprocessstages.ProductionEconomyArrangingDirectReuseNewUserOriginalUserFigure6:Descriptivesummaryofarrangingdirectreuseprocess42Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyArrangingdirectreuseisoftenenabledwhenaproductreachesitsEOUprematurely:theownermayrequireanupgradedproduct,maynolongerneedtheproduct,ormayhaveachangeinpreferences.Alternately,theusage/servicerequirementratemayhavebeenlessthanexpectedduringtheproductsservicelife,andassuchitisabletosurpassthatexpectedlifebeyondscheduledEOL.Inanycase,althoughtheproducthasreachedEOU,ithasnotyetfulfilleditsservicelife.Arrangingdirectreuseenablestheproducttocontinuetomaintainproductivitythroughuse,insteadofprematurelybeingdiscardedintoawasteorrecyclingsystem.2.1.1ArrangingdirectreuseincasestudysectorsInthecaseofthethreesectorsstudiedinthisreport,itisassumedthatthereisnodirectreuseofHDORpartsgiventhenatureoftheseproducts.Arrangeddirectreuseisundertakenforcasestudyvehiclepartsproductsandindustrialdigitalprinters.2.2RepairRepairreferstothecorrectionofspecifiedfaultsinaproduct.Thetermencompassesthecompletionoftheexpectedproducttechnicallife(Kingetal.2006)Asindicated,forthepurposesofthisstudythedefinitionof“Repair”,assetoutinDocumentUNEP/CHW.13/4/Add.2isutilized:Repair:Fixingaspecifiedfaultinanobjectthatisawasteoraproductand/orreplacingdefectivecomponents,inordertomakethewasteorproductafullyfunctionalproducttobeusedforitsoriginallyintendedpurpose.Itisimportanttonotethat,undertheBaselConvention,repairisanactivitythatcanbeperformedonbothwastesandnon-wastes,andthereforetheneedforrepairisnotsufficientfordistinguishingbetweenwasteandnon-waste.Forthepurposesofthisreport,“Repair”activitiesalsoincludethoserequiredforknownproductissues,whichultimatelyenablestheproducttocompleteitsoriginalexpectedlife;andthemaintenanceofaproductwhere,ifleftunmaintained,isknowntoconstraintheproduct’sservicelifeandutilitytolessthanwhatisotherwiseexpectedwhenrecommendedservicingisperformed.PleaserefertoFigure7forahigh-levelprocessdescriptionofkeyrepairprocessstages.Incommonuseoftheterm,theremaybesomeconfusionrelatedtowhatconstitutes‘repair’,asthereisgenerallynocleardistinctionbetweena‘repair’activity,anda‘scheduledmaintenance’activity,dependingontheproduct,sectorand/orindustry.Forthepurposesofthisassessment,anyrepairactivitywhichinvolvestheobjectorproductbeingreturnedtotheoriginaluserisconsideredtobea“Repair”VRP.EconomyRepairFigure7:DescriptivesummaryofrepairprocessOriginalUserProduction©Shutterstock/mr.teerasakkhemngernChapter2–Clarificationanddifferentiationofvalue-retentionprocesses43UnliketheotherVRPsstudiedwithinthisassessment,repairactivitieswithinthelargersystemoccurelsewhere(Cooperetal.2017)andtheyareconsideredasaseparateflow:Mostrepairactivitiesdonotrequireestablishedinfrastructure(collection,diversion,inspection),productionfacilities(industrialdisassemblyandreassemblyprocesses),ordistributioninfrastructure(transportation,distribution,sales).ThischaracteristicdifferentiatesrepairactivitiesfromotherVRPactivitiesunderasystems-perspective.Inthecaseofnon-industrializedeconomies,repairrepresentsthevastmajorityofcurrently-usedformalandinformalvalue-retentionactivitiesduetotechnological,andindustrialinfrastructurelimitations.Repairactivitiesareperformedattheproduct-level,whereafunctioningproductmusthavesomewornordamagedpartsremovedandnewpartsadded,inorderforittocontinuefunctioningforthedurationofitsexpectedlife.Ratherthantheentireproductbeingdiscardedintoawasteorrecyclingstreamduetoawornordamagedpart,repairactivitiesenablethecontinuanceoftheproduct’sexpectedlife.Itisgenerallyacceptedthatthereisnowarrantyprovidedforrepairedproducts,exceptforcomponentsthathavebeenreplacedintheprocess(ResourceConservativeManufacturingConsortium2017).2.2.1RepairincasestudysectorsInthecaseofthethreesectorsstudiedinthisreport,itisassumedthatrepairactivitiesareundertakenforallcasestudyproducts.2.3RefurbishmentAsindicated,forthepurposesofthisstudythedefinitionof“Refurbishment”,assetoutinDocumentUNEP/CHW.13/4/Add.2isutilized:Refurbishment:Modificationofanobjectthatiswasteoraproducttoincreaseorrestoreitsperformanceand/orfunctionalityortomeetapplicabletechnicalstandardsorregulatoryrequirements,withtheresultofmakingafullyfunctionalproducttobeusedforapurposethatisatleasttheonethatwasoriginallyintended.Itisimportanttonotethat,undertheBaselConvention,refurbishmentisanactivitythatcanbeperformedonbothwastesandnon-wastes,andthereforetheneedforrefurbishmentisnotsufficientfordistinguishingbetweenwasteandnon-waste.Inaddition,theResourceConservativeManufacturing(ResCoM)sharedterminologysupportsthatrefurbishmentcanenableanewpartialservicelifecycleforaproduct,butnotanewfullservicelifecycle,asdiscussedinmoredetailinSection3.1(ResourceConservativeManufacturingConsortium2017).Forthepurposesofthisreport,“Refurbishment”activitiesreflectthoseascontainedinthedefinitioncitedabove,andincludeactivityterminologiesspecifictokeyindustrysectors,suchas‘minoroverhauls’(heavy-dutyenginesandequipment),and‘upgrades’(electricalandelectronicequipment).RelativetootherVRPs,refurbishmentrequiressufficientmodificationofanEOUproductsuchthatitsusableoperatinglifecouldbeextendedbeyondtheoriginaldesignexpectation:Thisrequiresmaterialreplacementandrenewalactivitythatfarexceeds‘repair’activity,butwhichislessstructured,industrialized,andquality-focusedthan‘remanufacturing’activity.Awarrantymaybeprovidedformajorwearingpartsoftherefurbishedproduct,butitgenerallycoverslessthanthewarrantyforanewlymanufacturedorremanufacturedversion(ResourceConservativeManufacturingConsortium2017).Therefurbishmentprocessisperformedwithinrepairand/ormaintenancefacilitiestoincreaseorrestoreperformanceand/orfunctionalityortomeetapplicabletechnicalstandardsorregulatoryrequirements.PleaserefertoFigure8forahigh-levelprocessdescriptionofkeyrefurbishmentprocessactivities.©Shutterstock/CC744Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyProductionEconomyRefurbishmentOriginaluserORnewuserOriginaluserDatawiping&upgradeCollectforrefurbishmentRepairforfunctionalityAesthetictouch-upsMayconsistoftheseand/orothersteps;Takesplacewithinrepairand/ormaintenancefacilities.Figure8:Descriptivesummaryofrefurbishmentprocess2.3.1RefurbishmentincasestudysectorsInthecaseofthethreesectorsstudiedinthisreport,refurbishmentpracticesareonlytypicallyutilizedforvehiclepartsasoutlinedbelow:1.Vehicleparts:Refurbishmentactivitiesforvehiclepartsoccuratthecomponent(versusvehicleproduct)level,andprimarilyoccurunderrepairormaintenancesettings,outsideofindustrialfactoryprocesses.Assuch,forthepurposesofthisstudyitisassumedthatvehiclepartsundergomoregenericstandardrefurbishmentactivitiesthatrestorefunctionality,andwhicharethereforecategorizedwithinGroup2asapartialservicelifeprocess(refertoSection3.1.2).Itmustbenotedthatdespitethegeneralrefurbishmentpracticesdescribedabove,refurbishmentisgenerallynotundertakenforthecasestudyproducts,andthisisreflectedintheresultspresentedinSection5.2.2.2.4ComprehensiverefurbishmentImportantly,akeyinsightfromthisassessmentisthattherearedifferingdegreesofrefurbishmentactivitythatyielddifferinglevelsofmaterialvalueretentionandproductutility.Forthepurposesofthisreport,“ComprehensiveRefurbishment”activitiesarefurtherdifferentiatedfromother“Refurbishment”activitiesasfollows:Comprehensiverefurbishment:Refurbishmentthattakesplacewithinindustrialorfactorysettings,withahighstandardandlevelofrefurbishment.Comprehensiverefurbishmentdiffersfromstandardrefurbishmentinthatitinvolvesamorerigorousprocesswithinafactorysetting,andisonlyundertakenbycertainsectorsincluding,butnotlimitedtoindustrialdigitalprinters,medicalequipment,andHDORequipmentparts.Theadditionofvalueduringcomprehensiverefurbishmentenablesanalmostfullnewservicelifefortheproduct.Chapter2–Clarificationanddifferentiationofvalue-retentionprocesses45ProductionEconomyComprehensiverefurbishmentOriginaluserORnewuserOriginaluserDatawiping&upgradeCollectforcomprehensiverefurbishmentRepairforfunctionalityAesthetictouch-upsMayconsistoftheseand/orothersteps;TakesplacewithinindustrialsettingsFigure9:DescriptivesummaryofcomprehensiverefurbishmentprocessFigure9describesthecompletecomprehensiverefurbishmentprocessthatwouldtakeplacewithinindustrialorfactorysettings;accordingly,standardrefurbishmentactivitiesutilizeonlysomeofthesesteps,atalesserintensity,andtakeplacewithinrepairormaintenancefacilities.2.4.2ComprehensiverefurbishmentincasestudysectorsInthecaseofthethreesectorsstudiedinthisreport,thefollowingcomprehensiverefurbishmentpracticesaretypicallyutilizedforindustrialdigitalprintersandHDORequipmentpartsasoutlinedbelow2.Industrialdigitalprinters:IndustrialdigitalprintershavehighvalueevenatEOU,andatEOUtheyaretypicallymanagedasanentireproduct(versusmultiplecomponents).ThisenablesmoreenhancedandsophisticatedVRPstotakeplace:producersarebetterabletorecovertheentireindustrialdigitalprinterunit,andtoundertakecomprehensiverefurbishmentinanindustrializedfactorysetting.Assuch,forthepurposesofthisstudyitisassumedthatindustrialdigitalprintersundergocomprehensiverefurbishmentprocessesthatrestorevalue,utilityandfunctionalitytotheproduct,andwhicharethereforecategorizedwithinGroup1asanalmostfullservicelifeprocess(refertoSection3.1.1).Thecomprehensive©Shutterstock/DmyTo46Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyrefurbishmentprocessesthatareundertakenforindustrialdigitalprintersaresimilarincomplexityandrigortothoseundertakenforremanufacturing.3.HDORequipmentparts:Likeindustrialdigitalprinters,HDORequipmentpartshavehighvalueevenatEOU,andareoftendesignedtorequirescheduledoverhaulstobringfunctionalityandperformancebacktothepromisedstandard.TheHDORequipmentindustryhasawell-establishedinfrastructure,includingdesignforVRPsandscheduledoverhauls,thatenablescomprehensiverefurbishmentprocessestobeundertakenwithefficiency.Assuch,forthepurposesofthisstudyitisassumedthatHDORequipmentpartsundergocomprehensiverefurbishmentprocessesthatrestorevalue,utilityandfunctionalitytotheproduct,andwhicharethereforecategorizedwithinGroup1asanalmostfullservicelifeprocess(refertoSection3.1.10).ThecomprehensiverefurbishmentprocessesundertakenforHDORequipmentpartsaresimilarincomplexityandrigortothoseundertakenforremanufacturing.Itmustbenotedthatdespitethecomprehensiverefurbishmentpracticesdescribedabove,comprehensiverefurbishmentisgenerallynotundertakenfortwoofthecasestudyHDORequipmentpartproducts(HDORalternator;HDORturbocharger).ThisisreflectedintheresultspresentedinSection5.2.3.2.5RemanufacturingTheBaselConventiondoesnotspecificallyaddressremanufacturing,andassuchthereisawiderangeofdefinitionsanddescriptionsutilizedworldwide.TheWTO(2009)hasdeterminedremanufacturedgoodstobe:“…non-agriculturalgoodsthatareentirelyorpartiallycomprisedofpartsthat(i)havebeenobtainedfromthedisassemblyofusedgoods;and(ii)havebeenprocessed,cleaned,inspected,andtestedtotheextentnecessarytoensuretheyhavebeenrestoredtooriginalworkingconditionorbetter;andforwhichtheremanufacturerhasissuedawarranty”.NasrandThurston(2006)andtheResCoMproject(2017)furtherrefinethedefinitionofremanufacturing:whereremanufacturingisaspecificindustrialprocessofdisassembling,cleaning,inspecting,repairing,replacing,andreassemblingthecomponentsofapartorproductinordertoreturnitto“as-new”condition.Upgradestoelectronicsystemsand/orsoftwarecanalsobeperformedduringtheremanufacturingprocess,ifappropriate.PleaserefertoFigure10forahigh-levelprocessdescriptionofkeyremanufacturingprocessactivities.EconomyIndustrializedremanufacturingprocessCollectforremanufacturingTestingMayincludeupgradeifappropriateDisassemblyReassemblyCleaningInspectionRepairProductionNewcomponentsOriginalUserNewuserFigure10:DescriptivesummaryofremanufacturingprocessChapter2–Clarificationanddifferentiationofvalue-retentionprocesses47Similarly,theUSITC(2012)definesremanufacturingas:“Anindustrialprocessthattakesplaceinanindustrialsettingthatrestorestheend-of-lifegoodstooriginalworkingconditionorbetter.Firmsthatprovideremanufacturingservicestorestoreend-of-lifegoodstooriginalworkingconditionareconsideredproducersofremanufacturedgoods”.InSeptember2016,sixglobalautomotiveremanufacturingassociations7cametoaninternationalagreementonan(automotivesector-specific)remanufacturingdefinitiontoenablesupportandincreasedawarenessofremanufacturing(Motor&EquipmentRemanufacturingAssociation2016).“Remanufacturingisastandardizedindustrialprocess8bywhichcoresarereturnedtosame-as-new,orbetter,conditionandperformance.Theprocessisinlinewithspecifictechnicalspecifications,includingengineering,quality,andtestingstandards.Theprocessyieldsfullywarrantedproducts.Acoreisapreviouslysold,wornornon-functionalproductorpart,intendedfortheremanufacturingprocess.Duringreverse-logistics,acoreisprotected,handledandidentifiedforremanufacturingtoavoiddamageandtopreserveitsvalue.Acoreisnotwasteorscrapandisnotintendedtobereusedbeforeremanufacturing.”Anearlyandessentialpriorityofthisassessmentwastoeffectivelybridgethesevarieddefinitionsandinterpretations,andtoensurethatthisassessmentreflectedtherealisticindustrypractice.Assuch,forthepurposesofthisreport,tocreatealignment,andtoensureaprocessdescriptionappropriatelyreflectiveofreality,thefollowingdefinitionof“Remanufacturing”isusedforthepurposesofthisreport.7EuropeanAssociationofAutomotiveSuppliers(CLEPA)(EU),andEuropeanOrganizationfortheEngineRemanufacture(FIRM)(EU),Motor&EquipmentRemanufacturersAssociation(MERA)(US),andAutomotivePartsRemanufacturersAssociation(APRA)(US),AutomotivePartsRemanufacturersNationalAssociation(ANRAP)(Brazil),RemanufactureCommitteeofChinaAssociationofAutomobileManufactures(VRPRA)(China).8Anindustrialprocessisanestablishedprocess,whichisfullydocumented,andcapabletofulfilltherequirementsestablishedbytheremanufacturer.Remanufacturing:Astandardizedindustrialprocess8thattakesplacewithinindustrialorfactorysettings,inwhichcoresarerestoredtooriginalas-newconditionandperformanceorbetter.Theremanufacturingprocessisinlinewithspecifictechnicalspecifications,includingengineering,quality,andtestingstandards,andtypicallyyieldsfullywarrantedproducts.Firmsthatprovideremanufacturingservicestorestoreusedgoodstooriginalworkingconditionareconsideredproducersofremanufacturedgoods.Thisincludestheminimumexpectationofanindustrialprocessinanindustrialsetting,consistingofspecificactivitiesincludingdisassemblyandcleaning,therequirementfortestinganddocumentation,andtheassuranceof‘as-neworbetter-than-new’performanceandqualityoftheremanufacturedproduct.Giventhenatureofremanufacturing,theremaybepotentialforremanufacturedpartsorcomponentstobeintegratedintoadifferent,butrelated,productsuchasamorecurrentmodel.Thisrequiresmorecomprehensivedesignconsiderations,whicharediscussedingreaterdetailinSection8.2.2.5.3RemanufacturingincasestudysectorsTheexactprocessandactivityundertakenbyremanufacturersnecessarilydiffersbyproducttype:inmostcases,remanufacturingincludesthecompletedisassemblyofallcomponentpartsforinspectionandcleaning,howeverinthecaseofsomeproducts(e.g.industrialdigitalprinters),disassemblyonlydowntothemodule-levelmaybeappropriate.Thisisespeciallytruewhenthemoduleitselfhasbeendesignedforremanufacturing,inwhichcase,bydesign,themodulemayhavealongerexpectedtechnicallifethantheproductintowhichitisincorporated.Similarly,differentsectorsmayutilizedifferentreassemblyprocedures:inthecaseofmedicaldevices,everydisassembledparthasanidentifyingserialnumber,andmustbereassembledintothesameremanufacturedproduct;thisdiffersfromothersectorswheredisassembledpartsmaygodirectly48Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyintoageneralinventoryandutilizedasneededintheremanufacturingofcompletelydifferentproductunits.DesignstrategiesforVRPsarecoveredinsignificantlygreaterdetailinSection8.2.Inthecaseofthethreesectorsstudiedinthisreport,thefollowinguniqueremanufacturingprocessesareutilized:1.Vehicleparts:Thevehicleengine,alternatorandstarteraretreatedasproductsthemselves.Fulldisassemblyandcleaningactivitiesareperformedoneachcomponent,whichthentypicallygointoageneralinventorytobeusedinthereassemblyofadifferentremanufacturedvehiclepartsproduct.2.Industrialdigitalprinters:Theproductionprinterandprintingpressesaretreatedasproductsthemselvesbutconsistofmanyinternalpartsandcomponentsaswell.Remanufacturingincludesdisassemblytotheprimarymodular-level(e.g.frame,electronics,cartridges),andfullcleaning.Disassembledpartsandcomponentsmaygointoageneralinventory;however,allpartsandcomponentshaveidentifiableserialnumbersthataretrackedandrecordedastheyareutilizedintheremanufacturingofadifferentindustrialdigitalprinterproduct.3.HDORequipmentparts:TheHDORengine,alternatorandturbochargeraretreatedasproductsthemselves;fulldisassemblyandcleaningactivitiesareperformed,however,giventhatmanyHDORpartshavehighvalueanddurability,theyareoftendesignedforremanufacturing.Thus,itistypicalthattheHDORpartscoreremainstogetherduringtheremanufacturingprocess,withonlyafewnewlymanufacturedpartsbeingintegratedduringreassembly.493RetainingvaluethroughcircularproductionmodelsProductmarketsaroundtheworldhavebeguntoshiftinrecentyears,movingawayfromafocusonsalesvolume,andfocusingincreasinglyonvaluecreationandvalueretention,oftenthroughtheextensionofusefulproductlife(Saelens2016,Weiland2014).Thereareseveralmarketforcesbehindthistransitionincluding,butnotlimitedto,theincreasingimportanceofrevenue-drivingcustomerrelationshipsandretention,increasinglyvolatileinputmaterialprices,designcapabilityandinnovationsinmodularization,andincreasinglyefficientcollectioninfrastructureopportunities(Saelens2016,Weiland2014).Fromtheindustryperspective,valuecreationinthiscontextincludesthreeaspects(Saelens2016):1.UsingVRPstoenablegreatervaluerealizationthroughrepairs,refurbishmentorremanufacturing(includingupgrades);2.Reformingproductdesignapproachestowardsextendedvaluecreation;and3.Shiftingcustomerengagementawayfrompassivetransactionstoproactiverelationships.WhilethisstudyfocusesontheactualrelativeimpactsofdifferentVRPs(peritem#1),thislensalsohighlightstheimportantroleofindustryinensuringbroadconsiderationofproductdesign(e.g.designfordisassembly)asanenablerofVRPs(item#2),aswellastheimportantroleoftheeducatedandempoweredcustomerrelationship(item#3).Forefficiency,definitionsforVRPsandotherrelevantprocesses/mechanismsarerecalledinthefollowingsections.3.1End-of-useandend-of-lifeinthecontextofvalue-retentionprocessesInthecontextofVRPs,end-of-use(EOU)mustbedifferentiatedfromend-of-life(EOL),asthesecriticaltermsclarifywhereopportunityforVRPsexist.Inthedesignofnewproducts,specificationsfor‘expectedlife’oftheproductareestablished.Theexpectedlifedeterminesthedesigneddurabilityanddurationoftheproduct:howmanycycles,runs,miles,hours,etc.itshouldperformbeforemaintenanceinterventionsarerequiredtoensureperformance(e.g.repair,refurbishment),andhowmanyofthesecanbeperformedbeforetheproductwilldegradebeyonduse,orreachEOL.ProductEOLsignifiesthattherearenootheroptionsfortheproduct,buttoberecycledordisposedofintotheenvironment.However,ifanyotheroptionexiststokeeptheproduct,and/oritscomponents,withinthemarket–viaVRPs–thentheproducthasonlyreachedEOU.Asareminder,EOUmayoccurwithoutanyproductissueatall:Theownermaysimplynolongerwantorneedthefully-functioningproduct,eventhoughithasnotyetfulfilleditsentireexpectedservicelife,creatinganopportunityforarrangingdirectreuseoranotherVRP.TheopportunityforVRPsliesindeterminingandunderstandinghowaseemingproductEOLmayactuallyonlybeproductEOU.Inotherwords,onceaproductorcomponentshasreachedEOU,itmaybedirectedintoEOLoptionsofrecyclingordisposal–itmayalso,whereinfrastructureexists,bedirectedintoasecondarymarketforrepair,arrangingdirectreuse,refurbishmentorcomprehensiverefurbishment,orremanufacturinginstead.50Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyForthepurposesofthisstudy,VRPswereorganizedintotwocategories(refertoFigure11):equivalentfullservicelifeprocessesrefertoprocessesthatenablethefulfillmentofacompletenewlifeforeveryusagecycleoftheproduct,andincludesmanufacturing(OEMnew),comprehensiverefurbishment,andremanufacturing.Theseprocessestakeplacewithinfactorysettingsandindustrialoperations.Incontrast,partialservicelifeprocessesrefertoprocessesthatenablethecompletionof,and/orslightextensionof,theexpectedproductlife,througharrangingdirectreuseoftheproduct,repair,andrefurbishment.Theseprocessestakeplacewithinmaintenanceorintermediatemaintenanceoperations.ThesecategoriesandVRPsaremoreclearlydescribedinthefollowingsectionsandareillustratedinFigure11.PleasenotethatthelengthofthelinesinFigure11areonlyintendedtoreflectrelativeservicelifedurationenabledbydifferentVRPs,anddonotsuggestquantifiedactualservicelifeduration.ThedottedlinesreflectpotentialservicelifeextensionenabledbyeachVRP,ascomparedtotheservicelifeguaranteesindicatedbythesolidlines.FullServiceLifeVRPs(OccurwithinFactoryOperation)OEMNEW(MANUFACTURING)REMANUFACTURINGCOMPREHENSIVEREFURBISHMENTPartialServiceLifeVRPs(OccurwithinNon-FactoryOperation)ARRANGINGDIRECTREUSEREPAIRREFURBISHMENTThisonlyexistsforcertainsectorsandproducts.EOLEOUREMANUFACTURINGFullservicelifeCOMPREHENSIVEREFURBISHMENTARRANGINGDIRECTREUSEREPAIRREFURBISHMENTEXPECTEDEOLEXPECTEDEOUEXPECTEDEOUEXPECTEDEOLEXPECTEDEOLEXPECTEDEOLEOUMANUFACTUREDMANUFACTUREDMANUFACTUREDMANUFACTUREDMANUFACTUREDMANUFACTUREDEOLEOUAlmostfullservicelifeEOLEXPECTEDEOUFullservicelifeFigure11:Summaryofvalue-retentionprocessesdifferentiationwithinthecontextofEOUandEOLChapter3–Retainingvaluethroughcircularproductionmodels513.1.1Equivalentfullservice-lifeprocessesEquivalentFullService-LifeProcessesEnablethecompletionofafull,newservicelifeforeveryusagecycleoftheproduct.Manufacturing(OEMNew):Manufacturingisthevalue-addedtoproductionofmerchandiseforuseorsale,fromusinglaborandmachines,tools,chemicalandbiologicalprocessing,orformulation.Manufacturingprocessesarethestepsthroughwhichrawmaterialsaretransformedintoafinalproduct.Themanufacturingprocessbeginswiththeproductdesign,andmaterialsspecificationfromwhichtheproductismade.Thesematerialsarethenmodifiedthroughmanufacturingprocessestobecometherequiredpart.Newlymanufacturedproductsaredesignedtohaveanexpectedusefullifetime,attheendofwhichtheywillreachandexpectedend-of-life(EOL).MANUFACTUREDEXPECTEDEOLRemanufacturing:Remanufacturingisastandardizedindustrialprocess,occurringwithinindustrialfactorysettings,bywhichcoresarereturnedtosame-as-new,orbetter,conditionandperformance;andtherefore,enabledtocompletemultiplenewusagecyclesinthemarket.Dependingonthespecificproduct,remanufacturingcanbeperformedmultipletimesbeforefinalEOLisreached,withvalueandutilitybeingrestoredeachtime,enablingtheadditionalfullservicelife.MANUFACTUREDREMANUFACTURINGREMANUFACTURINGFullservicelifeFullservicelifeEXPECTEDEOUEXPECTEDEOUEOLComprehensiveRefurbishment:Comprehensiverefurbishmenttakesplacewithinindustrialorfactorysettings,bywhichcoresarereturnedfully-functioning,restoredperformancecondition.Assuch,whilecomprehensiverefurbishmentrestoresoriginalperformance,valueretentionandutilityarelessthanwouldbeachievedthroughremanufacturing,andanalmost,butnotfullnewservicelifeoftheproductisenabled.AlmostfullservicelifeEOLCOMPREHENSIVEREFURBISHMENTEXPECTEDEOLMANUFACTURED3.1.2PartialservicelifeprocessesPartialServiceLifeProcessesEnablethecontinuationoftheproducttothecompletionofitsexpectedservicelife,andmaypartially,butnotfully,extendtheoriginalexpectedservicelifeoftheproduct.Arrangingdirectreuse:Arrangingdirectreusewithinthisstudyreferstothecollection,inspectionandtesting,superficialcleaning,andredistributionofaproductbackintothemarketundercontrolledconditions.ThesignificanceofthisVRPisthatonlythoseproductsthatareinsufficientworkingcondition,notasfarintotheirservicelife,notrequiringanycomponentreplacementorrepair,andtowhichquickandeasyaesthetictouch-upscanbeperformed,qualifyasarrangingdirectreuseproducts.Theseproductsarenottestedfor,orreturnedtooriginalspecifications,andaretypicallyofferedtothemarketatasignificantpricediscount,withno,oratleastamuch-modifiedproductwarranty.DIRECTREUSEEXPECTEDEOLEOUMANUFACTURED52Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyRepair:Repairactivitiesareperformedattheproduct-level,whereafunctioningproductmusthavesomewornordamagedpartsremovedtoberestoredorreplaced,forittocontinuefunctioningforthedurationofitsexpectedlife.Ratherthantheentireproductbeingdiscardedintoawasteorrecyclingstreamduetoawornordamagedpart,repairactivitiesbringtheentireproductbacktoitsoriginalfunctioningcapacityforthecontinuationoftheproduct’sexpectedlife.EOUREPAIREXPECTEDEOLMANUFACTUREDRefurbishment:RelativetootherVRPs,refurbishmentrequiressufficientmodificationofanEOUproductsuchthatitsusableservicelifeisextendedbeyondtheoriginaldesignexpectation:thisrequiresmaterialreplacementandrenewalactivitythatfarexceeds‘repair’activity,butwhichissignificantlylessstructured,industrialized,andquality-focusedthanremanufacturing.EOLEOUREFURBISHMENTEXPECTEDEOLMANUFACTUREDAlthoughisitcommontoconsideranddiscussVRPsas‘equivalent’underabroadterminologyof‘reuse’,todosowouldbeproblematicandmisrepresentative.ThisisbecauseeachVRPisdistinctinhowexactlyitaffectstheproductlifecycle,retainsmaterialvalue,andgeneratesutilityfortheuser.ThisperspectivealsopresentstheimplicationthatfullservicelifeandpartialservicelifeVRPsmaybepursuedfordifferentreasonsbeyondtheirvalue-retentionpotential.Forexample,whereproductdesignnecessitatespartiallifeVRPinterventionsduringtheproduct’sfirstservicelife,partialservicelifeVRPsmaybeutilizedtodiscourageand/orpreventprematureEOL.3.1.3FullservicelifeversuspartialservicelifevalueretentionAsidentifiedabove,remanufacturingistheonlyVRPthatoffersafullnewlifetotheproduct.Thus,thematerialandenergyintensityofremanufacturingactivities—andtheirassociatedeconomicandenvironmentalimpacts—mustbeconsideredinacontextthatreflectsthevalueofatleastanotherfullnewlifefortheproductthatiscreatedasaresult.Incontrast,repairandstandard(non-comprehensive)refurbishmentprocessesaredifferent:repairactivitiesdonottruly“extend”theproduct9Forthepurposesofthisassessmentitisassumedthatthereisnoformalarrangingdirectreuse(undertakenbyOEMs)occurringwithintheHDORequipmentpartssystem.Theremaybegray-marketandinformalarrangingdirectreuseoccurring,inwhichcaseasimilardepreciationofvalueandutilityoverarrangingdirectreusecyclesshouldbeassumed.life,becauserepairistypicallyonlyappliedwhenaproductfailsorreachesEOUbeforeithascompleteditsexpectedEOL;standard(non-comprehensive)refurbishmentactivitiesmayenableanextensionoftheproductlifetosomedegree,butnotbyafullnewproductlife.Inotherwords,repairandstandardrefurbishmentallowaproducttofulfill,andpotentiallyslightlyextend,theoriginal,single,expectedlifecycleattheexpenseofrequiringadditionalmaterialandenergyinputsbeyondoriginalmanufacturingprocess.Assuch,whiletherespectiveimpactsoftheseprocessesappeartooffersignificantbenefitswhencomparedtooriginalequipmentmanufacturer(OEM)Newandremanufacturingprocesses,asdemonstratedthroughoutSection7.3,theirimpactsmustbeconsideredinadditiontotheimpactsoftheproduct’soriginalproductionprocess.Similarly,theimpactsofarrangingdirectreusearetypicallybelievedtobeeffectivelynegligible.However,itisessentialtoclarifythatarrangingdirectreuseonlyextendstheinitialproductlifebysomefinitetime,andthatproductutilityandvaluenecessarilydiminishovertimethroughuseanddepreciation.ThisisdemonstratedforexampleproductsfromtherelevantcasestudysectorsinFigure12andFigure13,andisalsodemonstratedintheproduct-levelanalysis,inSection5.2.9Asshown,thevalueofthelifeextensionenabledviaarrangingdirectreuseisnotequalto,butratherlessthan,thecompletevalueoftheinitialproductlifecycle.Chapter3–Retainingvaluethroughcircularproductionmodels5305010015020025030035005001000150020002500ENERGY(GJ/unit)&EMISSIONS(tCO2-eq./unit)VALUERETENTIONMATERIAL(kg/unit)&COST(103USD/unit)VALUERETENTIONRemainingmaterialutility(kg)CostRemainingembodied&processenergyvalueRemainingembodied&processemissionsvalueOEMNewDirectreuse–2yroldunitDirectreuse–4yroldunitDirectreuse–6yroldunitFigure12:USindustrialdigitalprintingpress(#2)utilityandper-unitvalueviaarrangingdirectreuseovertime024681012141618050100150200250OEMNewDirectreuse–2yroldunitDirectreuse–4yroldunitDirectreuse–6yroldunitENERGY(GJ/unit)&EMISSIONS(tCO2-eq./unit)VALUERETENTIONMATERIAL(kg/unit)&COST(103USD/unit)VALUERETENTIONRemainingmaterialutility(kg)CostRemainingembodied&processenergyvalueRemainingembodied&processemissionsvalueFigure13:USTraditionalvehicleengineutilityandper-unitvalueviaarrangingdirectreuseovertime54Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyPleasenotethatremainingmaterialutility(asreferencedinFigure12andFigure13)reflectsaproxy-approachtodescribingthematerial-leveldegenerationanddegradationovertime.TheOEMNewcategoryreflectsthecostandmaterialrequirement(economicmetrics),andtheembodiedandprocessenergyinputsandtheembodiedandprocessemissions(environmentalmetrics)associatedwiththebrand-newproduct.Subsequentarrangeddirectreusecategories(2year-oldunit;4year-oldunit;and6year-oldunit)reflectthedecliningsaleprice(assetvalue)achievedthrougharrangeddirectreuse.Utilizingcommonstraight-linedepreciationaccountingofassetvalue,alineardeclineisappliedtothematerial,energy,andemissionsvalues:thenegativeimpactofdecliningremainingmaterialutilityreflectsinherentmaterial-leveldegradationthatoccursthroughoutthecourseofregularuse.Incontrast,thedecliningremainingenergyvalueandemissionsvaluesrepresentthepositivemarginalenvironmentalimpactoffsetsthatareenabledbecauseofthedirectreuseoftheproduct.Additionaldetailsregardingtheproduct-levelresultscanbefoundinSection5.2.Implicitinthisisthatoncematerialshavefully-degraded,theproductisnolongerabletofunction,andhaslostallutilityforbothuserandVRPopportunity.Thus,comparingVRPssolelybasedontheirimmediateprocessimpactsdoesnotaccuratelyreflectthevalueandpotentialofeachinthecontextofachievingcirculareconomy.Invirtuallyallcases,contextualizingeachVRPintermsofhowitisutilizedandappliedacrossdifferentsectorsisnecessarytoprovideamorecompletepictureofthepotentialefficiencygain,impactavoidance,andvalueretention.Toaddressthisinherentcomplexity,itisnecessarytoconsiderproduct-levelimpactsatamoreaggregatemacro-level,consideringthebroadereconomicandenvironmentalimpactsthatVRPsmayhaveunderdifferentcircumstancesofsocioeconomicdevelopmentandsystemicbarriers.Inthispursuit,Section7.3ofthisreportleveragesandincorporatestheproduct-levelperspectivetomodeltherepresentativeimpactsofeachVRPacrossarangeofeconomiccontextsandscenarios.Thesemodelsaresubsequentlyusedtosuggestdifferentstatesoftechnical,regulatory,market,andinfrastructuralbarrierconditions,fromwhichthepossibletrajectoryofVRPadoptionandtheassociatedimpactsatthoselevelscanbeestimated.Ultimately,theseprojectionscaninformbothindustrialstrategiesandpolicyinitiativesinawaythatbestsuitsthecost-effectiveandlow-risktransitiontowardsgreaterVRPadoption,andthusultimatelyamorerapidtransitiontoacirculareconomy.3.2Differentiatingvalue-retentionprocessesfromtraditionalrecyclingandreuseInadditiontodefiningeachVRPclearly,itisalsoimportanttodistinguishVRPsfromothertechnicalmaterialcirculareconomyactivitiesthatincludereuseandrecycling.Recyclingremainsacentralactivityinthereductionofmaterialwaste,anddecreaseddependenceonvirginmaterial.Aspartofthecirculareconomy,recyclingrecoversbasematerialsatEOUandcyclesthematthematerial-levelbackintocomponentormaterialsproduction.Recyclingis:Theseriesofactivities,includingcollection,separation,andprocessing,bywhichproductsorothermaterialsarerecoveredfromthesolidwastestreamforuseintheformofrawmaterialsinthemanufactureofnewproducts,otherthanfuelforproducingheatorpowerbycombustion(fromDocumentUNEP/CHW.13/4/Add.2andDocumentUNEP/CHW/OEWG.10/INF/10undertheBaselConvention).VRPs,asproductionprocessinnovations,cancontributetoincreaseduseofnon-newcomponentsintheproductionprocess,withoutlosingthevalueinherentinthestructuralformofthecomponent.Comparedtoothercirculareconomymechanismslikerecycling,VRPscanretaintheembodiedvalue-added(costoflabor,energyandmanufacturingactivities)ofacomponent,andthushavethepotentialtomakeagreatereconomiccontributionperunitofproductionwhencomparedtotraditionalrecycling(HauserandLund2008,Klein1993,SundinandLee2012).VRPsandrecyclinggohand-in-handasessentialaspectsofacascadingmaterialvalue-retentionsystem,asdepictedinFigure3.Chapter3–Retainingvaluethroughcircularproductionmodels55AfewspecificandkeyfactorsdifferentiateVRPsfromothertechnicalprocessesofacirculareconomy,whichinclude:1.theproduct-and/orcomponent-levelperspectiveoftheactivity(asopposedtomaterial-levelperspective);2.thatthestructuralformoftheproductorcomponentismaintained;3.thattheembodiedvalue-added(costoflabor,energyandmanufacturingactivities)oftheproductorcomponentisretained;and4.thattheproductorcomponentisusedagainforitsoriginalintendedpurpose.DespitealleffortstodevelopandenhanceVRPsystemswithinacirculareconomy,allproductswilleventuallyreachEOL.Assuch,althoughnotthefocusofthisstudy,effectiveandefficientdiversionsystemsandrecyclingtechnologiesremainanessentialpartofacirculareconomy,andanimportantconsiderationinadditiontotheinsightspresentedinthisreport.3.3RepairinthecontextofcirculareconomyAsdiscussedinSection2.2,repairissomewhatdifferentfromtheotherVRPs,asitdoesnottypicallytakeplacewithinindustrialsettingsandisoftenconductedinformally.Forthesereasons,amoredetaileddiscussionofrepairiscoveredinthefollowingsections.3.3.1EnvisionedeffectandrelevantsectorsforrepairDefectiveproductscanberepairedduringoneusecycle(sameownership)orbetweentwocyclesofuse(changedownership).Anumberofcompanies,socialenterprisesandinitiativesareinplace:•toprovidetheserviceofrepair(e.g.byrepairworkshops,retailers,manufacturers);•tohelpcitizensrepairorfixproducts(e.g.community-centeredworkshops);and/or•torepairandsellproductsbetweentwocyclesofuse(e.g.reuseandrepairnetworks).Repairofbrokenandfaultyproductsthatwouldotherwisehavebeenlostaswasteisoneimportantelementinthestrategiesofthecirculareconomymodel.KingandBurgess(2005)concludedthatfromanenvironmentalpointofviewrepairisthemostpreferableoptiontokeepadefectproductinuse,sinceituseslessenergyandmaterialthanotherVRPs.Thevolumeflowofenergyandprimaryrawmaterialsusedforthelife-cycleofproductsforcertainservicesdeterminesthebundleofenvironmentalimpactsontheextractionanddisposalside(Schmidt-Bleek1993,Bringezu,Schütz,andMoll2003,Steinmannetal.2016).Longerusageofmaterialsalreadycontainedinproductsavoidswasteandmitigatesthedepletionofnaturalresources(Bakkeretal.2014,Bobba,Ardente,andMathieux2016,Prakashetal.2012,Kagawaetal.2008).Intermsofenergy-usingproductsthebenefitsachievedarevariableanddependontheselectedimpactcategory,theextensionofthelifetime,theimpactsofrepairandtheefficiencyofthereplacementproduct(ArdenteandMathieux2014,Devoldereetal.2009,Steineretal.2008).ConsideringtherepairactivitiesofhouseholdgoodsinFrance,theautomotiverepairsectorrepresents60percentoftherepaircompaniesinallsectors;thesecondmoststronglyrepresentedsectoristherepairofelectricalandelectronicequipment(ADEME2014).ADEME,theFrenchenvironmentalagency,statesthatfrom2010to2012thewholesectordecreasedintermsofemployeesandenterprisesastheturnoveroftheautomotivesectordecreasedby3percent,whiletheturnoveroftheothersubsectorsincreased.Whilerepairintheautomotivesectorsseemsratherwellestablished,itisstillatitsinfancyforelectricandelectronicappliances.3.3.2Currentgoodpractice,obstaclesandwaysofimprovementTherearegoodpracticeexamplesontheemergingrepairsector(refertoBox1andBox2).InGermany,astudyconductedbyPrakashetal.(2016)demonstratesthattechnicalfailuresareamongthemainreasons(56percent)forproductreplacementsoflargehouseholdappliances.Withregardtoelectronicnotebooks,only25percentofreplacementsweretheresultoftechnicaldefect.56Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyIntheUK,thepotentialofreusableandrepairableitemsinthewastestreamwasinvestigated,anditwasfoundthat23percentofallwasteelectricalandelectronicequipment(WEEE)separatelycollectedatthelocalhouseholdrecyclingcentrescouldbere-usedwithasmallamountofrepair(WasteandResourcesActionProgramme2011).About40percentofwastecollectedatthecurbsideand51percentoftheitemstakentothelocalhouseholdrecyclingcentersofdisposedbulkywastewereestimatedtobereusablewithsomeminorrepaired(WasteandResourcesActionProgramme2012).Productdesign,andtransparencyregardingmaterialuseandassembly,cancriticallydeterminewhetherproductrepairactivitiescanbepursued.Forinstance,productdesigncancomplicatethereplacementofcomponents,asisillustratedbytheIFIXITsmartphonerepair-abilityscores10,whichshowseveralexamplesofwherethereplacementofcomponentsisverydifficultornotpossiblewithoutdamagingothercomponents.Thisnotablydecreasesthetechnicallifecyclesofproducts.Abest-practiceexampleisthatofFairphone,forwhich‘designforreparability’playsacentralrole11.ThefounderofFairphone,BasvanAbel,hasbeenawardedthemostprestigiousenvironmentalprizeinGermanyin2016.Thecircumstanceofhighrepaircostsinrelationtocheapnewproducts,missingguidanceandlackingtoolsalsoconstitutedifficultiesfortheconsumertoconsiderrepair(Cooper2004,McCollough2010).Moreover,therearelife-styleissuesassociatedwithwhetherrepairactivitiesareundertaken.Formanypeople,havingthelatestversionofaproductisstronglyassociatedwithpersonalidentityandfeelingsofsuccessinlife(Coxetal.2013).Inordertoimprovethepossibilitiesofextendingproductlives“newcognitiveframings,institutionalframeworksandsocialpracticesthatengagewithusedproductsinordertosavethemfromendingupasmaterialstreams”willberequired(LauridsenandJørgensen2010).Recently,theEuropeanCommission(EuropeanCommission2016)analyzedtheenvironmentaleffectsofapossibleincreaseofthecurrentrepairratebyestablishingproduct-relatedrequirements10https://www.ifixit.com/smartphone-repairability11https://www.fairphone.com/toincreasethereparabilityofproductsinEurope.Theresultsofthestudyshowedthatmeasurestoensureavailabilityofsparepartsforatleastacertainamountofyearsandmeasurestoenableaneasierdismantlingofproductsseemtoprovidethehighestbenefitsintermsofresourcesavings.Inaddition,policiesmayprovideincentivesforrepair.InFlandersandinSweden,value-addedtax(VAT)onrepairedsecond-handproductsincludingbicycles,clothing,householdlinen,andleathergoodsandshoeshasbeenreduced.3.3.3GettingdataonrepairofhouseholdgoodsThereisverylittlepublisheddataonrepair,especiallyrelatedtothecasestudyproductsandsectorsfocusedonwithinthisreport.Thus,itisnotsurprisingthatmonitoringandmeasuringtheeffectofwastepreventionmeasuressuchasrepairactivitiesisstillinitsveryinfancy(Sharp,Giorgi,andWilson2010).Importantrepair-relateddatafortheimpactassessmentoftherepairofproductsincludethecurrentnumberandqualityofrepairs,aswellastherepairedstock.TheEuropeanCommission(2016)collectedthisdatabasedonexistingstudiesandexpertopinionstoestimatestockandsalesofselectedproductsinEurope(refertoTable3).Thisresearchconsidered,forexample,anaverageextendedlifetimeforanytypeofrepair,althoughdifferenttypesofrepairactivitiesmighthavedifferingeffectsontheactualservicelifetimeofproducts.Becauseoftheselimitations,theauthorsarrivedattheconclusionthat“thesizeoftherepairsectorinthepastwasnotsignificantenoughtobestudiedattheEUlevel”(EuropeanCommission2016).Furtherapproachestoprovidesomeevidenceonthescaleofrepairreliesongatheringbottom-updatafromcompaniesandinitiatives.Forexample,theREPAIRCAFÉS(refertoBox1:GoodPracticeExample–Community-CenteredWorkshops)maintainrepairrecords.In2016,a(second)globalsurveyofvolunteersatREPAIRCAFÉSundertakenbyTheCentreforSustainableDesign(CfSD)attheChapter3–Retainingvaluethroughcircularproductionmodels57Box1:GoodPracticeExample–Community-CenteredWorkshopsREPAIRCAFÉREPAIRCAFÉSarefreemeetingplaces,wherepeoplecometogethertocollaboratewithotherstoextendingthelifeoftheirproductsthroughrepair.Visitorscanfindtoolsandmaterialstorepairtheirbrokenitems(e.g.clothes,furniture,electricalappliances)withthehelpofexpertvolunteerswithrepairskillsinallkindsoffields.MartinePostmainitiatedtheREPAIRCAFÉSandthefirstREPAIRCAFÉ-meetingwasinAmsterdamin2009.Since2011,thenon-profitorganizationREPAIRCAFÉ-FoundationhasprovidedprofessionalsupporttolocalgroupsintheNetherlandsandothercountrieswishingtostarttheirownREPAIRCAFÉS.Today,thereareover1100REPAIRCAFÉS-groupsin29differentcountriesallovertheworld.(https://repaircafe.org).Box2:GoodPracticeExample–ReuseandRepairNetworksREVISIE-NETWORKINFLANDERS(BELGIUM)REVISIEisaqualitylabeltoguaranteethequalityofelectricalandelectronicequipment,whichissoldbythereuseshopsDeKringwinkelinFlanders.DeKringwinkelisafederationofshopssellingusedgoods.Theyoperateasanexclusivefranchiseandareservedbyreusecenters(ahubwherecollectedgoodsaresorted,testedandstored).ThereusecentersareembeddedlegallyintheFlemishwasteandmaterialmanagementpolicy.ThelegalframeworkisthebasisfortheaccreditationandthesubsidizingofthereusecentersbythePublicWasteAgencyofFlanders,OVAM.Thereusecentersderive39percentoftheirincomefromthesaleofsecond-handproducts,14percentfromthetonnagefeesforcollectionsandthesaleofrecyclablematerials,1percentfromOVAM’senvironmentalsubsidy,and46percentfromemploymentsubsidies.Komosie,whichstandsforFederationofEnvironmentalEntrepreneursintheSocialEconomy,istheumbrellaorganizationofallaccreditedreusecentersinFlanders.Komosiehasaqualitypolicyforitsmembersondifferentlevels.REVISIEisoneofthequalitylabels,whichcanbeusedbymembersmeetingtheaccreditedqualitymanagementstandardsofthelabelforelectricalandelectronicequipment.In1999,theKomosieFederationstartedtodevelopREVISIEasaqualitylabelforrepairedwasteelectricalandelectronicequipment(WEEE),financiallysupportedbytheFlemishwasteagencyOVAMuntiltheendof2008.Theobjectivewastocreatearegion-widenetworkwithrepairworkplacesthatwouldbecollectingandrepairingWEEEforsaleinthereuseshops.Today,REVISIEhasbecomeastrongembeddedqualitylabelwithinthesector.ThelabelassuresthecustomerthatanelectricalandelectronicdevicefromthereuseshopDeKringwinkelwillworkproperlyandsafely.Inspecializedrepairworkplaces(inthereusecenters),everydeviceissubjecttoathoroughtechnicalinspection,professionallyrepaired(ifnecessary),testedandfullycleaned.Quality,safetyandenergyconsumptionareparamountcriteriainthisoperation.ThereusecentersarecollectingWEEEviaowncollectingchannels(customersthatdeliverWEEEorhaveitpickedupathome)andtheygetaccesstoreusableWEEEviaboththeinter-municipalpartnershipsandviadistributionchannelsfromRecupel(theProducerResponsibilityOrganizationfortheimplementationofthelegaltake-backobligationofWEEEinBelgium).In2015,therewere31centers,ofwhichtenhavespecialrepairworkplaces/reusecentersforWEEEwhichmainlyinvolvescontrolling,testingandmakinglargeelectronicssuitableforsale.WEEEwhichcannotberepairedormadesuitableforsalearedistributedtotherecyclingsector.Approximately250peopleinthesectorareemployedinthecollection,treatmentandrepairofWEEE.Somereusecentersundertakelimitedrepairandrevisionforsomeoftheelectronicscollected.In2015therewere128shopsthatofferedlargeand/orsmallWEEE.NotallshopssellWEEE,butallcentersdo.58Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyUniversityfortheCreativeArts(UCA)inFarnhamintheUK,incollaborationwiththeREPAIRCAFÉ-Foundation,showedthatthemajoritykeeprecordsontheoverallnumberofrepairsundertaken,repairsbyitemcategoryandthetypesoffaultorrepaircarriedout(CharterandKeiller2016).Table3:EstimatedlifeandstockofhouseholdproductsinEuropeParameterUnitWashingmachinesDishwashersVacuumcleanersCoffeemachinesTechnicallifetimewithoutrepairYears131368Lifetimeextensionthankstorepairactivitiesduringthemid-lifeofproductsYears6644LifetimeextensionthankstorefurbishmentattheEOLofproductsYears6644Currentmid-liferepairrate%ofsales30%37%20%32%CurrentEOLrefurbishmentrate%ofproductsreachingEOL3%3%2%2%Source:(EuropeanCommission2016)AsmallproportionofREPAIRCAFÉSevenrecordtheweightofproductsrepaired,i.e.FarnhamREPAIRCAFÉSintheUK,asameansofestimatingtotalmassofproductsfromthewastestreamasaresultoftheirinterventions.Accordingtothesurvey,onaverage,63percentofthebrokenproductsbroughttoREPAIRCAFÉSarerepaired(CharterandKeiller2016).Since2014,therehasbeenanincreaseintheproportionofREPAIRCAFÉSthatfrequentlyreceiveelectricalandelectronicequipmentforrepairwhiletherehasbeenadecreaseinnon-electricalitems(ibid.).AnotherexampleforimproveddataprovisionandmonitoringisthemandatoryrecordingbymembersoftheKOMOSIEnetwork(refertoBox2:GoodPracticeExample–ReuseandRepairNetworks).Allmembersmustfulfillstandardsforrecordkeeping(OVAM2015).Memberswithspecializedworkplaceswheretheinspection,testingandrepairofdiscardedelectricalandelectronicequipmentanddevicesarecarriedoutonalargerscale(REVISIE-Network),mustrecordeachappliancebeingchecked,cleanedandrepaired,includingthemanufacturingyearandadetaileddescriptionofalltheoperationscarriedoutandtheresults(Vandeputte2014).Collectively,in2014,theKOMOSIEmembersprepared12ofallincomingelectricalandelectronicequipmentforreuse(consideringboth:productswhichrequiredarepairandthose,whichwerenotfaulty)(OVAM2015).Anotherapproachtomonitorandmeasurewastepreventionviarepairistheuseofmoreprocess-orientedindicators(Wilts2012),suchastheturnoverofrepairshows,whichispossibleindicatorthatcomplementssomeoftheotheroutputindicatorsalreadymentioned.TheFrenchenvironmentalagency(ADEME)producesregularcountry-levelreportswithsuchdataontherepairsectorinordertoassesstheimpactofnationalwastepreventionmeasures,andinparticulartopromoterepair(ADEME2014).Overtime,thesereportsaregainingincompletenessandreliability;ADEMEarguesthatthequantificationofactorsandstructuresinvolvedintherepairsectorprovedtobeacomplexexerciseandthedefinitionofthemethodologyrepresentsamajorchallenge.Thelatestreviewstudyontheeconomicrepairsectorpresentsstatisticaldataonthenumberofenterprises,establishments,employmentandturnoverperhouseholdgood.Activitiesofretailersandotheractorswithinthesocialeconomyorself-repairarenotquantified,buttrendsofdevelopmentarebeingqualitativelyassessed594Contextandmethodologyforthestudy4.1ConceptualframeworkTohelpfacilitateandsupportmorecirculareconomies,itisimportanttounderstandtheimpactsthatdifferenttypesofinnovationcanhaveuponproducts,businesses,sectors,andeconomicsystems.Giventhebroadrangeofinnovationsthatcaninfluence,andareessentialtocirculareconomies,ahybridapproachutilizingbottom-up(productandprocess-level)andtop-down(economy-level)perspectivesenablesappropriatereflectiondifferentVRPimpactsacrossproductsystems.Theanalysispresentedinthisreportutilizesahybridofbottom-upandtop-downevaluationstocapturesomeofthemoresignificanteconomicandenvironmentalimpactsofbothinnovation,andbarrierstobroadapplicationsinthecirculareconomy.Thisapproachdoesnotundertakealife-cycleanalysis(LCA)method,howeveritdoesincorporateanattributionalapproachthatidentifiesandaccountsforspecificstatesandimpactsoftherelevantprocessesattheproduct-level(refertoSection5)andattheaggregatedeconomy-level(refertoSection7).PerFigure14,anoverviewoftheseapproachesisprovidedbelow,andexpandedoninmoredetailinSections4.2and4.3,respectively.Thecomprehensivestudymethodology,models,anddataareincludedinAppendixB.Unit-levelassessmentbyproduct,foreachprocess:➢➢newmaterial-requirement;➢➢embodiedmaterialsenergy;➢➢embodiedmaterialsemissions.Unit-levelassessmentbyproductionprocess:➢➢processenergy;➢➢processemissions;➢➢processlabor;➢➢producercost.Economy-levelassess-mentofaggregatedpro-ductionimpacts:➢➢threesystem-basedbarrierscenarios;➢➢foursampleeconomies.PRODUCT-LEVELPRODUCTION-LEVELECONOMY-LEVELFigure14:OverviewofconceptualassessmentframeworkProduct:Attheproduct-level,abottom-upapproachisusedtoassessproductionrequirementsandlifecycleimplicationsforasingleindividualproduct,acrosseachVRP.Forexample,thisincludesnewmaterialrequirement(kg/unit),embodiedmaterialsenergyrequirement(MJ/unit),andembodied60Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomymaterialsemissionsimpact(kgCO2-eq./unit)foreveryunitproduced.Comprehensiveempiricaldatacollectionforasampleoftenproducts,representingthreedifferentsectorsisusedtohighlighttheproduct-leveleconomicandenviron-mentalimpactsofVRPswithinthecirculareconomy(refertoTable1).AppendixAdescribesthesecasestudyproductsandsectorsingreaterdetail(referalsotoSection4.2).Production:Production-levelimpacts(orfactors)layerontheprocess-specificimpactsofproductionforOEMNewandeachVRPonaper-unitbasis.Theseimpactsincludeprocessenergyrequirement(MJ/unit),associatedprocessemissions(kgCO2-eq./unit),thelaborrequirement(full-timeworker/unit),andthecostadvantage(percent$USD/unit).Productionimpactsarereflectedinaper-unitbasistosupportandenablesubsequentaggregationatthemacro-sectorandeconomyscales.Giventhedifferingnatureofproductionacrossglobaleconomies,productionimpactsarereflectedineconomy-specificimpactfactorsforeachoftheexampleproductionregions:Brazil,China,Germany,andtheUnitedStatesofAmerica(US)(referto4.3.3).Economy:Product-andproduction-levelimpactsperunitareaggregatedtothemacro-sectorandeconomyscalesdifferently,dependingonproductionmix,productionfacilityperformance,aswellasthecountryoforigin.Product-levelimpactdataareincorporatedintoatop-downaggregationapproach,basedonestimatedproductionvolumesforeachcase-studyproductandsectorinaneconomy.ToassessthemagnitudeofimpactthatcurrentcommonbarrierstoVRPsmayhaveuponeconomicandenvironmentalimpactmeasurements,thetop-downapproachnormalizesproductionlevelsacrossfoursampleeconomies(US,Germany,BrazilandChina)underaStatusQuo(currentstate)scenario.BarrierstoVRPsarewelldocumented;thisanalysisextends,throughsensitivityanalysis,understandingofwhichbarrierstoVRPsmostsignif-icantlyconstrainsthetransitiontocirculareconomy.Wheretheimpactsofbarrierscauseinefficiencyand/ornegativeimpactsfordifferentstakeholdersand/ortotheenvironment,policyapproachesmaythenbeusedtoappropriatelyandeffectivelytargetspecificbarriersforalleviation/mediationofboththebarrier,andtheresultingimpact.Twoadditionalbarriers-basedscenariosareutilizedtoexaminetheimpactofdifferentbarrieralleviationinitiativesuponeachofthefoursampleeconomies:theseincludeaStandardOpenMarketforVRPProductsscenario,andaTheoreticalHighforVRPProductsscenario.ThemethodologyforthisapproachisfurtherclarifiedinSection4.3,anddetailsregardingbarrieralleviationscenariosarefurtherdescribedinFigure15,andfurtheranalyzedinSection7.STANDARDOPENMARKETforVRPproductsscenarioTHEORETICALHIGHforVRPproductsscenario➢➢EacheconomyforecastusingUS-basedStatusQuoScenarioregulatory,market,technologicalandinfrastructureconditionfactors➢➢Eacheconomyforecastwithmaximumpossibleregula-tory,market,technological,andinfrastructureconditionfactors,andUS-basedTheoreticalHighproductionlevelsforVRPproducts(percentshare)STATUSQUOforVRPproductsscenario➢➢CurrentstateofVRPswithineacheconomy,givenknownbarriersINCREASINGBENEFITSOFVRPSWITHALLEVIATIONOFBARRIERSTOVRPSFigure15:Overviewofbarrieralleviationscenarios61Chapter4–ContextandmethodologyforthestudyAsystems-viewoftheeconomy,includingproductionofOEMNewandVRPproductsisessential:understandingtheinterconnectednessandcomplexityofrelationshipsbetweenarangeofsystemvariablesandconditions(factors)ensuresabetterappreciationofcurrent-stateimpacts,andimplicationsoffuturedecision-makingandpolicydirection.Ataminimum,thisstudyaccountsforsomeoftheprimarysystemfactorsthatmustbeconsideredinthecontextofVRPproduction,asdescribedinFigure16.STATEOFECONOMY❑❑GrowthrateforproductmarketOPENNESSTOPRODUCTION&TRADEOFVRPPRODUCTS❑❑Import&exportratesoffinishedreuseproducts❑❑Import&exportofcores❑❑Regulatoryconstraintsonproduction,distribution,and/orsaleSTATEOFDIVERSIONCUSTOMER&RECOVERYINFRASTRUCTURE❑❑Productexpectedlife&EOUfall-outrate❑❑EOUdiversiontosecondarymarketrate❑❑EOLdiversiontorecyclingrate❑❑EOLdisposaltoenvironmentrateMARKETREADINESS&MARKETPENETRATION❑❑Demandshare(ofmarket)❑❑Productionshare(ofmarket)❑❑Customer/consumeraccessSTATEOFPRODUCTIONEXPERTISE&INFRASTRUCTURE❑❑Shareofnewmaterialinputs❑❑Shareofreuseinputs❑❑Productionwastedivertedtorecycling❑❑ProductionwastedisposedtoenvironmentFigure16:Keyfactorsaffectingvalue-retentionprocessesandproductionsystemsExtensiveeffortwasundertakentoensurearigorousempiricalapproach.Thefollowingsectionsdescribethemodeldevelopmentandmethodologyforboththebottom-up(product-andproduc-tion-level)analysis(Section4.2),andthetop-down(aggregatedeconomy)analysis(Section4.3).Includedaredatacollectionmethods,keyproduct/componentcharacteristicsusedinthemodel,assumptionsusedbetweenthevariousVRPsincluded,anddescriptionofthemodelingprogram.4.2Bottom-upmodeling:empiricaldatacollectionandproduct-levelanalysisToensurethattheresultsobtainedfromthisanalysiscouldbeproperlyappliedtoindustry-wideconclusions,preliminaryproductselectionconsid-erationswerediscussedthoroughlywithindustryexperts,reviewedinliterature,andconsideredinthecontextofcurrentmarketconditions.TheresultingcasestudysectorandproductswereselectedlargelybecausethesesectorsareknowntoengageinVRPs,interestedcollaboratingindustrymemberswerewillingtoprovideaccessforon-sitedatacollectionandinterviews,andtheseproductsrepresentedsufficientscalewithinpotentialsampleeconomiestoenablemeaningfulmodelingapproaches.4.2.1CollectionofdataoncasestudyproductsandprocessesWheremuchofthecurrentliteratureoncirculareconomyandmaterialefficiencyreliesonassumptionsandsecondarydata,ofprimaryinteresttothisassessmentwasthecollectionoffirst-handdataaboutcasestudyproductsandproductionprocesses.Researcherswereengagedinthecompletedisassemblyandclassificationofconstituentcomponentsandmaterials,aswellasnumerouson-sitevisitswithindustrycollaborators62Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomytoconductcarefulobservationofeachproductionprocessandcommonpracticesforeachcasestudyproduct,whereverpossible.Whereon-siteassessmentswerenotpossibleduetoproprietaryconcerns,industrycollaboratorsprovideddetailedBillofMaterials(BOM)datasetsforproduct-levelmaterialsanalysis,aswellascomprehensiveutilitiesreportstosupportandenableprocessenergyandlaborrequirements,forOEMNewandeachVRPproduction.Eachon-siteassessmentinvolvedmultiplevisits,anddirectinteractionwithalllevelsoftheorganization,fromfront-lineoperators,throughtobusinessunitmanagersandvice-presidents;italsoinvolvedsupportfromacrosstheorganization,includingoperationsteams,finance,andfacilitymanagement.Giventhesubstantialscopeofthisassessment,insomecasesprocess-baseddatacouldnotbecollecteddirectlyduetothedynamicnatureoftheprocess(e.g.repairoftraditionalvehicleengines).Inthesecases,secondarydatafromrecentLCAandengineeringliteraturewereutilized,andadditionalvalidationwasprovidedthroughreviewbysupportingindustryexperts.Thedatacollectionmethodologyfirstrequiredanassessmentoftheproductandproduct-platformkeycharacteristicsofaveragelengthoffirstservicelife(e.g.uptoEOU),andactualusefullifeoftheproduct-platform(e.g.uptoEOL).Inaddition,itinvolved,thecollectionofprimaryproductandcomponentcharacteristics(e.g.weight,materialtypes,causesoffall-out/failure),typesofVRPsavailableforthatproduct,productionwastegeneration,andthepotentialreusability(orsalvagerate,e.g.96percent)ofeachproductcomponent,undereachdifferentVRP.Thisalsoincludedmaterialrequirementgross-upestimatestoaccountforproductionbyproductwasteandrecycling,substantiatedbydatafromrelevantLCAliterature.4.2.2Product-levelmodeldevelopmentandapproachProduct-levelanalysiswasprimarilyperformedatthecomponent-levelfortworeasons.First,inthecaseofremanufacturingandcomprehensiverefurbishment,differentproductcomponentscanhavedifferentreuse-potential.Inotherwords,withinthesameproduct,somecomponentscanbereusedformultipleservicelives(e.g.chassisorframe),whereasothersmaybelimitedtoonlyasingleservicelife(e.g.software,electronicsystems).ThisdifferentiationisdiscussedfurtherinSection8.2.4.Thecomponent-levelapproachutilizedintheproduct-levelmodelensuredthattotalmaterialcirculationforeachcomponent,viatheVRP,couldbeappropriatelycapturedrelativetoothercomponentsandtheproduct-platformoverall.Inaddition,thisapproachenabledamoredetailedassessmentofvalue-retentionandreuse-potentialacrosseachofthedifferentVRPs.Comparisonisassessedonasingleunitprocessbasis:Oneproduct,unitgoingthroughasinglecycleofanOEMNeworVRPprocess.Essentialcomponent-leveldataandinformation,derivedlargelyfromtheBOM,includedmaterialtype,weight(bymaterial),aswellastheassociatedembodiedmaterialenergyandembodiedmaterialemissionsofeach,usingthematerial-basedglobalaveragesfromtheInventoryofCarbonandEnergy(HammondandJones2011,CircularEcology2017).Thepresenceofrecycled-contentatthematerials-levelisaccountedforupfront,attheinputstage:forexample,theembodiedmaterialsenergyandemissionsvaluesarereflectiveofglobalaveragerecycled-contentforeachmaterial,andthereforeincludetheadditionalenergyandemissionsassociatedwiththatrecycledcontent,onaper-kgbasis.Anobjectiveoftheproduct-levelassessmentwastogeneralizetheimpactsofOEMNewandVRPproductionofninecasestudyproducts,acrossfacilitiesandeconomies.Assuch,itwasnotpossible©Shutterstock/Sofiaworld63Chapter4–Contextandmethodologyforthestudytomeaningfullyassumetheoriginofeachmateri-al-input,foreachcomponentwithineachproduct:Instead,globalaveragevaluesforembodiedmaterialenergy(MJ/kg)andemissions(kgCO2-eq./unit)impactdatapointswereused(HammondandJones2011,CircularEcology2017).Itisimportanttonote,however,thatfortheprocess-levelanalysis,itwascrucialtoreflectprocessenergyandprocessemissions,fortheeconomywherethatproductionactivitywasoccurringin.Thus,forproductionactivitiesineachrespectivecasestudyeconomy,process-relatedenergyandemissionsimpactswerebasedoneconomy-specificaspectsofefficiency(generation,aswellastransmissionanddistributionefficiencies)aswellastheimplicationsofelectricitygridmixtureintermsofGlobalWarmingPotential(GWP,kgCO2-eq.).Process-relatedenergyandemissionsdataweretakendirectlyfromtheEcoinvent3.3database,utilizingtheaveragevalueforeachcasestudyeconomy(additionaldetailsonthestudymethodologyareincludedinAppendixB).Animportantaspect,whenconsideringcirculareconomyandVRPs,istounderstandwhateventsormechanismsmaytriggertheopportunitytoengageinVRPs.TherearearangeofreasonsthataproductmayreachEOUandfall-outofthemarket,thusbecomingeligibleforanotherservicelifethroughVRPs,asdiscussedingreaterdetailinSection3.1.Specifictothecasestudyproductsassessedinthisstudy,theproduct-levelanalysisincorporatedthreeappropriatereusabilitymechanisms:Fatigue/Failure:Thefatigue/failuremechanismappliestocomponentsthattypicallyfailduetowear-and-tear,overtime.Thesecomponentshaveanappropriatedurability(orloss-probability)curvethatisappliedtotheproducts’servicelife,usingaWeibulldistribution.Hazard:Thehazardmechanismappliestocomponentsthatgenerallydonottendtofailfromuse,butratherfromunforeseen(‘hazard’)issues,suchasmisusebytheuserordamagesthatoccurduringtransit.Thistypeofmechanismwouldbeappropriateforstructuralcomponentssuchashousingsorframes.Inmodeling,hazardisrepresentedusingacumulativeexponentialdistri-butionoverallthecomponent’sservicelifecycles.Predetermined:The‘predetermined’mechanismappliestocomponentsthatarereplacedbasedonatime-scheduleorotherexternalindicatorsdeterminedbytheOEM,andnotasaresultofdirectmeasurementofcomponentperformanceorfailure.Thesecomponentscanincludebushings,bearings,andotherwearcomponentsthatwillbereplacedaspredeterminedbythemanufacturer.Thismechanismusesastep-distributionovermultipleservicelifecycles,wherethecomponentwillbeused/reuseduntilitreachesitspredeterminedend-of-life,afterwhichitisdivertedintowasteorrecyclingstreams.ThesimulationprogramusesMATLABtoperformaMonteCarlosimulationonthestochasticmodel,whichenablesoutputresultsofaveragenewmaterialrequirements(inversely,therequiredcomponentreplacement),bymaterialtype,foreachproductionprocess.Duetotheanalysisbeingastochasticmodel,MonteCarloisnecessarytoobtainaverageresults,aswellastoaddressandminimizeuncertaintywithinthemodel.Theprogramtakesthecomponent-leveldataandsimulatesmultipleservicelifecyclesforthecomponentusingrandomly-generatedprobabilities.Inotherwords,thisprocessdetermineswhetherthecomponentwillbereusedintheVRPforanadditionalservicelifecycle.ThereusabilitymechanismsarealsoappliedtosimulatetheprobabilityandimplicationsofthatadditionalVRPservicelifecycle.UsingtheMATLABprogramprocedure,theproductBOMisuploadedintothemodel,andthenumberofsimulations,n,isdefined.Thiscanalsobeconceptualizedasthenumberofproductsthemodelwillrun.Fromthere,eachcomponent,m,isrunthroughmultipleservicelifecycles,i,untilitultimatelyfailsthroughtheassignedreusabilitymechanism,thusreachingEOL.ThisprocedureisrunforeverycomponentoftheBOM,untilallcomponentshavebeenassessedforeachOEMNewandVRPsimulation.ThisanalysisestimatestheaveragematerialthatreachesEOLthroughoneofthefall-outmechanismsand,inversely,theaveragenewmaterialrequiredtoreplacethatfailedcomponentinaVRP,foreachconsecutiveservicelifecycle.EachproductstartsoutasanOEMNewproductwithoriginalproductandmaterialcompositionnecessarytocompleteasingleoriginalservicelife.Aftertheinitialservicelife,theproductthenbecomeseligibleforVRPs;however,itwillonlyundergoaVRPbasedonwhatisappropriateforthatproductandbasedontherelevantconditionsofthesector.Forexample,inthecaseofremanufacturing,somecomponentsmay64Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomynotbeeligibleforanadditionalservicelifecycle:relativetothewholeproduct,thesecomponentsmaynothaveretainedsufficientoverallvaluetojustifyremanufacturingthem;alternately,theremaybeanintolerableriskofproductfailureifcertaincomponentsweretobereusedintheprocess.Thisrigorousapproachtotheproduct-levelanalysisenablesamorerealisticunderstandingof:(1)thereusabilityofproductcomponentsfromanoriginalproductdesignstandpoint;and(2)theineffi-cienciesthatcanexistwithinVRPsthatarerelatedtothedesignandnatureofproductcomponents.4.3Top-downmodeling:macrodataandeconomy-levelanalysisThedynamicsofasystemmodelthatrepresentsanentireeconomyarecomplexandhavebeenreasonablysimplifiedtoallowforgenerali-zationwithinthismodel.Whilethecalculationofproduct-levelstocksandflowsislargelylinear,therearecallsintheliteraturehighlightingtheimportanceofaccountingforsomeofthekeyfactorsthatinfluenceandaffectconsumerbehavioruponthegrowthandtransformationofproductmarkets.(c.f.Peres,Muller,andMahajan2010,SubramanianandSubramanyam2012,YorkandPaulos1999,Mylan2015,Weitzel,Wendt,andWestarp2000).Inthiscase,allmodelsimulationbeginswiththeproductmarket:thetotalquantityandrepresentativesharesofaproduct,byeachproductionprocesstype,includingOEMNew,arrangingdirectreuse,repair,refurbishmentorcomprehensiverefurbishment,andremanufacturing.Becausetheobjectiveistosimulatetheinfluenceofdifferentconditions(oftenbarriers)uponthevariousproductstocksandflowswithinamarket,allmarketsareassumedtostartwithastock/quantity,orinstalledbaseforthespecificcasestudyproduct,thatreflectstheactualsizeofthereferenceeconomy.TheconditionsofeacheconomyaffecthowthatinstalledbaseissharedbyOEMs(New)andVRPproducers,aswellashowthosemarketsharesareexpectedtoevolveoveraperiodoftime.Asimplifieddescriptiverepresentationofthetop-downmodelispresentedinFigure17,below.Toreflectgrowth,marketevolution,andcompoundingcomplexityinarealisticandmeaningfulway,thesescenarioprojectionsaresimulatedoveraseven-yearperiod.Thissimulationperioddoesnotreflectasuggestedoroptimalcirculareconomytransformationtimeline,assuchacomprehensiveExportRecyclingmarketSecondarymarketRecyclingmarketDisposaltoenvironmentDisposaltoenvironmentRecyclingmarketDisposaltoenvironmentVirginmaterialsRecycledmaterialsVirginmaterialsDomesticcores/reuseImportedcores/reuseImports(Developed/industrializedeconomies)In-useproductstock(Installedbase)Maintenance&repairDomesticproduction(New,directreuse,refurbished,remanufactured)RecycledmaterialsImports(Developing/newlyindustrializedeconomies)Collection&diversion(New,arrangeddirectreuse,refurbished,remanufactured)DemandedproductCollectedEOUproductNewinputsReuseinputs/outputsRecyclinginputs/outputsGarbageConnectedrecyclingﬂowsConnectedreuseﬂowsNewdemand(New,arrangeddirectreuse,refurbished,remanufactured)Figure17:Descriptiveeconomicsystemmodelutilizedfortop-downanalysis65Chapter4–Contextandmethodologyforthestudytransformationmustbegroundedintheactualconditionsofeachindividualeconomy,andmustreflecttheprioritiesofeachindividualinitiative,someofwhichmayrequiresignificantlymore(less)timetoaccomplish.Basedonexpecteddemand,OEMNewandVRPversionsofaproductaresuppliedeitherbydomesticproducers,orviaimports(top-centerandtop-leftofFigure17).Domesticproducersrelyonavarietyofinputstoproduction,includingrecycledandvirginmaterials,aswellasdomestically-orimported-reuseinputs(cores).Inadditiontothefinishedproduct,otherproductionoutputsmayincludematerialsdirectedintoarecyclingmarket,ormaterialsthataredisposedintotheenvironment(bottom-centerandbottom-leftofFigure17).Asdescribedpreviously,repairactivitiescantakeplacewithintheservicelifeofaproductandreturntheproducttoitsoriginalowner.Therepairprocessmayrequirevirginand/orrecycledmaterialinputs(viapartsreplaced),andresultsinproductwastematerialsthatmaybedirectedintorecyclingmarketsordisposedintotheenvironment(top-centerofFigure17).Alternately,EOU/EOLproductsmayfall-outofthein-useproductstock(market)becomingavailableforcollectionanddiversion(top-rightofFigure17).TheseproductsmaybedivertedintoasecondarymarketforVRPs,intoarecyclingmarket,ordisposedintotheenvironment(bottom-rightofFigure17).Pleasenotethatthearrowswithinthediagram,reflectpresenceanddirectionalityofsystemfactorsandflowsonly,anddonotsuggestthemagnitudeinanyway.Forexample,materialsdirectedintotherecyclingmarketmaylaterbeusedinproduction,howevertheseflowsarenotquantifiedbythemodel.Anoverviewofthecomprehensiveanalyticalmodelthatwasdevelopedfortheeconomy-levelassessmentisprovidedinFigure18.Asdepicted,modelingcalculationsstartedwiththeinstalledbase(stock)oftheproductinthemarket(top-leftorangebox)andtheestimatedmarketshareofproductbyOEMNewandVRPprocess(top-centerbluebox).Fromthesestartingpoints,othervalueswithinthemodelwerederived;asimpactsofproductionwereassessedonaper-unitbasis,theaggregatedeconomy-levelresultspresentedinSection7arelargelybasedontheTotalFinishedDomesticProduction(centergreenbox),ImportsfromDevelopedandDevelopingEconomies(centergreenboxes),andProductionLevelsofRepair(center-rightgreenbox).Acompletedescriptionofthemodel,includingformulasisincludedinAppendixB.Est.marketshareofproduct,andOEMNeworVRPprocessStartingstockofproduct(byProcess)inthemarket(t=0)Installedbase(stock)ofproductinthemarketTotaldomesticproductdemandDemandforproducts(repair)ProductsavailableforcollectionatEOUEquivalentproductstosecondarymarketEquivalentproductstorecyclingmarketEquivalentproductsdisposedtoenvironmentImportedproductsDomesticsupplyofproductsTotalﬁnisheddomesticproductionExportedproductProductionlevel(repair)Productionlevel(OEMNew,reman,refurb,directreuse)NewmaterialrequirementDomesticreuse(core)inputrequirementdisposedtoenvironmentImportedreuse(core)inputrequirementEmployment/laboropportunityEmbodied&processemissionsgenerationEmbodied&processenergyuseCostadvantageProductionby-productdivertedtorecyclingImportsfromdevelopingeconomiesImportsfromdevelopedeconomiesMarketdemandformulasInstalledbase/stockformulasProduction&supplyformulasResourceorimpactformulasProductionby-productDemandforproducts(OEMNew,reman.,refurb.,directreuse)Figure18:Overviewofcompreheniveanalyticalsystems-modelmechanicsforeconomy-levelassessment66Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy4.3.1DemandandmarketsharemodelingIntheabsenceofcomprehensivemicro-dataforeacheconomy,asimplifiedapproachwasusedtomodeltheevolutionofmarketshareforeachproduct,byOEMNewandVRPproduction.Projectedmarketdemandforeachcasestudyproductwasbasedontwokeyparameters.First,demandwaspartiallyestimatedusingtheexpectedimplicitgrowthofthemarket,basedonthehistoric(2010–2015)five-yearcompoundannualgrowthrate(CAGR)performanceoftheproductcategory,foreachrespectiveeconomy.Second,theevolvingmarketshareofeachproduct,byprocesstype,wasanimportantconsiderationthatenabledthereflectionoftwodifferenttypesofdemand:newdemand,whichoriginatesfromcustomersthatpreviouslyhadnotparticipatedintheproductmarket;andreplacementdemand,whichoriginatesfromthefall-outofanEOUOEMNeworVRPproductfromthemarket,forwhichthecustomernowrequiresareplacement.Thisapproachenabledthereflectionofdifferentiatedvalue-retentionenabledbyeachVRP.Themodelassumesthatthetotal‘installedbase’or‘in-stock’marketforthecasestudyproductcanbedividedintorelevant‘marketshares’thatreflecteachoftheavailableproductionprocesses:OEMNew,arrangingdirectreuse,repair,refurbishmentorcomprehensiverefurbishment,andremanu-facturing.Inmosteconomies,thepracticesoftraditionalOEMNewproductionandrepairarecommonlyacceptedandunderstood:assuch,itisassumedthatthemarketsharepercentageforrepairisconstant.Incontrast,thedynamicnatureofthemodelensuresthatanincreaseindemandforVRPproductswilloffsettheequivalentdemandforOEMNew.Inotherwords,andespeciallyinthecaseofnewdemand,itisassumedthatanynewdemandnotsatisfiedbyaVRPproductwillinsteadbesatisfiedbyanOEMNewproduct,andassuchthequantityofOEMNewproductdemandedisdeterminedvianet-subtractionofVRPdemandfromtotalcasestudyproductdemand.ItisimportanttonotethatthemodelaccountsforrepairactivitiesdifferentlythanotherOEMNewandVRPactivities.OEMNew,arrangeddirectreuse,refurbishedandcomprehensively-refur-bished,andremanufacturedproductsrequireacomplexsupplychainwithextensiveinfrastructureandstakeholders;incontrast,repairedproductsfollowamoresimplisticflow(refertoFigure17).Itisassumedthattherepairprocessonlytemporarilyremovesaproductfromtheeconomyandthattherepairedproductisreturnedtoitsoriginalowneroncetherepairprocessiscompleted.Assuch,demandfor,andassociatedrequirementsoftherepairprocessaremodeledseparatefromdemandfortheotherVRPproductsthatentertheeconomyviaamorecomplexsupplychain.Themodelassumesthatonceallrepaircycleshavebeencompleted,theproductwillfailandberemovedfromthein-useproductstock,tobereplacedinthenextcycle.Inthiseconomy-levelmodel,theinfluenceofnetworkeffectisreflectedinasimplifiedmanner:asthenumberofVRPproductsinthatmarketincreases,itbecomesrelativelymoresignificantwithinthemathematicalfunction,andcandemonstratesomedegreeof‘acceleration’.Inotherwords,thelargerthesizeofthestartingmarket,thelargertherelativemarketshare,andthemoresignificanttheabsoluteimpactofthegrowthrateuponactualproductvolume.Whiletherearemanymorecomplexandcomprehensivewaystomodelthediffusionofinnovation,thisapproachenablesageneralized,butrealisticreflectionofmarkettransformationprojections.Withineachsingle-yearperiodoftheseven-yearsimulation,demandisestimatedbasedonrealproductsectorgrowthprojectionsandmarket-levelconditions.Datafromthepreviousperiod(year)informscalculationsforthenextperiod(e.g.productsthatreachEOUandfall-outinperiod1,arereplacementdemandinperiod2),andtheimplicationsofthesedynamicsarecompoundedtodemonstratetheevolutionofeachproducteconomyoverthetotalseven-yearsimulationperiod.Thisformofmarketsharemodelingensuresthatthesumofallsharesdoesnotexceed100percent,andaccomplishestheneedtobalancetheimpactofincreasing(decreasing)demandforOEMNeworVRP,ascompetingproductionprocessoptionsbecomerelativelyless(more)attractiveintheeconomy(Sterman2000).Themodelassumesconstantparametervaluesovertime,withtheexceptionofthesizeoftheinstalledbase,orin-usestockoftheproduct,whichisdeterminedendoge-nouslybythemodel,asafunctionofthestartingin-useproductstockintheeconomy,plustheadditionofnewproduct(demand),minusthose67Chapter4–Contextandmethodologyforthestudyproductsthatfall-outoftheeconomyduetofailureorreachingEOU.Productsthatfall-outofthein-useproductstockoftheeconomyaredirectedtoVRPs(EOU),ortorecyclingordisposal(EOL).4.3.2ModelingthesupplychainAllmarketsizeanddemandestimateswithinthemodelreflectconditionsofeachactualeconomy,determinedthrougheconomicreportsandmarketresearchdatasets.Intheinterestsofaccountingforconsumptionbehaviors,themodelthusalsoaccountsfortheextenttowhichdemandissuppliedbydomesticproduction,orbyimports.Aprimaryimplicationofimportsisthat,whiletheyenablethesatisfactionofdomesticdemand,theyalsoresultintheallocationofbothimpactsandbenefits(asmeasuredinthisassessment)totheproducingeconomy,oreconomyoforigin.Inotherwords,increaseduptakeofVRPproductsinaneconomyonlyaccomplishesdomesticimpactreductionifatleastsomeofthoseVRPproductsareproduceddomestically.Fromaglobalperspective,itisimportanttonotethatincreasedadoptionofVRPproducts,regardlessoforigin,cancontributetooverallimpactreduction,howeverthismaynotcontributetotheaccomplishmentofdomesticobjectives,suchascarbonemissionsreduction.Assumptionsregardingthesplitbetweendomesticproductionandimportaredeterminedexogenoustothemodel,baseduponcurrenttradebalanceconditionsforeacheconomy.Importandexportratesareheldconstantoverthemodelingperiodandareincorporatedtoreflecttheinherenttrade-relatedpoliciesthatwouldenableorhinderimportofcoresandfinishedVRPproductstosupplydomesticdemandandenableorhinderexportofcoresandfinishedVRPproductsasamechanismforincreaseddomesticproductioncapacity.Itisassumedthatdomesticsupplyaccountsfortheremainingbalanceofdemand(1–ImportRate),thatthereisnostockpilingintheeconomy,andthatthereisnotradeofarrangeddirectreuseorrepairedproducts.4.3.3ModelingproductionandproductionimpactsThroughthederivationoftotaldomesticproductionlevels,themodelapproximatesproductionrequirements(inputs),aswellasthegenerationofby-productmaterialsthatareeitherdirectedintoarecyclingstreamordisposedofintotheenvironment.AlthoughtheOEMNewandVRPproductionactivitiescandiffersignificantly,themodelsimplifiesproductioninputsintothreecategories:newmaterialinputs(inclusiveofaveragerecycledcontent),importedcoreinputs,anddomestical-ly-sourcedcoreinputs.Therelativeshares(percentofasingleunit)ofeachoftheseinputsshouldvarybyproductandproductionprocess,aswellastheeconomyinwhichtheactivityisoccurring.Asoneoftheprimaryobjectivesofthisassessmentistoquantifytherelativeimpactsofdifferentproductionprocessesunderdifferentmarketconditions,thisgeneralizationisnecessaryandsufficient.©Shutterstock/Sofiaworld68Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTounderstandtheaggregateimplicationsofcumulativeeconomicproduction,amass-balanceapproachisutilized.Giventhatinputsarepresentedassharesofthefinishedproduct,aconstraintwithinthemodelrequiresthatthesumofallproductioninputmaterials(percent)isequalto1.Allmaterialinputshareparametersareexogenoustothemodelandwerederivedfromthecomponent-levelandproduct-levelanalysesdescribedpreviouslyinSection4.2.Similarly,specificenvironmentalandeconomicimpactmetricsarecalculatedusingimpactfactorsthatweredeterminedperunitforeachdifferentproductionprocess.Theseimpactmetricscontributetogreaterunderstandingofrelativeenvironmentalimpacts(positiveandnegative)acrossOEMNewandVRPproductionactivities.Asdescribedpreviously,theimpactfactorsofinteresttothisstudyinclude:newmaterialoffset,productionwastegeneration,embodiedmaterialenergy,embodiedmaterialemissions,processenergyrequirement,processemissionsgeneration,costadvantage,andemploymentopportunity.4.3.4Modelingend-of-useandcollectionThepremiseofcirculareconomyisthecyclingofmaterials(technicalandbiological)throughasystemtoretainvalueandmitigateloss.Assuch,modelingthemanagementofproductsandmaterialsoncetheyreachtheend-of-use(EOU)stageisanessentialaspectofacircularsystemmodel.Inthiscase,themodelonceagainstartswiththeactualinstalledbaseofthecasestudyproduct,byprocesstype,andappliesadiscardorfall-outratetoestimatehowmanyofthatparticularproduct(viaprocesstype)willreachtheEOUstageinthatperiod.Thefall-outrateandquantityofproductreachingEOUisestimatedasafractionoftheinstalledbase,inaccordancewiththemethodologyofElshkakiandGraedel(2013).Inthiscase,thefall-outrate,reflectedas1/LinwhichListheexpectedlifetimeoftheproduct,ismultipliedbythetotalsizeoftheinstalledbaseofthemarketforeachproductandprocesstype.ItisimportanttonotethatEOUmayrefertoapointatwhichtheproductcannolongerbeuseddueto12Stockpilingreferstotheaccumulationofgoodsormaterials,potentiallyforintendedfutureuse.Althoughstockpilingisacommonpractice,itwasnotpossibletoadequatelyreflectthediverserangeofstockpilingpracticesandimplicationswithinthisassessment.performancedegradation,orthatthecurrentownernolongerwishestoretaintheproductforavarietyofreasons.Whentheproductbecomes‘availableforcollection’themodelassumesthatitleavestheeconomicmarket(noEOUproductstockpiling12orstorage)andwillenteroneofthreepossibleflows:(1)routingtosecondarymarketforreuseviaaVRPapplication;(2)routingtorecyclingmarket;or(3)disposaltotheenvironment.Theroutetheproductwilltakeisbasedoncollectionprobabilitieswhichareestimatedasafunctionofproduct-andeconomy-levelfactorsthatarereflectiveof,butarenotlimitedto:easeofcollection,stateofcollectionandcollectioninfrastructure,costofcollectionanddiversioninthemarket,presenceofsupportingdiversionregulations,socialnormsandattitudestowardsdiversion,presenceofrelatedreturnincentives(e.g.coredeposit),andotherbarrierstodiversionsuchastheprohibitionofreuse.Themodelutilizescollectionprobabilitiesandamass-balanceapproachtodeterminethequantitiesofEOUproductsthatfollowdifferentflows.Forsimplicity,itisassumedthatthereisnolossthatisnot‘captured’withinthemodel:the‘disposaltoenvironment’flowreflectsthoseproductsthataredeliberatelydirectedintothegarbagestream,aswellasthosethatare‘lost’tothesystembecausetheydonotentereitherthesecondarymarketortherecyclingmarket.ItisalsoimportanttonotethatthereisanecessaryqualitydiscountthatisappliedtoEOUproductsdirectedintothesecondarymarket.ThisdiscountreflectsthecommonconditionthatsomerecoveredproductsdonotmeetthenecessaryqualitystandardsforVRPs,withthelow-qualitydifferentialbeingroutedintothewastestreaminstead.4.4LimitationsofthestudyTheobjectivesofthisstudyareambitious,andthescopenecessarilyextensive.ThediscussionandinsightspresentedhereinoffernewperspectiveonthepursuitofcirculareconomythroughtheadoptionofVRPs;however,therearesomelimitationstothestudythatrequireattentionandconsiderationasfutureresearchinitiatives.69Chapter4–Contextandmethodologyforthestudy4.4.1ImpactconstraintsresultingfromcasestudydataavailabilityFromanimpactperspective,thecasestudiesproductsandsectors,andthesampleeconomiesstudiedarenotfullyrepresentativeorreflectiveoftheglobalmarketplace.Theavailabilityofsufficientandreliabledatawasaprimarydriverofcasestudysectorandsampleeconomyselection.Regardingproductselection,thecomprehensiveacross-processassessmentofenvironmentalandeconomicimpactsrequiredtheselectionofsectorsandproductsthatmetthreecriteria:(1)theproductmustbeknowntoundergoall(ormost)oftheVRPsbeingassessed,insufficientvolumes;(2)VRPsmustbeundertakenforcasestudyproductsineachsampleeconomy;and(3)researchersmusthaveaccesstomaterial-,component-,andproduct-levelimpactdataforeachoftherelevantVRPs.Realistically,muchofthisdataistraditionallyconsideredproprietaryandconfidential,andassuch,selectionofcasestudyproductsheavilyrelieduponthewillingnessofindustrycollabo-ratorsaroundtheworld.WhilemanyVRPsareundertakenfortraditionalbusiness-to-consumer(B2C)products(e.g.clothing,bicycles,mobilephones),theseproductswereoftendeemedunsuitablebecausetheycouldnotbestudiedtothenecessaryextent:manyoftheseundergoafew,butnotallVRPs,andassuchthenecessaryacross-processcomparisonwouldbelimited;thepracticeofVRPsontheseproductsoccursinsome,butnotalleconomies;detailedmaterial-,component-,andprocess-levelimpactdatawasnotavailableand/orisnottracked;and/orVRPsfortheseprocessesoccurinverylowvolumes,inhibitingsufficientmacro-levelanalysis.Tomitigatesomeofthelimitationsofcasestudyproductrepresentativeness,additionaldiscussiononanextendedselectionoflessindustrialproductshasbeenincorporatedinSection5.4tobroadenprocess-levelinsightsalongsidemarket-levelrepresentativeness.Theselectionofsampleeconomieswassimilarlychallenging:whilecarewastakentoensureareflectionofbothdeveloped(Germany,US)anddeveloping(Brazil,China)economies,eachofthesecasestudyeconomiesisconsideredtobeindustri-alized.Regardingsampleeconomyselection,modelingneedsrequiredthatthreecriteriabemet:(1)VRPsmustbeundertakenforcasestudyproductsineachsampleeconomy;(2)researchersmusthaveaccesstoindustrycollaboratorsbasedin,orwithsufficientknowledgeofthesampleeconomy;and(3)researchersmusthaveaccesstomaterial-,component-,andproduct-levelimpactdataforeachoftherelevantVRPs.Theomissionofnon-industrializedeconomieswaslargelyduetothelackofrequireddataforcasestudyproducts,studiedVRPs,andeconomicactivity.Tomitigatesomeofthelimitationsoftheindustri-alizedeconomyfocusonthecasestudies,additionaldiscussionontheconditionsandperspectivesofnon-industrializedeconomiesastheyrelatetocirculareconomy,sustainability,andVRPshasbeenincorporatedthroughoutSection8tohighlightinsightsandopportunitiesthatapplyacrossalleconomies.Thestudyofrepairprocessesacrosseachsampleeconomypresentedmanychallenges,asrepairactivitiesbynaturedonottypicallyoccurwithinstandardizedorindustrialprocesses.Repairactivitiescanbeincrediblydiverseinnature,typicallytakeplaceinsmallerestablishmentsand/orareundertakeninformally,andthevolumesoftheseactivitiesaretypicallynottrackedinamannerthatallowsformacro-levelanalysis.ToaccountfortheuniquenessofrepairinthecontextofotherVRPs,andtoprovideforextendedinsightinhowrepairisbeingincorporatedintocirculareconomyindistinctwaysaroundtheworld,aseparatesectionfocusedonrepairhasbeenincludedinSection3.3Althoughstockpiling(deliberateaccumulation)ofEOUproductsandmaterialslikelyoccursinthesampleeconomies,theabsenceofreliabledataonstockpilingbehaviorsandquantitiesrequiredthatanassumptionofzerostockpilingbeusedwithinthemodel.Animplicationofthisassumptionisthatthereisnotime-delayinthecyclingofmaterialsand/orproductsthroughthemodeledsystem,andthereforenoreflectionoftherealeconomicimplicationsofmaterialorproduct(‘core’)shortages(orabundance)inthesecondarymarketsbeingmodeled.4.4.2LimitationsofthemodelsAsdescribedintheprecedingsections,thecasestudiesincorporatetwomodelstoappropriatelyaccountforbottom-up(product-andprocess-level)70Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyandtop-down(economy-level)considerationsandvariables.Whiletheproduct-levelmodelingisextensive,comprehensive,andincorporatesdatafromrelevantlife-cycleassessments(LCAs)intheliterature,theextensivescopeofthisstudyprohibitedfullLCA’sfrombeingconductedforeachcasestudyproduct.TheuseofLCAdatafromtheliteraturewaslimitedtoprocess-levelrequirementswheretheycouldnotbeempiricallycollected:typicalenergytypeutilizedbythefacility(e.g.electricity);hoursofworkperunitperprocess;andworkprocessvariationsbetweenVRPs.Tomitigatesomeuncertainty,researchersensuredthatLCA-datausedintheproduct-levelmodelswerebasedonLCAstudiesthatutilizedacommonmethodologyandapproach.Giventheprocess-emphasisandtheextensivescopeoftheundertaking,theassessmentexcludesimpactsresultingfromforward-andreverse-logistics(includingdisposal)transpor-tationwithinthesystem;theseweredeemedtoberelativelyequivalentacrosseachprocess.Inaddition,use-phaseimpactswerealsoexcludedonthebasisthattheproductsandprocessesarecommensurable:thesameproductwasassessedforeachprocess,andnoproductperformanceefficiency-gainwasenabled.Inotherwords,theprocesseswereassessedagainsttheexactsameproduct,notacrossupgradedand/ormoreefficientversionsoftheproduct.Thiswasdonetoensureanappropriateandvalidcomparisonthatlimitedsituationaluncertainty.ItshouldbenotedthatmanyVRPsareperformedonolderversionsofproductsthatmaynotmeetcurrentlevelsofperformanceefficiency,andtheimplicationsofthesepracticesarediscussedingreaterdetailinSections8.2.4and8.3.2.Theeconomy-levelmodelingforthisstudyaccountsforabroadsystems-perspective,necessarilysimplifiedtofacilitatetheinclusionofallcasestudyproducts,sectors,andsampleeconomies.Giventherangeoftechnologicalcapabilitiesandcapacitythatexistacrossorganizations,sectors,andeconomies,theeconomy-levelmodelwasunabletoaccountfortheimplicationsofadvancesinrobotics,otherformsofartificialintelligence(AI),andnewtechnologiessuchasadditivemanufac-turing.However,theroleofadditivemanufacturinginVRPsisdiscussedfurtherinSection8.2.3.3.3.Inaddition,technologicalandsocialinnovationshavepotentiallysignificantrolestoplayinacceleratingtherateofVRPadoption,andthepotentialbenefitstherein.However,duetothedynamicanddiversenatureofsystemconditionsandbarriers,thedynamicsimulationsoftheeconomy-levelmodelsdonotreflectbarrier-alleviationpathwaysovertime,anddonotincorporatetransformativepathwaysofinnovation.Instead,theimpactsofbarrieralleviationareassessedviatheStatusQuo,StandardOpenMarket,andTheoreticalHighscenarioswhichreflectvaryingdegreesofbarrierpresence/absence.Finally,althoughtheessentialroleofcustomer/consumerawareness,attitudes,andbehaviorareemphasizedthroughoutthediscussioninsubsequentsections,manyoftheintricaciesofconsumerpsychologyandbehavioraleconomiesmodelingwerenotpossibleduetoadearthofrequiredmicro-dataonconsumer/customerresponsetoVRPproductsacrosseachsampleeconomy.Whilethisassessmentaccountsforcurrentattitudesandacceptanceviatheproxymeasureofdemandshareandproductionmix,thereisopportunitytofurtherenhancethesemodelsthroughtheincorporationofadditionalbehavioraleconomicdataandmodelingapproaches,withafocusonVRPproducts.ThisreportpresentssoundinsightsandperspectivesandisamongthefirststudiestopresentquantifiedestimatesofthecontributionthatVRPscanmaketowardsgreaterresourceefficiencyandcirculareconomy.However,itmustbeemphasizedthatthereisurgentneedforcontinuedresearcheffortstofurtherinvestigatehighlyrelevantissues,including:currentpracticesandbarrierstoVRPs,includingmaterial-flows,withinnon-industrializedandotherwiseconstrainedeconomies(e.g.Small-IslandDevelopingStates);datacollectionandanalysisontheuseofVRPsinconsumerproductsandB2Cmarkets;compre-hensiveeconomicmodelingthatincorporatesbothbehavioralaspectsofVRPproductdemand,andtechnologicalinnovationcapacityaspectsofVRPproduction;anddatacollectionandanalysisonthemagnitudeoflessformal/informalrepairanddirectreuseactivities,ascontributiontocirculareconomywithinnationaleconomies.Aspreviouslymentioned,acomprehensivediscussionofstudymethodologyisincludedinAppendixB.715Product-levelbenefitsofvalue-retentionprocesses5.1Modelingtheproduct-levelimpactsofvalue-retentionprocessesAsdescribedpreviously,aselectionofproductsfromkeysectorsthatalreadyengageinVRPstosomedegreewereselectedfortheproduct-levelstudy.ThesecasestudyproductsaredescribedinTable4.Amoredetaileddescriptionofmodelmethodology,datacollectionandvalidationproceduresisincludedinSections4.2and4.3.Table4:SummaryofcasestudyproductsandprocessesassessedSectorCasestudyproductsStandardprocessesIndustrialdigitalprinters•Productionprinter•Printingpress(#1)•Printingpress(#2)•All;comprehensiverefurbishment•All;comprehensiverefurbishment•All;comprehensiverefurbishmentVehicleparts•Traditionalvehicleengine•Lightweightvehicleengine•Alternator•Startermotor•Nosignificantrefurbishment•Nosignificantrefurbishment•Nosignificantrefurbishment•NosignificantrefurbishmentHeavy-dutyandoff-roadequipmentparts(HDOR)•Engine•Alternator•Turbocharger•All;comprehensiverefurbishment•Nosignificantrefurbishment•NosignificantrefurbishmentTheboundariesofthemodeledVRPsversusthetraditionallinearmanufacturingsystemareillustratedinFigure19,andcomparisonisonthebasisofasingleunitprocesscycle.Asdiscussedpreviously,thewayinwhichaVRPextendsthelifeoftheproductorcomponentswillvary:wherecomprehensiverefurbishmentandremanufacturingcanprovideacompletenewservicelifetotheproduct(oralmostcompletenewservicelife,inthecaseofcomprehensiverefurbishment),arrangingdirectreuse,repairandrefurbishmentaretypicallyusedtoenablethecompletionoftheoriginallifeoftheproduct.Tocapturetheserelativedifferentiations,Figure20illustratestheproductlifeofapopulationofeachofthecasestudyproducts(assumesnormaldistri-bution),inwhichtheproductsfall-outofthesystemoverthetypicallifespanduetoarangeofreasons,whereVRPsmaybeintroduced,andtheresulting72Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyproductlifeimplicationsofeachVRP.Forexample,reuseandrepairactivitiesenabletheEOUproducttocompletetheoriginalexpectedservicelife(hence,shorterusagecycleoverlappingwiththeoriginalOEMNewproduct’sexpectedservicelifecurve);inthecaseofremanufacturing,theEOUproductistypicallyrecoveredinthelaterphaseoftheexpectedservicelife(curve)andrestoredtolike-newconditionwhereitwillexperience,atminimum,anadditionalfullyfunctionalservicelife.RefurbishmentandcomprehensiverefurbishmentactivitiesmighttakeplaceanytimeintherangebetweenthestartoftheOEMNewaverageservicelifecycleandthestartoftheaverageremanufac-turingservicelifecycle(basedontherepresentationinFigure20below).OEMNewRepairDirectreuseRemanufacturingPOPULATIONOFPRODUCTAverageservicelifecycleTIMEFigure20:ExamplemodelforreutilizationofvehiclepartsproductsatEOUthroughvalue-retentionprocessesNewmaterialsourcedMaterialprocessingManufacturingManufacturingProducttransportationUseEndofuse(EOU)Endoflife(EOL)RecyclingordisposalMaterialprocessingNewmaterialsourcedComponentreplacementProcesswaste&failedcomponentsRefurb.RepairDirectreuseReman.Value-retentionprocessesTraditionalProcessMaterialﬂowFigure19:Product-levelsystemandflowsforvalue-retentionprocesses73Chapter5–Product-levelbenefitsofvalue-retentionprocessesTheparametersaffectingproductservicelifeandEOUopportunityforVRPsnecessarilyvariesbyproducttype,country,andmarketinseveralways:thecomplexityanddesigneddurabilityoftheproductorcomponentmayaffectthelengthofitstechnicallifeanditsconditionatthetypicalEOU;dependingontheeconomy,andpotentiallyotherconsumerpreferencesandnormsindifferentregions,someproductsmaybekept‘in-use’throughrepairandreuseactivitiesbeyondtheoriginalexpectedlifethattheyweredesignedfor,asaresultofincomeand/orotherconstraintsthataffectaccesstoOEMNewandotherVRPproducts.Atthemateriallevel,aprimaryadvantageofVRPsisthedirectrelatedreductioninnewmaterialrequirement13.Inotherwords,ratherthanmeetingoneunitofmarketdemandbyusing100newmaterials(OEMNew),thatmarketdemandmaybemetviaaVRPproductthatrequiresasmuchas90percentlessnewmaterialinput,withoutconstrainingdemand.Thiseffectivelyreflectsthe‘newmaterialoffset’amountthatisenabledbymaterialreuseinVRPs;thismaterialreuseresultsingreatermaterialvalue-retentionandmaterial-useefficiencywithinthesystem.Forthesecasestudies,thelifespancharacteristicsofeachcomponentwereassesseddifferentlyforeachVRP.Forremanufacturingandrefurbishment,industrycollaboratorsparticipatinginthestudysupportedtheestimationofthefollowingkeydatapoints:1)probabilityofsalvageatEOU(salvagerate);2)maximumnumberoftimesacomponentcouldbeeffectivelyreused;3)additionalnewmaterialinputstotheprocess(e.g.replacement);4)destinationofmaterialsremovedduringtheprocess(e.g.landfillorrecycling);5)thecauseofcomponentEOU,whichcouldconsistof:•mechanicalfatigueorfailure;•hazardlosses;or•predeterminedfailure(intentionalreplacement);and6)maximumpotentialservicelifeoftheproduct,afterwhichnoextensionwouldbepossible.13PleaserefertoGlossaryofKeyTerms.Newmaterialincludesamixtureofvirgin(primary)andrecycled(secondary)content.Giventhatthevastmajorityofmaterialsavailableforpurchaseintheglobaleconomyconsistsofsomemixtureofvirginandrecycledmaterials,theassumedratioofvirginandrecycledcontentusedinmodelingisbasedontheglobalaverageforeachmaterialtype,inaccordancewiththeInventoryofCarbonandEmissions(ICE)(HammondandJones2011).Additionalinformationrelatedtopotentialprocessimpactswererequestedfromcollaboratingcompaniesforeachoftherelevantproductsandprocesses,including:totalprocessenergyrequirement;laborhoursperunit;andaveragecostadvantagecreated(versusOEMNewproduction)viatheVRP.Thesedatapointsreflecttheproduct-levelrequirementsandimpactsofproductionvialinearandVRPs.5.2Environmentalimpactsofvalue-retentionprocessesattheproduct-levelTheenvironmentalimpactsofVRPsdifferbyproduct,material,andmarketasaresultofcomplexitywithinthesystem.MaterialrequirementandotherimpactswereprimarilydeterminedbasedondatafromUS-basedindustrycollabo-rators,andinsomecasesexistingliterature,andwereestimatedforothersampleeconomiesbasedonrelevantdataandimpactfactorsinsubsequentmarket-levelmodeling.Basedonthisresearchandanalysis,thematerialefficiency,embodiedandprocessenergyrequirement,andembodiedandprocessemissionsgenerationassociatedwithUS-basedproductionofcasestudyproducts,byOEMNewandVRPsarepresentedinthefollowingsections.Pleasenotethattheunitofcomparisonisasingleunitprocesscycle:assuch,theresultspresentedinthefollowingsectionsreflecttherequirementsandenvironmentalimpactsofasingleunitgoingthroughanOEMNew,remanufacturing,comprehensiverefurbishment,refurbishment,repair,ordirectreuseprocess.Itisimportanttonotethatthisanalysisdifferentiatesembodiedmaterialenergyofallrelevantmaterials–theenergyassociatedwiththeextractionandprocessingofrawmaterialspriortoproduction–fromtheenergyrequiredbytheactualproductionprocessitself.Similarly,embodiedmaterialemissions–theCO2-eq.emissionsassociatedwiththeextractionandprocessingofrawmaterialspriortoproduction–isdifferentiatedfromemissionsassociatedwiththeactualproductionprocess.74Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy5.2.1IndustrialdigitalprintersMaterial-levelanalysisresultsforindustrialdigitalprintersectorcasestudyproductsarereflectedinTable5throughTable7.GiventhecomplexityandcomprehensivenatureoftheBillofMaterialsassociatedwiththesecasestudyproducts,aminimumof80percentoftheproduct’sweightisrepresentedintheanalysis;inmanycasesgreaterthan80percentbyweightisreflected.Thediffer-entialbetweenrepresentedproductweightandtheweightoftotalnewmaterialinputsreflectsproductionprocesswasteandrecycling;inotherwords,materialinputswhicharenotpartofthefinishedproduct.Table5:USproductionprinterproduct-levelmaterialefficiency,energyandemissionsimpactsProductionprinterRepresentedproductweight(kg):891.8kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelStainlesssteelCastironCopperAluminumBrassPCBTOTALTOTALTOTALOEMNew962.65.9-3.31.81.26.4981.095580.012413.3Reman15.40.1-0.10.00.00.015.6605.964.7Comp.refurb7.20.0-0.00.00.00.07.3293.131.6Repair1.00.0-0.00.00.00.01.1260.936.2Arrangingdirectreuse0.00.0-0.00.00.00.00.00.00.0Table6:USindustrialdigitalprintingpress(#1)product-levelmaterialefficiency,energyandemissionsimpactsIndustrialdigitalprintingpress#1Representedproductweight(kg):3707.3kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelStainlesssteelCastironCopperAluminumBrassPCBTOTALTOTALTOTALOEMNew3577.928.2-123.2317.8-29.94077.1483605.460236.6Reman279.55.1-12.636.2-4.4337.963873.58323.2Comp.refurb155.13.6-11.518.6-2.5191.336189.44729.5Repair34.50.0-0.00.0-0.00.0694.050.4Arrangingdirectreuse0.00.0-0.00.0-0.00.00.00.075Chapter5–Product-levelbenefitsofvalue-retentionprocessesTable7:USindustrialdigitalprintingpress(#2)product-levelmaterialefficiency,energyandemissionsimpactsIndustrialdigitalprintingpress#2Representedproductweight(kg):2075.8kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelStainlesssteelCastironCopperAluminumBrassPCBTOTALTOTALTOTALOEMNew2088.14.444.017.2113.4-16.32283.4253924.832307.7Reman93.50.16.05.717.7-0.3123.38517.3834.9Comp.refurb28.80.05.40.027.1-0.161.56184.9485.7Repair20.20.07.50.00.0-0.027.6592.244.6Arrangingdirectreuse0.00.00.00.00.0-0.00.00.00.0Basedontheaveragesforthesecasestudyproductsfortheindustrialdigitalprintersector,weightedimpactreductionpotentialforeachprocessrangesasshowninFigure21.Pleasenotethatprocessenergyandprocessemissionsresultsareinclusiveoftheelectricitygenerationsupplychain,includingefficiencyandlosses.OEMNewRemanufacturedRefurbishedRepairDirectreuseEmbodiedenergy(MJ/unit)Materials(kg/unit)Embodiedemissions(kgCO2-eq./unit)Processenergy(MJ/unit)Processemissions(kgCO2-eq./unit)1009080706050403020100%Figure21:ComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessesforindustrialdigitalprinters5.2.2VehiclepartsMaterial-levelanalysisresultsforcasestudyproductsrepresentingthevehiclepartssectorarereflectedinTable8throughTable11,withresultsforthetraditionalvehicleengineandlightweightvehicleenginediscussedingreaterdetailinSection5.2.2.1.GiventhecomplexityandcomprehensivenatureoftheBillofMaterialsassociatedwiththesecasestudyproducts,aminimumof80percentoftheproduct’sweightisrepresentedintheanalysis;inmanycasesgreaterthan80percentbyweightisreflected.Thedifferentialbetweenrepresentedproductweightandtheweightoftotalnewmaterialinputsreflectsproductionprocesswasteandrecycling;inotherwords,materialinputswhicharenotpartofthefinishedproduct.76Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTable8:USvehiclealternatorproduct-levelmaterialefficiency,energyandemissionsimpactsVehiclealternatorRepresentedproductweight(kg):4.9kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelCastironCopperAluminumTOTALTOTALTOTALOEMNew1.81.21.31.15.4286.118.4Reman0.30.20.30.21.012.73.6Refurb-------Repair0.00.00.10.00.14.80.3Arrangingdirectreuse0.00.00.00.00.00.00.0Table9:USvehiclestartermotorproduct-levelmaterialefficiency,energyandemissionsimpactsVehiclestartermotorRepresentedproductweight(kg):3.3kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelCastironCopperAluminumTOTALTOTALTOTALOEMNew0.31.90.90.53.6168.411.3Reman0.00.10.20.00.48.90.9Refurb-------Repair0.00.00.10.00.14.80.3Arrangingdirectreuse0.00.00.00.00.00.00.05.2.2.1Vehiclepartsdesigntradeoffsinthecontextofvalue-retentionprocessesParticularlyinthecaseofvehicles,therehasbeenadesignemphasisinrecentyearsonreducingtheweightofthevehicleinpursuitofgreaterfuelefficiency.Someeconomieshaveprogressedfurtherthanothersintermsofmarketadoptionoflightweightoptions.Ofinteresttothisstudyisthesignificantpotentialdifferenceinmaterial-levelenvironmentalimpactsalightweightvehicleenginethatutilizesacylinderblockofcastaluminum,ascomparedtothematerial-levelenvironmentalimpactsofatraditionalvehicleenginethatusesacastironcylinderblock.Althoughbotharepartofthevehicleengineproductcategory,thisexampleisusedtohelpdemonstratethesubstantialimpactdifferentialthatresultsfromdesigndecisions,asdiscussedfurtherinSection8.2.Itshouldbenotedthatthisassessmentdoesnotincludetheentirelife-cycleofthevehicleparts,andthereforedoesnotreflectproduction-levelimpactsorfuel-effi-ciencyrelatedadvantagesofthecastaluminumenginecylinderblockthatarefurtherdocumentedinlife-cycleanalysisliterature(Lewis,Kelly,andKeoleian2014,Kimetal.2010).77Chapter5–Product-levelbenefitsofvalue-retentionprocessesTable10:UStraditionalvehicleengineproduct-levelmaterialefficiency,energyandemissionsimpactsTraditionalvehicleengine(Castironcylinderblock)Representedproductweight(kg):108.5kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelCastironCopperAluminumTOTALTOTALTOTALOEMNew11.293.5-20.0124.85,669.8389.8Reman1.81.8-1.85.4353.722.4Refurb-------Repair0.00.2-0.30.550.43.1Arrangingdirectreuse0.00.0-0.00.00.00.0Table11:USlightweightvehicleengineproduct-levelmaterialefficiency,energyandemissionsimpactsLightweightvehicleengine(Aluminumcylinderblock)Representedproductweight(kg):89.9kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelCastironCopperAluminumTOTALTOTALTOTALOEMNew11.230.7-61.4103.310516.0641.5Reman1.70.7-2.44.8417.625.5Refurb-------Repair0.00.2-0.30.550.43.1Arrangingdirectreuse0.00.0-0.00.00.00.014ThelightweightvehicleengineBOMisassumedtobeconsistentwiththatofthetraditionalvehicleengineBOM,withtheexceptionofthecylinderblock,whichwasexchangedforanaluminumone(lessercomponentweight)forthisillustrativeanalysis.Basedontheaveragesfortheaggregatedcasestudyproductsforthevehiclepartssector,weightedimpactreductionpotentialassuming100percenttraditionalengines(castironcylinderblocks)foreachprocessrangesasshowninFigure22.Incomparison,Figure23reflectstheweightedaveragematerial-levelimpactsforcasestudyvehicleparts,assuming100percentlightweightengine(aluminumcylinderblocks).Asmentionedpreviously,rigorouslifecycledataforproductionprocessesanduse-phaseswerenotcompletedforthelightweightvehicleengine,andinsteadthefocusisonthematerial-levelimpactsoftheuseofanaluminumcylinderblockversusatraditionalcastironcylinderblock.Pleasenotethatprocessenergyandprocessemissionsresultsareinclusiveoftheelectricitygenerationsupplychain,includingefficiencyandlosses.78Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyOEMNewRemanufacturedRepairDirectreuse1009080706050403020100%Embodiedenergy(MJ/unit)Materials(kg/unit)Embodiedemissions(kgCO2-eq./unit)Processenergy(MJ/unit)Processemissions(kgCO2-eq./unit)Figure22:ComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessesforvehiclepartsproductionwith100percentcastironenginesOEMNewRemanufacturedRepairDirectreuse1009080706050403020100%Embodiedenergy(MJ/unit)Newmaterials(kg/unit)Embodiedemissions(kgCO2-eq./unit)Figure23:Material-levelComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessforvehiclepartswith100percentlightweightengines5.2.5Heavy-dutyandoff-road(HDOR)equipmentpartsResultsforHDORpartssectorcasestudyproductsarereflectedinTable12throughTable14.ThecomplexityandcomprehensivenatureoftheBillofMaterialsassociatedwiththesecasestudyproducts,aminimumof80percentoftheproduct’sweightisrepresentedintheanalysis;inmanycasesgreaterthan80percentbyweightisreflected.Thedifferentialbetweenrepresentedproductweightandtheweightoftotalnewmaterialinputsreflectsproductionprocesswasteandrecycling;inotherwords,materialinputswhicharenotpartofthefinishedproduct.79Chapter5–Product-levelbenefitsofvalue-retentionprocessesTable12:USHDORengineproduct-levelmaterialefficiency,energyandemissionsimpactsHDORengineRepresentedproductweight(kg):11787.0kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelCastironCopperAluminumBrassTOTALTOTALTOTALOEMNew3539.27304.8---10844.1253759.219996.1Reman641.91563.4---2205.351988.24110.9Comp.refurb332.81746.8---2079.650359.94031.9Repair83.9626.5---710.417349.51394.3Arrangingdirectreuse0.00.0---0.00.00.0Table13:USHDORalternatorproduct-levelmaterialefficiency,energyandemissionsimpactsHDORalternatorRepresentedproductweight(kg):41.4kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelCastironCopperAluminumBrassTOTALTOTALTOTALOEMNew9.919.96.60.0-36.4976.772.9Reman1.02.00.70.0-3.799.17.4Comp.refurb-----0.00.00.0Repair0.50.00.60.0-1.135.02.3Arrangingdirectreuse0.00.00.00.0-0.00.00.080Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTable14:USHDORturbochargerproduct-levelmaterialefficiency,energyandemissionsimpactsHDORturbochargerRepresentedproductweight(kg):57.8kgNewmaterialinputsbyprocessandmaterial(kg/unit)Embodiedmaterialenergy(MJ/kg)Embodiedmaterialemissions(kgCO2-eq./unit)SteelCastironCopperAluminumBrassTOTALTOTALTOTALOEMNew2.647.7--0.650.91,269.4102.1Reman0.55.0--0.15.5138.211.0Comp.refurb-----0.00.00.0Repair0.00.0--0.60.624.21.5Arrangingdirectreuse0.00.0--0.00.00.00.0Basedontheaveragesforthesecasestudyproductsfortheheavy-dutyandoff-roadequipmentpartssector,weightedimpactreductionpotentialforeachprocessrangesasshowninFigure24.Pleasenotethatprocessenergyandprocessemissionsresultsareinclusiveoftheelectricitygenerationsupplychain,includingefficiencyandlosses.OEMNewRemanufacturedComp.refurbishedRepairDirectreuseEmbodiedenergy(MJ/unit)Newmaterials(kg/unit)Embodiedemissions(kgCO2-eq./unit)Processenergy(MJ/unit)Processemissions(kgCO2-eq./unit)1009080706050403020100%Figure24:ComparativeweightedaverageimpactsperunitforUSviavalue-retentionprocessesforHDORpartsproductionAsdiscussedinSection3,theabsoluteproduct-levelbenefitsachievedthroughcircularproductionmodels,althoughclearlydemonstrativeofthevalueofVRPsrelativetoOEMNewproduction,mustbeconsideredinthecontextofthevalueandutilitycreated.Thecasestudyproductresultspresentedintheprecedingsectionsreflectquantifiedper-unitprocessbenefitsintermsofmaterialandenergyuse,aswellasemissionsgeneration.Inabsoluteterms,VRPsenablereductioninenvironmentalimpactsfrom60percentto99percentofOEMNewwhenlookingatasingleprocesscycle.TheeconomicconsiderationsofVRPsattheproductlevelarealsohighlyrelevanttothediscussionofimpactsandbenefitsthatbecomepossiblethroughtheuseofVRPsinthepursuitofcirculareconomy.81Chapter5–Product-levelbenefitsofvalue-retentionprocesses5.3Economicadvantagesofvalue-retentionprocessesattheproduct-levelAsemphasizedbefore,fullservicelifeandpartialservicelifeVRPsareundertakenfordifferentreasonsandenabledifferentimpactopportu-nities.Assuch,theproduct-levellaboropportunity,productionwaste(includesscraprecyclableprocessbyproduct),andcostadvantagesforselectcasestudyproductswereassessedandevaluatedforcasestudyindustrialdigitalprintingpress#2(Figure25andFigure26)casestudyvehicleengine(Figure27,andFigure28),andcasestudyHDORengine(Figure29andFigure30).Pleasenotethechangeinscaleintheverticalaxesacrosseachofthesefigures.Theseproduct-levelresultsarepresentedrelativetotheOEMNewversionofthesameproduct.Assuch,thehigherrelativevaluesforemploymentopportunityobservedforremanufactured,compre-hensiverefurbishment,andrefurbishmentinFigure25,Figure27,andFigure29reflectthegreaternumberoflaborhours,andthereforefull-timelaborrequirementoftheseVRPprocessesrelativetotheOEMNewprocess.Incontrast,relativecostforVRPsislowerthanforOEMNewacrossFigure25throughFigure30,reflectingthecostreduction(discount)forthecustomer.Moredetaileddiscussionandreflectionontheseproduct-levelfindingsarepresentedsubsequentlyinSections5.3.1,5.3.2,and5.3.3.Employmentopportunity(%FTE/unitvs.OEMNew)Cost(%USD/unitvsOEMNew)Productionwaste(t/unitvsOEMNew)0%20%40%60%80%100%120%140%160%OEMNewRemanufacturedComprehensiverefurbishmentFULLSERVICELIFE%PERUNITVS.OEMNEWFigure25:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyindustrialdigitalprintersAsshowninFigure25,relativetoasingle-unitoftheOEMNewindustrialdigitalprintingpress#2,thefullservicelifeVRPsofremanufacturingandcomprehensiverefurbishmentofferareducedcosttothecustomer,significantlyreducedproductionwaste,andanincreasedrequirementforskilledlaborwhichmaycreatearelativeemploymentopportunity.82Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy0%20%40%60%80%100%120%OEMNewArrangingdirectreuseRepairPARTIALSERVICELIFE%PERUNITVS.OEMNEWEmploymentopportunity(%FTE/unitvs.OEMNew)Cost(%USD/unitvsOEMNew)Productionwaste(t/unitvsOEMNew)Figure26:Employmentopportunity,costadvantage,andproductionwastereductionviapartialservicelifeVRPsforcasestudyindustrialdigitalprintersPartialservicelifeVRPsofferanalternativesetofvalue-retentionoptionsforthecustomerthatemphasizeasignificantlyreducedcost,andalmostnoproductionwastegeneration(Figure26).Asexpected,theseless-intensiveprocessesrequirefewerlaborhours.Repairactivitiesdogenerateapositiveemploymentopportunity;however,itissignificantlylessthanthelaborrequiredtoproduceanOEMNewversionoftheproduct.Arrangingdirectreuseactivitiesrequirelabortofacilitatethereverse-logisticsoftheproduct,howeverastheactualprocessofdirectreusedoesnotrequirelabor,itisnotreflectedinthisassessment.Asareminder,requirementsofcollectioninfrastructurewerebeyondthescopeofthisstudy(refertoSection4.4foramorecomprehensivediscussiononlimitations).83Chapter5–Product-levelbenefitsofvalue-retentionprocessesEmploymentopportunity(%FTE/unitvs.OEMNew)Cost(%USD/unitvsOEMNew)Productionwaste(t/unitvsOEMNew)0%50%100%150%200%250%OEMNewRemanufacturedFULLSERVICELIFE%PERUNITVS.OEMNEWFigure27:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyvehiclepartsEmploymentopportunity(%FTE/unitvs.OEMNew)Cost(%USD/unitvsOEMNew)Productionwaste(t/unitvsOEMNew)0%20%40%60%80%100%120%OEMNewArrangingdirectreuseRepairPARTIALSERVICELIFE%PERUNITVS.OEMNEWFigure28:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyvehicleparts84Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyAsshowninFigure27andFigure28,therelativeproduct-leveleconomicopportunitiesoffullservicelifeandpartialservicelifeVRPsforcasestudyvehicleenginesaresimilartowhatwasobservedforindustrialdigitalprinters:costreductionacrossallVRPsrelativetoOEMNew;productionwastereductionacrossallVRPsrelativetoOEMNew;andasignificantincreaseinemploymentopportunityresultingfromremanufacturing(afullservicelifeVRP).ThesefindingswerealsoreplicatedforcasestudyHDORengines,asshowninFigure29andFigure30.AEmploymentopportunity(%FTE/unitvs.OEMNew)Cost(%USD/unitvsOEMNew)Productionwaste(t/unitvsOEMNew)0%50%100%150%200%250%OEMNewRemanufacturedComprehensiverefurbishment%PERUNITVS.OEMNEWFULLSERVICELIFEFigure29:Employmentopportunity,costadvantage,andproductionwastereductionviafullservicelifeVRPsforcasestudyHDORequipmentpartsEmploymentopportunity(%FTE/unitvs.OEMNew)Cost(%USD/unitvsOEMNew)Productionwaste(t/unitvsOEMNew)0%20%40%60%80%100%120%OEMNewRepairPARTIALSERVICELIFE%PERUNITVS.OEMNEWFigure30:Employmentopportunity,costadvantage,andproductionwastereductionviapartialservicelifeVRPsforcasestudyHDORequipmentparts85Chapter5–Product-levelbenefitsofvalue-retentionprocesses5.3.1Productioncostadvantagesofvalue-retentionprocessesSignificantcostadvantages(reductions)aremadepossiblethroughVRPs,asalargeshareofcoststotheproducerareoffsetbythereducedrequirementfornewinputmaterialsandassociatedprocessingcosts.Inaddition,forsomeproductsandsectors,processenergy-relatedcostscanbesignificantlyreducedthroughareductioninthenumberofprocessingstagesandactivities,whichmaybeoffsetbymoremanualactivities,suchasthedisassemblyandproductquality-testingstagesrequiredinaremanufacturingprocess.CostadvantagesofVRPsrange,conservatively,between15percentand80percentofthecostofanOEMNewversionoftheproduct,withthelowestcostoptionenabledviarepairforpartialservicelifeVRPs,andcomprehensiverefurbishmentforfullservicelifeVRPs.Onceagain,whileeveryVRPoffersacostadvantage(reduction)incomparisontotheOEMNewoption,thepreferredVRPoptionmaydependontheprioritiesandeconomicsituationofthecustomeroruser.Thecostadvantagesshowninthesefiguresreflectscommercialpricing,andassuchrepresentthemostconservativecostadvantage:inherenttothesepricesisadditionalprofitmarginthatmaybebuiltintothepricebytheVRPproducerbasedontheirownobjectives.Giventhis,theactualcostadvantagetotheproducermaybesignificantlymorethanwhatispassedontothecustomer;however,attheveryleast,pricediscountingremainsaneffectivecompetitivestrategyforVRPproducers,asdiscussedinSection6.1.3.5.3.2Employmentopportunitiesthroughvalue-retentionprocessesTherequirementforpotentiallymoremanualVRPproductionprocesses,andanecessaryleveloflaborforceskills,highlightstheemploymentopportunityinherentinVRPs.Whilethecostoflaborremainsasignificantshareoftotalproductioncostsinallmanufacturingactivity,inthecaseofVRPlabortheadditionalcostistypicallymorethanoffsetbytherelativereductioninmaterials,utilities,andotheroverheadandoperatingcosts.Inthecaseofremanufacturedproducts,asignificantincreaseinfull-timelaborrequirementisobserved,andatthesametime,remanufacturersaretypicallyabletoofferaconsistentcostadvantagetopotentialcustomers.Inotherwords,whilethecostoflaborforremanufacturingmaybearelativelyhighershareoftheremanufacturer’stotalproductioncostsversusthetraditionalOEM,theotherproductioncostadvantagesthatarecreatedtypicallymorethancoverthepotentialincreaseinassociatedlaborcosts.ItisimportanttonotethattheemploymentopportunityisnotequalacrossallVRPs:infact,onlyremanufacturing,andtosomedegreecompre-hensiverefurbishment,offergreaterfull-timeemploymentopportunityrelativetotraditionalOEMNewproduction.Ineconomieswitharelativelyhighershareofarrangingdirectreuse,andrepairactivities,theremaybearelativereductioninemploymentopportunity.Fromtheperspectiveofpolicy-makers,itisessentialtonotethat,inadditiontotheper-unitenvironmentalbenefitsdescribedinSection5.2,andtheeconomicadvantagesdescribedinFigure25,Figure27,andFigure29,fullservicelifeVRPsincludingremanufacturingandcomprehensiverefurbishmentoffersignificantlyhigheropportunitytoincreaseemploymentlevels,creatingadditionaldirectandsecondaryeconomicbenefitswithinaneconomy.Thus,astheproductionshareofremanufacturingandrefurbishmentareincreased,acorrespondingincreaseinfull-timeemploymentopportunitiesispossible.5.3.3Productionwastereductionthroughvalue-retentionprocessesAcorollarytothereductioninnewmaterialrequirementthatcanbeachievedbyVRPs’isthereductioninproductionwastesandrecyclableby-productsmaterials.AscanbeseeninFigure25throughFigure30,everyVRPofferssomedegreeofreducedproductionwasteforwhichthereislittlediversionorcollectionpotential:wherearrangingdirectreuserequiresnonewmaterialinputs,andthereforenoadditionalproductionwastes,evenremanufacturing–aprocesswhichservestoincreasesvalue-retentionandproductutilitythroughafulladditionalnewlife–createsproductionwastereductionpotentialthatrangesbetween90percent(industrialdigitalprinters)and95percent(vehicleparts)forthesecasestudysectors.86Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyThedecreaseinthevolumeofproductionwasteandrecyclablesisfirstandforemostaneconomicopportunityassociatedwithincreasedadoptionofVRPs:notonlydohighquantitiesofproductionwasteindicatethatthereisvaluewithinthesystemthatiscurrentlybeinglost(e.g.notbeingutilizedatitshighestpotential)throughdesign,technologicaland/orotherformsofprocessinefficiency;buttherearealsooperatingcostsassociatedwiththatwasteproductionthatmustbebornebytheproducer,includingstorage,haulingandtippingfees.Whiletheproduct-levelanalysisandinsightsprovideessentialinformationandcontextforthediscussionofcirculareconomypotentialandimplemen-tation,thecontextoftheeconomiesinwhichtheseactivitiesareundertakenisalsosignificantandintegraltothedevelopmentofstrategiesforcirculareconomy.Thefollowingsectioncontinuesthiseffort,applyingtheseproduct-levelinsightstotheaggregatecontextandconditionsofactualeconomies.5.4Assessingproduct-levelopportunitiesinothersectorsAsdiscussed,theintersectionofcirculareconomyandVRPsnecessitatesafocusoncasestudyproductsthatconsistedpredominatelyoftechnical(inorganicandsyntheticmaterial)nutrients,andforwhichmultipletypesofVRPsareundertaken.Thesescoperequirementssuggestabiastowardsindustrialproductsthataresoldintobusiness-to-business(B2B)marketplaces.However,VRPscanoffermarginalproduct-levelbenefitsacrossotherproductsandsectorsthatarelessindustrialinnature,and/orthataremoreconsumer-facing(e.g.business-to-consumer,orB2C).ThefollowingsectionsdiscusstheVRPimplicationsforseveraladditionalproducts.Itisimportanttonotethattheproductspresentedheredonotrepresenttheentiretyofallproducts;theyhavebeenincludedtoreflectonabroaderrangeofproducttypes,primaryusers,markets,astheyrelatetothepotentialforadoptingVRPs.Theseassessmentshighlighttheimportanceofconsideringthenatureanddesignofbothproductandproduct-systempriortoengaginginVRPs,asdiscussedinmoredetailinSection8.2.4.5.4.1InkjetprintercartridgesWhenproductsreachEOUsomeconsumers/users/customersmaybemotivatedtopursueoptionsforextendingtheservicelifeofaproduct.Especiallyinthecaseofconsumerproducts,consumersmaylackthenecessaryinformationtoknowwhichoptiontopursue,andtheconsumer’sbehaviorcaninfluencethemagnitudeofanyenvironmentalsavingsthatmightbeachieved.(Krystofik,Babbitt,andGaustad2014)Thisisparticularlytrueinthecaseofinkjetprintercartridges,wherecustomerattitudescanaffectwhetheranOEMNeworremanufacturedproductispurchasedinthefirstinstance;andatEOU,consumerbehaviorscanaffectwhethercartridgerefillsareundertaken,andtheimplicationsofthesubsequentrefilltranspor-tationrequirements.Althoughthereareseverallifecycleassessmentsforprintercartridgesintheliterature(FourElementsConsultingLLC2008,PollockandCoulon1996,Krystofik,Babbitt,andGaustad2014,Gutowskietal.2011),veryfewfocusonthelifecycleimpactdifferentialenabledbyalternativeEOUoptions.©Shutterstock/ChrisCurtis87Chapter5–Product-levelbenefitsofvalue-retentionprocessesInthecaseofinkjetprintercartridgestwoVRPoptionsarecommonlyavailableinindustrializedeconomies:cartridgerefilling(arrangingdirectreuse),andremanufacturing(PollockandCoulon1996,Krystofik,Babbitt,andGaustad2014,InternationalImagingTechnologyCouncil2006).Krystofik,Babbitt,andGaustad(2014)observedimpactattheservicelifelevelratherthanthenumberofprintedpages,findingthatsatisfyingfiveservicelives(includinguse-phaseenergy)usingremanufacturedprintercartridges(versusfiveOEMNewcartridges)offereda37percentreductioninglobalwarmingpotential(GWP)impact(kgCO2-eq.)and~50percentreductionincumulativeenergydemand(CED,MJ).Incontrast,oneOEMNewcartridge,refilledfourtimesoffereda76percentreductioninGWPimpact(kgCO2-eq.)and~48percentreductioninCEDforthefirstrefill(Krystofik,Babbitt,andGaustad2014,1139and1143).Intheseassessments,uncertaintiesrelatedtoconsumerrefilltransportationrequirementsandpracticeswereconsideredandincorporated.FindingsbyFourElementsConsultingLLC(2008)presentedaslightlydifferentperspective.Lookingspecificallyattheproductionphaseofthelifecycle,remanufacturingpresenteda7percentreductioninGWPimpacts,a4percentreductioninprimaryenergy,anda7percentreductionintotalwastewhencomparedtoOEMNewproduction.However,whenincorporatedwithuse-phaseperformanceefficiencychangesandEOL,theseresultsinverted:theremanufacturedprintercartridgeincurredaGWPimpactincreaseof6percent,aprimaryenergyincreaseof9percent,andtotalwasteincreaseof37.5percentcomparedtotheOEMNewproduct(FourElementsConsultingLLC2008,13).FindingsbyGutowskietal.(2011,4545)identifiedsimilaruse-phaseimplications:arefilledtonercartridgeoffereda6percentenergysavingsovertheOEMNewoption,assumingthattherefilledcartridgeperformedasnew;however,accountingforperformancechanges,thissavingswouldbeoffset,potentiallyincurringanincreaseinenergyrequirements.5.4.2OfficefurnituresystemsAlthoughthepurchasetransactionofofficefurnituresystems(e.g.interconnectedcubiclepanels,worksurface,andcabinetcomponents)typicallyoccursattheB2B-level,itistheeverydayuserwhointeractswiththeofficefurnituresystem.Assuch,performanceexpectationsofVRPofficefurnituresystemsisnecessarilyhigh.Inpractice,repairandmaintenanceofofficefurnituresystemsistypicallyincludedundertheOEMwarranty;arrangingdirectreuseisnotformallyundertaken;howeverremanu-facturingofofficefurnituresystemsisbecomingincreasinglycommon(TechnavioResearch2016,NextManufacturingRevolution2014).Similartoprintercartridges,thereareseverallifecycleassessmentsforofficefurnituresystemsintheliterature(Dietz2005),withsomeofthesespecificallyfocusedonthecomparativeenviron-mentalimpactdifferencesbetweentheOEMNewandremanufacturedoptions(Sahnietal.2010,Krystofiketal.2017,CenterofExcellenceinAdvanced&SustainableManufacturing2016,NationalCenterforRemanufacturingandResourceRecovery2005).Giventhehigh-shareoftechnicalnutrientsandlowuse-phaseenergyrequirementofofficefurnituresystems,itislogicalthateachofthesestudiesfound©Shutterstock/MikhailKlyoshev88Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyvaryingdegreesofenvironmentalimpactreductiontiedtotheremanufactureofofficefurnituresystems:alignedwithfindingsbySahnietal.(2010),Krystofiketal.(2017)foundan82percentreductioninGWPimpacts(kgCO2-eq.)andan83percentreductioninCED(MJ)ineachofthetworemanufacturingservicelivesassessed,relativetotheOEMNewproduct.TheNationalCenterforRemanufacturingandResourceRecovery(2005)founda40percentreductioninwastegenerationenabledviaofficefurnitureremanufacturing.5.4.3Mobile(cellular)phonesIncreasingly,consumerelectronicproductsarethefocusofenvironmentalimpactdiscussions:notonlydotheseproductscontaintoxic,andvaluablematerialsthatshouldbeappropriatelymanaged;globaldemandforinternet-connecteddevices,includingmobilephones,isincreasingdramaticallyeachyear(Waring2014,IDC2016).Givenwide-spreadconsensusthatlandfillisnotanacceptableformofEOUmanagementformobilephones,asevidencedbye-wasterecyclingprogramsaroundtheworld,theimportanceofenablingimprovedEOUoptionsformobilephonesislogical(OntarioElectronicStewardship2009,KingandBurgess2005,ConferenceofthePartiestotheBaselConventionontheControlofTransboundaryMovementsofHazardousWastesandTheirDisposal2014,GeyerandBlass2010).Someenvironmentalimpactandlifecycleassessmentsofmobilephonesexistintheliterature(Yu,Williams,andJu2010,Fehskeetal.2011,Mobergetal.2014),withthemosttypicalVRPoptionofrefurbishmentassessedcomparativetoanOEMNewoption(Zinketal.2014).Zinketal.(2014,1106)foundthatindirectcomparison(excludingabreak-evenanalysis),therefurbishedmobilephonepresentedthepotentialfora55percentreductioninGWPimpact(kgCO2-eq.)relativetotheOEMNewproduct.896Analysisofvalue-retentionprocessesatthesystems-level6.1Marketandsystemconditionsaffectingcurrentstateofvalue-retentionprocessesOneofthemostsignificantchallengestoincreasingthescaleofVRPsineconomiesaroundtheworldisthecomplexnatureofthesystem,which—beyondthetraditionalsupply-chainperspectiveofproduction—mustconsidermassiveandcomplexaspects.Theseincludecollectioninfrastructureandincentives,regulatoryclassificationsandterminologythatcaninterferewithaccessandtrade,marketsandsocialnormsthatassociate‘new’withstatusandquality,andwell-entrenchedtechno-logicalandproductionsystemsorientedtowardslinearflowsandproducerresponsibility.Foreaseofreference,theeconomy-levelsystems-modelpreviouslydiscussedingreaterdetailinSection4.3andoriginallypresentedinFigure17isshownbelow(Figure31).ExportRecyclingmarketSecondarymarketRecyclingmarketDisposaltoenvironmentDisposaltoenvironmentRecyclingmarketDisposaltoenvironmentVirginmaterialsRecycledmaterialsVirginmaterialsDomesticcores/reuseImportedcores/reuseImports(Developed/industrializedeconomies)In-useproductstock(Installedbase)Maintenance&repairNewdemand(New,arrangeddirectreuse,refurbished,remanufactured)Domesticproduction(New,directreuse,refurbished,remanufactured)RecycledmaterialsImports(Developing/newlyindustrializedeconomies)Collection&diversion(New,arrangeddirectreuse,refurbished,remanufactured)DemandedproductCollectedEOUproductNewinputsReuseinputs/outputsRecyclinginputs/outputsGarbageConnectedrecyclingflowsConnectedreuseflowsFigure31:Descriptionofthecomplexeconomicsystemrequiredtosupportvalue-retentionprocesses90Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTheobjectiveofincreasingthescaleandprevalenceofVRPsandproductswithinaneconomyrequiresaholisticapproachthatconsidersthemagnitudeandcauseofbarriersthroughouttheentiresystem,aswellashowthosebarriersmayinteracttocompoundornegateoneanother.TosimplifythenatureofkeyknownbarrierstoVRPs,Figure31enablestheorganizationoftheoccurrenceofthebarriers:•Regulatoryandaccessbarriers:Referstobarriersthatrestrictthemovementof,and/oraccesstoVRPproductsorcores.Inmanycasesthesebarriersmaymanifestasprohibitionsoftheproductionand/orsaleofVRPproductsintoadomesticmarket;theymayalsomanifestasincreasedfees,tariffsorothertransac-tionalcostsassociatedwithbringingfinishedVRPproductsorcomponents(cores)forVRPproductionintothedomesticeconomy.Atahighlevel,thesebarrierseitherconstrainthecustomermarketfromaccessingVRPproducts(production,import,and/orsalesrestrictions),ortheyconstrainVRPproducersfromaccessingessentialproductioninputs(domesticcollectionandreuse,and/orimportrestrictions).•Collectioninfrastructurebarriers:ReferstoconstraintsontheVRPsystemrelatedtotheabilitytorecoverEOUproductsorcomponentsfromthemarketandredirectthemintoappropriateend-of-lifematerialsmanagementstreams.Ofimportancetothisstudyisthepresenceof,andefficiencyofthesecondarymarketsystemthatrecoversEOUproductsandcomponentsforuseasinputstoVRPproduction.VRPproductionisdependentontheabilitytoaccessEOUproductsandcomponents;thevastmajorityofeconomicandenvironmentalbenefitscreatedviaVRPsaretiedtotheoffsetoforiginalproductionmaterialsandprocessesthroughthereuseofviableparts,components,and/ormodules(inthecaseofremanufac-turingandrefurbishment,thesemaybereferredtoas‘cores’).Ifcollectioninfrastructureisinadequateorinefficient,thereuseinputrequirementsofVRPproducerscannotbemet.Thereareimplicationsforproducer,industryandeconomy:intheabsenceofVRPinputmaterials,producersarelikelytoreverttoOEMNewtraditionalproductionpractices–usinggreatermaterialinputs,energy,andemissionslevelstomeetdemand.•Technologicalbarriers:ReferstotheconstraintsontheVRPsystemrelatedtotheVRPproducer’sabilitytoaccessthenecessarytechnology,productknowledgeandknow-how,andskilledlabornecessarytomaximizethebenefitsofVRPproduction,asidentifiedmorespecificallyinTable15.Wheretechnology,productknowledge,processknow-howand/orskilledlaborareinsufficient,thecapacityoftheVRPproducerisrelativelyconstrained,andtheassociatedpotentialeconomicandenvironmentalbenefitsarelimited.Inadditiontobeinglimitedinthecurrentstate,theVRPproducer’sabilitytobuildcapacityover-time–whetherdemandopportunityexistsornot–islikelystunted.Thisensuresthat,evenunderbarrier-alleviationscenariosandstrategies,growth,uptake,andgainsfromincreasedVRPproductionoccurmoreslowly,andwithlesserimpactavoidance.•Marketbarriers:Referstotherangeofbarrierswhichmaypresentinthecustomermarket,andwhichmayincludeaccesstodistributionandsaleschannelsinthelogisticalcontext,ortoapre-existingmarketpreferencefor‘new’products.Thecomplexityofcustomer(consumer)attitudes,preferences,willing-ness-to-pay,andactualpurchasingbehaviorcreatessignificantadditionalchallengesforVRPs,eveninmarketswherenootherbarriersarepresent.WhereastrategicapproachformanyVRPproducersistoofferadiscountedpriceasawaytoincentivizethepurchaseoftheVRPproduct,thispricediscountisdirectlytiedtotheVRPproducer’sabilitytofindcostadvantageintheproductionprocess.Asmentionedabove,thepresenceoftechno-logical,collection,and/oraccessconstraintscandirectlyaffecttheVRPproducer’sabilitytoofferapricediscount,andthereforetorespondtopotentialcustomermarketbarriers.AmorecomprehensivediscussionandlistofthesebarriersarereflectedinthesubsequentsectionsandsummarizedinTable15.Thelegacyofpastpolicydecisionsandtechno-logical,behavioral,organizationalandinstitutionalconditionsefficiencypresentsignificantbarrierstoprogressinthisarea.Atthesametime,theeconomicsandrelativeattractivenessofdifferentcircularproductionmodelsvarysignificantlyfordifferentproductsandmarkets,witheachfacing91Chapter6–Analysisofvalue-retentionprocessesatthesystems-levelTable15:Summaryofkeybarriersinhibitingpracticeandscale-upofvalue-retentionprocessesTypeExamplesofsystemicbarrierstoVRPsRegulatoryandaccessbarriers•Lackoflegallyandinternationally-agreedand/oraccepteddefinitionsofremanufacturing,refurbishment,andrepairactivities15•Legalclassificationof‘used’goodsas‘waste’,whichmayrestrictconsiderationof‘used’goodsasvaluableinputstoVRPproductionactivities11•Bansand/orrestrictionsontheimportsof‘cores’11•Requirementsforspecialclassificationand/orimporttreatmentoffinishedVRPproducts,includingextensivedocumentationandpackagingconditions11•Micro-levelbehavioroffirmsandcustomerscanbeaffectedbymacro-levelfactorssuchastaxesandregulations16Technologicalbarriers•Lackofthird-partyaccesstooriginalproductspecificationstosupportVRPproductionandtesting11•Lackofthird-partyaccesstocorelocation,impedingcollectionefficiencyandeffectiveness11•OEdesignthatinhibitsVRPoptionsfortheproduct11•R&Dandcorequalitytestingtechnicalcapabilities11•Capitalrequirementtoextend/addVRPproductioncapacitytoexistingmanufacturingoperations17•Costandoverheadburdenofcorecollectioninfrastructureandlogistics11•Long-standingorganizationalsystemsorientedtowardslinearproductionactivities11•Non-traditionallaborforceskillrequirements18•Lackofindustrystandardizationanddefinedstandards,whichcreatesanunleveledplayingfieldevenbetweenVRPproducers11(refertoSection8.4.3forextendeddiscussionofvoluntarystandardsopportunities)Marketbarriers•Increasingpresenceofnewbutlow-qualityimportedproductoptionscompetingagainstdomestically-producedVRPproducts11•LackofcustomerawarenessandunderstandingofVRPproductoptions11•Lackof‘demand’or‘pull’forVRPproductsintothemarketplace11•Complexmarketsignalsandindicators,andinconsistentmarketstrategiesofVRPproducerswhichcanleadtocustomerconfusionandmisunderstanding19•OEMconcernforpotentialcannibalizationofnewproductsalesbyVRPproducts14•Customerperceptionofvaluerelatedtotheconceptof‘reuse’andVRPproducts11•PresenceofprohibitivepolicythatrestrictsmarketaccesstoVRPproducts11•Pre-existingmarketpreferencefornewproducts(e.g.asstatussymbol)11•Complexcustomerpreferencesforproductattributesrelatedtosustainability:sometimesattractive,sometimesdeterrent12Collectionbarriers•Presenceandqualityofdiversionandcollectioninfrastructure,whichmaypreventVRPproducersfromaccessingcores/reuseinputs11•Centralizedversusdecentralizedcollectionsystems(e.g.third-party)whichincreasecomplexityandmagnitudeofreverse-logisticssystemcosts11•Regulateddiversionprogramsenablesharedcollectioncostburden(e.g.Germany),versusfirm-initiatedcollectionsystemsforwhichtheentirecostburdenfallsuponthefirm11•Customerdiversionbehaviorandconvenienceofdiversionversusdisposaloptions1115(U.S.InternationalTradeCommission2012,HopkinsonandSpicer2013,Nasretal.2016,UNEPIRPBeijingWorkshopandNasr2016,UNEPIRPBerlinWorkshopandNasr2016).16(OrganisationforEconomicCo-operationandDevelopment2009).17(EuropeanCommission2004).18(Ashford1993).19(GuideandLi2010,Atasu,GuideJr,andVanWassenhove2010)92Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyitsownchallengesintermsofadoptionandmarketaccesspotential.Asystems-levelperspectiveenablestheidentificationofconditionsthatactasbarrierstoimprovedadoptionofandengagementwithcircularproductionprocesses,andwhichmayinhibittherealizationoftheresource-savingpotentialsofthesedifferentcircularmodels.WhilethefirmsthatengageinVRPsareincreasinglyinnovativeandcreativeintheirprocesses,VRPactivityremainslowrelativetotraditionalproductionandmanufacturing.AccordingtotheUSInternationalTradeCommission(2012),remanufac-turinghasanestimatedintensityofonly~2percentofallmanufacturingoccurringintheUnitedStates,andEuropeanRemanufacturingNetwork(2015)studyresultsrevealaremanufacturingintensityofonly1.9percentofallmanufacturingoccurringinEurope.AdditionaldetailsabouttherelativeshareofotherVRPs(productionmixandmarketshare)wereestimatedviainterviewswithcollaboratingindustryexperts.Thecollectioninfrastructure(includingprogrammingand/orlandfillbans)thathelptofacilitatethecollectionofEOUproductsfromcustomersandusersforthesecondarymarketarealsoimportantforcirculareconomymodels.Regionalinfrastructureoftenexiststoallowformaterialsrecycling.However,remanufacturing,andrefurbishment,inmanycountries,lacklocalorregionallevelinfrastructureand/orprogrammingthatmayhelptofacilitatethedirectionofEOUproductsintoappropriatesecondarymarkets.Inmanycases,thesecollectionactivitiesoccurbetweencommercialorindustrialentities,howeverwithoutsupportivecollectioninfrastructure/systemsasignificant,andpotentiallyprohibitivecostburdenofcollectionisplaceduponindependententities.Fromtheperspectiveofproductioncapacity,theavailabilityof,andaccesstoequipment,expertise,programming,andfacilitiescanlowerlogisticscostsandallowmarketplayerstoaccesslocallaborandengineeringskillsthuscreatinglocaljobs.Eachoftheseproductlifeextensionpracticesisaccompaniedbyopportunitiesandconstraints,someofwhicharesector-specific,andsomearelinkedtothescaleofreverse-logisticsoperations,whichcanbestronglydependentoneconomiesofscaleandonthelevelofeconomicdevelopment.Likemostbusinesses,thoseengaginginVRPsmustmanagecomplexsystemsofagentsthroughouttheirsupplychains:customersandwholesalers,coresuppliersanddistributors,OEM’sandcompetitors(Atasu,GuideJr,andVanWassenhove2010).However,thereisevidencethatproducersofVRP-productsarecompetitivelydisadvantagedrelativetoproducersofthe‘new’versionoftheproductinthreedistinctforms:productionandsupplychaincomplexity,regulatoryandsystemcomplexity,andmarketcomplexity.6.1.1ProductionandsupplychaincomplexityUnliketraditionalmanufacturers,producersengagedinVRPsfaceadditionalinfrastructurecostrequirementsinthesourcingofinputs.Thesecostsmanifestthroughtheadditionallabor,transportation,andcommunicationthatarerequiredtorecovercoresfromcustomerslocatedaroundtheworldinsomecasesandreturnthemtotheappropriateVRPfacilityforprocessing.Wheretheproducerhasaccesstotheoriginalsalesdestination(e.g.theOEM),thelocatingofcorescanbesimpler,andcollectioninfrastructurecanbepiggybackedontopofexistingdistributionnetworksviareverse-logistics.ThesestillincuradditionalcostsbutarefarsimplertoundertakeascomparedtothemanycaseswheretheVRPproducerisnotaffiliatedwiththeoriginalsaleandisnotprivytoinformationaboutthelocationofcores,forcollectionpurposes.TheasymmetricalinformationregardingthelocationofcorescreatesacostadvantageforOEMsengaginginVRP;regardlessofthisadvantage,therequirementforreverse-logisticswithinthesupplychainputsanyVRPproduceratadistinctdisadvantagetotraditionallinearproductionactivities.6.1.2RegulatoryandsystemcomplexitySignificantanduniquepolicy-relatedbarrierstoVRPsexistincertainmarkets.Thesepolicy-relatedbarriersoften,eitherdirectlyorindirectly,createdisadvantageforavarietyofreasonsthatrangefromconsumerprotectioninterests(e.g.importrestrictions)toenvironmentalprotectioninterests(e.g.productrecyclingtargets).Asdiscussed,oftenthesebarriersoriginateintheunderstandingof,andregulateddefinitionofVRPsandVRPinputs,suchascores.Wherepolicylanguagefailstorecognizetheembodiedvalueofacore,and/orrequirescorestobetreatedaswastematerials,thecollectionand93Chapter6–Analysisofvalue-retentionprocessesatthesystems-levelmovementofcorestosupportVRPproductionbecomesprohibitivelyconstrained.SignificantfactorsaffectingthecompetitivenessofVRPproducersinclude:theavailabilityoflow-costnewproducts;customerpreferencesfornewproducts;shrinkingrelativedemandforVRPproducts;lackofknowledgeofforeignmarkets;transportationcosts;availabilityofcores;andlackofdistributionormarketingchannels(U.S.InternationalTradeCommission2012,EuropeanRemanufacturingNetwork2015).6.1.3MarketcomplexityIntraditionalmarketcompetition,producerscanusedistinctandcomplexstrategiestosignalqualityandvaluetotheirtargetcustomer,usingmechanismsofbrand,price,advertising,appearance,functionality,andotherproductcharacteristics(Atasu,GuideJr,andVanWassenhove2010).InthecontextofVRPproducts,thesetraditionalsignalscanbecomeconvoluted,asdescribedinafewexamplesbelow.Brand:Giventherequirementfora‘core’,VRPproducersmustwalkafinelineofusingoriginalOEM-brandedcoresinabrandedVRPproduct,andappropriatelydifferentiatingthemfromthe‘new’versionofthatsameproduct.ThereisoftensignificantconcernfromOEMsthatremanufacturing,andrefurbishmentcannotonlycannibalizesalesofthenewproductbutcanalsoerodethereputationandconfidencethatthemarketmayhaveinthebrand.Whereastrongbrandmaysignalpositivelytothemarketaboutthenewproduct,usingthesamebrandforVRPproductsmayhaveadifferentoutcome(GuideandLi2010).Forexample,wherethenewandVRPproductareindistinguishablefromoneanother,theVRPproductcanbecomeaperfectsubstituteforthenewproduct;whetherthiscreatesanadvantageordisadvantagetotheproducerdependsonwhethertheyaretheOEMortheVRPproducer(Atasu,GuideJr,andVanWassenhove2010).AsVRPscanbeperformedbyanOEM,contractedouttoathirdparty,orindependentlyundertaken,theroleofbrandingcanhavebothpositiveandnegativeimplications.WhiletheroleofbrandmaybedifferentinthecontextofB2CversusB2Bproducts,theservicereputationandreliabilityassociatedwithbrandisparticularlyimportantforB2Btransactions,particularlythoseoccurringathigherpricepoints(refertoSection8.2.1)(Brown,Sichtmann,andMusante2011,Tukker2015b).Price:Pricehasoftenbeenusedtosignal‘quality’,withhigherpricessuggestinghigherquality,higher-pricedinputs,andlowerpricessuggestinglowerquality,lower-pricedinputs.Inthiscase,VRPproducersmaybemotivatedtopricetheVRPproductatadiscount–becausetheyhavehighermargins,andbecausetheymayattractcustomerswithalowerwillingness-to-payfortheproduct.However,thepracticeofpricediscountingalsosendsasignalthatthemarketmayinterpretasindicatingalower-qualityproduct.Inthecaseofremanufacturing,wherethefinishedremanufacturedproductmeetsorexceedsthesameperformanceandqualityspecificationsasthenewproduct,thispricesignalcanactuallyunderminethetechnologicalandprocessinvestmentbehindremanufacturingandcanmisrepresenttheproductinthemarketplace.Intheabsenceofotherinformation,customersmustinterpretwhetherthelower-pricedVRPproductisdiscountedtoattracttheirbusinessordiscountedbecauseoflowerproductquality.Avisualorganizationofthesebarriers,includingbarrierinterrelationships,ispresentedinFigure32.94Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyBarrierstoGrowthinValue-RetentionProcessesInsufficientworkerskill/workertrainingLowRemainingCoreValueLackthetechnologytofullyassessthehealthofacoreLowcorporateacceptanceofVRPLownewhireskillLackofpublishedprocedures/standardsRestrictivegov’tpolicy/regulationsChallengingcontaminationremoval(cleaning)Designnotviable/Style/TechnologyobsolescencePoorlyconceived/implementedbusinesscaseforVRPLackingfinaltestandcertificationLackingcorediagnosticsCoresenterthecentralizedrecoverysystemCoresaredifficulttofindandsourceLegalrestrictionsTradebarriersoverusednewprefercorerestoration/remediationtechnologiesprocesstechnologyemployeeturnoverCollectionbarriersTechnologicalbarriersRegulatorybarriersMarketbarriersBarrierstogrowthinvalue-retentionprocessesFigure32:Classificationofbarrierstovalue-retentionprocesses95Chapter6–Analysisofvalue-retentionprocessesatthesystems-level6.2KeystakeholdersDespiteitslogicalappeal,therearesignificantchallengesthatinhibitthegrowthofVRPsalongsidetraditionalproductionactivities.Thesechallengesandbarriersarepresentedacrossarangeofkeystakeholdersfromessentialsystemperspectives:market,production,anddiversionandcollection/recovery.6.2.1ProducersOEMrefurbishersandremanufacturersWhilethemarginadvantageattractssomeOEM’stoengageintheside-businessactivityofVRPs,forcertainproductsorproductlines,predominantchallengesfromtheperspectiveofOEM’sincludetheperceivedthreatofcannibalizationandmarketshareloss,andthetechnicalchallengeofchangingestablishedsystemsandprocesses.SomefirmsthathaveembracedVRPs,suchasCaterpillarInc.,arguethatthelowerpriceremanufacturedoptionactuallycreatesnewmarketsforcustomerswhoareabletosubsequentlyparticipateinthemarket,giventhelowerpricepointopportunity.ThismaybeparticularlytrueineconomiesinwhichVRPproductsarenotaccessible,andwherethehigherpriceofOEMNewproductsmaypreventcustomersfrompurchasingaproducttheymayneed.Firmsthathaveeffectivelydifferentiatedtheirmarketsfor‘new’productand‘VRP’producthavedemonstratedthepotentialtogrowoverallmarketsharethroughVRPproductlines(U.S.InternationalTradeCommission2012).OEM’sholdthegreatestpowerwithinthefullservicelifeVRPsystem;theyaretheownersoftheintellectualproperty,productdesignspecifications,andlocationalinformationforcorecollection.CompetitiveOEMswishingtolimitthird-partyactivityinthemarkethavebeenknowntowithholdtheseimportanttypesofinformation,ultimatelypreventingmorecomprehensiveVRPsfromhappening.ThedesirebyOEM’stopreventcompetitionfromVRPproductsandthird-partyVRPproducersisoneofseveralkeyfactorsimpactingthegrowthofVRPswithinindustry(UNEPIRPBeijingWorkshopandNasr2016,UNEPIRPBerlinWorkshopandNasr2016,Nasretal.2016).ThelackofOEMengagementinVRPactivitiesisalsoaconstraintongrowthofVRPsinpursuitofimprovedresourceefficiency.Third-partyvalue-retentionprocessentitiesThird-partyrepair,refurbishers,andremanufac-turersareindependentfirmsthatcollectavailableproductcomponentsforthepurposesofVRPsinsomeform,eitherincollaborationwith,or,withouttheknowledgeoftheOEM.Formanyproducts,fullservicelifeVRPscannotbeadequatelycompletedwithoutthenecessaryproductdesignspecifications;inmanycasesthethird-partyVRPproduceralsofaceschallengestryingtolocateandrecoverproductcoresaspartofaseparatereverse-logistics.IncasesofOEMreluctancetoengageinVRPs,someviewthird-partyVRPproducersastheprimarydriverofpotentialgrowthofVRPsintheindustry;however,withoutaccesstoproductspecificationsfromOEM’sandsomeOEMdesignsthatpurposefullypreventVRPsorupgradability(e.g.printercartridges),theproductionpotentialofthird-partyVRPproducersremainsquiteconstrained.OvercomingthelackofOEMcollabo-rationandengagementiskeytoexpansionofVRPproductscontributingtomuchgreaterresourceefficiencyandcircularity.6.2.2Market-levelstakeholdersDomesticcustomersMarketdemandisalwaysadefiningfactorforthegrowthofanyindustry.ThedecisionbyOEM’sandthird-partyproducerstoengageinVRPsisoftendictatedbymarketdynamics:IsthereamarketforVRPversionsofaproduct,andatwhatpricepointistheVRPproductviable?OEM’sandthird-partyproducerstypicallyofferdiscountedpricepointsfortheVRPproduct,simplytoaccountforthediscountedmarketperception:that‘used’isequivalenttoahigher-riskandlower-qualityproduct.Attherightdiscount,however,customerswillacceptdifferentVRPproducts.ThecostadvantagethatmayexistacrossVRPproductsisdescribedfurtheraspartoftheproductleveladvantagesofVRPsinSection5.3.1.CustomersmaybemoreopentoVRPproductsunderaservicebusinessmodel,inwhichthecustomeronlyleasestheproduct,andreceivesafull-service-for-feeofferingfromtheleasingcompany.AsignificantbarriertoVRPindustrygrowth,isthatcustomersdonotseemtobeawareand/orsufficientlyeducatedaboutVRPproductsandtheirvalue.Overcomingtheperceptionthat‘VRPspossesshigherriskandlesserqualitythan‘new’versionsoftheproduct96Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomythrougheducationandawarenessandpromotingthecostandresourceuseadvantagesofVRPsmustbestrategicprioritiesinthepursuitofresourceefficiencywithinproductionsystems.Transitioningthemarketplaceawayfromproduct-orientedofferings,andtowardsservice-orientedofferingscouldsignificantlyimpacttheacceptabilityandproliferationofVRPsgoodsinthemarketplace.AllofthesefactorsarediscussedingreaterdetailinSections8.2and8.3.InternationaltradepartnersExportopportunitiesforVRPgoodsaresignificantformanyeconomies.FortheUnitedStates,withremanufacturingindustriesaccountingforapproxi-mately$11.7BUSDin2011,andespeciallyforforeignmarketsthatrequirelowerpricepoints,and/orthathaveaccessibilitychallengeswithintheirdomesticmarkets(U.S.InternationalTradeCommission2012).ExportopportunitiescreategrowthpotentialforVRPproducers,howevertheseopportu-nitiesareoftenconstrainedbyregulatorybarriersinforeignmarkets.TheprimarybarrierfacinginternationaltradeandexchangeofVRPproductsandcomponentsrelatestothelackofaccepteddefinitionsofwhattheseprocessesentail,andhowVRPare(orarenot)differentiatedfromwastes.Manydeveloping/newlyindustrializedeconomies,concernedabouttheriskofbecomingadumpinggroundforthewasteby-productsoffirst-worldnations,restrictthemovementofnon-newproductsandcores(e.g.India,Brazil),andoftencompletelyprohibittheimportofVRPproductsorcoresforremanufacturing(e.g.China)(U.S.InternationalTradeCommission2012).Whilethemitigationofdumpingpracticesmustbeapriority,andthesemeasuresmightbehelpfulinsomesituations,theymayalsoinadvertentlyimpedelegitimatetradeopportunitiesforVRPproducts,andthereforeimpedethepursuitofresourceefficiency,globally.6.2.3CollectionandrecoverynetworksThesizeoftheVRPindustry,andtheabilitytoimproveresourceefficiencyisentirelydependentupontheVRPproducer’sabilityrecoverproductcoresfromthemarketinthefirstplace.Thelogisticsofcollectionarewellstudied,andanunavoidablefactofreverse-logisticsandcollectionisthatthereisanincreasedcosttothesystemthatmustbebornebysomeone.Intheabsenceofdiversionregulations,thereisoftenlittleincentiveforOEMsormunicipalgovernmentstoassumethecostburdenofcollection.ForsomeVRPproducers,typicallylargerOEM’sengaginginremanufacturing,thatcanjustifythebusinesscaseforrecoveringcores(e.g.wherethereisasecondarymarketincentivepaymentforthecorethatwouldbepaidtothecollector),thecollectionsystemcanbeeffective,asdemonstratedbythehighcollectionratesforHDORequipmentpartsforremanufacturing,globally(~93percent).However,collectorsmusteducateandincentivizetheusertoensurethattheproductgetsbackintothecollectionsysteminsteadofgoingtolandfill.Inthecaseofremanufacturing,producersoftenattempttoaccomplishthisbyofferinganincentivepaymentforthereturnoftheproductorchargingadepositfeeontheproductatthetimeofpurchase.Withtheappropriateeducationandincentivesinplace,usersandagentsthroughoutthesystemarebetterpositionedtoincreasecollectionratesandimprovetheefficiencyofreverse-logisticssystemstogetcoresbackintotheVRPsystem.7Value-retentionprocesseswithinmarkets7.1ModelingframeworkToreflecttherangeofconditionsthatexistineconomiesaroundtheworld,fourrepresentativesampleeconomies—Brazil,China,GermanyandtheUS—wereidentified,eachwithdifferingconditionsandbarriersthataffecttheadoptionandgrowthofVRPs.Primarybarriercategoriesfocusonchallengesinregulatorypolicy,technologicalcapability,marketconditions,andcollectionsystem(reverse-logistics)infrastructure.OpeneconomyforVRPsRegulatory&accessbarriersTechnologicalbarriersMarketbarriersCollectionbarriersRegulatory&accessbarriersTechnologicalbarriersCollectionbarriersRegulatory&accessbarriersTechnologicalbarriersCollectionbarriersRestrictedeconomyforVRPsRegulatory&accessbarriersTechnologicalbarriersCollectionbarriersIncreasingbarrierstovalue-retentionprocessesandproductsMarketbarriersMarketbarriersMarketbarriersModifiedfrom(UNEPIRPBeijingWorkshopandNasr2016,UNEPIRPBerlinWorkshopandNasr2016)Figure33:Spectrumofbarrier-conditionsandbarrier-alleviationscenariosTheoverarchingapproachtomodelingandaccountingfordifferentsystemicbarrierstoVRPsisdescribedinFigure33,whichreflectstherangefromnobarrierstoVRPs(green),increasinglythroughtomanybarrierstoVRPs(red).Forthepurposesofthisassessment,eachrepresentativeeconomywasthenconsideredintermsofthepolicy,technological,andeconomicliteraturesurroundingitsindustrialsystems,andratedonaspectrumofbarrierpresenceandseverity.97Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyConsideredinconjunctionwiththeproduct-levelimpactsdiscussedinSection4,thesebaselineeconomicmodelsprovidethesocioeconomiccontextsinwhichtheimpactsofbarrieralleviationonValue-RetentionProcessperformanceandadoptionpotentialwereprojected.AdditionaldetailsabouttheassessmentofVRPbarrierscanbefoundinAppendixB.Thepotentialforarrangingdirectreuse,repair,refurbishingandremanufacturingisdependentlargelyonproducttypeanddesign,materialcomposition,andthepresenceofappropriatetechnicalknowledgeandinfrastructuretosupporttheseactivities.Assuch,thepotentialmaterialefficiency,or‘reusableshare’ofasingleunitoftheproductisunlikelytochangeacrossmarkets;andassuch,theseper-unitmaterialefficiencyvaluesareheldconstantacrossthemarketeconomiesrepresentedinthisreport.Whatmaychangefromoneeconomytoanotherrelatestotechnicalproductionefficiency:themagnitudeofproductionwasteandassociatedrequirementfornewmaterialinputs;thelaborrequiredtocompletetheprocessforasingleunit;theassociatedenergyrequirementoftheproductionprocess,reflectiveoftheefficiencyofinfrastructureinthateconomy;andtheemissionsassociatedwiththatenergyconsumption.ThesefactorsarepresentedingreaterdetailinAppendixB.7.2BarrieralleviationscenariosAswithanyformofinnovation,asignificantdeterminantofsuccessinValue-RetentionProcessadoptionisthedegreetowhichthebarriersprecludingthegrowthoftheseprocessinnovations(VRPs)arealleviated.Topredicthowthecirculareconomymightbeenabled,consideringthemyriadinteractionsofinhibitingfactors,baselineeconomicmodelswerecombinedwithproductlevelVRPmodelstosubsequentlyprojecttheevolutionoftheindustrialeconomyoveraseven-yearperiodunderthreedifferentscenariosforbarrieralleviation.Assuch,theresultsofthisscenarioanalysisreflectthe20TheuseoftheUSexampleasStandardOpenMarketisnotareflectiononthereputationandperformanceofotherprogressivecountries,butratheranecessaryconditionforthesomeoftherequiredmodeling.ThisdecisionwasduetotheIndustrialDigitalProductionPrintercasestudysector,whichisaffectedbyBaselConventionrulesthatconstrain(ifnotvolume,thentheeaseof)theexchangeoftheseunitsforuseinVRPsattheinternationallevel.WhilenotacommentaryonthevalueoftheBaselConvention,theabsenceofsimilarconstraintsmadetheUStheleast-constrainedsampleeconomywithinthestudy.cumulativevaluesoverthesimulatedseven-yearperiodThesescenariosaremodeledasfollows:StatusquoforVRPproducts:IndustrialeconomiesinallrepresentativemarketscontinuetogrowandadoptVRPsattheircurrentrate,withallinhibitingfactorsheldconstant,ultimatelymaintainingcurrentrateofeconomicandenvironmentalperformance.StandardopenmarketforVRPproducts:Eachrepresentativeeconomyisforecastedtogrowunderregulatory,trade,economic,andtechnologicalconditionsthatareequivalenttothoseoftheStatusQuoUnitedStatesassessment.20Moderateexistingbarrierintensityismetwithsimilarlymoderateinterventionstowardalleviation.TheoreticalhighforVRPproducts:Barrieralleviationisprojectedasapriorityinallrepresentativemarkets,reflectingwidespreadacceptanceofandinvestmentinatransitiontothecirculareconomy.Researchanddevelopmentoftechnologies,businessmodels,andpolicyinitiativestosupportVRPsproceedatanincreasedrateandintensityrelativetothecontemporaryUSbaselinecase,andtheshareofproductionactivityacrosseachVRPissettoreflecttheTheoreticalHighUSproductionshare.Thisscenarioisdeliberatelysettoestablishanextreme,positive,scenarioforVRPs.Foreaseofreference,thisapproachwasoriginallydiscussedinSection4.3,andpresentedinFigure15(refernowtoFigure34).Itisimportanttonotethattheuseofaseven-yearsimulationperioddoesnotsuggestthatthisisasufficientoroptimatetransformationperiodforindustrializedornon-in-dustrializedeconomies.Thetransformationtocirculareconomyiscomplexandrequirescompre-hensiveandintegratedengagementofgovernment,industry,andvalue-chainstakeholders,andassuchexpectationsofthetransformationtimelinemustbefirmlygroundedintheindividualconditionsandprioritiesofeveryrespectiveeconomy.Thesescenariosreflecttherangeofmarketevolutionpossibilitiesthatmayresultfromdifferentlevelsofconceptualacceptanceofandinvestmentinthecirculareconomyconcept,asboththe98Chapter7–Value-retentionprocesseswithinmarketsindustryandthedemandsuponitcontinuetogrow.TheresultsoftheseprojectionsarethusintendedtoprovideinsightsintohowtoaddressbarrierfactorinteractionsinpursuitofgreaterVRPadoption.Aspreviouslymentioned,toreflectgrowth,marketevolution,andcompoundingcomplexityinarealisticandmeaningfulway,thesescenarioprojectionsaresimulatedoveraseven-yearperiod.Thisdurationperiodwasselectedbecauseitensuredthatsystemicchangescouldbeobservedovertime,withoutanunrealisticassumptionthattherewouldbenoothersignificantendogenouschangesinaneconomy.STANDARDOPENMARKETforVRPproductsscenarioTHEORETICALHIGHforVRPproductsscenario➢➢EacheconomyforecastusingUS-basedStatusQuoScenarioregulatory,market,technologicalandinfrastructureconditionfactors➢➢Eacheconomyforecastwithmaximumpossibleregula-tory,markettechnological,andinfrastructureconditionfactors,andUS-basedTheoreticalHighproductionlevelsforVRPproducts(percentshare)STATUSQUOforVRPproductsscenario➢➢CurrentstateofVRPswithineacheconomy,givenknownbarriersINCREASINGBENEFITSOFVRPSWITHALLEVIATIONOFBARRIERSTOVRPSFigure34:OverviewofbarrieralleviationscenariosAswithanystrategicinitiative,therearethreecriticalstages:first,establishabaselinetounderstandtherealityofthe‘currentstate’;second,clearlydefinetheobjectiveortarget,sothatthevisioncanbearticulated;andfinally,establishanimplementationplanwithclearlydefinedstepsandmilestonesthatenableprogressfromthecurrentstatetowardthedesiredfuture.InthecaseofVRPs,theStatusQuoandTheoreticalHighscenariosreflectthefirstandsecondstages,respectively.TheStandardOpenMarketforVRPproductsscenarioofferssomeinsightintopotentialimplementationplans–viapolicydecisionsandsysteminterventions–thatmayguidepolicymakersandindustrydecisionmakersinthedevelopmentofappropriatestrategiesfortheircountry’sspecificconditionsandneeds.Withineachofthesebarrieralleviationscenariosseveralsystem-basedfactorsweredeterminedandapplied:(1)Regulatoryfactors,whichreflectthepresenceandrelativeextentofregulatory-baseddifferentiationand/ordiscriminationagainstcasestudyproductsproducedviaVRPs,whichalsodifferacrosscasestudysectorswithineachoftherepresentedeconomies;(2)Marketfactors,whichreflectrelativecustomer-baseddifferentiationand/ordiscriminationagainstrefurbishedandremanu-facturedproductsacrossrepresentedeconomies;and(3)Technologicalfactors,whichreflecttherelativedegreeofsystemictechnologicalbarriersacrosseachoftherepresentedeconomies.Collectioninfrastructurefactorswereheldconstantineacheconomy,acrosseachscenario.7.2.1RegulatoryandaccessfactorsRegulatoryandaccessfactorsaredifferentiatedbycasestudysector,asarangeofregulatorybarriersexistspecifictodifferentsectors,producttypesand/ormaterials.Forexample,theBaselConventionappliestocasestudyindustrialdigitalprinters,thuspotentiallyrequiringadditionalproceduralrequirementsforthemovementofaffectedrepaired,refurbished,andremanufacturedindustrialdigitalprintersbetweenSignatorycountries(e.g.US)andcountriesthatarebothSignatoryandParty99Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy(e.g.ermany)21.RegulatoryfactorsaredeterminedquantitativelybasedonacombinationoftheOECD’sTradeFacilitationIndicators22foreachrepresentedeconomy,andtheWorldBank’s2015EaseofDoingBusinessIndex23.TheOECDTradeFacilitationIndicatorsweredevelopedtohelpcountriesalleviateproblematicborderproceduresandreducetradecostsandreflectrelativeeaseoftradeacrossOECDcountriesacrossarangeoftradefactors.TheWorldBankEaseofDoingBusinessIndexrankseconomies,relativetoeachother,onthebasisandpresenceofbusiness-friendlyregulations:countriesarerankedoutofapossible190,withascoreof‘1’reflectingthemostbusiness-friendlyconditions.Thesemetricswerenormalizedandmultipliedtodetermineappropriateregulatoryandaccessfactorsforeachrepresentedcountry,byappropriatecasestudysectors(pleaserefertoTableB-30inAppendixB).7.2.2MarketfactorsMarketfactorswithintheeconomy-levelmodelreflectaqualitativeaverage‘discount’thatmightbeappliedbycustomersandbusinessestorefurbishedandremanufacturedgoodswithinaneconomy,andwhichthereforeconstrainsdemandfortheseVRPoptions.Thisdiscountreferencesexpectationsandperceptionsaboutproductquality(e.g.productsviaVRPsashavinglesserqualitythanthatofanOEMNewoption),aswellasmarket-basedpreferencesfor‘new’productsasstatussymbolsandindicatorsofaffluenceorprestige.EconomiesthathavehadgreaterexposuretoVRPsandoptionsareassumedto‘discount’refurbishedandremanu-facturedproductstoarelativelesserdegreethanwouldbeineconomieswithlittletonoexposuretoVRPs.Inotherwords,marketfactorsaregreaterforthoseeconomiesthatcurrentlyfacethegreatestmarketconstraints.Theinfluenceofsocialnorms,consumerpreferences,informationasymmetryareimportantconsiderationswithintheVRPmarket,andarediscussedingreaterdetailinSections6.1,6.2,and8.3.2.21AmultilateralagreementunderArt.11oftheBaselConvention(OECDDecisionC(2001)107/Final)allowsforsuchmovements;however,certainproceduralrequirements,suchasaPICprocedure,apply.22OECD.2015TradeFacilitationIndicators.http://www.oecd.org/trade/facilitation/indicators.htm23WorldBank.2015EaseofDoingBusinessIndex.http://data.worldbank.org/indicator/IC.BUS.EASE.XQ.24OECD.Science,TechnologyandInnovationOutlook2016.http://www.oecd.org/sti/oecd-science-technology-and-innovation-outlook-25186167.htm7.2.3TechnologicalfactorsTechnologicalfactorsreflecttherelativebenchmarkingscoresfromtheOECD’sScience,TechnologyandInnovationOutlook2016report,whichreflectsthedegreetowhichnational-levelscience,technologyandinnovation(STI)policies,instruments,andsystemsarecontributingtogrowth24.Fortherepresentedeconomies,relativescoresfromtheSTIOutlook2016reportareaggregatedintofivecategoriesdescribingthecurrentstatusoftherelativeSTIsystem(pleaserefertoTableB-29inAppendixB).7.2.4ImportshareFinally,tradeconditions,specificallyimportratioassumptionswererequiredtosimulateStandardOpenMarketandTheoreticalHighscenarios,particularlyforeconomiesthatcurrentlyenforcesomedegreeofimportrestrictionsagainstVRPs.ForthesescenariostheimportshareforOEMNewproductsforeacheconomywasheldconstant;intheStandardOpenMarketforVRPproductsscenario,importratiosforVRPsweresetequaltothatoftheequivalentproductfortheUS;intheTheoreticalHighscenario,importshareswereeithermaintained(developed/industrializedeconomies),orsettoanassumed20percentshare(developing/newlyindustrializedeconomies)(pleaserefertoTablesB-31andB-32inAppendixB).100Chapter7–Value-retentionprocesseswithinmarkets7.3Analysisandopportunitiesviavalue-retentionprocesses7.3.1OverviewofanalysisapproachAprimaryobjectiveofthisstudyistounderstandthebenefits,throughimpactsavoided,ofincreasingtheadoptionofVRPswithineconomicproductionactivities.Assuch,resultsandanalysisarepresentedforthemostpart,inaggregateformatcontrastingtheimpacts(andimpactsavoided)betweenOEMNewproduction,andthecumulativeVRPactivitylevelforeachcasestudysectorwithineachstudiedeconomy.Whereappropriate,andtoprovideanunderstandingoftheapproach,additionalclarifyingexamplesofsimulationovertime(e.g.oversevenyears),andthesubstantiatingdatabehindaggregatedresultsareprovided.Itshouldbenotedthatproductionlevelsreflecttheaggregatedproductionvolumeinaneconomy,whichmaybesuppliedintothedomesticmarket,ormaybeexported.Totaldomesticproductionmaybedifferentfromdomesticmarketdemandlevels:insomecases,domesticproductionmaybelowerthandomesticdemand,withthedifferentialsupplyrequirementbeingmetbyimportedunits.Incaseswheredomesticproductionexceedsdomesticdemand,theimplicationisthatthereisasubstantialquantityoffinishedunitsbeingexportedtoothermarkets(refertoFigure31).Thecalculationoftotalenvironmentalimpactsincludesthedirectenvironmentalproductionimpactsthatresultfromdomesticproductionlevels,includingexportedunits;italsoincludestheindirectenvironmentalproductionimpactsthatareassociatedwiththeproductionofOEMNewandVRPproductsinothereconomies.Thisapproachensuresthattheenvironmentalimpactsareappropriatelyallocatedtotheconsumingeconomyalongsidethedirectenvironmentalimpactsthatcontributetothedomesticeconomy.Inadditiontopresentinganalysisofthecurrentstateimpacts(viaStatusQuoscenario),theadditionalStandardOpenMarketforVRPProductsandTheoreticalHighforVRPProductsscenariosdataareincludedtohighlighttheopportunityandimplicationsofalleviatingbarrierstoVRPs.Aseachoftherepresentedeconomiesfacedifferingconditionsandconstraints,theopportunitiesandimplicationsforbothpolicymakersandcorporatedecision-makerswillnecessarilydiffer.Aspreviouslydescribed,theTheoreticalHighscenarioreflectsidealconditionsinwhichadoptionofVRPsreflectstheproductionsharesandmarketadoptionobservedfortheoptimizedTheoreticalHighUSscenario.Thepurposeforthisidealscenarioistodemonstratewhatmightbepossibleif,throughjoint-effortandcollaboration,stakeholdersinaneconomywereabletoimmediatelyalleviatetheprimarybarriersconstrainingVRPadoption.Thefollowingsectionsillustratethisanalysis,organizedbycasestudysector:industrialdigitalprinters;vehicleparts;andHDORequipmentparts.Itisimportanttonotethatsomeobservations,forexample,thosedrivenbyanoverarchingconditionofaneconomy,maybeapplicableacrossallsectors;otherobservationsmaybesector-specific,and/orevenprocessspecific.7.3.2ContextofanalysisAnunavoidableconsequenceofeconomicgrowthistheincreasedconsumption,tosomedegree,ofmaterialsandresources.Asproductionlevelsrisewithinaneconomy–eithertomeetdomesticorinternationaldemand—therequirementforenergy,labor,andmaterialinputs,andthegenerationofemissionsandsolidwastewillalsorise.Theprojectedgrowthratesfortherepresentedsectorsarebasedoncompoundannualgrowthrates(CAGR)ofactualpastfive-yearperformancewithineacheconomy.TheprimaryobjectiveofincreasingthescaleofVRPswithinaneconomy’sproductionsystemistoenableanincreasingrateofeconomicgrowthandprosperity,alongsidearelativelydecreasingrateofmaterialsandresourceconsumption.Intheabsenceofanyimprovementstomaterialorproductionprocessefficiency,therateofinputconsumptionandtherateofwasteandemissionsgenerationswillparalleltherateofchangetotheproductionlevel.Logically,inthiswaygrowingcustomerdemandwithinaspecificmarketwillrequiregreaterquantitiesofmaterialandenergyinputstoproduction;ashrinkingorstagnatingproductmarketwilllikewisereducethequantityofmaterialandenergyinputsandwastesgenerated.However,giveneconomicandhumanprosperity101Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyobjectivestiedheavilytoeconomicgrowth,thepursuitofmoresustainableproductionsystemscannotrelyonde-growthstrategies.Thisisparticularlymeaningfulinthecontextofdeveloping/newlyindustrializedmarketsinwhichmiddleclasspopulationandassociatedconsumptionpatternsareincreasing.Thepursuitofmaterialefficiencyandproductionefficiencycanbeachievedbydecreasingtheper-unitrequirementsandimpactsofproductionwheretherateofincreaseinmaterialsandenergyconsumption,andwasteandemissionsgenerationisdecoupledfromproductiongrowth.Akeystrategyinthepursuitofreducedper-unitimpactsofproductionistheincreasedscaleandadoptionofVRPsthateffectivelyoffsetinputrequirementandwastegeneration,withoutcompromisingtheabilityoftheeconomytogrow.ThebarrierstoVRPsdiscussedinSectionErreur!Nousn’avonspastrouvélasourcedurenvoi.arecomplex,interconnected,andvaryfromonecountrytoanother.Despitethiscomplexity,itmustbeacknowledgedthatthealleviationofthesebarriersrepresentstheproverbial‘low-hangingfruit’opportunitieswhenconsideredinthecontextofthemoremassiveglobalsystemoverhaulandredesignthatwillbeneededtomorefullyrespondtotherealityoffiniteresourcesandfast-approachingmaximumcarryingcapacityoftheplanet.EvenifallknownbarrierstoVRPswerealleviatedtomorrow,moresubstantialchangesrelatedtoconsumptionbehavior,productdesign,collectioninfrastructure,financialmarketandcorporaterewardssystemsarerequiredtosufficientlyrespondtotheplanet’sconstrainedsystems.Inthemeantime,insightsandstrategicoptionsareneededtosupportandenablepolicymakersandindustrydecision-makerstobeginplanningandimplementingtowardsthedesiredfuturestate.Therearekeydifferencesinthepriorities,opportu-nities,andidealstrategiesfordeveloped/industri-alizedversusdeveloping/newlyindustrializedeconomies.7.4AnalysisofIndustrialdigitalprinterssectorsTheindustrialdigitalprintingsubsector(high-volumecommercialdigitalprinters)consistsofcompaniesthatproduceimagingtechnologysystems,partmodules,replaceablecomponents,andconsumablecolorantcartridges.Thesecompaniesprimarilyfocusonimagingproductsthatusetonerorinkastheprintmaterial.Thereisasignificantsubsectorencompassingindependent,contract,andOEMorganizationsthatprovidealternativestonewproducts.IndustrialdigitalprintersareuniqueamongthecasestudyproductsbecausetheyaredesignedwithVRPsinmind,asdiscussedfurtherinSection8.2.AlthoughthereareonlyafewproducersofindustrialdigitalprintersworldwidethatengageinVRPsincludingarrangingdirectreuse,refurbishmentandremanufacturing,theseproducersrepresentasignificantshareoftheglobalmarketandhavewellestablishedglobalinfrastructuretosupportthegrowthofdemandforVRPindustrialdigitalprinters.7.4.1IndustrialdigitalprinterproductionlevelsProductionlevelsrefertotheoutputvolumeofdomesticproducersandincludesthetotalnumberofunitssuppliedintothedomesticmarket,aswellasthetotalunitsexportedtoothermarkets.Theestimatedproductionlevelsofindustrialdigitalprinters,byOEMNewandVRPproductiontypes,andbyeconomy,arepresentedinFigure35throughFigure38.Alsoshownareestimatedtotaldomesticmarketdemandlevelsforeacheconomy,whichareindicativeoftherelativelevelsofimportedproductstosupplydomesticdemand.TheindustrialdigitalprintersectorintheUShasprogresseddramaticallyintermsofadoptionofVRPswithintheproductionmix(Figure35).LedbyafewkeymarketleadersthatarebasedintheUS,thereisgreatopportunityformaterialefficiencyandimpactreductionthroughVRPs.Pleasenotethat,sincetheStandardOpenMarketforVRPProductsscenarioisreflectiveofUSconditions,thereisnochangetoUSproductionlevelsandassociatedproductionimpactsbetweentheStatusQuoandStandardOpenMarketforVRPProductsscenarios.102Chapter7–Value-retentionprocesseswithinmarkets0123456123456712345671234567EstimatedProduction(103units)StatusquoStd.openmarketTheoreticalhighOEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)Figure35:EstimatedUSproductionofindustrialdigitalprintersrelativetoestimateddemandinUSsimulatedover7yearscenariosGermanyalsoshowsameaningfulshareofremanufacturingactivityintheStatusQuoscenario,althoughproductionactivitiescurrentlyemphasizeOEMNewproduction(Figure36).Incontrast,BrazilandChinaeachhavealessershareofVRPproductionfortheseproductsintheStatusQuoscenario.InBrazil,regulatorybarriersconstrainthemovementofindustrialdigitalprintercoresintothecountryforremanufacturingorcomprehensiverefurbishment(Figure37).InChina,thislowerVRPshareislargelyduetoregulatoryconditionsthatdonotallowforunconstrainedremanufacturingandrefurbishmentofindustrialdigitalprinters(Figure38)(U.S.InternationalTradeCommission2012).Productionlevelsareaveryimportantaspectofthisanalysis,asitistheproductionlevelthatsignifi-cantlyinformstheassociatedimpactsofproduction,includingprocess-basedmaterialrequirement,processenergyrequirement,andassociatedprocessemissions.Theseprocess-basedimpactsareimportantlydifferentiatedfrommaterials-basedimpacts.Whiletheembodiedmaterialsenergyandemissionsassociatedwithallcasestudyproducts,basedontheirmaterialcomposition,reflectsaglobalaverage,theprocess-basedenergyandemissionsarereflectiveoftheeconomy,andcorrespondingenergy-productiongrid,inwhichproductiontakesplace.Thealleviationofsomeoftheregulatory,techno-logicalandmarket-basedbarriersundertheStandardOpenMarketsuggestthattheuptakeofVRPproductionmayleadtoincreasedshareoftheproductionmix,overtime,forindustrialeconomiesfacingsignificantregulatoryandotherbarriers(Figure37andFigure38).However,adoptionratescanbeconstrainedbythestartingshareofVRPs:whererelativelylow(high),growthoftheVRPproductionmixshareoccursmoreslowly(quickly).103Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy0.00.51.01.52.02.53.03.54.04.55.0123456712345671234567StatusquoStd.openmarketTheoreticalhighEstimatedProduction(103units)OEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)Figure36:EstimatedGermanyproductionofindustrialdigitalprintersrelativetoestimateddemandinGermanysimulatedover7yearscenariosThisisfurtherevidencedbytheimpactofanimposedhigherproductionshareviatheTheoreticalHighscenario,wherecombinedwiththealleviationofothersystemicbarriers,VRPproductionlevelsincreasesignificantlyinpreviouslyconstrainedeconomies(Figure37andFigure38).0.00.51.01.52.02.53.0123456712345671234567StatusquoStd.openmarketTheoreticalhighEstimatedProduction(102units)OEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)Figure37:EstimatedBrazilproductionofindustrialdigitalprintersrelativetoestimateddemandinBrazilsimulatedover7yearscenarios104Chapter7–Value-retentionprocesseswithinmarkets0.02.04.06.08.010.012.0123456712345671234567StatusquoStd.openmarketTheoreticalhighOEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)EstimatedProduction(103units)Figure38:EstimatedChinaproductionofindustrialdigitalprintersrelativetoestimateddemandinChinasimulatedover7yearscenarios7.4.2Analysisofmaterial-levelimpactsfromindustrialdigitalprinterproductionTheproductionlevelandgrowthratesofproductionineacheconomyandscenariobothinformandaffecttheassociatedimpactsthatareofinteresttothisstudy.ThematerialimpactsofproductionarepresentedinFigure44throughFigure47,howeverademonstrativeexampleoftheaggregationapproachisprovidedfirst,inthissection,andinSection1.4.3.Aggregatedproductionissimulatedoveraseven-yearperiod,andtheassociatedimpactsarecalculatedaccordingly.Newmaterialsbothusedandavoidedthroughtheincorporationofindustrialdigitalprinterremanufacturingforeachoftheseven-years,acrossallthreescenariosisdepictedinFigure39,whileFigure40highlightsjustthequantityofnewmaterialsavoidedoverthesameperiodandscenarios.NewmaterialavoidedisarepresentationofmaterialoffsetthatisenabledthroughVRPs:inotherwords,thereuseofmaterialsandcomponents(sometimesreferredtoas‘cores’)aspartofVRPproductionactivitiesinherentlyreducestheneedfortheequivalentquantityofnewmaterials.This‘newmaterialavoided’measurereflectsthedifferenceinthequantityofnewmaterialthatwouldhavebeenrequiredif100percentofaneconomy’sproductionwasvialinearOEMNewprocesses.Thiscanalsobeconsideredasthequantityof‘materialsaved’becauseofVRPproductionactivitieswithinaneconomy.105Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy0.01.02.03.04.05.06.07.08.0123456712345671234567StatusquoStd.openmarketTheoreticalhighOEMnew:newmaterialusedRemanufacturing:newmaterialusedRemanufacturing:newmaterialavoidedTotalnewmaterial(kt)Figure39:EstimatedaggregatednewmaterialusedandavoidedviaUSremanufacturingofindustrialdigitalprinterssimulatedover7yearscenarios0.00.51.01.52.02.53.03.54.0123456712345671234567StatusquoStd.openmarketTheoreticalhighTotalnewmaterialuseavoided(kt)Remanufacturing:newmaterialavoidedFigure40:EstimatedaggregatednewmaterialavoidedviaUSremanufacturingofindustrialdigitalprinterssimulatedover7yearscenarios106Chapter7–Value-retentionprocesseswithinmarketsAsseenfromFigure39andFigure40,theremanu-facturingofindustrialdigitalprinterstakingplaceintheUSisresponsibleforsignificantreductioninnewmaterialrequirements,whichareoffsetbythereuseofproductcoresintheremanufacturingprocess.7.4.3AggregationofimpactsfromindustrialdigitalprinterproductionFromtheabsolutematerial,energyandemissionsdatageneratedovertheseven-yearsimulation,anaggregatevaluefortheentireperiodiscalculated.Figure41describes,asanexample,thecumulativenewmaterial(aggregate7years)thatisbothusedandavoided,whencomparingUSindustrialdigitalprinterproductionviaOEMNewversusremanufac-turingprocesses.GiventhesignificantpresenceofVRPproductionintheUSmarketplace,themateri-al-avoidedthroughremanufacturingissignificant.Itisalsoimportanttonotethatremanufacturingdoesrequiretheuseofsomenewmaterialinputsaspartoftheprocessdescribedintheprevioussections.Undereachofthescenarios,itcanbeseenthatthroughremanufacturing(asonlyoneexampleofVRPs),production-levelgrowth(andtheeconomicgrowthandprosperityinherenttosuchgrowth)canoccur,withoutparallelgrowthinnewmaterialrequirement.Similarly,theaggregatedenergyandemissionsimpactsofUSindustrialprinterproductionarereflectedinFigure42andFigure43.Thesevaluesweredeterminedutilizingthesameapproachaswasusedtoassessnewmaterialrequirementandnewmaterialavoided.FromtheaggregateresultspresentedinFigure42(energyimpact)andFigure43(emissionsimpact),forindustrialdigitalprinters,themostsignificantimpactsderivefromtheembodiedmaterialenergyandembodiedmaterialemissionsassociatedwiththeextractionandprimaryprocessingofproduc-tion-inputmaterials.BothofthesefigurescomparetheaggregateimpactsofOEMNewproductionandaggregateimpactsofVRPproductionineachscenariofortheUS.Itisworthnotingthatthehighvalueforaggregatedembodiedmaterialsenergyforindustrialdigitalprinters(andpotentiallyotherelectronicequipment)islargelydrivenbythepresenceofprintedcircuitboardsintheproduct,whichsignificantlyaffectstheaggregateembodiedenergyusereflectedinFigure42(refertoTable5,Table6,andTable7fordetailedunit-levelimpacts;additionaldetailsontheembodiedenergyimplicationsofprintedcircuitboardscanbefoundinAppendixB,TableB-2).0.05.010.015.020.025.030.0OEMnewRemanOEMnewRemanOEMnewRemanStatusquoStd.openmarketTheoreticalhighNewmaterialusedNewmaterialavoidedTotalNewMaterial(kt)Figure41:ComparisonofnewmaterialusedandavoidedviaUSremanufacturingofindustrialdigitalprinters107Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy0.00.20.40.60.81.01.21.4OEMnewAllVRPsOEMnewAllVRPsOEMnewAllVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialsenergyProcessenergyEnergyimpact(PJ)Figure42:Estimatedaggregate7-yearembodiedandprocess-basedenergyforUSproductionofindustrialdigitalprinters0.040.060.080.0100.0120.0140.0160.0180.0OEMnewAllVRPsOEMnewAllVRPsOEMnewAllVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialsemissionsProcessemissionsEmissionsImpact(ktCO2-eq.)20.0Figure43:Estimatedaggregate7-yearembodiedandprocess-basedemissionsforUSproductionofindustrialdigitalprintersGiventhis,potentiallythegreatestbenefitcreatedviaVRPsforindustrialdigitalprintersistheoffsetofnewmaterialrequirement,andthereductioninassociatedembodiedmaterialenergyandembodiedmaterialemissions.Thisinsightisfurtherobservedacrossallsampleeconomies,aspresentedinthenextsection.108Chapter7–Value-retentionprocesseswithinmarkets7.4.4Industrialdigitalprinterssector:impactsavoidedthroughvalue-retentionprocessesUsingtheapproachdescribedinSections7.4.2and7.4.3,theaggregatedimpactsthatareavoidedineacheconomyasaresultofVRPindustrialdigitalprintersproduceddomesticallyandimportedareestimatedandpresentedinFigure44(US),Figure45(Germany),Figure46(Brazil),andFigure47(China).Foreachofthesefigures,estimatedproductionandimportlevelsofVRPindustrialdigitalprintersaredepictedinpanel(a);estimatedmaterialuseavoidedasaresultofVRPproductionaredepictedinpanel(b);estimatedembodiedandprocessenergyuseavoidedasaresultofVRPproductionaredepictedinpanel(c);andestimatedembodiedandprocessemissionsavoidedasaresultofVRPproductionaredepictedinpanel(d).Figure44:Estimatedaggregate7-yearimpactsavoidedviaUSindustrialdigitalprinterproductionwithvalue-retentionprocesses0246810121416StatusquoStd.openmarketTheoreticalhighEst.VRPproductionEst.production&importlevels(103units)(a)Est.production&importlevelsofVRPindustrialdigitalprintersEst.VRPimports02004006008001000120014001600StatusquoStd.openmarketTheoreticalhighEnergyavoided(TJ)(c)Est.energyuseavoidedviaindustrialdigitalprintersVRPsProcessenergyavoidedEmbodiedmaterialenergyavoided20.020.521.021.522.022.523.023.524.0StatusquoStd.openmarketTheoreticalhighMaterialuseavoided(kt)(b)Est.materialuseavoidedviaindustrialdigitalprintersVRPs02060100140180200StatusquoStd.openmarketTheoreticalhigh(d)Est.emissionsavoidedviaindustrialdigitalprintersVRPsEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(ktCO2-eq.)1601208040109Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyInreviewoftheseresults,itisimportanttonotethedifferingscales:notonlydoproductionlevelsvarysignificantlyacrosstheseeconomies,butthefactorsinfluencingtheassociatedimpactsofproduction(e.g.theefficiencyofenergyproduction,transmissionanddistribution,andtheenergyproductiongrid-mix)alsovarysignificantly.Asdemonstratedattheproduct-level,thehighlevelsofembodiedmaterialenergyavoidedineveryeconomy,relativetoprocessenergyavoided(Figure44throughFigure47),islargelydrivenbythesignificantimpactofreuseofprintedcircuitboards.05001000150020002500Energyavoided(TJ)(c)Est.energyuseavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhighProcessenergyavoidedEmbodiedmaterialenergyavoided02468101214Est.VRPproductionEst.VRPimports(a)Est.production&importlevelsofVRPindustrialdigitalprintersStatusquoStd.openmarketTheoreticalhighEst.production&importlevels(103units)050100150200250300(d)Est.emissionsavoidedviaindustrialdigitalprintersVRPsEmbodiedmaterialemissionsavoidedProcessemissionsavoidedStatusquoStd.openmarketTheoreticalhighEmissionsavoided(ktCO2-eq.)0102030405060Materialuseavoided(kt)(b)Est.MaterialuseavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhighFigure45:Estimatedaggregate7-yearimpactsavoidedviaGermanyindustrialdigitalprinterproductionwithvalue-retentionprocess110110Chapter7–Value-retentionprocesseswithinmarketsItisalsoimportanttonotetheconditionsoftheStandardOpenMarketscenarioandtheTheoreticalHighscenario.TheslightreductioninimpactavoidanceobservedforGermany(Figure45,panelsb,c,andd)andChina(Figure47,panelsb,c,andd)betweentheStatusQuoandtheStandardOpenMarketscenariosisattributedtotwoprimarycauses:Theeffectofmodifiedimportshareswhichmayreducethedomesticproductionrequirement,andthustheimpactsofdomesticproduction,andtheeffectofachangingproductionprocessmix,whereinthedisplacementoflower-impactpartialservicelifeVRPsbyhigher-impactfullservicelifeVRPsmayactuallymarginallyincreasethenewmaterialrequirement,andassociatedmaterialandprocessimpacts(refertoTheoreticalHighscenariosforGermanyandChina,inFigure45andFigure47,respectively).Figure46:Estimatedaggregate7-yearimpactsavoidedviaBrazilindustrialdigitalprinterproductionwithvalue-retentionprocesses020040060080010001200(a)Est.production&importlevelsofVRPindustrialdigitalprintersStatusquoStd.openmarketTheoreticalhighEst.VRPproductionEst.VRPimportsEst.production&importlevels(units)050100150200EnergyAvoided(TJ)(c)Est.energyuseavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhighProcessenergyavoidedEmbodiedmaterialenergyavoided0.00.51.01.52.0Materialuseavoided(kt)(b)Est.materialuseavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhigh025000(d)Est.emissionsavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(tCO2-eq.)2000015000100001000111Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFigure47:Estimatedaggregate7-yearimpactsavoidedviaChinaindustrialdigitalprinterproductionwithvalue-retentionprocessFromthisanalysis,therearesignificantopportu-nitiestoreducetheenvironmentalburdenandimpactsassociatedwiththegrowthofthemarketforVRPindustrialdigitalprintersacrossalleconomies.Whilethegreatestbenefitsstemfromtheavoidedembodiedmaterialenergyandembodiedmaterialemissionsassociatedwithrawmaterialextractionandprocessing,thereisalsoasignificantreductionintheper-unitrequirementsandimpacts,onaverage,whendemandcanbepartiallymetthroughVRPproduction.WhiletheresultsoftheTheoreticalHighforVRPProductsscenarioareunrealisticintheshort-term,decisiveandstrategicactiontoalleviatebarrierstoVRPsintheindustrialdigitalprintersectorcanonlyenhancethecontri-butionofVRPstowardsthecirculareconomy.010002000300040005000600070008000900010000Energyavoided(TJ)(c)Est.energyuseavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhighProcessenergyavoidedEmbodiedmaterialenergyavoided(a)Est.production&importlevelsofVRPindustrialdigitalprintersEst.VRPproductionEst.VRPimportsStatusquoStd.openmarketTheoreticalhigh051015202530354045Est.production&importlevels(103units)06008001000(d)Est.emissionsavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(ktCO2-eq.)4002001200020406080100Materialuseavoided(kt)(b)Est.materialuseavoidedviaindustrialdigitalprintersVRPsStatusquoStd.openmarketTheoreticalhigh112112Chapter7–Value-retentionprocesseswithinmarketsItshouldbenotedthattheimposedpresenceoffullservicelifeVRPsintheTheoreticalHighscenariosforBrazil(Figure46)andChina(Figure47)effectivelydisplacethecurrenthighadoptionlevelsofformalandinformallower-impactpartialservicelifeVRPsofrepairanddirectreuse.Forless-andnon-industrializedeconomieswherepartialservicelifeVRPs(namely,repair)arethedominantformofvalue-retentionwithintheeconomy,theadoptionofhigher-impactfullservicelifeVRPsmaybeunrealisticintheshort-termandmayalsoleadtounintendednegativeenvironmentalconsequencesinthemid-tolong-term,asdiscussedfurtherinSection8.3.2.ItmustalsobeacknowledgedthatthepotentialfornegativeenvironmentalimpactreductionbetweentheStatusQuoandStandardOpenMarketScenariosacrossthesampleeconomiesappearstobeminimal:thisistheresultofthescenarioassumptionsforwhichbarrierstoVRPsarealleviated,butadoptionratesofVRPsreflectactualcurrentstateconditionsoftheeconomy.Thisinsightisparticularlyimportant,asitfirmlyhighlightsthatthepassivealleviationofbarrierscanonlyachievemarginalimprovementsinimpactreduction:increasingadoptionratesofVRPswithinaneconomy’sproductionmixthroughpolicyandmarket-basedinstrumentsremainsacriticalelementofanycirculareconomystrategythatseeksnegativeenvironmentalimpactreduction(refertoSection8.4).7.5AnalysisofvehiclepartssectorTheautomotivepartsindustryisoneoftheworld’slargestmarketsforVRPs.Thissectorincludescompaniesthatprocesscomponentsforproductionlightdutycarsandtrucks,andformediumandheavycommercialvehicles.Thesectorencompassesindependent,contract,andOEMorganizations,aswellasthesupplychainthatprovidesthereverse-logisticsofcoresfromEOLvehicles.TheproductsforwhichVRPsarecurrentlyemployedincludeengines,transmissions,starters,alternators,steeringracks,andclutches(U.S.InternationalTradeCommission2012).VRPproductionofvehiclepartshasbeenoccurringinmarketsaroundtheworldfordecades;assuch,remanufacturingisamorefamiliarVRPopportunityforthevehiclepartsindustryandtheircustomers.Particularlyforheavilymechanical(versuselectrical)vehicleparts,suchasthoseincludedascasestudyproducts,remanufacturingisafamiliaroptioninmarketswhereVRPproductsarepermitted.7.5.1VehiclepartsproductionlevelsTheestimatedproductionlevelsofvehicleparts,byOEMNewandVRPproductiontypes,andbyeconomy,arepresentedinFigure48throughFigure51.Alsoshownareestimatedtotaldomesticmarketdemandlevelsforeacheconomy,whichareindicativeoftherelativelevelsofimportedproductstosupplydomesticdemand,and/orexportedproducts.ThevehiclepartssectorintheUShasprogresseddramaticallyintermsofadoptionofVRPswithintheproductionmix(Figure48).AlthoughcurrentlyatarelativelylowproductionshareintheUS,thereisgreatopportunityformaterialefficiencyandimpactreductionthroughVRPs.IntheUS,aprimarybarriertogrowthofVRPsforvehiclepartsisthecompetitionpresentedbylow-pricedimportsfromothereconomies.Ingeneral,theUS’shighimportlevelofvehiclepartssignificantlyconstrainsthegrowthofdomesticVRPactivity.ThisstudydoesnotconsiderchangestotheimportratiosfortheUSmarket;so,whileVRPproductionofvehiclepartsremainsfairlyconsistent,evenundertheTheoreticalHighforVRPProductsscenario,itshouldbeassumedthatanincreasingpresenceofcompet-itively-priceddomestically-remanufacturedoptionsmaydisruptthecurrentcompetitivemarketandmayleadtoincreaseddomesticVRPproductionasaresult.IncontrasttotheUS,Germany,BrazilandChinahavealessershareofVRPproductioninthecurrentstateduetothepresenceofsomeconstrainingconditions.InthecaseofBrazil,marketgrowth(CompoundAnnualGrowthRate(CAGR)2012–2014)intherelevantStatusQuoscenarioperiodwasnegative.Pleasenotethat,sincetheStandardOpenMarketforVRPProductsscenarioisreflectiveofsomeoftheUSconditions,thereisnochangetoUSproductionlevelsandassociatedproductionimpactsbetweentheStatusQuoandStandardOpenMarketscenarios.113113Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy051015202530354045123456712345671234567OEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)Estimatedproduction(106units)StatusquoStd.openmarketTheoreticalhighFigure48:EstimatedUSproductionofvehiclepartsrelativetoestimateddemandinUSsimulatedover7yearscenario0246810121416123456712345671234567OEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)StatusquoStd.openmarketTheoreticalhighEstimatedproduction(106units)Figure49:EstimatedGermanyproductionofvehiclepartsrelativetoestimateddemandinGermanyover7yearscenarioAsshowninFigure50,themodelassumesthecurrent(declining)marketgrowthratesincasestudyvehiclepartsproductionoccurringinBrazil.DecliningtotalproductionlevelsovertimealsocontributestheadoptionofVRPswithintheproductionmix,andtheabsolutereductionofnegativeenvironmentalimpacts,aspresentedinFigure62.114Chapter7–Value-retentionprocesseswithinmarkets00.51.01.52.02.53.03.54.04.55.0StatusquoStd.openmarketTheoreticalhigh123456712345671234567OEMnewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)Estimatedproduction(106units)Figure50:EstimatedBrazilproductionofvehiclepartsrelativetoestimateddemandinBrazilover7yearscenarioItisimportanttonotethatthedisplacementoflower-impactpartialservicelifeVRPswithhigher-impactfullservicelifeVRPsintheTheoreticalHighscenariosforBrazil(Figure50)andChina(Figure51)reflectsanunrealistictransitionawayfrommorecommonrepairanddirectreuseactivities.ThedecreaseinpotentiallyavoidedimpactsthatresultfromsuchatransitionaredemonstratedinFigure62andFigure63,anddiscussedingreaterdetailinSection7.5.5.0510152025303540StatusquoStd.openmarketTheoreticalhigh123456712345671234567OEMnewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)Estimatedproduction(106units)Figure51:EstimatedChinaproductionofvehiclepartsrelativetoestimateddemandinChinaover7yearscenario115Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy7.5.2Analysisofmaterial-levelimpactsfromvehiclepartsproductionTheproductionlevelandgrowthratesofproductionineacheconomyandscenariobothinformandaffecttheassociatedimpactsthatareofinteresttothisstudy.TheimpactsofproductionarepresentedinFigure52throughFigure70,howeverademonstrativeexampleoftheaggregationapproachisprovidedinthissection,andinSection7.5.3.Theseresultsassumethat100percentofvehicleenginesinaneconomyaretraditional,utilizingcastironcylinderblocks.Onceagain,aggregatedproductionissimulatedoveraseven-yearperiod,andtheassociatedimpactsarecalculatedaccordingly.Figure52depictsthenewmaterialsbothusedandavoidedthroughtheincorporationofvehiclepartsremanu-facturingforeachoftheseven-years,acrossallthreescenarios,whileFigure53highlightsjustthequantityofnewmaterialsavoidedoverthesameperiodandscenarios.0123456Totalnewmaterial(Mt)StatusquoStd.openmarketTheoreticalhigh123456712345671234567OEMNew:newmaterialusedRemanufacturing:newmaterialusedRemanufacturing:newmaterialavoidedFigure52:EstimatedaggregatednewmaterialusedandavoidedviaUSremanufacturingofvehiclepartsover7yearscenario116Chapter7–Value-retentionprocesseswithinmarkets0100200300400500600700123456712345671234567StatusquoStd.openmarketTheoreticalhighTotalnewmaterial(kt)Figure53:EstimatedaggregatednewmaterialavoidedviaUSremanufacturingofvehiclepartsover7yearscenario7.5.3AggregationofimpactsfromvehiclepartsproductionFromtheabsolutematerial,energyandemissionsdatageneratedovertheseven-yearsimulation,anaggregatevaluefortheentireperiodiscalculated.Figure54describes,asanexample,thecumulativenewmaterialthatisbothusedandavoided,whencomparingUSvehiclepartsproductionviaOEMNewversusremanufacturingprocesses.Incontrasttothesignificantmaterialavoidancedemonstratedinthecasestudyofindustrialdigitalprinterproducts,therelativelysmallerproductionshareofVRPsinthevehiclepartssectorishighlighted.Itisimportanttonote,however,thatdespitetheapparently‘smaller’magnitudeofmaterialavoided,thereisstillasignificantbenefitcreatedintermsofabsolutequantityofnewmaterialthatisoffsetthroughtheapplicationofVRPproduction.WhileFigure54,Figure55andFigure56reflectaggregatedimpactsassuming100percentcastironengineblock,abriefcomparativeanalysisofthetradeoffsassociatedwithutilizing100percentlightweightaluminumengineblock(versustraditionalcastiron)isprovidedinSection7.5.4.117Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy05101520253035OEMnewRemanOEMnewRemanOEMnewRemanStatusquoStd.openmarketTheoreticalhighNewmaterialusedNewmaterialavoidedTotalnewmaterial(Mt)Figure54:Comparisonofaggregate7-yearnewmaterialusedandavoidedviaUSremanufacturingofvehiclepartsAsmentioned,therelativelevelofVRPsinthevehiclepartsproductionmixissmallerthanthatofindustrialdigitalprinters,andassuchmaterialcurrentlyavoidedviaremanufacturingappearssmall(Figure54).Thecurrentlyhighlevelsofembodiedmaterialandprocessenergy(Figure55),andembodiedmaterialemissions(Figure56)highlightthepotentialtoreduceenvironmentalimpactsthroughadoptionofVRPs.050020002500OEMnewAllVRPsOEMnewAllVRPsOEMnewAllVRPsStatusquoStd.openmarketTheoreticalhighEnergyimpact(PJ)EmbodiedmaterialenergyProcessenergy15001000Figure55:Estimatedaggregate7-yearembodiedmaterialenergyandprocessenergyuse,UScasestudyofvehiclepartswithtraditionalengine118Chapter7–Value-retentionprocesseswithinmarkets06080100120140160OEMnewAllVRPsOEMnewAllVRPsOEMnewAllVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialsemissionsProcessemissionsEmissionsimpact(MtCO2-eq.)4020Figure56:Estimatedaggregate7-yearembodiedmaterialemissionsandprocessemissions,UScasestudyofvehiclepartswithtraditionalengine7.5.4ImpacttradeoffsoflightweightdesigninvehiclepartssectorAspresentedinSectionErreur!Nousn’avonspastrouvélasourcedurenvoi.,thereareimpactsofaproductthatmaydifferduetodesigndecisionsasbasicaswhatmaterialtouse.Forillustrativeexample,asimplifiedassessmentoftheimpactdifferentialattheproduct-levelwaspresentedfortraditionalenginesutilizingcastironcylinderblocksandlightweightenginesutilizingaluminumcylinderblocks.Toclarifytheimplicationsofthelightweightmaterialdecisionataneconomy-level,Figure57reflectsthecomparativenewmaterialuseandavoidanceenabledbyproductionandremanufac-turingoflightweightenginesinsteadoftraditionalenginesinthecombinedcasestudyvehiclepartsunderStatusQuoandTheoreticalHighscenarios.Despitethereductioninmaterialuse,however,theuseofamoreenergy-intensivematerialcreatesnegativeenvironmentalimplicationsintermsofembodiedenergyandembodiedemissions,asshowninFigure58andFigure59.119Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy05101520253035OEMnewOEMnewRemanRemanOEMnewOEMnewRemanReman(traditionalengine)(traditionalengine)(traditionalengine)(traditionalengine)(lightweightengine)(lightweightengine)(lightweightengine)(lightweightengine)Totalnewmaterial(Mt)StatusquoTheoreticalhighNewmaterialusedNewmaterialavoidedFigure57:USaggregate7-yearmaterialuseandavoidancecomparisonoftraditionalvs.lightweightenginemix0200400600800100012001400160018002000Embodiedmaterialenergyimpact(PJ)EmbodiedmaterialenergyOEMnew(traditionalengine)(traditionalengine)(traditionalengine)(traditionalengine)(lightweightengine)(lightweightengine)(lightweightengine)(lightweightengine)OEMnewAllVRPsAllVRPsOEMnewOEMnewAllVRPsAllVRPsStatusquoTheoreticalhighFigure58:USaggregate7-yearembodiedmaterialenergycomparisonoftraditionalvs.lightweightenginemix120Chapter7–Value-retentionprocesseswithinmarketsNewmaterialuseisreducedwhenallvehicleenginesareproducedwithaluminumcylinderblocks(Figure57)however,embodiedenergyandemissionsarehigher(Figure58).Undereitherthetraditionalorlightweightvehicleenginedesign,theTheoreticalHighscenariowithmaximizedVRPproductionoffersimpactreductioninmaterialuse,embodiedenergy,andembodiedemissionsrelativetotheStatusQuostate.020406080100120OEMnew(traditionalengine)(traditionalengine)(traditionalengine)(traditionalengine)(lightweightengine)(lightweightengine)(lightweightengine)(lightweightengine)OEMnewAllVRPsAllVRPsOEMnewOEMnewAllVRPsAllVRPsStatusquoTheoreticalhighEmbodiedmaterialsemissionsEmbodiedmaterialemissionsimpact(MtCO2-eq.)Figure59:USaggregate7-yearembodiedmaterialemissionscomparisonoftraditionalvs.lightweightenginemix7.5.5Vehiclepartssector:impactsavoidedthroughvalue-retentionprocessesUsingtheapproachdescribedinSections7.5.2and7.5.3,theaggregatedimpactsthatareavoidedineacheconomyasaresultofVRPvehiclepartsproduceddomesticallyandimportedareestimatedandpresentedinFigure60(US),Figure61(Germany),Figure62(Brazil),andFigure63(China).Foreachofthesefigures,estimatedproductionandimportlevelsofVRPvehiclepartsaredepictedinpanel(a);estimatedmaterialuseavoidedbecauseofVRPproductionaredepictedinpanel(b);estimatedembodiedandprocessenergyuseavoidedasaresultofVRPproductionaredepictedinpanel(c);andestimatedembodiedandprocessemissionsavoidedasaresultofVRPproductionaredepictedinpanel(d).Inreviewoftheseresults,itisimportanttonotethedifferingscales:notonlydoproductionlevelsvarysignificantlyacrosstheseeconomies,butthefactorsinfluencingtheassociatedimpactsofproduction(e.g.theefficiencyofenergyproduction,transmissionanddistribution,andtheenergyproductiongrid-mix)alsovarysignificantly.121Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFigure60:EstimatedaggregateimpactsavoidedviaUSvehiclepartsproductionwithvalue-retentionprocessesForeconomiesinwhichtheincreaseinfullservicelifeVRPsintheTheoreticalHighscenariodoesnotcomeatthecostoflowerimpactpartialservicelifeVRPs(refertoUSinFigure60andGermanyinFigure61),thereispotentialforreducedenviron-mentalimpactsthroughincreasedadoptionofVRPs.However,asobservedinBrazil(Figure62)andChina(Figure63),theincreaseinimportsand/ortheoffsetofpartialservicelifeVRPshighlightsthatstrategiesforincorporatingVRPstosupportcirculareconomymustbeconsideredcarefullyinthecontextofeacheconomy.050100150200250300EnergyAvoided(PJ)(c)Est.energyuseavoidedviavehiclepartsVRPsEmbodiedmaterialenergyavoidedProcessenergyavoidedStatusquoStd.openmarketTheoreticalhigh05101520253035404550Std.openmarketTheoreticalhigh(a)Est.production&importlevelsofVRPvehiclepartsEst.VRPproductionEst.VRPimportsStatusquoEst.production&importlevels(106units)068101214161820(d)Est.emissionsavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(MtCO2-eq.)423.73.83.94.04.14.24.34.4StatusquoStd.openmarketTheoreticalhighMaterialuseavoided(Mt)(b)Est.materialuseavoidedviavehiclepartsVRPs122Chapter7–Value-retentionprocesseswithinmarketsFigure61:Estimatedaggregate7-yearimpactsavoidedviaGermanyvehiclepartsproductionwithvalue-retentionprocessesAsobservedintheTheoreticalHighscenarioforBrazil(Figure62),thereductionintherepairshareoftheproductionmixresultsinanetdecreaseinavoidedembodiedmaterialenergy,embodiedmaterialemissions,andprocessenergyandemissions,whencomparedtotheStandardOpenMarketscenario.Inotherwords,whilethereisstillaverylargenet-positiveabsolutereductioninimpacts,theveryhighshareofrepairactivitiesintheBrazileconomydoesallowforrelativelygreateroffsetofembodiedmaterialsenergyandemissions.TheseoutcomesareobservedinthecaseofChinaaswell(Figure63).024681012141618StatusquoStd.openmarketTheoreticalhigh(a)Est.production&importlevelsofVRPvehiclepartsEst.VRPproductionEst.VRPimportsEst.production&importlevels(106units)0102030405060(c)Est.energyuseavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighEnergyAvoided(PJ)EmbodiedmaterialenergyavoidedProcessenergyavoided80700.00.20.40.60.81.01.21.4(b)Est.materialuseavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighMaterialuseavoided(Mt)0123456(d)Est.emissionsavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(MtCO2-eq.)123Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFigure62:Estimatedaggregate7-yearimpactsavoidedviaBrazilvehiclepartsproductionwithvalue-retentionprocesses0510152025303540(c)Est.energyuseavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighEnergyavoided(PJ)EmbodiedmaterialenergyavoidedProcessenergyavoided45012345678910Std.openmarketTheoreticalhigh(a)Est.production&importlevelsofVRPvehiclepartsStatusquoEst.VRPproductionEst.VRPimportsEst.production&importlevels(106units)00.51.01.52.02.53.0(d)Est.emissionsavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(MtCO2-eq.)0100200300400500600700800900(b)Est.materialuseavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighMaterialuseavoided(kt)124Chapter7–Value-retentionprocesseswithinmarketsFigure63:Estimatedaggregate7-yearimpactsavoidedviaChinavehiclepartsproductionwithvalue-retentionprocessesTothisend,thecomplexityofVRPswithinamarketrequirescarefulconsiderationofnotonlythepolicyobjectives(e.g.impactreduction),butalsotheimplicationsofsocialnormsandpractices.Inaddition,whiletheseresultsdirectlymeasureimpactavoidanceinabsoluteterms,itmustberememberedthatthevalueandutilitycreatedviaafullnewproductlifethroughremanufacturingissignificantlygreaterthanthevalueandutilitycreatedviaarrangingdirectreuseandrepair.Inthecaseofvehicleparts,VRPsgenerallyrequirelessper-unitprocessenergy,andthereforerelativelylessassociatedprocessemissions.As01020304050607080StatusquoStd.openmarketTheoreticalhigh(a)Est.production&importlevelsofVRPvehiclepartsEst.VRPproductionEst.VRPimportsEst.production&importlevels(106units)050100150200250300(c)Est.energyuseavoidedviavehiclepartsVRPsStatusquoStd.openmarketTheoreticalhighEnergyAvoided(PJ)EmbodiedmaterialenergyavoidedProcessenergyavoided35040045050001234567(b)Est.MaterialUseAvoidedviaVehiclePartsVRPsStatusquoStd.openmarketTheoreticalhighMaterialuseavoided(Mt)10203040506070Emissionsavoided(MtCO2-eq.)(d)Est.EmissionsAvoidedviaVehiclePartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoided0125Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomysuch,therearenet-positiveavoidedimpactsacrossallmeasuredimpactcategoriesineveryeconomy.7.6AnalysisofHDORequipmentpartssectorTheheavy-dutyandoff-roadsectorconsistsofcompaniesthatproduceequipmentandsystemsusedinthecommercialtrucking,construction,mining,agriculture,andbulktransportationindustries.Thissectorisprimarilyfocusedonmobileequipmentthatishighlydurableandofhighvalue.Theseproductsoftenexperiencehighuseoveranextendedperiod,andtheirservicelifecyclesareoftenmanyyears’longerthangeneralconsumerproducts.ManyofthecomponentsintheHDORequipmentpartssector,forwhichVRPsareemployed,aresimilarinfunctionanddesigntovehiclepartequivalents;however,givenworkloadexpectations,rigorousproductuse,andsignificantwear-and-tear,theyaremuchlargerissize,andaredesignedforgreaterdurabilityandevenscheduledoverhaulrefurbishmentandpreventativemaintenanceactivities.ThenatureandvalueofHDORequipmentpartsaresubstantiallydifferentthantheothercasestudysectorspresentedinthisstudy:thecustomermarketforHDORequipmentpartsistypicallyhighly-spe-cializedandeducatedaboutVRPoptions;inaddition,manyofthemajorproducersofOEMNewHDORequipmentpartsarealsoactivelyengagedinsomedegreeofVRPproduction,andasaresulttherearelargeandrelativelyefficientreverse-logisticssystemsinplacetoenablerefurbishmentandremanufacturing.Often,theseprocessesmaybeofferedaspartofacustomerservicemodelinwhichrefurbishmentactivitiesareplannedforandscheduled.TherigorousoversightofHDORequipmentinthemarket,aswellasthesystemssupportingactivecollectionandreusethroughVRPs,ensuresauniqueperspectiveonVRPsfortheHDORequipmentpartssector.7.6.1HDORequipmentpartsproductionlevelsTheestimatedproductionlevelsofHDORequipmentparts,byOEMNewandVRPproductiontypes,andbyeconomy,arepresentedinFigure64throughFigure67.Alsoshownareestimatedtotaldomesticmarketdemandlevelsforeacheconomy,whichareindicativeoftherelativelevelsofimportedproductstosupplydomesticdemandand/orexportedproducts.RecentHDORequipmentindustryperformancehasshownmarketcontraction,particularlyindeveloped/industrializedeconomiessuchastheUS(Figure64);incontrast,developing/newlyindustri-alizedeconomieslikeBrazilandChinathatofferfavorableproductionincentivesaswellasgrowingdemandfromconstructionandminingindustries,arepoisedforsignificantmarketgrowth(Figure66andFigure67).DespitetherelativelylowproductionshareintheUS,thereisgreatopportunityformaterialefficiencyandimpactreductionthroughVRPs.Aswiththevehiclepartssector,thescale-upofVRPsintheHDORequipmentpartsproductionmixdemonstratesnet-positiveimpactavoidance,tovaryingdegrees,acrosseachstudiedeconomy.Pleasenotethat,sincetheStandardOpenMarketscenarioisreflectiveofsomeoftheUSconditions,thereisnochangetoUSproductionlevelsandassociatedproductionimpactsbetweentheStatusQuoandStandardOpenMarketscenarios.InthecasesofGermanyandBrazil(refertoStandardOpenMarketscenarioinFigure65andFigure66),overallproductionleveldecreasesbecauseofanincreaseintheimport-ratio,imposedasaconditionofthescenario.126126Chapter7–Value-retentionprocesseswithinmarkets0.00.51.01.52.02.53.03.54.04.55.0123456712345671234567StatusquoStd.openmarketTheoreticalhighOEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)Estimatedproduction(106units)Figure64:EstimatedUSproductionofHDORequipmentpartsrelativetoestimateddemandinUS,simulatedover7yearscenarios0246810121416123456712345671234567OEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)StatusquoStd.openmarketTheoreticalhighEstimatedproduction(106units)Figure65:EstimatedGermanyproductionofHDORequipmentpartsrelativetoestimateddemandinGermany,simulatedover7yearscenarios127Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy051015202530354045123456712345671234567OEMNewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)StatusquoStd.openmarketTheoreticalhighEstimatedproduction(106units)Figure66:EstimatedBrazilproductionofHDORequipmentpartsrelativetoestimateddemandinBrazil,simulatedover7yearscenariosItisimportanttonotethereduceddomesticproductionlevelsresultingfromtheimposedscenarioconditions.Inaddition,thedisplacementoflower-impactpartialservicelifeVRPswithhigher-impactfullservicelifeVRPsintheTheoreticalHighscenariosforBrazil(Figure66)andChina(Figure67)reflectsanunrealistictransitionawayfrommorecommonrepairanddirectreuseactivities.ThedecreaseinpotentiallyavoidedimpactsthatresultfromsuchatransitionaredemonstratedinFigure75andFigure76,anddiscussedingreaterdetailinSection7.6.4.01002003004005006007008009001000123456712345671234567OEMnewRemanufacturedRefurbishedRepairDirectreuseEst.totalmarketdemand(units)StatusquoStd.openmarketTheoreticalhighEstimatedproduction(106units)Figure67:EstimatedChinaproductionofHDORequipmentpartsrelativetoestimateddemandinChina,simulatedover7yearscenarios128Chapter7–Value-retentionprocesseswithinmarkets7.6.2Analysisofmaterial-levelimpactsfromhdorequipmentpartsproductionTheproductionlevelandgrowthratesofproductionineacheconomyandscenariobothinformandaffecttheassociatedimpactsthatareofinteresttothisstudy.TheimpactsofproductionarepresentedinFigure68throughFigure71,howeverademonstrativeexampleoftheaggregationapproachisprovidedfirstinthissection,andinSection7.6.3.Aswiththepreviouscasestudysectors,aggregatedproductionissimulatedoveraseven-yearperiod,andtheassociatedimpactsarecalculatedaccordingly.Figure68depictsthenewmaterialsbothusedandavoidedthroughtheincorporationofHDORequipmentpartsremanufacturingforeachoftheseven-years,acrossallthreescenarios,whileFigure69highlightsjustthequantityofnewmaterialsavoidedoverthesameperiodandscenarios.05101520253035404550Totalmaterials(Mt)123456712345671234567StatusquoStd.openmarketTheoreticalhighOEMNew:newmaterialusedRemanufacturing:newmaterialusedRemanufacturing:newmaterialavoidedFigure68:EstimatedaggregatednewmaterialusedandavoidedviaUSremanufacturingofHDORequipmentparts,simulatedover7yearscenariosEvenintheTheoreticalHighscenario,thelowershareofVRPsintheUSproductionmix(relativetoOEMNewproduction)constrainsthepotentialforavoidednegativeenvironmentalimpacts,asshowninFigure68andFigure69.129Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy00.20.40.60.81.01.21.41.6Totalnewmaterialavoided(Mt)123456712345671234567StatusquoStd.openmarketTheoreticalhighFigure69:EstimatedaggregatenewmaterialavoidedviaUSremanufacturingofHDORequipmentparts,simulatedover7yearscenarios7.6.3AggregationofimpactsfromHDORequipmentpartsproductionFromtheabsolutematerial,energyandemissionsdatageneratedovertheseven-yearsimulation,anaggregatevaluefortheentireperiodiscalculated.Figure70describes,asanexample,thecumulativenewmaterialthatisbothusedandavoided,whencomparingUSHDORequipmentpartsproductionviaOEMNewversusremanufacturingprocesses.TheimplicationsoftherelativelysmallerproductionshareofVRPsintheHDORequipmentpartssectorisclearlyobservableinFigure70,withasignifi-cantlylesserquantityofnewmaterialoffset.Asemphasizedbefore,however,itisimportanttonotethatdespitetheapparently‘smaller’magnitudeofmaterialavoided,thereisstillasignificantbenefitcreatedintermsofabsolutequantityofnewmaterialthatisoffsetthroughtheapplicationofVRPproduction.130Chapter7–Value-retentionprocesseswithinmarkets050100150200250300350OEMnewRemanOEMNewRemanOEMnewRemanStatusquoStd.openmarketTheoreticalhighTotalnewmaterial(Mt)NewmaterialusedNewmaterialavoidedFigure70:Comparisonofaggregate7-yearnewmaterialusedandavoidedviaUSremanufacturingofHDORequipmentpartsThesubstantialsizeanddesigneddurabilityofHDORequipmentpartsrequiresasignificantvolumeofmaterialinputattheper-unitlevel;inaddition,theproductionprocessisquiteenergyintensive.Assuch,thereareopportunitiesforreductioninmaterialrequirement,embodiedenergyandemissions,andprocessenergyandemissionsintheUSmarketthroughtheincreasedadoptionofVRPsintheproductionmix(Figure71andFigure72).Theseopportunitiesincreaseexponentiallyfordeveloping/newlyindustrializedmarketsinwhichHDORequipmentpartsproductionissubstantiallyhigherand/orisexpectedtogrowsignificantly.PleaserefertoBrazil(Figure75)andChina(Figure76).020004000600080001000012000OEMnewAllVRPsOEMnewAllVRPsOEMnewAllVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialsenergyProcessenergyEnergyimpact(PJ)14000160001800020000Figure71:Estimatedaggregate7-yearembodiedandprocess-basedenergyforUSproductionofHDORequipmentparts131Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy02004006008001000OEMnewAllVRPsOEMnewAllVRPsOEMnewAllVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialsemissionsProcessemissionsEmissionsimpact(MtCO2-eq.)120014001600Figure72:Estimatedaggregate7-yearembodiedandprocess-basedenergyforUSproductionofHDORequipmentparts7.6.4HDORequipmentpartssector:impactsavoidedthroughvalue-retentionprocessesUsingtheapproachdescribedinSections7.6.2and7.6.3,theaggregatedimpactsthatareavoidedineacheconomyasaresultofVRPHDORequipmentpartsproduceddomesticallyandimportedareestimatedandpresentedinFigure73(US),Figure74(Germany),Figure75(Brazil),andFigure76(China).Foreachofthesefigures,estimatedproductionandimportlevelsofVRPHDORequipmentpartsaredepictedinpanel(a);estimatedmaterialuseavoidedasaresultofVRPproductionaredepictedinpanel(b);estimatedembodiedandprocessenergyuseavoidedasaresultofVRPproductionaredepictedinpanel(c);andestimatedembodiedandprocessemissionsavoidedasaresultofVRPproductionaredepictedinpanel(d).Inreviewoftheseresults,itisimportanttonotethedifferingscales:notonlydoproductionlevelsvarysignificantlyacrosstheseeconomies,butthefactorsinfluencingtheassociatedimpactsofproductionalsovarysignificantly.132Chapter7–Value-retentionprocesseswithinmarketsFigure73:Estimatedaggregate7-yearimpactsavoidedviaUSHDORequipmentpartsproductionwithvalue-retentionprocessesIneachsampleeconomytheincreaseinVRPproductionandimportsacrossthethreescenariosiscorrelatedtoanincreaseinavoidednegativeenvironmentalimpacts,tovaryingdegrees.InChina,whereadoptionofVRPsundertheTheoreticalHighscenarioismostsignificant(Figure67),thecorrelatedincreaseinestimatedavoidedimpactsishighlighted(Figure76).0.00.51.01.52.02.53.03.54.04.5StatusquoStd.openmarketTheoreticalhighEst.VRPproductionEst.VRPimports(a)Est.production&importlevelsofVRPHDORequipmentpartsEst.production&importlevels(106units)02004006008001000(c)Est.energyuseavoidedviaHDORequipmentpartsVRPsEnergyavoided(PJ)EmbodiedmaterialenergyavoidedStatusquoStd.openmarketTheoreticalhighProcessenergyavoided12001400160002468101214161820(b)Est.materialuseavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighMaterialuseavoided(Mt)020406080100120(d)Est.emissionsavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(MtCO2-eq.)133Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFigure74:Estimatedaggregate7-yearimpactsavoidedviaGermanyHDORequipmentpartsproductionwithvalue-retentionprocessesTothisend,thecomplexityofVRPswithinamarketrequirescarefulconsiderationofnotonlythepolicyobjectives(e.g.impactreduction),butalsotheimplicationsoftraderatiosandbalances,aswellassocialnormsandpractices.Overall,therearenet-positiveavoidedimpactsacrossallmeasuredimpactcategoriesineveryeconomy.02000400060008000(c)Est.energyuseavoidedviaHDORequipmentStatusquoStd.openmarketTheoreticalhighEnergyavoided(PJ)EmbodiedmaterialenergyavoidedProcessenergyavoided10000120001400005101520253035StatusquoStd.openmarketTheoreticalhigh(a)Est.production&importlevelsofVRPHDORequipmentpartsEst.VRPproductionEst.VRPimportsEst.production&importlevels(106units)0100200300400500600700800900(d)Est.emissionsavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(MtCO2-eq.)020406080100120140160180200(b)Est.materialuseavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighMaterialuseavoided(Mt)134134Chapter7–Value-retentionprocesseswithinmarketsFigure75:Estimatedaggregate7-yearimpactsavoidedviaBrazilHDORequipmentpartsproductionwithvalue-retentionprocesses020406080100120StatusquoStd.openmarketTheoreticalhigh(a)Est.production&importlevelsofVRPHDORequipmentpartsEst.VRPproductionEst.VRPimportsEst.production&importlevels(106units)0200040006000800010000(c)Est.energyuseavoidedviaHDORequipmentStatusquoStd.openmarketTheoreticalhighEnergyavoided(PJ)EmbodiedmaterialenergyavoidedProcessenergyavoided12000050100150200250300(b)Est.materialuseavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighMaterialuseavoided(Mt)050100150200250300350(d)Est.emissionsavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(MtCO2-eq.)400450135Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFigure76:Estimatedaggregate7-yearimpactsavoidedviaChinaHDORequipmentpartsproductionwithvalue-retentionprocesses020000400006000080000100000120000(c)Est.energyuseavoidedviaHDORequipmentStatusquoStd.openmarketTheoreticalhighEnergyavoided(PJ)EmbodiedmaterialenergyavoidedProcessenergyavoided140000160000180000200000020040060080010001200140016001800StatusquoStd.openmarketTheoreticalhigh(a)Est.production&importlevelsofVRPHDORequipmentpartsEst.VRPproductionEst.VRPimportsEst.production&importlevels(106units)0510152025(d)Est.emissionsavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighEmbodiedmaterialemissionsavoidedProcessemissionsavoidedEmissionsavoided(GtCO2-eq.)050010001500200025003000(b)Est.materialuseavoidedviaHDORequipmentpartsVRPsStatusquoStd.openmarketTheoreticalhighMaterialuseavoided(Mt)1361378DiscussionofkeyinsightsAsindicated,aprimaryobjectiveofthisassessmentistoevaluatewhetherinnovationwithintheproductionprocesscanenablereducednegativeenvironmentalimpactsofproductionwithoutcompromisingeconomicopportunityandthesatisfactionofconsumerneeds.Thefollowingsectionsdescribetheimplicationsofproduct-andeconomy-levelenvironmentalandeconomicimpactsassociatedwithVRPs.Thepursuitofacirculareconomyisfocusedonimprovingtheretentionofvaluewithinthesystemasastrategyforreducingthepressuresanddemandsonournaturalresources.Fromthisassessment,theinclusionofVRPsaspartofaproductdesignandbusinessmodelplan,andasanincreasingshareofaneconomy’sproductionmix,presentsaviableandessentialstrategyforcirculareconomyandtheinherentbenefitsthereof.ItmustbenotedthattheoutcomesofthesecasestudyproductsandsampleeconomiesdonotprovideuniversalconclusionsandinsightsaboutthepotentialforVRPsand/orcirculareconomytoreduceenvironmentaldamageandincreaseeconomicopportunity.Ashighlightedpreviously,theuniquenatureoftheproduct(refertoSection5)andcomplexsystemconditions(refertoSection6)cansignificantlyimpactwhether,andtowhatextent,environmentalandeconomicobjectivescanbeachieved.Thefollowingsectionsorganizethemajorfindingsandinsightsofthisassessmentintofourmainstrategiccategories:1)thenet-positiveoutcomesthatareenabledwhenVRPsareincorporatedintotheproduct-systemandasanincreasingpartofaneconomy’sproductionmix;2)thevalueandnecessityofexpandingtheboundariesofproduct-relateddecisionstoconsidertheproductwithinthebroadersystemthatitwillexistwithinforitslife-cycle(product-system);3)theimportanceofidentifyingandunderstandingthesystemicbarriersthatconstrainthescale-upofVRPs,withtheobjectiveofstrategicallyalleviatingthesetohelpmeetnationaleconomicandenvironmentalobjectives;and4)therealityofcurrentsystemmechanicsanddynamics,includingtheriskofreboundeffects,thataffecttheintegrationofVRPswithinacirculareconomy.8.1Value-retentionprocessescreatenet-positiveoutcomesforcirculareconomyAcrosseachoftheimpactmetricsanalyzedwithinthisstudy,aclearandapparentnet-positiveoutcomewasobservedinalmostallcases.Whiletheenvironmentalimpactsoftheuse-phaseofcasestudyproductsisbeyondthescopeofthisassessment,thereareenvironmentalimpactreductionopportunitiesthatcanberealizedinthepre-andpost-consumerstagesofaproduct’slifecycle(c.f.Cooperetal.2017)8.1.1Value-retentionprocessesarenotcreatedequalStudiesonthebroad-scalepotentialofcirculareconomyarestartingtoappear(Cooperetal.2017,EllenMacArthurFoundation2013a,2016,WorldRedefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyEconomicForumandEllenMacArthurFoundation2014).Cooperetal.(2017)assessedglobalimplicationsofcirculareconomyforindustrialenergyuse,usinganinput-outputbasedmodelfocusedonfullsupplychainembodiedenergyatthematerialslevel.Althoughadifferentmethodologyfocusedonprimaryenergyextractionandenergydissipation,Cooperetal.(2017)utilizedmanycommonassumptionsnecessaryforhigher-levelmodelingofcirculareconomy:acknowledgingflowsofmaterialsbetweennationaleconomies,andthereforesharedeffectsofcirculareconomyforbothproducingandconsumingsocieties.Althoughaggregatedviaadifferentmethodandperspective,thesefindingsdemonstratedthepotentialforcirculareconomytocontributetoareductionofsupplychainembodiedenergyof6percent-11percentatthegloballevel(Cooperetal.2017).Asrevealedinthereviewandcasestudiesofthisreport,themagnitudeofenvironmentalimpactavoided,economicopportunitycreated,andultimatelythevalueretainedwithinthesystem,dependsuponthespecificVRPthatisemployed.AshighlightedinSection3,andinthesummarypresentedinFigure77,VRPscanbedividedintotwogroupsorcategories:(1)Equivalentfullservicelifeprocesses,whichenableafull,oralmostfullnewservicelifeoftheproduct;and(2)Partialservicelifeprocesses,whichenableapartialextensionoftheservicelifeoftheproduct.AssociatedwiththeservicelifeandthespecificVRP,differingdegreesofvaluecreation,value-retention,andthereforeutilityforthecustomer,canbeachieved.Whenconsideredinthecontextoftheprocessdefinitions(refertoSection2),andthesubsequentqualityandperformanceoftheVRPproduct,itbecomesclearthatdifferentVRPsareappropriatefordifferentobjectives.Remanufacturingandcompre-hensiverefurbishment(equivalentfullservicelifeprocesses)bothaddandretainrelativelygreatervalueinthesystemintermsofbothmaterialsandfunctionalformthanpartialservicelifeprocesses;FullservicelifeVRPs(Occurwithinfactoryoperation)OEMNEW(MANUFACTURING)REMANUFACTURINGCOMPREHENSIVEREFURBISHMENTPartialservicelifeVRPs(Occurwithinnon-factoryoperation)ARRANGINGDIRECTREUSEREPAIRREFURBISHMENTThisonlyexistsforcertainsectorsandproducts.MANUFACTUREDMANUFACTUREDEOLEOLEOUEOUREMANUFACTURINGREMANUFACTURINGFullservicelifeCOMPREHENSIVEREFURBISHMENTARRANGINGDIRECTREUSEREPAIRREFURBISHMENTEXPECTEDEOLEXPECTEDEOUEXPECTEDEOLEXPECTEDEOUEXPECTEDEOLEXPECTEDEOLEXPECTEDEOLEOUMANUFACTUREDMANUFACTUREDMANUFACTUREDMANUFACTUREDEOLFullservicelifeFigure77:Summaryofvalue-retentionprocessdifferentiationwithinthecontextofEOUandEOL138Chapter8–Discussionofkeyinsightshowever,forsomeproductsandeconomiestheserelativelymoreintensiveindustrialprocessesmayincreasetherelativeprocessenergyrequirementandassociatedprocessemissionsaswell.Thiswasobservedincasestudiesofindustrialdigitalprinters.Atthesametime,therigorousindustrialprocesscanleadtogreatereconomicopportu-nitiesintheformofincreasedlaborrequirement,decreasedwastemanagementcosts,andgreaterutility,viarelativepriceandquality,forthecustomer.Asareminder,thelengthofthelinesinFigure77areonlyintendedtoreflectrelativeservicelifedurationenabledbydifferentVRPs,anddonotsuggestquantifiedactualservicelifeduration.ThedottedlinesreflectpotentialservicelifeextensionenabledbyeachVRP,ascomparedtotheservicelifeguaranteesindicatedbythesolidlines.Incontrast,arrangingdirectreuse,repair,andrefurbishment(partialservicelifeprocesses)canbeundertakenatarelativelylowercostthanfullservicelifeprocesses,enablingcustomerswithbudgetconstraintstocontinueparticipatinginthemarket;andtheycanbecompletedwithlessermaterialrequirement,energyrequirementandassociatedemissionsandwaste.However,partialservicelifeprocessesofferrelativelylimitedvalueandutilitytothecustomerandretainlessvalueinthesystemovertime.Thecasestudiesofthisassessmentshowmoresignificantvalue-retentionopportunitiesstemfromremanufacturingandcomprehensiverefurbishmentratherthanfromdirectreuseandrepairactivitiesattheproduct-level.ThespecificimpactavoidanceandeconomicopportunitypotentialcreatedbyeachdifferentVRPforeachofthecasestudyproductsarefurtherclarifiedinSections8.1.2and8.1.4,respectively.8.1.2Product-levelefficiencygainsleadtoeconomy-levelefficiencygainsAttheproduct-level,offset(reduced)embodiedenergyandemissionscreateimmediateandobviousrangesofpotentialimpactreductionandvalue-retentionassociatedwiththeadoptionofVRPs,aspresentedinSection7.3,andhighlightedinTable16throughTable20.Themagnitudeandnatureoftheseimpactreductionandimpactavoidancerangescanbeattributedtotwokeyfactors:1)theproducttype;and2)thenatureoftheVRPbeingemployed(SeeSection8.1.3).AsthenumbersofVRPproductsaspartofaneconomy’sproductionmixincreases,theimpactreductionpotentialbecomessignificant,ashighlightedinSections7.4.4,7.5.5,and7.6.4,respectively.Thecomparativedifferencesbetweentheenviron-mentalimpacts,enabledbythepresenceofVRPswithinaneconomy’sproductionmix,aredemonstratedinFigure78throughFigure83,whereexampleproductsfromeachsectorareshownunderUSconditions.ItisimportanttoconsiderthatalthoughthefullservicelifeVRPs(e.g.remanu-facturingandcomprehensiverefurbishment)showrelativelygreaternegativeimpactsthanpartialservicelifeVRPs,theyalsoretaingreatervaluewithintheproduct,andenablegreaterutilityforthecustomerovertimeThevaluespresentedinthetablesbelowreflectUS-basedempiricalproduct-levelcasestudyresultsperunit.Inthecaseofmaterialsinputandenergyconsumptionforremanufacturingofvehicleparts,theseresultsarealignedwiththeliteraturefromstudiesinotherjurisdictions,includingChina(SmithandKeoleian2004,Liuetal.2014,Liuetal.2018).Itmustbenoted,asdiscussedingreaterdetailinSection8.2.4,thatVRPsmaynotbeappropriateforallproducts:Therangespresentedinthetablesbelowreflecttherelativepotentialproduct-levelenvironmentalbenefits(impactavoidance)thatwereobservedforthecasestudyproducts,andmaybepossibleforotherproductsandsectorsunderthenecessaryconditions.139Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTable16:Summaryrangesofrelativepotentialproduct-levelmaterialvalueretentionviaVRPsCasestudyindustrialdigitalprintersCasestudyvehiclepartsCasestudyHDORequipmentpartsMaterialvalue-retentionrange(kg/unitvs.OEMnew)Materialvalue-retentionrange(kg/unitvs.OEMnew)Materialvalue-retentionrange(kg/unitvs.OEMnew)LowHighLowHighLowHighRemanufacturing91%98%80%95%81%91%Comprehensiverefurbishment95%99%––82%82%Repair99%99%96%99%94%99%Arrangingdirectreuse100%100%100%100%––Table17:Summaryrangesofrelativepotentialproduct-levelembodiedmaterialenergyavoidanceviaVRPsCasestudyindustrialdigitalprintersCasestudyvehiclepartsCasestudyHDORequipmentpartsEmbodiedenergyavoidedrange(MJ/unitvs.OEMnew)Embodiedenergyavoidedrange(MJ/unitvs.OEMnew)Embodiedenergyavoidedrange(MJ/unitvs.OEMnew)LowHighLowHighLowHighRemanufacturing87%99%80%96%79%90%Comprehensiverefurbishment92%99%––80%80%Repair99%99%97%99%93%99%Arrangingdirectreuse100%100%100%100%––Table18:Summaryrangesofrelativepotentialproduct-levelembodiedmaterialemissionsavoidanceviaVRPsCasestudyindustrialdigitalprintersCasestudyvehiclepartsCasestudyHDORequipmentpartsEmbodiedemissionsavoidedrange(kgCO2-eq./unitvs.OEMnew)Embodiedemissionsavoidedrange(kgCO2-eq./unitvs.OEMnew)Embodiedemissionsavoidedrange(kgCO2-eq./unitvs.OEMnew)LowHighLowHighLowHighRemanufacturing86%99%80%96%79%90%Comprehensiverefurbishment92%99%––80%80%Repair99%99%97%99%93%99%Arrangingdirectreuse100%100%100%100%––140Chapter8–DiscussionofkeyinsightsThepotentialreductioninembodiedmaterialsenergyenabledbyVRPs(refertoTable17)supportsthesimilarlyscopedstudyandfindingsofCooperetal.(2017),whodeterminedapotentialreductionof6percent–11percentofglobalindustrialenergyuserelatedtoeconomicactivity.ItmustbenotedthatVRPsrepresentonlysomeofthecirculareconomyapproachesincorporatedintothestudybyCooperetal.(2017).Table19:Summaryrangesofrelativepotentialproduct-levelprocessenergyavoidanceviaVRPsCasestudyindustrialdigitalprintersCasestudyvehiclepartsCasestudyHDORequipmentpartsProcessenergyavoidedrange(MJ/unitvs.OEMnew)Processenergyavoidedrange(MJ/unitvs.OEMnew)Processenergyavoidedrange(MJ/unitvs.OEMnew)LowHighLowHighLowHighRemanufacturing57%64%65%87%65%87%Comprehensiverefurbishment69%85%––74%74%Repair100%100%100%100%100%100%Arrangingdirectreuse100%100%100%100%––Themagnitudeandnatureoftheseimpactreductionandimpactavoidancerangescanbeattributedtotwokeyfactors:(1)theproducttype;and(2)thenatureoftheVRPbeingemployed(refertoSection8.1.3).AsthenumbersofVRPproductsaspartofaneconomy’sproductionmixincreases,theimpactreductionpotentialbecomessignificant,ashighlightedinSections7.4.4,7.5.5,and7.6.4,respectively.Thecomparativedifferencesbetweentheenviron-mentalimpacts,enabledbythepresenceofVRPswithinaneconomy’sproductionmix,aredemonstratedinFigure78throughFigure83,whereexampleproductsfromeachsectorareshownunderUSconditions.ItisimportanttoconsiderthatalthoughthefullservicelifeVRPs(e.g.remanu-facturingandcomprehensiverefurbishment)showrelativelygreaternegativeimpactsthanpartialservicelifeVRPs,theyalsoretaingreatervaluewithintheproduct,andenablegreaterutilityforthecustomerovertime.Table20:Summaryrangesofrelativepotentialproduct-levelprocessemissionsavoidanceviaVRPsCasestudyindustrialdigitalprintersCasestudyvehiclePartsCasestudyHDORequipmentpartsProcessemissionsavoidedrange(kgCO2-eq./unitvs.OEMnew)Processemissionsavoidedrange(kgCO2-eq./unitvs.OEMnew)Processemissionsavoidedrange(kgCO2-eq./unitvs.OEMnew)LowHighLowHighLowHighRemanufacturing57%64%65%87%65%87%Comprehensiverefurbishment69%85%––74%74%Repair100%100%100%100%100%100%Arrangingdirectreuse100%100%100%100%––141Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFigure78:ComparativeenvironmentalimpactsofVRPsforUSindustrialdigitalprintingpress0.0592.20.00.00100200300400500600700ArrangingdirectreuseRepair(c)ComparativeenergyimpactsofpartialservicelifeVRPsEnergyimpacts(MJ/unit)Embodiedmaterialsenergy(globalaverage)USprocessenergyPartialservicelifeOEMNewRemanufacturingComprehensiverefurbishmentFullservicelifeEnergyimpacts(GJ/unit)(a)ComparativeenergyimpactsoffullservicelifevrpsEmbodiedmaterialsenergy(globalaverage)USprocessenergy253.98.56.299.936.314.80501001502002503000.044.60.00.005101520253035404550ArrangingdirectreuseRepair(d)ComparativeemissionsimpactsofpartialservicelifeVRPsEmbodiedmaterialsemissions(globalaverage)USprocessemissionsPartialservicelifeEmissionsavoided(kgCO2-eq./unit)OEMnewRemanufacturingComprehensiveFullservicelife(b)ComparativeemissionsimpactsoffullservicelifeVRPsEmissionsImpacts(tCO2-eq./unit)Embodiedmaterialsemissions(Globalaverage)USprocessemissions32.30.80.57.22.61.105101520253035142142Chapter8–DiscussionofkeyinsightsFigure79:ComparativeenvironmentalimpactsofVRPsforUStraditionalvehicleengine0102030405060(c)ComparativeenergyimpactsofpartialservicelifeVRPsPartialservicelifeArrangingdirectreuseRepair0.050.4Energyimpacts(MJ/unit)Embodiedmaterialsenergy(globalaverage)USprocessenergyRemanufacturing(a)ComparativeenergyimpactsoffullservicelifeVRPsOEMnewEnergyimpacts(GJ/unit)Embodiedmaterialsenergy(globalaverage)USprocessenergyFullservicelife5.70.411.13.902468101200.51.01.52.02.53.03.5(d)ComparativeemissionsimpactsofpartialservicelifeVRPsPartialservicelifeArrangingdirectreuseRepair3.10.0Embodiedmaterialsemissions(globalaverage)USprocessemissionsEmissionsavoided(kgCO2-eq./unit)RemanufacturingFullservicelife(b)ComparativeemissionsimpactsoffullservicelifeVRPsOEMnewEmissionsImpacts(tCO2-eq./unit)Embodiedmaterialsemissions(Globalaverage)USprocessemissions0.390.020.80.30.00.10.20.30.40.50.60.70.80.9143Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFigure80:ComparativeenvironmentalimpactsofVRPsforUSHDORengine0101214161820(c)ComparativeenergyimpactsofpartialserviceVRPsPartialservicelifeArrangingdirectreuseRepair0.017.38642Energyimpacts(GJ/unit)Embodiedmaterialsenergy(globalaverage)USprocessenergyRemanufacturingFullservicelife(a)ComparativeenergyimpactsoffullserviceVRPsOEMnewComprehensiverefurbishmentEnergyimpacts(GJ/unit)Embodiedmaterialsenergy(globalaverage)USprocessenergy253.852.050.41205.3421.6316.2020040060080010001200140004006008001000120014001600(d)ComparativeemissionsimpactsofpartialserviceVRPsPartialservicelifeArrangingdirectreuseRepair1394.30.0200Embodiedmaterialsemissions(globalaverage)USprocessemissionsEmissionsavoided(kgCO2-eq./unit)OEMnewRemanufacturingComprehensiverefurbishmentFullservicelife(b)ComparativeemissionsimpactsoffullserviceVRPsEmissionsImpacts(tCO2-eq./unit)Embodiedmaterialsemissions(Globalaverage)USprocessemissions20.04.14.086.930.422.80.010.020.030.040.050.060.070.080.090.0100.0144Chapter8–DiscussionofkeyinsightsRemanufacturingFullservicelifeMaterialimpacts(kg/unit)(a)ComparativematerialimpactsoffullservicelifeVRPsAveragenewmaterialrequirementAverageproductionwastegenerationOEMnew25002000100050001500Comprehensiverefurbishment2283.4123.3228.321.16.661.5051015202530ArrangingdirectreuseRepairPartialservicelife(b)ComparativematerialimpactsofpartialservicelifeVRPsMaterialimpacts(kg/unit)AveragenewmaterialrequirementAverageproductionwastegeneration0.00.027.62.7Figure81:ComparativematerialimpactsofVRPsforUSindustrialdigitalprintingpress145Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyRemanufacturingFullservicelifeMaterialimpacts(kg/unit)(a)ComparativematerialimpactsoffullservicelifeVRPsAveragenewmaterialrequirementAverageproductionwastegenerationOEMnew140120806001004020124.800.10.20.30.40.50.6ArrangingdirectreuseRepairPartialservicelife(b)ComparativematerialimpactsofpartialservicelifeVRPsMaterialimpacts(kg/unit)AveragenewmaterialrequirementAverageproductionwastegeneration0.00.00.50.0118.75.41.9Figure82:ComparativematerialimpactsofVRPsforUStraditionalvehicleengine146Chapter8–DiscussionofkeyinsightsRemanufacturingFullservicelife(a)ComparativematerialimpactsoffullserviceVRPsAveragenewmaterialrequirementAverageproductionwastegenerationOEMnew1286010420300400500600700800ArrangingdirectreuseRepairPartialservicelife(b)ComparativematerialimpactsofpartialserviceVRPsMaterialimpacts(kg/unit)AveragenewmaterialrequirementAverageproductionwastegeneration0.00.0710.4Comprehensiverefurbishment10.81.62.20.12.10.3106.3200100Materialimpacts(t/unit)Figure83:ComparativematerialimpactsofVRPsforUSHDORengineThereisoftenaperceptionthatthepursuitofsustainabilitymustcomeataneconomiccost.Whilethisperceptionmaybewarrantedinashort-termcontext,thisassessmenthasrevealedthat,throughtheadoptionofVRPs,significantimpactreductioncanbeachievedatthesametimethateconomicopportunity,includingreducedproductioncostsandpotentialnewcustomerand147Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyconsumersegments,iscreated,albeitatdifferentlevelsforeachdifferentVRP(Figure81,Figure82andFigure83).AsdemonstratedinSection5.3andthecomparativeimpactshighlightedinFigure81,Figure82,andFigure83,thereductioninnewmaterialinputrequirement,andtheembodiedvalueinherentinthealready-functionalform,ensurethatVRPscanoffsetasignificantshareofcoststhatwouldotherwiseberequiredforOEMNewproduction.Thiscostadvantagetotheproducer,typicallyintherangeofa30percent–80percentreductionversustheOEMNewproduct,generatesadditionaleconomicopportunitiesinseveralways:first,withloweroperatingcoststherearefewercostbarrierstoentryintothemarketplaceforpotentialVRPproducers,andthiscansupportandenablefasterscale-upwithindomesticindustry;andsecond,loweroperatingcostsenableVRPproducerstopassthecostadvantagealongtotheircustomers.Lower-pricedVRPproductoptionsinthemarketcanenablenewsegmentsofcustomerstoparticipatewherebudgetconstraintsmaypreviouslyhavepreventedsuchengagement(Atasu,Sarvary,andVanWassenhove2008,Debo,Toktay,andWassenhove2006,Debo,Toktay,andVanWassenhove2005,Hamzaoui-EssoussiandLinton2014,Hazenetal.2012).ThisisparticularlytrueinmarketswhereaccesstoVRPproductshasbeenhistoricallyconstrained,asobservedintheStandardOpenMarketandTheoreticalHighscenariosforBrazilandChina.BeingabletopositionVRPproductsatalowerprice-point,eveninunconstrainedmarketsliketheUS,canenableVRPproducerstocompetemoreeffectivelyagainstlower-pricedoptions,onceagaincreatingthepotentialforfasteradoptionandscale-upinthedomesticeconomy.WhenaggregatedtothelevelofacomplexeconomywithamixtureofdifferentOEMNewandVRPproductionactivities,net-positiveoutcomescontinuetobeobservedforthecasestudyproductsinthesampleeconomies.Whilethemagnitudeofimpacts-avoidedisdirectlyrelatedtothesizeofthecasestudysectorsineachstudiedeconomy,therelativepositiveoutcomeofavoidedimpactscanbeobservedacrosseachsectorandeconomy.Theseobservationshighlighttheimportanceofutilizingasystems-viewwhenassessingthepotentialforVRPswithinthecirculareconomy:1.AnyincreaseinVRPproductionreducesaveragenewmaterialdemand,andinotherwords,createsanopportunitytoavoidrequirementfornewmaterials.UndertheStandardOpenMarketandTheoreticalHighscenarios,theincreaseinVRPproductionwithineachsampleeconomyshowcasesthepotentialforsignificantreductionsinaggregatenewmaterialrequirements.Thisisparticularlysignificantforproductsthatrequirelargequantitiesofenergy-intensivematerials,suchasindustrialdigitalprinters.2.Theavoidanceofnewmaterialinputscreatessignificantbenefitsintheavoidedembodiedmaterialsenergyandembodiedmaterialemissionsimpactsthatwouldotherwisebeincurredthroughtheextractionandprimaryprocessingofthosenewinputmaterials.RegardlessofwhichVRPisadopted,anet-positivereductioninembodiedenergyandembodiedemissionsisconsistentlyobservedacrosseverysectorandeconomy.3.InverselycorrelatedtotheincreaseinVRPproductionistherelativedecreaseinproductionwaste.InthecaseofvehiclepartsandHDORequipmentparts,asignificantamountofproductionwasteisgeneratedthroughthetransformationofnewmaterialinputsintoanOEMNewproduct.ThesignificantretentionofthefunctionalformandmaterialvalueofcomponentpartsenabledviaVRPsthusalsooffsetstheproductionwasteassociatedwithoriginalproduction.8.1.3Producttypeaffectspossiblegainsfromvalue-retentionprocessesAnimportantinsightfromthisassessmentisthatproducttypeanddesignhaveimportantrolestoplayindeterminingthemagnitudeofvalueretentionandimpactavoidancepotential.Morespecifically,thepotentialbenefitsfromVRPsaretiedtothenatureoftheproductandproductarchitecture(refertoSection8.2.4formoredetaileddiscussion),andrelatestowhethertheVRPisappliedtothe‘whole’product,ortoproduct‘components’,asexemplifiedbyindustrialdigitalprinters,andvehicleparts,comparatively.Assuch,theinterconnectivityandconsiderationofappropriatenessbetweentheproductandtheVRPmustbeconsideredasa148Chapter8–Discussionofkeyinsightsdesignpriority.Thishighlightsfurtherthenecessityforadoptingaproduct-systemapproach,whichisdiscussedingreaterdetailinSection8.5.Thenatureofproductslikeindustrialdigitalprintersisthat,despiteotherdesignconsiderations,theyaredesignedtobeasingleproductwithinasingleproduct-system.Inotherwords,whenanindustrialdigitalprinterfailsinawaythatcannotberepaired,itistypicalforthecustomertorequireanewindustrialdigitalprinter.ThisallowstheOEMtohavegreatercontrolovertheentiresystemandmakesitmucheasiertodesigntheproductandsystemforVRPs.Thisenhancedlevelofcontrol,resultingfromtheproductbeinga‘whole’product,meansthatforindustrialdigitalprinterstherecanbeanentireinfrastructureinplacetoensurethatvalueretentioncanbemaximizedinthesystemthroughVRPs.Inmoregeneralterms,whentheproductis,inandofitselfa‘wholesystem’(versuspartsorspares),ithasbeendesignedtoworkasacompleteunit(e.g.productinformationstaysrelativelymoreintact),andtheopportunityandabilitytoretainvalueinthesystemandfostergreatermaterialefficiencyismuchhigher.Forthesereasons,theOEMofthesetypesof‘whole’productshaveanadvantageouspositioninbeingabletoconstructandcontroltheproduct-systemapproaches.Asindicated,higherEOUcollectionandVRPreuserateswereobservedforthesecasestudyproductswhentheOEMwasengagedinreverse-logisticsandVRPs.Assuch,engagementofOEMsisacentralandessentialstrategyforenhancingtheefficiencyofthesystemssupporting‘whole’productVRPsglobally.Incontrast,productslikevehiclepartsrepresentonlyasmallpartoftheentirevehicle(whichisitselfa‘wholesystem’)andareoftenproducedacrossamuchbroaderandmorecomplexsupplychainsystem.Inotherwords,whenavehiclepartfailsinawaythatcannotberepaired,itistypicalforthecustomertoreplacethevehiclepart,nottheentirevehicle.WhilecompatibilitywithOEMvehicledesignisessential,thereisalsosignificantspaceinthismarketforpartssupplierstoengageintheproductionofreplacementpartsandspares,separatefromtheOEM.Inthismoredecentralizedproductsystem,thereisimplicitlygreatercomplexityandlesscontrol.Inadditiontoalargernumberofsupplychainplayers,therearesignifi-cantlymorecustomers;asonlysmallcomponentsofawholevehicle,thereverse-logisticsassociatedwithcollectionvehiclepartsforVRPscanbemoreintricateandcostly.Inthecaseofvehicleparts,itisalsoveryeasyforcustomerstosecurelower-costreplacementpartswithouthavingtodealwiththeOEM.Inmoregeneralterms,whentheproductcanonlybeutilizedasacomponentpartofanotherproduct,theopportunityandabilitytoretainvalueinthesystemandfostergreatermaterialefficiencyismorechallenging,andgreatercollaborationbetweenOEMs,VRPproducers,andthird-partyreverse-logisticsentitiesmayberequired.AsexpandedoninSection8.2.4,thecomplexnatureofVRPproducts,processesandbusinessmodelsmeansthatthecostsofpursuingVRPs,andthepotentialenvironmentalandeconomicbenefits,canvarysignificantlyfordifferentfirms.ThedecisiontopursueVRPsmustbeacarefullyconsideredandstrategicchoicebyindustrydecision-makers.8.1.4ImpactavoidancepotentialthroughbarrieralleviationInadditiontotheeconomy-,process-,andproductsector-specificinsightsoutlinedintheprevioussections,therearesomeoverarchinginsightsthatcanbeobservedfromtheTheoreticalHighscenario,inwhichbarriersarealleviatedinanexaggeratedsimulation.Assumingcurrentdesignandtechnologicalconditions,theUSandGermaneconomiesthatdonotfacesignificanttechnologicalorregulatorybarriersdonotseesignificantmarketdemandgrowthbeyondtheexpectedcompoundannualgrowthrates(CAGR)estimatesspecifictoeachcasestudyproductandsector.However,astheshareofVRPsintheproductionmixincreasesunderthedifferentscenarioconditions,net-positiveavoidedimpactsofembodiedmaterialenergyrequirement,embodiedmaterialemissionsgeneration,andmaterialconsumptionareobserved(refertoFiguresinSections7.4.1,7.5.1,and7.6.1).Incontrast,theeconomiesofBrazilandChina,assumingcurrent-stateregulatory,technological,market,andinfrastructureconditions,doshowmarketdemandgrowthopportunitybeyondtheexpectedcasestudyproductandsectorCAGR,inboththeStandardOpenMarketandTheoreticalHighforVRPProductsscenarios.ThisadditionalgrowthisattributedtoincreasedaccessbywayofbarriersalleviationtoVRPproducts,previouslyunavailableunderStatusQuoconditions,asnew149Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyproducersandconsumersengageintheVRPsandVRPproducts.Customerspreviouslyunabletoparticipateinthemarketduetobudgetconstraints,canaccesslower-costrefurbishedandremanu-facturedoptionsundersimulatedbarrier-alleviationscenarios.Insomeeconomies(e.g.China),thismayoffsetontheprevalenceofarrangingdirectreuseandrepairactivitiestosomedegree,asotheraffordableVRPoptionsbecomeavailable.ItmustalsobenotedthatineconomiesthatpreviouslyrestrictedaccesstoVRPproducts,thealleviationofbarriersmayincreasetheshareofimportsthathelptosupplydomesticdemand,andthiscanhavedownwardpressureondomesticproductionlevels.ThisisspecificallyobservableintheresultsfromtheStandardOpenMarketforVRPProductsscenarioforHDORequipmentpartsinBrazilandChina(Figure66andFigure67).Itisalsoapparentthatthepre-existingconditionsofeacheconomyhaveasignificantinfluenceontheadoptionofcircularproductionprocesses,relatively.Althoughaggregateimpactsofdomesticproductionshowcorrelatedincrease,theaverageper-unitimpactsofdomesticproductiondecreaseastheshareofVRPproductionscales-upwithinaneconomy.OfsignificancearethestartinglevelsofVRPproductsinthemarketandproductionmix,aswellascustomerattitudesandperceptionsofVRPsproducts,andthepresenceofcompetingalternatives(e.g.repair,and/orlower-pricedOEMNewversionsoftheproduct)(Rogers2003,1976).ThesefactorswereobservedtoaffecttherateatwhichdifferentVRPproductsweredemandedbyascenariomarketoverthesimulatedperiod,aswellastherateatwhichproducersadoptedandengagedinVRPs.ThisisparticularlyapparentinthecaseofChina’sStandardOpenMarketforVRPProductsscenarios,whereeventhoughsignificantrelativeVRPproductiongrowthpotentialmayexist,whenappliedtothealmostnon-existentstartingproductionshareforVRPs(effectivelyzero),markettransformationisstillslow(Figure38,Figure51,andFigure67).Fromastrategicperspective,ineconomiesthathavelowstartingVRPmarketshareandlowlevelsofmarketawareness,itwilltakelongertoreachmeaningfulthresholdsforuptakeofVRPoptions.TheextenttowhichaneconomyreliesuponimportedproductstomeetdomesticdemandinfluencestheextentofbenefitthatcanbeachievedbyincreasingdomesticdemandforVRPproducts.ThiscanbeseeninthecasestudyexamplesforGermany,BrazilandChinaintheStandardOpenMarketscenarioforallcasestudysectors:theimpositionofahigherimportsharethannormallyexistsinthoseeconomies(basedonUSimportratiosforeachspecificsector),leadstoaminorreductionindomesticproductionlevelsintheshort-term.Whileenvironmentalimpactsofthatoffsetdomesticproductionhavebeenreallocatedelsewhere,inthesecasesthedomesticeconomymissesoutontheeconomicopportunitiesthatwouldotherwisebeassociatedwithincreaseddemandforVRPproducts.IfincreasedVRPimportscomefromeconomieswithlessefficientand/ormoreharmfulproductionconditions,theimpactreductionopportunitymayhavebeennegated,orevenworsened;incontrast,ifincreasedVRPimportscomefromeconomieswithmoreefficientand/orlessharmfulproductionconditions,theimpactreductionopportunitymaybeimproved.Thisleadstotheimportantinsightthatthealleviationoftradebarrierscancreateadditionalissuesandcomplexityintheshortterm,andthereforemustbeconsideredcarefullyinthecontextoftheentireproduction-consumptionsystem.TheseconcernsaretiedtooneofthesystemicreboundeffectsidentifiedbythisassessmentandarefurtherdiscussedinSection8.3.2.Asobservedinthisanalysis,regardlessofhowquickly,ortowhatextentVRPsincreasewithintheproductionmixand/ormarketdemand,thepotentialtooffsetnewmaterialrequirement,andretainvaluewithinthesystemisautomaticallyincreasedwiththealleviationofbarrierstoVRPsthroughtheStandardOpenMarketforVRPProductsandTheoreticalHighforVRPProductsscenarios.Whiletheabsolutemagnitudesofnewmaterialoffset,energyrequirement,andemissionsgenerationaredependentupontheproducttype,andthemagnitudeofthedomesticindustryandproductionlevel,theopeningofmarketsandalleviationofbarrierscanleadtonetpositiveimpactavoidance,andautomaticimprovementsinmaterialefficiency.Thiswasobservedconsistentlyacrosseachcasestudysector.TheinclusionofVRPsintodomesticproductionactivitieshasdemonstratedefficiencyopportunityacrosseachstudiedscenarioeconomy:throughenhancedtechnologyandprocessesineconomiesthatcurrentlyhavelowornoVRPs,VRPinnovation150Chapter8–Discussionofkeyinsightsenablesnewefficiencyandopportunitiestopursuecirculareconomywithpositiveimpactsthatcanrippleacrosstheentireeconomy.Throughimproveddesign,distribution,andmarkettransformationineconomiesthatcurrentlyhavewell-establishedVRPactivities,higherefficiencyandimpactreductiongainsarepossible.However,asobservedunderthisassessment,themostmeaningfulimpactreductionpotentialwillonlybepossiblethroughboldandassertiveinitiativesthatenabletheextreme,butessentialvisionoftheTheoreticalHighscenarios.8.2ImplicationsforindustrialdesignstrategyandpracticeThedesigncommunityhasidentifiedthattherearekeydifferencesbetweendesignforsustainability(eco-design),anddesignforcirculareconomy:mostfundamentally,designforsustainabilityprinciplesaretypicallybasedwithinthetraditionalwastehierarchy,andfoundedintheassumptionthataproductwillinevitablybecomewaste;thiscontrastswiththeidealcirculareconomyvisionthatwastedoesnotexist(denHollander,Bakker,andHultink2017).Critiquesofthewastehierarchyemphasisthathastraditionallyguidedeco-designsuggestthattheinclusionofdisposalwithinthewastehierarchyframeworkisproblematicbecauseitlegitimizestheoption(VanEwijkandStegemann2016).Inaddition,fromaproductdesignperspective,thedismantlinganddestructionofaproduct’sintegrityrequiredbyrecyclingmakesthistheleastpreferableprocessinthecontextofacirculareconomy(denHollander,Bakker,andHultink2017).Asdiscussed,morecircularsystemscanbecreatedinseveralways:bydirectlyreusingproductsthatstillhaveusefullife;repairingandservicingproductstorestorequalitytodiminishedlife;refurbishingproductstoextendlifebeyondthetraditionalend;orremanufacturingproductstocreateanentirelynewservicelife.Inotherwords,utilizingproductandproduct-systemsdesigntominimizetheneedforrecyclinganddisposalwithintheproduct’slifecycle.Ensuringthattheseapproachescanbesuccessfulandeffective,however,requiresbothbusinessmodelsandproductcharacteristicsthatmakesuchstrategieseconomicallyviable(denHollander,Bakker,andHultink2017).Workingbackfromtheend-of-life,thegreatestinfluenceonaproduct’sviabilityforVRPscomesinvariablyfromitsdesign,wheredecisionsmadeearlyinthedesignprocesscandramaticallyimpactboththeeconomicviabilityandsustainabilityofaproduct.Huthwaite(1988),forexample,foundthatwhileproductdesignprocessesareresponsibleforonly5percentofaproduct’scost,thedesignitselfdetermines75percentormoreofmanufacturingcosts.Similarly,Nasretal.(2002)suggestthatdesigndecisionsalsoinfluence©Shutterstock/SalienkoEvgenii151Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomymorethan80percentofaproduct’senvironmentalandsocialimpacts.Itisthusclearthatwithoutearlydesignintervention,thevaluerecoveredthroughandbenefitscreatedbytheseVRPscannototherwisereachapointofeconomicviability.GuidedbytheInertiaPrinciple,Stahel’sguidelinesforcirculardesign(2010,195)highlightmeaningfullogicforacirculardesignhierarchy:“Donotrepairwhatisnotbroken,donotremanufacturesomethingthatcanberepaired,donotrecycleaproductthatcanberemanufactured.Replaceortreatonlythesmallestpossiblepartinordertomaintaintheexistingeconomicvalueofthetechnicalsystem.”Whilethisapproachdoesnotembracethepotentialforvaluecreationthroughupgradesand/orexceedanceofthefunctionalspecificationsoftheoriginalproduct,itprovidesaproduct-centeredfocusondesignprinciplesthatcanhelptoguidethedesigndecisionprocess(denHollander,Bakker,andHultink2017).Itisimportanttonotethatproductdesigngoalsareoftendictatedbytheunderlyingobjectivesandconstraintsoftheproducer,andtheconceptualproductionapproach.Whentheproducerframeworkreliesonabasisofwidelyaccessible,inexpensivematerialsandabusinessmodelthatchampionssalevolume,productdesignobjectivesbecomefocusedonbalancingcost,quality,functionality,anddelivery.Inthiscontext,durabilityandlongevityareoftensacrificedwillingly,aseventualobsolescenceandreplacementbecomedriversofcontinuedsales.Assuch,thepursuitofcirculareconomydependslargelyonbusinessstrategiesrecognizingtheneedtodecoupleeconomicgrowthfromvolume-basedprosperity,anddecision-makerunderstandingofwheretostart.8.2.1IntegratingdesignandcirculareconomybusinessmodelinnovationWhenconsideringtheintegrationofcirculareconomybusinessmodelsandproductdesign,Bockenetal.(2016)identifiestwoprimaryobjectives:theobjectiveofslowingflowsofmaterialsandresources;andtheobjectiveofclosingloopswithinthesystem.Theclosingofmaterialloopsisheavilyfocusedonthemateriallevel(nottheVRPproductlevel),andrequiresradicalfirmandsystemchanges,andcollaborationwithothersystemactorstoidentifyindustrialsymbiosisopportunities,andtoextendresourcevaluebyexploitingtheresidualvalueofmaterials(Bockenetal.2016).Tocloseproduct-loops,designprinciplestargetingthedis-andreassemblyofproductscancontributetotheefficiency,effectiveness,andcost-managementofVRPsystems(Bockenetal.2016).Theslowingofmaterialandresourceflowswithincircularsystemsrequiresdifferentproduct-andbusiness-designconsiderations.Anoverarchingsufficiencyapproachincorporatestheobjectiveofreducedconsumptionintoproductdesignviadurability,upgradability,reparability,theprovisionofservicewarranties,andanon-consumeristicapproachtothemarket(Bockenetal.2016).Attheproduct-level,thismayinvolvedesignforlong-life(e.g.durability,repair),anddesignforproduct-lifeextension(e.g.designforremanufacturing),allorientedatkeepingtheproductinthesystemforlonger,thusslowingtheflowsofmaterialsandresourcesintoandoutofthesystem.Forthefirm,thismayinvolveabusinessmodelfocusedonprovidingaccessandperformance(ratherthanownership),andsystemstoenableproductvalueextension(e.g.viaVRPs)andlong-life(e.g.servicewarranties)(Bockenetal.2016).Todesignforproductintegrity(denHollander,Bakker,andHultink2017)asystems-perspectivemustencompasstheexpandedlifecycleviewoftheproductandproduct-system,aswellasconsiderthevariousstakeholdersthatneedtobeinvolvedintheprocess.AshighlightedbyBockenetal.(2016)circulareconomybusinessmodelslookstogeneratevalueandprofitfromtheflowofmaterialsandproductsovertime.Innovativeservice-orientedproductandbusinessmodelsshowpromiseinminimizingdisposalofpotentiallyvaluableresourcesbyenablingproducerstoretainownershipoftheproduct;withretainedownershipcomestheadditionalopportunities(andchallenges)toimproveandoptimizeproductdesignanddelivery,servicecontracts,andsystemstofacilitateVRPsatproductEOUand/orEOL.Product-ServiceSystems(PPS)areonetypeofapproachthat,throughdifferentmechanisms,providesaccessandperformance(deliveryofservice)alongside,orinsteadofprovidingjustaphysicalproduct(ownership)(Bockenetal.2016).WhereownershipbythefirmismaintainedundersomePPS-approaches(refertoBox3),firmsareincentivizedtodesigntheirproductsforefficiency,durability,serviceability,value-retention,andmultipleservicelifepotential(Tukker2015b).TherearedifferenttypesofPSSs,asoutlinedinBox3.152Chapter8–DiscussionofkeyinsightsBox3:ProductServiceSystemsinaCircularEconomyAccordingtoBoehmandThomas(2013)“…aProduct-ServiceSystem(PSS)isanintegratedbundleofproductsandserviceswhichaimsatcreatingconsumerutilityandgeneratingvalue.”TherearethreemaincategoriesofPSS:(1)Product-orientedPSS,whicharemainlyfocusedonsales,withsomeaddedservices;(2)Use-orientedPSS,inwhichtheproductstaysownedbytheproducer,ismadeavailabletotheuserinadifferentform,andmaybesharedbymultipleusers(e.g.leasing,renting/sharing,pooling);and(3)Results-orientedPSS,inwhichtheclientandtheprovideragreeonavaluedresult,notnecessarilyonaproduct(e.g.activitymanagement,pay-per-serviceunit;pay-per-fractionalresult)(Tukker2004,2015b).ThereisincreasingacademicinterestinPSS,withresearchandinvestigationapproachingthepotentialopportunityfromengineering,business,andenvironmentalperspectives(Tukker2015b).ThedesignperspectiverequiresthatPSSintegrateadditionalconsiderationsandsteps,includingdemandidentification,feasibilityanalysis,conceptdevelopment,servicemodeldevelopment,realizationplanning,andservicetesting(Tukker2015b).Designformodularity,requirementengineering,andeconomicoptimizationtechniquesareparticularlyimportantdesignprincipleswithinthecontextofPSSapproach(Tukker2015b).Shared-ownershipmodels,involvingcollaborativeagreementsbetweenusersisoftenaproposedmodelforreducedtotalconsumptionandvaluecreation(Bockenetal.2016).Thecommunalsharingofservices(e.g.cleaning,maintenance)andaccess(e.g.toaproduct)createsvalueforstakeholdersbyhelpingtoreducecostsacrossthenetwork(Bockenetal.2016).Additionalapproachesincludingtheexchangeofby-productsenablesparticipatingpartiestocapturevaluebyavoidingcostsandengagingthecreationofnewbusinessopportunitiesgeneratedfromformerwastematerials(Bockenetal.2016).Lifset(2000)notesthatsharingmodelsmaycreatetheriskofmoralhazard:withoutappropriateprotectionsandcontractsthatrequiretheindividualusertoensuremaintenanceofthesharedgood,thereisthepotentialriskthatuse-phaseenvironmentalburdensmaybeincreased,and/orproductlifespanmaybereduced.AlthoughmuchofthecurrentresearchonPSSdemonstratestheopportunityforimprovedresourceefficiency(Stahel1982,Schmidt-Bleek1993),notallapproachestoPSSareequallyeffective.PerTukker(2015b),thedesignfocusfromproduct-anduse-orientedPSSapproacheslackclearsustainabilityoutcomesandmayhaveunintendedconsequences:product-orientedPSSisstillhighlymotivatedtosellmoreproducts;carelessand/ormoreintensiveuseunderuse-orientedPSScanaffectservicelifeandpotentialforVRPs(Tukker2015b);whereasresults-orientedPSShavedemonstratedsomesuccessatachievingresourceefficiency–notbecauseofthesustainabilitymotivation,butratherasaresultofthebuilt-inbusinessincentiveforkeepingcostslow,therebydecreasingassociatedmaterialuseandimpacts(Tukker2015a).NotallofferingsmaybeappropriateforaPSSapproach,andfirmsmustconsiderthecostsandopportunitiesofPSSversusproductfortheirparticularoffering(Tukker2004).Specificconsiderationsmustincludethemarketvalue–includingtangibleandintangiblevaluetoconsumers/users,--theproductioncostofoperatingthePSS,theinherentcapitalandinvestmentneedsforPSSproduction,andwhetheraPSSapproachwillenableafirmtocapturevalueinthecurrentandfuturevalue-chain(Tukker2004).PSShavebeenfoundtoworkbestforproductsthatareexpensive,technically-advanced,requiremaintenanceandrepairwithintheirservicelife,areeasytotransport,areusedinfrequentlybythecustomer,andarenotheavilyinfluencedbyfashionorbranding(Tukker2015b)(pleaserefertoSection8.2.4forfurtherdiscussiononappropriateuseofVRPs).InaB2Ccontext,theintangiblevaluecreatedbyaccessibilityandconvenienceisimportantbutoftenoverlookedfactorthatcanaffectthesuccessofaPSSinitiative.Inaddition,PSSdonotdelivertheownership‘extras’ofstatusandesteemthatmaymotivateconsumers(TukkerandTischner2006).Incontrast,importantconsiderationsforB2Brelationshipsincludedawell-regardedbrandreputation,relevantservicecompetencies,andstrongbuyer-sellerrelationshipsindicativeofthefirm’sabilitytoprovidevaluebeyondtheproduct(Brown,Sichtmann,andMusante2011,Tukker2015b).153Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyOnePPSapproachthatfallsintotheresults-orientedcategoryofPPSoffersapay-per-useorpay-per-unit-serviceapproachthatshiftsthefirmsprofitcenterawayfromtheprovisionoftheproducttotheprovisionofaresultthatisvaluedbythecustomer.Forexample,anindustrialprinterprovidestheserviceofprintedmaterials,degradingovertimewithuse.Underapay-per-unitapproach,userspayforeveryprintedsheet:thisapproach,bydesign,helpstheusertoassociatetheproductdegradationfromusewitharealunit-cost,ultimatelyencouragingtheminimizationoftotalcostsofownershipandthemaximizationofproductlifetimes(Baker2006,Lifset2000).Alongsidesomecritiquesofshiftedownershipmodels,Lifset(2000)notesthattheemphasisonpossessionandresults(insteadoftheproduct)doesnotnecessarilychangethedesignorimpactsofaproductandproduct-system.Implicitformutualcirculareconomyandsustainabilityobjectivestobeachievedistheneedtointegratetheseinnovatebusinessmodelswithcirculareconomydesignprinciples.Successfulapproachestoalternativebusinessmodelsforcirculareconomyinvolveanappreciationforboththefunctionalandnon-functionalcharac-teristicsofaproduct(Lifset2000).Understandingthepotentiallymultipleaspectsofaproductorservicethatgeneratevaluefortheuser/customercanhelpfirmstoenvisionnewwaysofapproachingthemarketplace:forexample,InterfaceInc.maymanufacturemodularandrecyclablecommercialfloortiles,butwhattheyprovidetotheircustomersisaflexible,reliable,aesthetically-pleasing,andmaintainablefloor-coveringservicethatincludesenvironmentally-soundmanagementatEOU(Johansen1998,Ceschin2013).Firmsthatidentifyandproperlyintegratethesecustomervalueperspectivesintotheirbusinessmodels,alongsideotherprinciplesoutlinedinBox3canpotentiallyachievegreatersavings,consumefewerresources,andreducetheirnetimpactontheirenvironment.Abusinesscaseandbusinessmodelfocusedonmaximizingtheusefullifeandutilizationratesofaproductsignificantlyreframesthedesignobjectivesandparameters.Accompanyingthistypeofmodelisanincentivetobuildandenhanceeffectiveandefficientproductcollectionsystemsandnetworksthroughoutallmarketsinwhichthecompanyoperates.SomeofthesuccessesobservedintheindustrialdigitalprinterandHDORequipmentpartssectors,asanalyzedwithinthisstudy,relatetothewillingnessofproducersinthosesectorstodevelopandinvestinmoreinnovativebusinessmodelsthatnotonlyhelptoaccomplishtheactualneedsofthecustomer,butwhichalsocontributesignificantlytocirculareconomythroughtheadoptionofVRPs.8.2.2IntegratingproductcircularityintoproductdevelopmentLookingspecificallyatVRPs,designforproductintegrityasproposedbydenHollander,Bakker,andHultink(2017)aimstopreventproductobsolescenceandrecoverresourcesatthehighestlevelofintegrity.Severaldesignforproductintegritystrategiesareproposedtargetinglonguse(designforphysicaldurability,designforemotionaldurability),extendeduse(designformaintenance,designforupgrading),andrecovery(designforrecontextualizing,designforrepair,designforrefurbishment,anddesignforremanufacture)(2017,521).Theyalsocallforanacknowledgementthatproductdesignforcirculareconomymusttakeplacewithasystemsperspectivethatconsidersthebusinessmodelneededtoenabletheretentionofproductionintegrityandeconomicvalueovermultipleservicelifecycles(denHollander,Bakker,andHultink2017).WhiletheimportanceofeducatingdesignersandengineersaboutVRPsandequippingthemwiththepropertoolscannotbeunderstated,eventhebest-educateddesignteamcouldnotcreateaproductwithinthecontextofcircularityifnotexplicitlycalledforintheproductspecificationsandrequirements.Thisisbecausedesignersarenottheprimarydecision-makersregardingwhataproductdoesorhowitdoesit;rather,theyfocusonusingcreativitytomeetsuchproductrequirements—specificationsthataredefinedmuchearlierintheproductdevelopmentprocess.Manyindustryleadersuseastructuredproductdevelopmentprocesstoidentifycriticalactionanddecisionpointsbetweentheemergenceofanideaandthecommercializationofaproduct.Althoughtheactualimplementationofeachprocesscanvarysignificantlybycompany,product,andcontext,therearesixkeyphases—(1)planning,(2)businesscase,(3)define,(4)concept,(5)design,and(6)launch—thatarecommonacrossnearlyallindustries.Aftereachphase,afinaldecisionofwhethertocontinueproductdevelopmentismadebasedonthedegreetowhichdevelopmentupto154Chapter8–Discussionofkeyinsightsthatpointhasfulfilledtheprecedingphases’criteriaforsuccess.Figure84illustratesthisprocessframeworkandthecriticaldecisionpointswithineachphase,includingconceptualexamplesofwhereVRPconsiderations(redtext)mightbeintegratedtocreatesystemicviability.012345PRODUCTPLANNING•Customeranalysis•Situationanalysis•Visionandplanning•Riskassessment•CorporatestrategyforVRPsDEFINE•Projectplan•Productspecifications•Deliverables•Fundingplan•ROIanalysis•VRPrequirementsDESIGN•Designproducttomeetrequirements•Manufacturingplan•Operationsplan•DesignforVRPsLAUNCH•Setupproductionoperations•Stabilizemanufacturingprocesses•ImplementtakebackprogramforVRPsCONCEPT•Developproductideas•Ensuretechnologyrobustness•Integratesubsystems•ProveVRPmethodsBUSINESSCASE•Economicimpactanalysis•Productvalueanalysis•Marketsizing•Cashflowmodel•Value-retentionbusinessmodelsFigure84:Productdevelopmentprocesseswithintegratedvalue-retentionprocessesTheconceptualframeworkthatdefineswhataproductmustdo—whatneedsitwillmeet,andhowitwillmeetthem—iscreatedearlyintheproductdevelopmentcycle,longbeforethedesignteambegins.Beforedesigning,acompanymustfirstdecidewhetherVRPsfitwithinitscorporatestrategyandbusinessmodels;whetherithastheknowledgeandtheinfrastructuretosupporttheseVRPs;andwhetheritcanovercomeregulatoryandmarketbarriersonthepathtoeconomicviability(refertoSection8.2.4).ThesedecisionsultimatelyinformthedegreetowhichVRPconsiderationsmayfeasiblybecomespecifiedproductrequirements.Thus,thedesignphaseistoolateinthedevelopmentprocesstobeginaddressingtheopportunityforVRPs,andwhilestrengtheningthedesignteam’stoolsandeducationisimportant,itisalsoinsufficientasanisolatedstrategyinpursuitofcirculareconomy.Instead,requirementsforVRPsmustbemadeacentralcomponentoftheproductspecificationsbeforedesignersareaskedtoapproachthem;thiswillbetterenabledesignerstoleveragetheappropriateknowledgeandtoolstofulfiltheserequirements.Ofrelevancetothisassessmentaretheplanning,businesscase,anddesignphasesofthisprocess.8.2.2.1ProductplanningTheplanningphaseofaproductdevelopmentprogramisusedtodefinethefundamentalmarketandbusinessneedsineachproductspace.Fromthere,acompanyoutlinesasetofhigh-levelrequirementstodescribewhataproductshoulddotomeettheseneeds.Intheseinvestigations,acompanyexplorestheoverallmarketopportunity,identifiesmarketrisks,definesthecustomerrequirements,surveysexistingproductsandtheirfeatures,developthefinancialgoalsandprioritiesformanufacturing,andindicatekeyprioritiesforfurtherdevelopment.Itisinthisphasethatgovern-mentalregulations,customerexpectationsand155Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomydemands,andtheawarenesscreatedexternallymaymostinfluencethetrajectoryofproductdevelopmentand,ultimately,itsfinalcharacteristics.Thesefactorscreatethecontextinwhichanynewproductwillexist,andthusbyextensioninfluencetheconstraintsandcharacteristicexpectationstowhichitmustadhere.Understandingthesystems-implicationsofcustomerpreferences,regulations,orpurchasinginfluencesfavoringVRPproductsandsystems—orhighlightingthepotentialcostsofneglectingthesefactors—canhelptoguidecompaniesintheintegrationofVRPpotentialintothefundamentalproductplan.8.2.2.2ThebusinesscasefortheproductThebusinesscasephaseisacriticaldatacollectionphaseinwhichtheproductisdefined,justified,andaprojectplandeveloped.ItisinthisphasewheretheteamdevelopsandusesfinancialmodelstoevaluatetheimpactonthebusinesscaseofusingVRPs.Undertraditionalbusinessmodelsbasedintheassumptionof‘ownership’,corporateresponsi-bilityfortheproductistypicallyconsidereduptothepointatwhichitleavestheproductionfacility;afterwhich,allthingsrelatedtotheproductarelefttothenewowner:thecustomer.Thevaluethatisaccountedforisreflectedintermsofprofitmargin.However,thereareinnovativebusinessmodelsalreadyinthemarketplacewhicharemuchmoresupportiveandenablingofcirculareconomy(refertoSection8.2.1).Use-orientedPSSsofferanewapproachtomoresustainablebusinessmodels,offeringopportunitiestoenhancethecompetitivenessofthebusinesswhileachievingadditionalsustainabilityobjectivesatthesametime(Tukker2004,2015a,Beuren,Ferreira,andMiguel2013).Forexample,theproducermayretaintheownershipoftheproduct,andthebusinesscasevaluewouldtheninsteadbebasedonregularfee-basedrevenuethatthecustomerpaysfortheserviceprovided,suchaspagesprinted,ormilesdriven(e.g.leasing,renting,andpoolingmodels)(Tukker2004).Inherentinthisapproachisadifferentperspectiveoftheproductinquestion:ratherthanabusinesscasefocusedonshorttermcostminimization,profitmaximization,andtheaccomplishmentofsalesobjectivesandtargets,thebusinesscasemayinsteadbeinformedbyanincentivetoconsiderthefulllife-cycleoftheproduct,ratherthanjustcradle-to-gate;itmayalsobeinformedbyanincentivetoretainassetvalue,designtheproductforlongevity,andpotentiallytodesigntheproductforadditionalusagecyclesthroughVRPs.8.2.2.3ProductdesignInthisphase,productconceptsaredevelopedfromproof-of-concepttechnologiesintoproductdesigns,manufacturingapproaches,andsystems-levelprototypesthatarefullyfunctionalandmayleadtofullcommercialization.Designstrategiesmust,ofcourse,leverageknowledgeandtoolsthatsupportthecreationandintegrationofcircularity-enablingproductfeaturesandtechnologysystems.Asthepenultimatephaseintheproductdevelopmentprocess,however,thedesignstageiscertainlytoolateapointatwhichtobeginconsideringproductcircularity.Inthissense,productdesignprocessesabsolutelydependuponthoroughupstreamintegrationofandinvestmentincircularconsiderationsinordertocreateproductsandsystemsthatmayactuallyachievethedesiredcircularityandvalue-retention.Ultimately,designsmustbetranslatedintoprototypeproductsandsystems,whichmustbefullytestedundertheactualeconomicandenviron-mentalconditionsoftheintendeddeploymentcontext.Comprehensiveplansandsimulatedmodelsformanufacturing,financing,introducing,anddistributingtheproductcanthenbedesignedanddevelopedbasedontheseprototypes.Inthis,design,development,andtestingstagesserveprimarilytovalidatetheentireproject—fromtheproducttothemanufacturingprocessestotheeconomicviabilityandcustomeracceptanceincompetitivemarkets.Aproduct’scircularity,then,isnotafunctionofitsdesign,butratherasystemiceffect,causedbyprecedinginfluencesinPhases0through3andfinallyonlyenabledbydesign.8.2.3DesigningforproductcircularityItisthusclearthatenablingamorecircularindustrialeconomyisasystemicendeavorthatbeginslongbeforeproductdeveloperscreatephysicalproductdesignsorfunctionalprototypes.Giventhepotentialriskofunintendedtrade-offsbetweendesignprinciples,asystems-perspectiveisessential:whereahigh-levelofmodularityandintegrationmayhelptoreducepartcountand/orbetterorganizeproductsub-systems,thesedesign156Chapter8–Discussionofkeyinsightspathsmayconstrainfuturepotentialforupgrada-bilitywithinaVRPprocess,orevenconstrainrecyclabilityatEOL.Manyoftheformativebusinessandmarketdecisionsthatultimatelydrivetheadoptionofacircularphilosophyrequiresupportingdecision-makerswiththeknowledgethatcircularindustrialandeconomicmodelsareindeedavailable,accessible,andtechnicallyfeasible.Tothisend,itisnecessarytodiscusstheprinciplesbywhichproductsandsystemsmaybedesignedforcircularitynotjustinPhase4,butthroughouttheentireproductdevelopmentprocessacrossthreemajorprinciples—(1)creatingvalue,(2)protectingandpreservingvalue,and(3)easilyandcosteffectivelyrecoveringvalue—underwhichdifferentapproachestodesigningproductsforacirculareconomymaybeexplored.Theseprinciplesalong,withcorrespondingdesignapproaches,areillustratedinFigure85.•Designtointegratevalue•DesignforqualityDesigntocreatevalue•Designfordurability•Designforviability•DesignforserviceabilityDesigntopreservevalue•Designfordisassembly/separability•Designforassessability•DesignforrestorabilityDesigntorecovervalueDesignprinciplesDesignapproachesFigure85:DesignprinciplesforVRPproducts8.2.3.1CreatingvaluePriem(2007)definesvaluecreationas“innovationthatestablishesorincreasestheconsumer’svaluationofthebenefitsofconsumption.Whenvalueiscreated,theconsumerwilleither(1)bewillingtopayforanovelbenefit,(2)bewillingtopaymoreforsomethingperceivedtobebetter,or(3)choosetoreceiveapreviouslyavailablebenefitatalowerunitcost,whichoftenresultsinagreatervolumepurchased.”Thetotalvaluecreatedcanbeviewedasthesumofalltheenhancementsandeffortsthatareembeddedintheproductthroughtheprocessofconceiving,making,andprovidingtheproducttothecustomerplusanyadditionalperceivedbenefitsbythecustomer.Itisasumofalltheeffortexertedtocreatetheproductincludingtheintellectualcapitalinvestedininventingandrefiningideas.Itisalsoameasureoftheeffortrequiredtoharvestrawmaterialsfromnatureindilutedandunorganizedforms,suchasmineraloresorcrudeoil,andtoconverttherawmaterialsintousableintermediatematerials,suchandmetalsheetorbarstock,orpelletizedplasticresins.Thevaluealsoincludesthematerialsandefforttodevelopthemanufacturingprocessesthatconverttheusableintermediatematerialsintohigherformpartsandassemblies,andtheinvestmentrequiredforpartandassemblytooling.Finally,theembeddedvalue157Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyincludesthecostofbusinesspractices,marketing,infrastructure,andlogisticsusedtogettheproducttotheconsumer.VRPshaveadvantagesoverrecyclingbecausetheyrecovervaluebeyondjustthematerials.VRPscanrecovertheentirefunctionofthepartorassembly.Inherently,VRPsthenretaintheuniquetechno-logicalfunctionandtheresourcesusedtoinventandmanufacturethepartorassembly.VRPscanalsorecovertheengineeredplastics,carbonfiber,laminates,andalloyedmetalsthatarenottypicallyrecoveredbyrecycling.Accordingly,productdesignmustconsiderproductcircularityasaspecificrequirementinordertomaximizetheabilitytorecovervalue.Thiscanbeaccomplishedbyintegratingproductfunctions,concentratingthevalueintopartsandassembliesthatareeasytorecover,andassuringthattheproductmeetshighqualitystandards.Thecollectionofhighvalue-addedproductsthroughVRPsisthereforegenerallymuchlesscostlythanfabricatingnewproductsfromvirginmaterials.8.2.3.1.1DesigntointegratevalueAsimilarprincipleincludesthatassembliesshouldbedesignedtobemultifunctionalwithahighlevelofintegrationtominimizepartcount.Thisconsoli-dationreducestheoverallnumberofparts,reducestheassemblyanddisassemblycomplexity,andenablesamodularstructurefurtherimprovingaccesstosystemsandcomponentsneedingfurtherprocessing(Sa’edandKamrani1999).ThisapproachisalsoreferredtoasDesignforModularity(DfM)andisacommondesignapproachinleasing-focusedbusinessmodelsforindustrialdigitalprinters(Agrawal,Atasu,andÜlkü2016).However,whenappliedtoconsumerelectronics,theupgradabilityofproductscanresultinconflictingoutcomesineconomicandenvironmentalbenefitsrelatedtoconsumerinterest,competitiveness,andconsequentdemand(Agrawal,Atasu,andÜlkü2016,Ülkü,Dimofte,andSchmidt2012).Inaddition,thenatureoftheproductandproductarchitecturecanaffectwhetherthemodularupgraderesultsinsuperiororinferiorenvironmentalperformancerelativetotheOEMNewversions(AgrawalandÜlkü2012).Wheremodularityisanappropriatedesignstrategy,productsshouldbedesignedwithstandardizedpartsallowingreuseinothermodelsorsubsequentmodels,maximizingthedemandandoutletsforreused,refurbished,andremanufacturedparts.Finally,manymanufacturersuseVRPstoextendtheirabilitytodeliverproductsforseveralyearsafterthemainassemblylinehasbeendecommis-sioned.Examplesincludeautopartssuchasenginecontrolunitsoralternatorsinwhichtheseproductsarerequiredtosupportwarranteeclaimsyearsafterthemainproductionhasbeenshutdown.8.2.3.1.2DesignforqualityDesigningaproductforVRPsalsorequiressettinghighstandardsforthequalityoftheoriginalproduct.Thevalueforwhichcustomerspayisultimatelyinthefunctionaproductperforms.Assuch,developersmustdesignVRPproductstoretaintheirvalueovermultiplelifecycles,seamlesslyfittingbackintotheproductionlineandmeetingtheoriginaltolerancesdespitepart-to-partvariation.Designing-inqualitybeyondwhatisrequiredtosatisfyminimumcustomerfirst-useexpectationswillimprovethequalityofproductsrecoveredatEOUforreuseinVRPs,and,inturn,helptoreducecostlyrework,sorting,scrap,andrequal-ificationcoststhatmightthreatentheeconomicviabilityofVRPs(Anderson2004,Shimbun1989).Maintainingproductviabilityinthesemarketsisbotheconomicallyandenvironmentallypreferabletosimplyrecyclingintermediatematerialsandcanenablemoresystems-levelcircularityandprofita-bilitythanmaterialreclamationalone.BasedontheembodimentofhighvalueatproductEOL,theinitialinvestmentintightproducttolerances,qualitytooling,durablematerials,andfunctionallyflexibledesignstrategiescanpayoffwithhighcollectionyield.8.2.3.2PreservingvalueDesigningtopreservetheproductvaluestartswithmakingtheproductdurabletobeabletolastmultiplelifecycles,survivingthepotentialforbothphysicalandemotionalobsolescence(denHollander,Bakker,andHultink2017).Thisincludesselectingmaterialsappropriatetoresisttheenviron-mentalconditionsthatcausewear,corrosion,andfatigue.Thisprinciplealsoincludesdesigningtheproducttobeviableforfuturelifecycles,designingaroundrequirementsthatarelikelytochange,158Chapter8–Discussionofkeyinsightssuchasaesthetics,energyefficiency,orfunctionalperformance.Preservingvaluealsomeansenablingappropriateserviceandmaintenancepreventingtheproductfromfailingprematurely,andtobeforwardlookingandproactivewhendesigningtobecompliantwithgovernmentregulations.8.2.3.2.1DesignfordurabilityProductsthataretargetedforVRPs,needtobedurableandbuilttolasttheintendedlifecycle.Theproductdurabilityneedstomatchtheintendedlife,andnotbeoverdesigned(KeoleianandMenery1993).Thedesignfordurabilityapproachconsiderstheproduct’slongevity,reparabilityandmaintain-ability.Manyproductsareexposedtoharshenvironmentsandenvironmentalstressessuchas:solarradiation,thermalcycling,mechanicalbending,mechanicalfriction,impact,orchemicaldegradation.Preservingtheproduct’svalueincludesdesigning-indurabilitysothattheproductresistsmaterialdegradation,corrosion,andwear.Thisincludesselectingtheappropriatematerialandmayincludematerialhardeningorcorrosionresistantcoatingstoextendcomponentlife.Italsoincludesavoidingmaterialsthatdegradewithage,exposuretoenvironmentalconditions,orexposuretochemicalssuchastheonesusedincleaningprocesses.Productscanalsoreceivedamagenotonlyduringuse,butalsoduringcollectionandprocessing(BrasandHammond1996).Designingtopreservefunctionmaythereforealsoincludeshieldingandprotectionagainstdamageduringuseandcollection.Ifdegradationcannotbeavoided,thenlargercomponentscanbedesignedwithreplaceablewearsurfacestominimizethesizeofthecomponentstoberemanufacturedorreplaced.Anotherdesignalternativecouldbetousesacrificialpartsaswearsurfacestoprotectthemorevaluablecomponents.ManyOEMproducersofHDORequipmentincorporatethisdesignapproach,withscheduledmaintenanceandrefurbishmentproceduresscheduledatthepoint-of-saleoftheoriginalOEMNewproduct.8.2.3.2.2DesignforviabilityPreservingvaluealsoassuresthatthedesignisviableatthetimeofcollection.Designviabilityreferstohowlongaproductisexpectedtooccupyacompetitivepositioninthemarketplace.Productdesignsinstabletechnologicaldomainscanremainviableforlongperiodsoftime.Forexample,basicdieselengineplatformsforovertheroadtruckingandrailtransportationremainrelativelyunchangedformanyyears.However,manyproductshaverequirementsthatarelikelytochangeovertheirlifecycle;suchasaesthetics,energyefficiency,technologyintegration,software,orfunctionalperformance.Preservingtheproduct’svalueformultiplelifecyclesmaythereforerequirethattheproductbedesignedtoconsidertheconsumer-productrelationship(denHollander,Bakker,andHultink2017),toensureviabilityatthetimeofcollection,eitherthroughtimelessdesignorthroughupgradeability.Thereareanumberofstrategiesthatcanbeusedtoincreasedesignviabilitywhenrapidtechnologicalobsolescenceisanissue.Computerserversareanexcellentexampleofadesignforupgradeability(DfU)whichisasubsetofthedesignforviabilityapproachusedtoextendtheproduct’susefullife.AsurveyoftheITmarketbytheInternationalDataCorporation(IDC)Researchrevealedthatreplacingaserverafterthreeyearsofoperationwillhaveareturnoninvestment(ROI)oflessthanoneyearascomparedtocontinualoperationofcurrentequipment,basedontheefficiency,reliability,andperformancegainsofthenewequipment(Scaramellaetal.2014).Additionally,thecostforpowerandcoolinggreweighttimesasfastastheserverpurchasingcosts,andthecostsformaintenanceandmanagementgrewfourtimesasfastastheserverpurchasingcostsenhancingtheeffectsoftheefficiencygains(Scaramellaetal.2014).Theincreasingdifferenceincostofoperatingtheexistingdesignovernewdemonstrateshowaproductcanloseviabilityovertime.Thisrapidchangeinperformanceisanopportunityformanufacturerstodesigninfeaturestoenableupgradestoextendthelifeandviabilityoftheproduct.Servermanufacturershavetakenthisprincipletoheartandhavedesignedmanyofthecomponentswiththedemonstratedhistoryofimprovingperformancetobe“refreshed”orupgradedsuchas:memory,massstoragedevices,networkconnectivity,processors,andpowersuppliesextendingtheservicelifeoftheproductandreducingtheneedforwholesalereplacement.159Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyOtherproducts,suchasthePuzzlePhone,25aredesignedwithvarioustechnologysubsystemsconcentratedinmodulessothatentiresubsystemswithexpiringfunctioncanbereplacedorupgradedpreservingthevalueoftheremainingproduct.Thistypeof“upwardremanufacturing”(NasrandThurston2006)or“adaptability”(Li,Xue,andGu2008)enablestheremanufacturedproducttobeincorporatedintoanewor“nextgeneration”system(Bras2007,2010).ItisalsoimportanttodesignproductsinordertomeetpotentialfutureregulationsthatmaybeenforcedatthetimetheproductisrecoveredforreuseinVRPs.Thisincludesavoidingpotentiallyhazardoussubstancesandmaterialsintheproduct,checkingforhumanhealth,safety,andenviron-mentalproductaspects,andselectinglowerimpactmaterials.Anotherwaytobeforwardlookingistoevaluatetheregulatorytrendlinesonthemetricsofinterest.Regulationssuchasautomobileemissionsorequipmentenergyefficiencycontinuetotightenastheproducttechnologycatchesupwiththecurrentrequirements.Aforward-lookingproductdesignermaytryandprojectwhereregulationsaregoinganddesigntomeetthefutureregulationratherthanjustmeetingtheregulationscurrentlybeingenforced.8.2.3.2.3DesignforserviceabilityPredictiveprocesseshavebeenamainstayofmaintenancefordecades;theReliabilityCenteredMaintenanceprocess(RCM),forexample,wasfirstpublishedbyUnitedAirlinesinthelate1970’s.RCMintroducedthedifferencebetweenpotentialfailures—identifiableconditionsindicatingthatacompletefailureiseitherabouttooccurorisintheprocessofoccurring—andfunctionalfailuresinwhichtheproductcannolongerperformtherequiredfunction.However,theadvancementandincreasingcomplexityofindustrialtechnologiescompelsmaintenancesystemstoextendbeyondregulartestingandmaintenanceandenablecontinuousperformancemanagement,componentconditionmonitoring,andprognosticanalysisasameansofongoingequipmentsupport.Developmentsinthesetechnologyareaspromisenotonlytomaximizeefficienciesandextendproductlife,25(http://www.puzzlephone.com)butalsotominimizedowntimeandinterruptiveassessmentsthatcancostvaluabletimeandenergy.Collectively,technologiesthatenablethiskindofadvancedmonitoringaretermedPrognosticandHealthManagement(PHM)systems.Predictionmethodologiesinthisspacearewidelyunderdeveloped,andwhilethepotentialbenefitsofsuchsystemsareimmense,manyindustrialusersrelyonproductsandequipmentthatsupportsonlylimitedperformancemonitoringandprognosticsystems.Inthisrespect,circularsystemacrossmultipleindustrysectorsstandtobenefitenormouslyfromthedevelopmentoftechnologiesandmethod-ologiesthatallowcircularsystemstobeintegratedwithadvancedPHMcapabilities.Resultantbenefitsinproductlifeextensionpassedontouserswillsubsequentlyminimizerecurringcapitalcostsofmaintaining,repairing,andreplacingequipment,andwillalsoallowforimprovementsinenergyefficiency,aswellasreductionsindowntimeandproductioninterruptions.8.2.3.3RecoveringvalueDesigningtoeconomicallyrecovertheproductvaluestartswithbeingabletoaccuratelyassessthevalueoftheproductwhenitisreturnedsothatdecisionscanbequicklymadeonthenextstepsrequiredintheprocess.Thismayincludedesigninginvisualindicatorstohelpimprovethespeedandaccuracyofvisualinspection,oritmayincludemoresophisticatedsensordata.Thisprinciplealsoincludesdesigningtheproductsothatitcaneasilybedisassembledandseparated,bothtoaccessandremovevaluablecomponents,andtoenablefurtherprocessing.Thisprincipleincludesdesigningappropriatefasteningandjoiningmethods,access,andeaseofhandling.Finally,thedesignshouldenableanyrequiredprocessingtobringtheproductbacktotherequiredstandards.Inmanyinstances,thisincludescleaning,materialrestoration,functionalrestoration,andre-assembly.8.2.3.3.1DesignforassessabilityFastandaccurateassessmentoftheproductsfunctionalstateandlevelofdegradationatthetimeofrecoveryisessentialforenablingefficientandappropriatedecisionsabouttheeffortnecessary160Chapter8–Discussionofkeyinsightstorestoreadditionallifeandvalue.InmostcasesattheEOUsomeleveloffunctionaldegradationorfailurehasoccurred.Thedesignforassessabilityapproachistoenablethefunctionaldegradationtobemoreeasilydetected.Thisincludesdesigningtheproductsuchthatthecomponentscanbeinspectedintheleastnumberofdisassemblystepsaspossible.Assuch,thedesignteamshoulddetermineifthefunctionalfailurescanbedetectedatthesystemlevelorifsomelevelofdisassemblyisrequired.Forexample,theremaybesomesystemlevelprecursorstofailurewhichmaybeusedtodeterminethelevelofremainingfunction.Precursorsaremeasurablemetricsthatwillchangeasthepartorassemblyages(vibration,heat,color,wearlength,resistance,etc.).Additionally,thefailuremodemayhaveawearoutpattern.Theproductmaythereforebedesignedwithawearsurfacethatchangescolortoindicatethedepthofweartoimprovethespeedandaccuracyofvisualinspection.Thehighestformofassessmentistodesigna“smartpart”withsophisticatedsensorsthatarecapableoftrackingandrecordingtheproductusage(e.g.operatinghours,environmentalconditions)andcanrelaythisinformationduringrecoveryenablingaquickassessmentofremaininglife(Bras2007,CharterandGray2008).Additionally,itisnecessarytounderstandiftheproducthasalreadybeenthroughaVRP(reused,refurbished,orremanufactured).Allpartsandmodulesshouldthereforebedesignedtobemarkedortrackedsothatthenumberofcyclescanbeidentified.Thisdocumentationandtrackingmechanismshouldbeavailablefromcradletograveandcouldincludeproductdocumentation,markingsorlabels,barcodeidentification,orradio-frequencyidentification(RFID)technology.8.2.3.3.2Designfordisassembly/separabilityDesignfordisassembly(DfD)isadesignapproachthatconsidersthefutureneedtodisassembleandseparateaproductforVRPs.Thisdesignapproachstartswithstructuringtheproducttomakethemostimportantcomponentsaccessibleandnotburiedwithintheassembly.InthecontextofVRPs,componentsare“important”iftheyrequireprocessing,suchascleaning,upgrading,materialrestoration,functionalrestoration,collection,orreplacement,andneedtoberemovedfromtheproduct.Thisapproachalsolookstocreateamodularstructure,orco-locateorgroupsimilarmaterials,partsthatwearout,orpartswiththesametechnologyincloseproximitysothattheycanbesimultaneouslyandeasilyseparated,replaced,andrecycled.Also,theapproachlookstodesigncomponentstobemultifunctionaltoreducetheoverallnumberofcomponentssincefewercomponentsmakedisassemblyeasierandfaster.Designfordisassemblyincludesdesigningappropriatefasteningandjoiningmethods,access,andeaseofhandling(BoothroydandAlting1992,Bogue2007,Bras2007).Commonpracticeincludeavoidingpermanentfasteningtechniquessuchaswelds,adhesives,heatstaking,crimping,orrivetsbetweenmodulesorcomponentsthatwillbereplaced,remanufactured,orrecycled.Thesepermanentfasteningtechniquesincreasesthedisassemblytimeandcost.Inaddition,jointdesignsshouldconsiderallVRPcharacteristicssuchasloadconditions,assemblyanddisassemblyefficiency,operatingenvironment,cleaning,andoverhaulandmaintenance.8.2.3.3.3DesignforrestorabilityandcleaningAftertheproductisassessedandseparated,thedesignshouldenablerestorativeprocessingtobringtheproductbacktoitsoriginalstandardsofconditionandperformance.Inthecaseofremanu-facturing-focuseddesignliteraturethisissometimesreferredtoas‘remanufacturability’,ordesignforremanufacture(denHollander,Bakker,andHultink2017).Insodoing,anew,valuablelifecyclemaybecreatedfromtheproductwithoutthelossofthevalueembodiedintheprocessesthatbuiltitorthematerialsfromwhichitwasconstructed.Theabilitytorecovervalueimplicitlydependsonhowwelltheelementsthatconstitutethatvalue—thepartsandmaterialsthatperformtheproduct’sfunction—werepreserved,howeasilytheycanbeaccessed,howquicklytheycanbeevaluated,howsimplytheymaybeprocessed,andhowwelltheycancompetewithcontemporaryproductsoncerestored(denHollander,Bakker,andHultink2017).Andinthissense,aproduct’srestorabilityisnotsomuchanindependentcharacteristicasanaturalfunctionofallthedesignfactorsthatprecede.Inmanycases,however,productsmaybedesignedwithalltheprecedingcharacteristics–fromqualityandreliabilitytoregulatorycompliance–without161Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyeverbeingexplicitlydesignedforcircularity.Whatseparatesadurabledesignfromonethatistrulycircular,istheabilitytoendurerestorativeprocessesthatproductsdesignedforaconven-tionallinearsystemoftenneglecttoconsidermighteverbeapplied.Beyondfunctionalrestorationandreassembly,suchprocessesprimarilyincludeuniquecleaningmethodologiesandmaterialrestorationtechniquesthatcan,insomecases,evenenableproductstoperformbetterthantheircontemporaryvirgincounterparts(Ijomah2009,Bras2007).Cleaning—agenerictermusedfortheremovalofacontaminationorpollutionfromacomponentorassembly—occursthroughoutrefurbishmentandremanufacturingprocessesandissometimesrepeatedinseveralstages.Cleaningmaybeapartofincominginspection,enablingassembliestobeassessedandinspected,ormaybedoneafterdisassemblytoenableindividualcomponentstobeinspectedandsorted.Cleaningmayalsobedonepriortoreconditioningtopreparesurfacesforrestoration,orsimplyafterreassemblytopreparetheentireproductforpaintandpackaging.Thetechnicalchallengeisthatthetypeofcontam-ination(e.g.grease,biologic,dust,rust,paint),thetypesofsurfaces(e.g.rough,smooth,blindcorners),thesensitivityofthesurfacetocleaningprocesses(e.g.waterresistant,solventresistant),andtherequiredlevelofcleanliness(e.g.paintable,particulatefree,non-volatileresidue,hygienic)canvarywithindustryandlevelofuse.Thefundamentalconceptofcleaningcanbebrokendownintothebasicforcesusedtoremovecontamination.ThesecategoriesofcleaningforcesaredescribedinFigure86(Liuetal.2013).SolvencySurfaceactivationEnzymeChemicalPhysicalThermalPressureFrictionAbrasionUltrasonicElectrolyticUltravioletModiﬁedfrom(Liuetal.2013)Figure86:Categoriesofcleaningforce162Chapter8–DiscussionofkeyinsightsNotonlyisthediversityofcontaminationanissue,industryisalsochallengedwiththeenvironmentalresponsibilityofcleaningproductsandsystems.Allcleaningprocessesmusteffectivelybringtherecoveredproducttoauseableornew-equivalentstate.InefforttomaximizetheenvironmentalbenefitsofVRPs,“GreenCleaning”processesmustmeetrequiredcleaningfunctioncosteffectively,aswellasperformthecleaningprocessinanenviron-mentallypreferablemanner.Giventhatcleaningisgenerallyrequired,productsshouldbedesignedtowithstandthecleaningprocessesthatwillbespecificallyusedtorecoverthevalue.Thisisdonethroughanunderstandingoftheaggressivenessofthecleaningprocess(time,temperature,chemistry,agitation)andselectingproductmaterialsthatwillbestable,willnotreact,andwillresistdamageduringthecleaningoperation.Productsshouldalsobedesignedwithanunderstandingofthecontaminationparticletopartsurfaceattractionforcesandthendesignedwiththebestmaterialsorsurfacetreatmentstominimizetheseforces.Productgeometricfeaturessuchascorners,ribs,holes,andcavitiesshouldbedesignedtominimizecontaminationaccumulationorenhancethecleaningoperation.Theproductdesignmayincludefeaturessuchasdrainageholes,orremovabletrapstomaximizethecleaningeffectiveness.Finally,theproductshouldbedesignedtoshieldorprotecthighvaluemodulesorcomponentsfromenvironmentalcontaminationtominimizecleaningrequirements.Likecleaning,materialrestorationisaprocessthatisuniquetothecircularmodel.Aproduct’sabilitytoadapttodifferenttechnologiesinthisspaceisthereforeanimperativedesignconsiderationevenintheearlieststages.Materialrestorationthroughadvancedadditivemanufacturingtechnologiesisbecomingaparticularlyimportantconsid-eration.Overthelastdecade,theindustryhasseensignificantadvancesinadditivemanufac-turingtechnologieswhichhaveledtopromisingnewcircularapplicationssuchasmaterialsurfacerestorationandrecoating,improvedsurfacepropertiesforwearresistance,increasedcorrosionresistance,partrepair,improvedmechanicalproperties,andcompleteneworreplacementcost-effectiveon-demandpartproduction.Itisalsolikelythatthistechnologywillbetransformativeintheserviceandmaintenancesectors,whereon-demandpartproductionwilleliminatetheneedforproductionoverrunandwarrantysupportinventories.Additivemanufacturingcreatesormodifiespartsbyaddingmaterialsinlayerswitheachlayerconsistingofathincross-sectionofmaterial.Variousadditivemanufacturingtechnologiesdifferbythematerialsthatcanbeused,howthemateriallayersarecreated,andhoweachlayerisbondedtogether.Thesetechnologydifferencesimpactboththeaccuracyandmaterialandmechanicalpropertiesofparts,aswellasmachinesize,cost,andprocessingspeed.Additivemanufacturingcanfundamentallychangethewayproductsarerecoveredbyrestoringworncomponentsandsurfacesbacktothespecifieddimensions.DirectedEnergyDeposition(DED)technologiessuchaslaserengineerednetshaping(LENS),directmetaldeposition(DMD),laserconsolidation(LC),lasercladding,orplasmatransferredwirearc(PTWA),usethermalenergy(e.g.laser,electronbeam,orplasmaarc)tomeltanddepositmaterialontospecifiedsurfaces,wherethematerialsolidifies.Theseprocessescanbeusedwitheitherpowdersorwire,witharangeofpolymers,ceramics,andmetals.Othertechnologiessuchaskineticorcoldsprayballis-ticallyimpingenon-moltenparticulatesuponasurfaceatsupersonicvelocitiestoformacoating.Partofdesigningforcircularprocessesistounderstandwhichpartsandmaterialsaregoingtodegrade,andiftheseareascannotbeimprovedwithdesignasdiscussedinprevioussections,thendesignthesepartswiththeabilitytorestorethematerialandsurfacestothedesiredspecifi-cations.Additivemanufacturingtechniquesandmachineshavelimitationsonmaterials,partsize,andpartorientation,andaccuracy.Designneedstoconsidertheselimitationsandplanformaterialapplicationandpotentialsecondaryoperations.Additionally,planningforadditivemanufacturingtechniquescanchangethewaypartsareinitiallydesigned.Forexample,PTWAisoftenusedtoremanufactureandcoataluminumengineblockcylinderbores,eliminatingtheneedtodesigninheavycastironsleeves.163Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy8.2.4AppropriateuseofVRPsAsthemoreintensiveVRPprocesses,compre-hensiverefurbishmentandremanufacturingmaynotalwaysbetheoptimalstrategywithinacirculareconomy,andthereareextensivefindingsintheliteratureaffirmingthattheappropriatenessoffullservicelifeVRPs,inparticular,mustbeevaluatedonaproduct-by-productbasis(Matsumoto,Nakamura,andTakenaka2010,Schauetal.2011,Östlin,Sundin,andBjörkman2009,Gutowskietal.2011).ExtendingtheproposedcategorizationbyGutowskietal.(2011),productcharacteristicsandconditionsthatareneededtooptimizethedecisiontoengageinVRPs,includingremanufac-turing,mustinclude:thenatureoftheproductanditssub-systemcomponents;itsuse-phaseenergyrequirementandenergyefficiency;theresidualvaluethatcanberetainedinthesystembykeepingthecomponentpartsintactviaremanufacturing;andthematerialcompositionoftheproduct,whichcanaffectextraction,processingandmanufactur-ing-phaseenergyrequirementswhenconsideringmultipleproductservicelives.Theinteractionbetweentheproductanditssub-systemsisanimportantaspectofthisapproach.Formanyproducts,itisexpectedthatsomesub-systemcomponentsmaylastforonlyasingleplannedservicelife.Insomecases,sub-systemcomponentsmayrequirereplacementduringtheplannedservicelifeduetofasterdegradationfromwear-and-tear,orthetechno-logicalobsolescenceofsoftware.Inmanyofthesecasestheunaffectedchassisandothermechanicalcomponentsorsub-systemsoftheproductmaystilloffercompetitivefunctionalityandhaveretainedsignificantvalue.8.2.4.1OptimizedVRPdecisionframeworkcategorizationPleasenotethatthefollowingdiscussionemphasizesremanufacturingwithinaVRPdecisionframework,inordertopursuemaximizedvalue-re-tentionasthepriorityofacirculareconomy.Implicitinthisapproachisthatwhereaproduct/componentmaynotbesuitableforremanufacturing,theotherVRPoptionsofrefurbishment,repair,andarrangeddirectreuseremainviablevalue-retentionstrategies.Asremanufacturingsetsthehighest-levelofproductionrequirementofalltheVRPs,otherVRPscanbeconsideredforappropriatenessonanindividualbasis,relativetothisstandard.ThisconceptisclarifiedfurtherinFigure87whichdescribesfourdifferentexampleproductstosupporttheframeworkcategorization.ExampleproductsA(e.g.medicalimagingequipment),C(e.g.industrialdigitalprinter),andD(e.g.mobilephone)reflectproductswithmorecomplexsub-systems.ExampleproductB(e.g.officefurniture)reflectsaproductwitharelativelysimplersub-system.Theseexamplesareprovidedtohighlighttheconsiderationsthatbusinessdecision-makersshouldassesswhenevaluatingwhethertoengageinremanufacturingandotherVRPs.©Shutterstock/Gorodenkoff164Chapter8–DiscussionofkeyinsightsFigure87:Plannedservicelivesofproductsub-systemsforexampleproducts(A,B,C,andD)Somecomplexproductsub-systemshavethepotentialformultiplefullservicelivesviaVRPs(e.g.movingmechanicalparts,fixedmechanicalparts,andchassis/frame)(refertoExampleProductAinFigure87).Itisimportanttoconsiderwhetherthesemulti-servicelifesub-systemsconstitutesignificantretainedvalue,intheformofavoidednewmaterialrequirement.Otherconsiderationsshouldincludewhethertheretainedvalueoftheremanufacturedproductexceedstheinvestmentrequiredtoremanufactureandreturnittoas-newcondition,assumingrepairand/orreplacementofsingle-lifesub-systems(e.g.userinterface,software,exterior,andfluidsystems).Inothercases,theproductsub-systemsaremoresimplified,withthemajorityhavingthepotentialformultiplefullservicelives(refertoExampleProductBinFigure87).Giventhattherequiredinvestmentappearstobelargelyaestheticinnature,providedthattheinvestmentrequiredtobringtheproductbacktoas-newconditiondoesnotexceeditsretainedvalue,remanufacturingappearstobeaviableoption.Someproductspresentverycomplexconsider-ationsforremanufacturingdecisions,asaresultofthenumberofparts,and/orthenumberoflinkagesrequiredforthecircularsystemtofunctioneffectively(refertoExampleProductCinFigure87,andrefertoSection8.5foradditionaldiscussion).Asthemajorityofproductsub-systemslastonlyforthefirstservicelife,andsomemayrequireadegreemid-liferepair/maintenance,remanu-facturingmaynotseemlikeanidealinvestment.However,thechassis/framecanstillberecovered0123NumberofplannedproductserviceslivesatthesubsystemlevelExampleproductsubsystemsExampleProductCChassis/frameFixedmechanicalpartsMovingmechanicalpartsElectricalsystemsHydraulic/ﬂuidsystemsExterior/aestheticsSoftwareUserinterface01234Chassis/frameFixedmechanicalpartsMovingmechanicalpartsElectricalsystemsHydraulic/ﬂuidsystemsExterior/aestheticsSoftwareUserinterfaceNumberofplannedproductserviceslivesatthesubsystemlevelExampleproductsubsystemsExampleProductANumberofplannedproductserviceslivesatthesubsystemlevelExampleproductsubsystemsExampleProductDExampleProductDExampleProductD01.00.51.5Chassis/frameFixedmechanicalpartsElectricalsystemsExterior/aestheticsSoftwareUserinterface01234567Chassis/frameFixedmechanicalpartsExterior/aestheticsExampleproductsubsystemsExampleProductBNumberofplannedproductserviceslivesatthesubsystemlevel165Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyandincorporatedintoaremanufacturingprocess,providedthatthecurrentversionsoftheproductstillusethesamedesign.Forproductlinesthatofferupgradedfeaturesandenhancementswitheverynewversion,remanufacturingusingtheoriginalchassiscanreducetheenvironmentalandeconomicimpactsoftheproduct,whilealsoenablingupgradedperformancepotentialthroughreplaceduserinterface,softwareorelectricalsystems.Finally,someproductsandsub-systemsaredesignedtoonlylastforasingleplannedservicelife(refertoExampleProductDinFigure87).Inthiscase,noneoftheproductssub-systemsretainvalueafterthecompletionofthefirstplannedservicelife;theshortlifeofthechassis/framealsonegatesmuchofthepotentialforupgradingsoftwareanduserinterfacetechnologythroughremanufacturing.Refurbishmenttoenableshort-termextensionofproductfunctionality(only)maybepossible.Basedontheseconditionsandconsiderations,thefollowinggroupsareproposedandappliedforthepurposesofthisstudy.ThesearesummarizedfurtherinTable21.•Group1–Remanufacturing-appropriate(exampleproductsAandB):Referstoproductswhich,fortherelevanttime-periodbeingconsidered,havenotgenerallyundergonedesignmodifi-cationsthatsignificantlyaffecttheproduct’suse-phaseenergyrequirement,orthatsignif-icantlyaffectthematerialcompositionoftheproduct.Designchangeshavenotresultedinimproveduse-phaseenergyefficiency,and/orhaveresultedinthereplacementoflowerenergy-intensivematerial/componentswithhigherenergy-intensivematerials/components.Inaddition,theuse-phaseoftheproducthasnotoverlydegradedordiminishedthefunctionalityofitsprimarycomponents.Theremustbesufficientvalueretainedwithinthefunctionalformoftheproductthatadditionalinvestmentintoremanufacturingdoesnotnegatethepotentialforprofit.•Group2–Notremanufacturing-appropriate(exampleproductD):Referstoproductswhich,fortherelevanttime-periodbeingconsidered,havegenerallyundergonedesignmodificationsthatsignificantlyaffecttheproduct’suse-phaseenergyrequirement,orthatsignificantlyaffectthematerialcompositionoftheproduct.Wheredesignchangeshaveresultedinimproveduse-phaseenergyefficiencyorhaveresultedinthereplacementoflowerenergy-intensivematerial/componentswithhigherenergy-in-tensivematerials/components,theseproductsarenotgenerallyappropriateforremanufac-turing.Alternately,theuse-phaseoftheproducthasoverlydegradedanddiminishedthefunctionalityofprimarycomponents,requiringextensiveinvestmenttoreturnthemtoas-newcondition.Inthiscase,theinvestmentrequiredexceedsthevalueoftheproductbothinthesenseoftheretainedvalueofthefunctionalform,aswellastheprofit-potentialoftheproductinthemarket.•Group3–Complex,potentiallyremanufacturable(exampleproductC):Inmanycases,modifi-cationstodesignmayresultinacomplexoutcomeofassociatedlife-cycleenergyrequirements.Forexample,adesignenhancementthatincreasestheshareofhigherenergy-intensivematerials/componentsmayalsobeaccompaniedbyause-phaseenergyefficiencyimprovement.Inthesecases,amorecomprehensiveassessmentoftheretainedvalueoftheproduct,aswellasthecostsandbenefitsofengaginginremanu-facturingareneededbeforeaninformedbusinessdecisioncanbemade.Forthepurposesofthisstudy,allproductexamplesselectedforthecasestudyareconsideredtobelongtoGroup1orGroup3,asremanufac-turableproducts.ThisapproachwasusedtoenablecomparisonacrosstherangeofVRPs,todemonstratetheproduct-levelopportunities,aswellasaggregateeconomy-levelinsightsaboutVRPswithinthecontextofcirculareconomy.166Chapter8–DiscussionofkeyinsightsTable21:Summaryofremanufacturing-appropriateproductcategories26AdaptedfromGutowski,Sahni,Boustani,andGraves(2011)ConsiderationGroup1:(1)Reman-AppropriateGroup2:(2)NotReman-AppropriateGroup3:(3)Complex,PotentiallyRemanufacturableExampleproductAandBDCProductdesignmodifications(overthetime-periodbeingconsidered)Significantlyimproveuse-phaseenergy-efficiency26NoYesPotentiallySignificantlyincreaseshareofhigh-energymaterialscompositionNoYesPotentiallyChangethechassis/frameNoYesPotentiallyProductandsub-systemsChassis/framehasmorethanoneservicelifeYesNoPotentiallyRetainedvalueexceedsinvestmenttobringtoas-newconditionYesNoPotentiallyUse-phasehasnotoverly-degradedfunctionalityofprimarycomponentsYesNoPotentiallyAsdemonstrated,remanufacturingisclearlynotappropriateforallproducts;thedecisiontoengageinremanufacturingand/orotherVRPsmustremainwithdecision-makersandstrategists,withconsid-erationofthecostsandrequirementsuniquetotheirproduct-system.Fromthisperspective,designprioritiestofacilitatetheeffectiveemploymentofdifferentVRPscanbepursued:forexample,forproductsthatareexpectedtobecomeobsoleteduetofunctional,psychological,compliance,oreconomicfactorsinashorttime-frameshouldnotbedesignedforremanufacturing.Insteadotherdesignprioritiesincludingserviceability,modularity,andupgradabilityshouldbeemphasizedtofacilitateotherVRPsincludingrepairandrefurbishment.8.2.5DesignstrategyconclusionsProductscanbedesignedforcircularity,butsuchdesignscanonlybeeffectiveifproductdevelopersidentifycircularityascentraltothebroaderbusinessandmarketobjectivesunderlyingthepurposeforproductdevelopment.Theentiresystemofproductdevelopmentmustbedesignedtoconsidercircularity,resourceefficiency,andregenerativevalue.Toaccomplishthis,productdevelopersmustincorporatethreeessentialconceptsintoproductandsystemdesign:theneedtocreatevalue,protectvalue,andrecovervalue,allincosteffectiveways.Inthiscontext,productquality,durability,reliability,separability,assess-ability,andrestorabilitycanreplaceinexpensivematerials,low-costlabor,andhigh-volumesalesastheindicatorsofvalue.Metricsforresourceefficiency,productutility,andenvironmentalimpactmustsupplementdiscussionsonthecostofqualityandreturnoninvestment.Optimizingdesignforcirculareconomyrequiresseriousconsiderationofthenatureoftheproductandproduct-system:notallproductsareappropriateforfullservicelifeVRPs,andinsuchcasesotherdesignprinciplesthatfacilitate167Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyservice-lifecompletionandextensionthroughpartialservicelifeVRPsmustbeincorporated.Thishighlightsthefactthatthereareinherentdesigntrade-offsthatmustbeconsideredinordertoavoidunintendedconsequencesofdesigndecisionsthatcaninterferewiththevalue-retentionpotentialofVRPs,andultimaterecyclabilityoftheproductatEOL.Finally,itmustalsobenotedthateveryproduct,nomatterhowwellitwasdesignedforVRPs,willeventuallyceasetomeettherequiredfunction.Thefinaldispositionofallproductsshouldconsequentlybeconsideredduringproductdevelopmentandtherefore,eachpartshouldalsobedesignedtoallowforefficientrecyclingopportunities.8.3Themechanicsofasystemdesignedforvalue-retentionprocessesTherealityisthatthedesignersoffutureVRPsystemswillnothavetheluxuryofhavinga‘clean-slate’onwhichtostart.Existingmarketandsocialnormsmustbetakenintoaccount,andaccommodatedintheshort-term,andadjustedthroughstrategicinterventionsovertime.Inindustri-alizedeconomies,existingproduction,logisticsandcollectioninfrastructurearewell-entrenched,andthebusinesscaseforoverhaulingthesesystemsinpursuitofmaximumVRPefficiencyalonemaybedifficult,thusrequiringanincrementalapproach.Incontrast,manynon-industrializedeconomiesfacethechallengeofstrategicallybuilding-upproduction,logisticsandcollectioninfrastructurewherenonecurrentlyexist.Thereissignificantpressureonnon-industrializedeconomiestoavoidthesustainability-relatedpitfallsofindustrializationbyleap-froggingoverlessefficientproductionsystemsandtechnologies(CranstonandHammond2012,AllenandThomas2000,UNEP2011,Hammond2006).Takenattheaggregate,thesetypesofundertakingsappeardauntingandverycostlyintheshort-term.However,truetothevalue-retentionobjectiveofthecirculareconomy,thisdoesnotnecessarilyneedtobethecase.TherearemanyexistingattributesandaspectsofcurrentproductionsystemsthatcanbeleveragedinthepursuitofasystemdesignedforoptimizedVRPproduction.WhileeveryeconomyfacesdifferentchallengesandbarrierstoVRPs,eachalsohasanalreadyestablishedrelationshipwiththekeyaspectsoftheVRPsystemthatcaninformapolicyandimplementationstrategy.Forindustrializedandnon-industrializedeconomiesthatcurrentlyengageindiversionandcollectiontorecyclingmarkets,thesesystemscanbeadapted,formallyorinformally,toincludediversiontosecondarymarketsforreuseandVRPproduction,andcanincludenewvalue-chainmembersthatcanhelptofacilitateefficiencywithinglobalflowsofEOUproductsforVRPinputs.Forindustrializedandnon-industrializedeconomiesthatdonotengageincollectionorreverse-logistics,expertiseincurrentforward-logisticssystems(e.g.trade,sales,anddistribution)canbeleveragedtoimproveoveralllogisticssystemutilizationandproductivity,alongsidetheapplicationofBestPracticesthatmayhavealreadybeenestablishedforcollectionprogramsinotherjurisdictions.Foreconomieswithtechnologicalbarriersaffectingproducercapacity,thelearningsabouttechnologytransferenabledthroughimprovedaccessandtradeinotherproductscategoriescanbeemployedtothebenefitofVRPproduction.Further,thevastbodyofknowledgeaboutconsumerbehavior,innovationdiffusion,andeffectivemarketingthathavebeenemployedinthepasttoguideconsumersawayfromlessbeneficialproducts(e.g.CFC-containingaerosols)canbeutilized.Itisimportanttonotethatalthoughnon-indus-trializedeconomiesmayfacetechnologicalandinfrastructurebarriersthatinhibitthescale-upoffullservicelifeVRPsintheshort-term,thebroadersystemelementsdescribedwithinthisassessmentcanfacilitateandenableimprovedefficiencyandopportunityevenwithinpartialservicelifeVRPsofrepairanddirectreuse.SomeadditionalkeyinsightsrelatedtothemechanicsofasystemdesignedforVRPsandtoenablecirculareconomyareoutlinedinthefollowingsections.8.3.1Value-retentionprocessesareagatewaytorecyclingThereisacommonperspectivethatVRPsmaydetractfrom,orcompeteagainstrecycling;infact,allVRPsandrecyclingareessentialwithinthecontext168Chapter8–Discussionofkeyinsightsofacirculareconomy.Ahierarchicalperspectiveonvalue-retentionisuseful:whereVRPsensurethatbothmaterialvalueandfunctionalityareretainedwithintheproduct,oncefunctionalityhasdegradeditistherecyclingsystemthatensuresmaterialvalueisstillretainedwithinthebroadersystem.AnexampleofhowVRPscancreateagatewaytorecyclingisinthecasestudyofindustrialdigitalprinters,wherethenatureofVRPsandrecyclingcanbeobserved.Thestructuralsteelformoftheindustrialdigitalprintercomprisesthemajorityofproductweightanddoesnottypicallydegradethroughnormaluse.Thesesteelcomponentscontainrecycledcontent,andaredesignedtobestrong,durableandrobustformultiplelifecyclesthroughVRPs.First,andbydesign,there-circu-lationofindustrialdigitalprintersthroughVRPsensuresthatasignificantshareofthematerialsinproduct(min.90percentbyweight)canberetainedintheoriginalfunctionalform,overmultipleusefullives.Thisretainsthevalueoftheproductandcomponentmaterialsoveranextendedperiodandcreatesadditionaleconomicvalueforbothproducersandcustomers.Then,oncethematerialvaluehasbeendegradedsufficientlyovertimethatVRPsarenolongerabletocreatevalue(e.g.producttechnologyisnolongerrelevantorvalued),thereducedbutstillsubstantialvalueinherentinthestructuralcomponentsoftheindustrialdigitalprintercanberetainedinthesystemthroughappropriaterecyclingactivities.Atthesametime,becausetheindustrialdigitalprinterhasbeendesignedforVRPsandmultiplelifecycles,thereisnewopportunityformoresustainablebusinessmodels(e.g.product-servicebasisand/orleasing),andfortheestablishmentofefficientproductcollectioninfrastructure.Becauseofthissystem-wideapproachtoVRPsandproductcircularity,forcertainproducersofindustrialdigitalprinters,averyhighproductcollectionrateforVRPsisenabled,andinturn,amuchmoresignificantdiversion-to-recyclingrateaswell.Ahigh-levelexampleofthepotentialforrefurbishmentandremanufacturingtoactasa‘gateway’toimprovedrecyclingisdescribedinFigure88.Material&partsManufactureProductMaterial&partsManufactureProductDisassembly/reutilizationDisassembly/reutilizationRecyclingResourcesHorizontalLoopCascadeLoopFigure88:Value-retentionprocessasagatewaytorecycling169Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyIftheindustrialdigitalprinterwasrecycledimmediatelyattheendofitsoriginallife,thematerialvaluewouldstillberetainedwithinthesystem,buttheadditionalbenefitsofoffsetprocessenergyrequirement,processemissions,andeconomicvalueoftheproduct’sfunctionalformwouldbelost.Instead,aspartofasetofEOLoptions,VRPsandrecyclingcanbestrategicallyusedtomaximizevalueretentionoveranextendedperiodandmultipleservicelives,thusincreasingtheefficiencywithwhichthecirculareconomyretainsvalueoverall.Fromavalue-retentionperspective,relianceonrecyclingaloneultimatelyleadstolostvalueforthesystemandcustomerandreducedeconomicopportunity.Inaddition,thevalue-retentionpotentialofanyeconomyisdirectlytiedtotheeffectivenessandefficiencyofreverse-logisticssystems:disruptionofglobalandlocalreverse-logistics,whetherdivertingtorecyclingortoVRPproduction,reducesthevalueretainedbythesystem,andultimatelydegradestheabilityofVRPproducerstoachieveeconomiesofscale,andtheabilityofthecountrytopursueacirculareconomy.8.3.2Reboundeffectandsystemicimplicationsofvalue-retentionprocessesTheeffectivenessandappropriatenessofcirculareconomyhasbeenquestionedintheliteratureregardingtheextentthatactualprimaryproductionisreducedordisplacedbycirculareconomyreuseactivitiesandVRPs(Allwood2014,GeyerandBlass2010,Zinketal.2014).Theactualdisplacementofprimaryproductionactivitiesandreductioninabsoluteimpactsisinfluencedasmuchbytheindividualproductandprocessattributes,asbythemarketforcesactingwithinthesystem(McMillan,Skerlos,andKeoleian2012,Thomas2003).ZinkandGeyer(2017)notethatwhereabsolutematerialandproductiondisplacementoccurs,itcannotbeassumedthatitisoccurringona1:1basisduetothepresenceofotherinfluencesandforcesactingwithinthesystem.AsemphasizedbytheresultspresentedinSections5,VRPsattheproduct-levelprovideanopportunitytooffsetordisplacenewmaterialrequirement,andthustheassociatedembodiedmaterialenergyandemissionsimplications.Thisdisplacement,evenifnot1:1,presentsanefficiencygainfromVRPsthatcanmanifestasmaterialefficiency,resourceefficiency(energyuse,emissions),andcostefficiency.Theoriginsofrebound-effectdiscussionisbasedintheeconomicperspectiveheavilyfocusedonthedirectpriceeffectsofincreasedefficiency:whereincreasedefficiencycontributestodecreasedcostofdoingorreceiving,thereisthepotentialthatthecostreductionwilldriveanincreaseindemand,ultimatelyincreasingtheabsoluteimpact(Greening,Greene,andDifiglio2000).Therehavebeenmanycallsintheliteraturetoexpandonthislimitedprice-effectfocusedviewofrebound,drawingfrominsightsonenergyefficiencyrebound(Borenstein2013,Berkhout,Muskens,andVelthuijsen2000,SorrellandDimitropoulos2008),andunintendedpositiveandnegativeeffectsofenvironmentalprotectionmeasures(Hertwich2005).Astrictenvironmentalperspectiveonreboundeffectstendstofocusonthemanyvalidenvironmentalimplicationsofincreasedproductionandconsumption;however,thecirculareconomyandbroadersustainabilityperspectivesmustalsoacknowledgeimportantmarketandsocioeconomicimplicationsthatareanimportantpartofsustaina-bilityandcirculareconomytransformationpathways.Differentiatedfromenergyefficiencyrebound,thepotentialforunintendedpositiveandnegativeeffectsof‘circulareconomyrebound’(ZinkandGeyer2017)extendbeyondprice-effectsandenergyefficiencyconsiderationstoconsidertheimplicationsofincreasedproductionorconsumptionefficiencyinthecontextofmarketinfluencesanduser/customerperspectives.FurtherdifferentiatingVRP-relatedreboundfrom‘circulareconomyrebound’istheassessmentofthesereboundimpactsattheproduct-level.Thus,althoughmanyofthereboundconsiderationspresentedbyZinkandGeyer(2017)reflectvalidmaterial-levelrecyclingreboundconcerns,thesearebeyondthescopeofthisdiscussionfocusedonVRP-relatedreboundeffects.AnextendedconsiderationofVRP-relatedreboundeffectsarepresented,andinaccordancewiththeinsightsandstructureproposedbyZinkandGeyer(2017)theseeffectsareorganizedtoaccountfor:•priceeffectstiedtoVRPsandVRPproducts;•substitutabilityofVRPsandVRPproducts;and•othereconomy-levelandtransformationaleffects.170Chapter8–DiscussionofkeyinsightsAswithallreboundeffect,whereverthereareefficiencygainsresultingfromtheintroductionofnewtechnology,thesecanbeoffsetbyunexpected(orexpected)behavioralandsystemresponses.ItmustberememberedthatallVRPsrelyuponhigh-quality,durableoriginalmanufacturedproducts:therewillalwaysbeaneedfororiginalmanufacturingactivity.Thus,engagementinVRPsshouldnotcauseanOEMNewproducttobeavoidedineverycase,andthepotentialforreboundeffectsisrealandmustbeacknowledged.8.3.2.1PriceeffectstiedtoVRPsandVRPproducts8.3.2.1.1IncreaseddemandandproductefficiencyleadstoincreasedconsumptionIncreaseddemandforVRPproductscanderivefromthediscountedpricepoint(inallmarkets),aswellasfromthealleviationofaccessbarriers(inrestrictedmarkets).Pricediscountsareattractivetocustomers,particularlywherequalityandperformancearemaintainedandwarrantied(e.g.remanufacturing).PricediscountisaprimaryaspectofdemandmodelingforVRPproducts(Atasu,Sarvary,andVanWassenhove2008,Agrawal,Atasu,andVanIttersum2015,Atasu,GuideJr,andVanWassenhove2010,Debo,Toktay,andWassenhove2006),andisinalignmentwiththeliteratureondirectrebound(Berkhout,Muskens,andVelthuijsen2000,Greening,Greene,andDifiglio2000,Borenstein2013,SorrellandDimitropoulos2008)aswellasneo-classicaleconomictheory(Bertrand1883).AsnotedbyZinkandGeyer(2017),inconsiderationofmarketinfluences,thecompletedisplacementofanOEMNewproduct,andassociatedprimaryproduction,cannotbeassumed.Implicitinthisperspectiveisthatwhenlessthan1:1displacementisoccurring,thereisalsosomedegreeofproductiongrowthoccurring(Thomas2003).Scitovksy(1994,37)foundthatmarketsfornon-newconsumerdurables“…stimulatetheeconomypartlybyenablingthewell-to-dothesoonertoreplacetheirwornoutorobsolescingdurablegoodswithnewones,andtherebyincreasingthetotaldemandforthem.”WhilethisincreaseindemandforVRPproductsenablescontinuedeconomicgrowth–oneimportantconsiderationforthecirculareconomy–italsonecessitatesthecontinuedincreaseinaggregateconsumptionofnewmaterialsandenergy,aswellasthegenerationofwasteandemissions.ItalsoraisesconcernsaboutsocioeconomicdividesthatmaybehighlightedthroughthegrowthofVRPand/ornon-newproductmarkets.AnimplicationofgrowingmarketsforVRPproductsisthatinsomecasesthereducedpricepointoftheless-efficienttechnologyenablesnewmarketdemandfromthoseusers/customersotherwiseunabletoparticipateinthemarket(Thomas2003).Inmanycases,theseusers/customersareinlesswealthyand/ornon-industrializedeconomies,andunregulatedorunmonitoredtransactionscanquicklyleadtoconcernsaboutdumping,particularlyinthecaseofVRPelectricandelectronicproducts(Zhang,Schnoor,andZeng2012,SthiannopkaoandWong2013,NiandZeng2009,Schmidt2006,UNEP2005).IncaseswhereVRPproductqualitycannotbeguaranteedthereexistsaconcern,ifnotavalidtension,betweensocial(e.g.consumersafety)andenvironmental(e.g.use-phaseenergyefficiency)interests,andtheeconomicopportunityforotherwiseinaccessiblelower-pricedVRPproducts.AsdiscussedinSections6.1.2and7.2.1,manynon-industrializedcountrieshaveimplementedregulatorypoliciesthatworktomitigatethepotentialdownsideofthistensionviaimportrestrictionsonVRPinputsandfinishedproducts(Thomas2003).Aswithotheraspectsofcirculareconomy,thebroadersystemmustalwaysprovidecontext;forexample,thecaseofremanufacturedindustrialdigitalprinters(refertoProductCinFigure87).Giventhatremanufacturingenablestheupgradeandenhancementoftheproducttoas-neworbetterspecification,aremanufacturedindustrialdigitalprintercanmeetcurrentfunctionalityandperformancerequirements.Particularlyinthecaseofindustrialprinters,equivalentperformancequalityandalowercostmayleadtoincreasedprintingactivitybycustomers,resultinginhigheruse-phaseimpactsofbothenergyandpaperconsumption.Atthesametime,thishigherconsumptionstillcomesatalowerrelativecost:asignificantshareofproductmaterials,embodiedmaterialsenergy,andembodiedmaterialsemissionsareretainedwithinthesystem,whichenablesaloweraverageresourcerequirementoverall.171Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy8.3.2.2SubstitutabilityofVRPsandVRPproductsInmanycases,users/customerswillnotconsidertheVRPproducttobeequivalentorsubsti-tutablefortheOEMNewversionoftheproduct,oftenduetoperceptionsaboutproductquality,andimplicitlytheriskassociatedwithanon-newproduct(MitraandGolder2006,Debo,Toktay,andVanWassenhove2005,KirmaniandRao2000,Hazenetal.2017,Brucks,Zeithaml,andNaylor2000,Jacoby,Olson,andHaddock1971,Geistfeld1982,LichtensteinandBurton1989,Ovchinnikov2011,Hazenetal.2012).However,prospecttheoryandotherliteratureonVRPssuggeststhatpotentialcustomersevaluateVRPproductsbasedtheinteractionbetweenperceivedrisk,perceivedbenefit(e.g.pricereduction),andperceivedvalue(KahnemanandTversky1979,Atasu,Sarvary,andVanWassenhove2008,MonroeandChapman1987).Theissueofwhether,andtowhatextentVRPsareconsideredsubstitutableremainsanimportantfocusintheliterature.Attributesofperceivedquality,priceandbrand,canhighlyinfluencecustomerdecision-making;alongsideproductattributes,socialnormsandnetworkswillalsoinfluencethespeedofadoptionofVRPproducts(McCollough2010,WangandHazen2016,Ülkü,Dimofte,andSchmidt2012,Jansson,Marell,andNordlund2010,Rogers1976,2003,Peres,Muller,andMahajan2010,Mylan2015,KahnemanandTversky1979).AdoptionofVRPproducts,asinnovativenewoptionsincurrentlyrestrictedmarkets,areafunctionofdistributioninfrastructure,otherregulatoryconditions,aswellassocialnormsthatmaypredisposecustomerstowardsdifferentoptions(Peres,Muller,andMahajan2010,WangandHazen2016,Hofstede1980)..ThefollowingsectionsrelatetotheimplicationsofsubstitutingVRPproductsforOEMNewproducts,aswellastheimplicationsofsubstitutingdifferent(e.g.lower-impactpartialservicelifeversushigher-impactfullservicelife)VRPswithintheproductionmix.8.3.2.2.1ThepresenceoflessefficienttechnologiesinthemarketAlignedwithenvironmentalperspectiveonreboundeffectsistheconcernthatthereuseofproductswithhighuse-phaseenergyconsumptionandemissionsgenerationmayencouragetheretentionofless-efficientproductmodelsinthemarketplace(Berkhout,Muskens,andVelthuijsen2000,Greening,Greene,andDifiglio2000,Borenstein2013).Ratherthandisplacingolder,lessefficientandhigher-pollutingproductmodelswithmoreefficient,cleanerdesigns,VRPsmayservetokeepoldermodelsinthemarket,potentiallypreventingtheuptakeofmoreefficientdesigns,andthusincreasingthenetimpactoftheseproductsintheuse-phase(Gutowskietal.2011,CooperandGutowski2017).Whileinmanycases,thecomparativeevaluationsoflife-cycleimpactsarebasedupontheVRPforasignificantlyolderproductmodelandanewlyupgraded,efficientmodel,ashighlightedinSection8.2.4VRPsarenotalwaysappropriateandthedecisiontoengageinVRPsmustcarefullyconsiderthenatureoftheproductandtheproduct-system.Accordingtointerviewswithindustryexperts,formalVRPs(especiallyfullservicelifeVRPs)forsignificantlyoldermodelsand/orless-efficientversionsofaproductaretypicallynotpursued,asitisoftenmoredifficulttodevelopmarketdemandforVRPversionsoftheseproducts,andthereforeareoftennotdeemedtobeworththeinvestmentbytheVRPproducer.Itmustalsobenotedthat,despiteuse-phaseimpactreductionsenabledbynewerandmoreefficientproductmodels,theeconomicrealityofmanyusers/customersmustbeconsidered.InaccordancewithmarketinfluenceobservationsofMcMillan,Skerlos,andKeoleian(2012)andZinkandGeyer(2017),thelatest,mostefficientproductmodelsareoftenfarmoreexpensivethantheVRPoption.Thissuggeststheopportunityforfutureresearchintoreasonablesubstitutionbehaviors,andthelifecycleimpactsbetweenVRPsversusOEMNewproductsthatareactuallylikelytobeconsideredsubstitutesinthemindofthecustomer.Thepotentialforless-efficientproductmodelstoberetainedinthemarketplaceisreal;howeverthroughtheeducationandengagementofindustrymembersregardingtheappropriateapplicationsof172Chapter8–DiscussionofkeyinsightsVRPs,someofthisriskmaybemitigated(refertoSection8.2.4).Arealisticmiddle-groundmustbeacknowledgedintheshort-termthat,whilepotentiallyimperfectcomparedtotheidealstateinwhichonlythemostefficientproductsareused,VRPproductspresentaviablealternativetoacomparablyefficientOEMNewproductmodel,andameaningfulalternativetotheuserwhowouldotherwisebeunabletoparticipateinthemarketatall.8.3.2.2.2Displacementoflower-impactpartialservicelifeVRPsmayincreasetotalimpactsAsobservedfromtheTheoreticalHighscenarioforvehiclepartsinChina(Figure63),thereisapotentialreboundeffectforeconomieswithcurrentlyhighsharesofpartialservicelifeVRPs(e.g.repairandarrangingdirectreuse)andlowsharesoffullservicelifeVRPs(e.g.remanufacturingandcomprehensiverefurbishment).Inthesecases,thelowervalue,lowerimpactVRPsmaybedisplacedbyVRPswithrelativehighervalue,butalsorelativelymorenegativeimpacts.WithaccesstofullservicelifeVRPs,customersmaychoosetheseoptionsoverarrangingdirectreuseorrepair.Thedisplacementoflow-impactrepairedvehiclepartsbyhigher-impactremanufacturedorrefurbishedvehiclepartscouldpotentiallyresultinanincreasetoprocessenergyandprocessemissionsassociatedwiththatsector,asobservedinthecaseofChina(refertoFigure63).Whilethisreboundeffectmayonlyoccurintheshort-term,itisareminderthatallVRPsplayanessentialandimportantroleinacirculareconomy,andthatthecomplexityofthebroaderVRPsystemmustbeconsideredinthedevelopmentofprogramming,andpriortosignificantpolicyinterventions.Innon-industrializedeconomiestheprevalenceoflower-impactpartialservicelifeVRPs(namelyrepair)reflectswhatiscurrentlypossibleandappropriategiventheeconomic,infrastructure,andtechnologicalconditionsofthoseeconomies(Weeks1975,BellandAlbu1999).Displacinghighlevelsofrepairinnon-industrializedeconomieswithoutsufficientadvanceintheotheressentialsystemaspectsincludingtechnologicalcapacityandeconomicviabilityforconsumersisunrealistic.Inaddition,thedisplacementoflower-impactpartialservicelifeVRPswithhigher-impactfullservicelifeVRPswillleadtoabsoluteincreasesinmaterialandresourceconsumptionandotherenvironmentalimpactswithinthesetypesofeconomies.8.3.2.3Economy-levelandtransformationaleffectsofVRPsandVRPproducts8.3.2.3.1TheearlieropportunityfortechnologyupgradeinterventionsAcontrastingperspectiveonthisissueisthatthepresenceofeffectiveVRPoptionsinamarketmayenableaninterventionopportunitythatcreatespositivereboundeffect.Formanyproductsectorsthatdealwithelectroniccomponents,whentheproductisreturnedintotheVRPsystembeforeitsexpectedlifeiscomplete,fullservicelifeVRPs(comprehensiverefurbishmentandremanufac-turing)canallowfortheupgradeoftheproductstoenhanceandimproveperformanceefficiency,andpotentiallyotheruse-phaseenvironmentalimpacts.AsdescribedinSection8.2.4.1OptimizedVRPDecisionFrameworkCategorization,dependingonthespecificproductandprocess,fullservicelifeVRPscanreutilizeproductcomponentsthathavenouse-phaseimpacts(e.g.thechassis,frame,exterior)(Figure87)andundertaketheupgradeofsoftwareand/orelectronicsystems.Thisiscommonpracticeinthecomprehensiverefurbishmentandremanufacturingofindustrialdigitalprinters(refertoProductCinFigure87).Whenusedappropriately,fullservicelifeVRPsmayofferinterventionopportunitiesthatenablereducedlife-cycleimpactsoftheproduct,relativetoitsoriginalspecification.InhighlyefficientandorganizedVRPsystems,valuecanberetainedwithinthesystemlonger(e.g.materials),withoutcompro-misingontechnologicalefficiencyadvancements,suchasemissionsreductionsduringuse-phase.Althoughnotpartofthisstudy,technologyandperformanceupgradesthroughVRPsarequitecommonfortheelectricalcomponentsandsystemsintheautomotive,marine,locomotive,heavy-duty,andaerospacesectors.AsexpandedoninSection8.2.3,upgradabilityisjustonedesignstrategythatcanenablethecreationandretentionofvaluewithintheindustrialeconomicsystem(Section8.2.3.2.2).TheeconomicopportunitycreatedviathecostefficienciesofVRPsmayservetomotivatemoreorganizedandstandardizeddesignapproaches,includingdesignformodularity(Section8.2.3.1.1)anddesignfor173Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomydisassembly(Section8.2.3.3.2).ThesedesignapproachesmustnecessarilyexistwithinabroadersystemdesignedforVRPs,andimplicitintheseapproachesismoretransformationalchangeinattitudesandsystems.8.4Overcomingbarrierstovalue-retentionprocessesAlleconomieshavethepotentialtooptimizetheroleofVRPswithintheircirculareconomystrategy.Fromthisassessment,thereisnoevidencethatthe‘developing/newlyindustrialized’statusofaneconomyaffectstheabilitytofullyengageinVRPs,andthereisconfirmationthatthisisnotanissueof‘developed/industrializedversusdeveloping/newlyindustrialized’economicstanding.Mexico,consideredtobeanadvanceddevelopingeconomy,hasdemonstratedcapabilityandhigh-performanceinremanufacturing,largelyenabledthroughtradeandinvestmentcollab-orationwithentitiesfromtheUSandCanada(U.S.InternationalTradeCommission2012).Theintroductionofremanufacturingaspartoftheproductionmixcanhelptoenhancetechnologicalcapacity,know-how,skilledlaboropportunities,andincreasedawarenessofdomesticcustomers;theseeconomicbenefitsareinadditiontothereductionsinnetmaterialrequirement,processenergyandprocessemissionsthatareachievedbyMexicanremanufacturers(LundandHauser2010,BrentandSteinhilper2004).Whatbecomesclearfromthecasestudyresults,andobservationofothernon-casestudysectors,isthatitisthepresenceandnatureofthebarrierstoVRPswithintheeconomicandproductionsystemsthatdeterminethemagnitudeof,andspeedatwhichthebenefitsofbothfullandpartialservicelifeVRPscanberealized.AsimplifiedoverlayofhowthesebarriersaffectdifferentaspectsoftheVRPsystemispresentedinFigure89.Figure89:Descriptionoftheeconomicsystemrequiredtosupportvalue-retentionprocessExportRecyclingmarketSecondarymarketRecyclingmarketDisposaltoenvironmentDisposaltoenvironmentRecyclingmarketDisposaltoenvironmentVirginmaterialsRecycledmaterialsVirginmaterialsDomesticcores/reuseImportedcores/reuseImports(Developed/industrializedeconomies)Newdemand(New,arrangeddirectreuse,refurbished,remanufactured)RecycledmaterialsImports(Developing/newlyindustrializedeconomies)Collection&diversion(New,arrangeddirectreuse,refurbished,remanufactured)DemandedproductCollectedEOUproductNewinputsReuseinputs/outputsRecyclinginputs/outputsGarbageConnectedrecyclingflowsConnectedreuseflows(C)CustomerVRPmarketcapacity(D)DomesticVRPproducercapacity(B)Reverse-logisticsﬂows(A)Forward-logisticsﬂowsMaintenance&repair174Chapter8–DiscussionofkeyinsightsBarriersthataffectforwardandreverseflows:Point(A)highlightstheareasofthesystemwhereregulatoryandaccessbarrierscanaffectflowsoffinishedVRPproductsfromproducerstocustomersindomesticand/orinternationalmarkets.Point(B)highlightstheareasofthesystemwherecollectioninfrastructurebarrierscanaffectflowsofEOUproductsandcomponentsfromthecustomer/userbackintothesecondarymarketsand/ortotheOEMtobeusedasinputstoVRPs.Barriersthataffectcapacity:Point(C)highlightswheremarketbarriersmaycreatecapacityconstraintsforthedomesticVRPcustomermarket.Point(D)highlightswheretechnologicalbarriers,maycreateengagementandcapacityconstraintsfordomesticVRPproducers.ThepresenceofbarriersinthesystemnotonlyconstrainandlimitthepotentialofVRPproduction:theyarealsointerconnected.Assuch,furtherreinforcingthenecessityofasystems-perspective,thealleviationofthesebarriersmustbeconsideredinthecontextoftheentiresystemandallinterplayingconditions.TheseobservationsareclarifiedfurtherinSection6.1.8.4.1EconomicconditionsandaccesstoVRPproductsFundamentalvariablesaffectthespeedofinnovationdiffusionandadoption,includingtheperceivedattributesoftheinnovation,thecommunicationchannelsthroughwhichinformationisdissem-inated,andthenormsofthesocialcommunity(Rogers,2003).Inpractice,thepatternoftheadoptionofaninnovationdependsontheinteractionofdifferentfactorsthatcanbegroupedasfollows:supply-sidefactors(availabilityofinformation,relativeadvantageoftheinnovation,barrierstoadoptionandfeedbackbetweensuppliersandconsumers);demand-sidefactors(adopterswithdifferentperceptions,imitationofearlyadopters);andcross-countryfactors(culture,religion,opinionleaders).Thechoicebetweenthedifferentmodelsofdiffusionofaninnovationandthefactorswhichwillmostinfluenceitsadoptionwilldependonthecharacteristicsoftheinnovationandthenatureofpotentialadopters.AsdiscussedbyKarakaya,Hidalgo,andNuur(2014),theadoptionofnewinnovationsdependsontheinteractionofavarietyoffactorsthatcandifferacrossandevenwithineconomies,including:(1)supply-sidefactorsthatincludetheavailabilityofinformation,theperceivedrelativeadvantageoftheinnovation,andinformationasymmetrybetweenthebuyerandseller;(2)demand-sidefactorsthatincludecustomer/userperceptions,andincentivesforadoption;and(3)economy-widefactorsthatincludesocialnorms,culture,religion,andpolitics(McPherson,Smith-Lovin,andCook2001,KimuraandHayakawa2008).However,Karakaya,Hidalgo,andNuur(2014)alsopointoutthatthenatureoftheinnovationitselfisalsoanimportantfactor,andinthecaseofeco-innovationsthereislimitedevidencethatadoptioncanbepredictedaccordingtotraditionalinnovationdiffusionmodels(c.f.Rogers2003).Thereissignificantneedforfutureresearchtoassessandbetterunderstandtheuniquefactorsandinfluencesthatfacilitatetheadoptionofeco-in-novations,includingVRPs,inordertosupportthefastertransitiontocirculareconomy.Precludingdiffusionandadoption,however,istheneedforcustomersandproducersinamarkettohaveaccesstotheinnovationinthefirstplace–literally(e.g.abilitytoaccessVRPproductsand/ortechnologies),andfiguratively(e.g.exposuretoandeducationaboutVRPsandVRPproducts).Inthisassessment,thepresenceofaccessbarriersdominatestheabilityofaneconomytorealizethebenefitsfromVRPsthroughuptakeanddiffusion:wherecustomeraccessbarrierswerepresentinthescenario,thenumberofVRPproductsinthecustomermarketremainedverylow.Thelackofunderstandingofvalueandopportunity,andthedilutednetworkeffectensuredtheslowuptakeofVRPproducts,aswellasadelayincustomermarketawarenessofbenefits.IntheabsenceofcleardomesticmarketdemandandaccesstoVRPtechnologies,potentialVRPproducersareunabletosupportthebusiness-caseforVRPs,despitetheknownenvironmentalandeconomicbenefits.ThedelaysrelatedtoaccessbarrierscanbeobservedinthecasestudiesofBrazil(refertosomeexamples:Figure50andFigure66)andChina(refertosomeexamples:Figure51andFigure67),whereunderthemorerealisticStandardOpenMarketforVRPProductsscenario,theuptakeandadoptionof175Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyVRPsinbothproductionanddemandmixremainsminimalrelativetotheotherprevalentpracticesofOEMNew,repairandarrangingdirectreuse.AccessbarriersslowthegrowthofVRPproductionwithinthedomesticeconomy,aswellasthespeedofVRPcapacityscale-up,andtherelatedgrowthindomesticdemandforVRPproducts.Technologyandknowledgetransferthatisessentialforenhancingthelearningcurveofdomesticproducersisinhibited,ultimatelypreventingopportunitiesforimprovedproductionandoperationalefficiency.Asaresult,customermarketawarenessofVRPoptionsandbenefitsarepreempted,andtheultimatedevelopmentandmaturationofVRPswithinaneconomyisstunted.Fromastrategicperspective,thesedelaysinterferewithdomesticproducerreadinessandcapacitytoengageinVRPsquickly,ultimatelyaffectingcompetitivenesswithintheglobaleconomy,andreducingtheabilityoftheeconomytopursuecirculareconomyandimpactreductionthroughVRPs(BellandAlbu1999,DelRío,Carrillo-Hermosilla,andKönnölä2010).8.4.2EnvironmentalandtechnologypolicyopportunitiesAlthoughthemodelingapproachinthecasestudiesofthisreportdonotreflectatransformativeapproach,economicinnovationisanimportantperspectiveforcirculareconomyandVRPs.Evolutionaryeconomicsconsidershowtechnologies,technologicalcompetition,andsocio-technicalsystemscanaffectthetrajectoriesofinnovationandhowpotentialbarrierstoinnovationcanbemitigatedviastrategicpolicy,demonstratingasystems-perspectivethatiscommontocirculareconomythinkingandresearch(DelRío,Carrillo-Hermosilla,andKönnölä2010,GreenandRandles2006).Inthecontextofinnovation,VRPsrepresentincrementaleco-innovationattheprocess-level,inwhichtraditionalapproachestoproductionandproduct-responsibilityareadjustedtoreducenegativeenvironmentalimpactsandenhancethevalue-retentionpotentialofthesystem.Incontrast,circulareconomyrequiresmoresubstantiveandradicalinnovationconcernedwithcreatingnewandefficientlinkagesbetweendiverseandnumerousstakeholdersintheproduction-system.Fromabarriers-perspective,thebarrierstocirculareconomyaresystemic,affectingmultiplestakeholders,andrequiringfacilitationandmitigationonlypossibleviapolicy;incontrastthebarrierstoVRPsaremorespecificand/orisolated,andhenceprocess-levelchangesmaybetargetedbyindividualfirmsandindustryorganizations(DelRío,Carrillo-Hermosilla,andKönnölä2010).ThebarriersfacingVRPs,andassociatedcirculareconomycanbeorganizedintothreecategoriesoriginallyproposedbyDelRio,Carrillo-Hermosilla,andKönnölä(2010)inthecontextofeco-innovation:(1)thelackofpressureorpushtochangefromtheexternalenvironment;(2)theconditionsinternaltothefirmthatcaninhibitchange,includinglackofresources,technologicalcapacityandpriority;and(3)thetechno-economiccharacteristicsofVRPsanddesign-for-VRPscanbetooexpensive,and/orincompatiblewithexistingprocessesandinfrastructure.Inadditiontothese,complicateddefinitionsassociatedwiththetradeofVRPproductscaninterferewiththeuptakeofVRPs,oftenbecauseofassociatedcomplicatedcomplianceandreportingrequirements.Remanufacturingneedsanacceptedinternationaldefinitionthatreflectstherigorousindustrialprocessofremanufacturingitself.Itisimportantthatthedevelopmentofthesedefinitionsbedistinguishedfromtherelated,butinherentlydifferent,discussionofwhether‘cores’constitutewasteand/orotherclassifications.OversimplifiedanduninformeddefinitionsofremanufacturingcreateunnecessaryregulatorybarriersforlegitimateVRPproductofferings;alternatemethodstocontrolthequalityandnatureofVRPproductsenteringaneconomythroughtrade,outsideofwaste-relatedcompliancesystems,shouldbeconsidered.Itisalsoimportantforthoseinvolvedintheprocessofdefinitioncreationtoenableoptimizedintegrationandalignmentofdefinitionsacrosseconomies:whetherthisoccursthroughtheenhancementofrelevantexistinginternationalagreements(e.g.recentclarifyingexplanatorynotesfortheterm“wastes”intheGlossaryofTermsinDocumentUNEP/CHW.13/4/Add.2),orthroughspecificandappropriateinclusionindevelopingandfuturebi-lateralandothertradeagreements.Giventhedemonstratedeconomicandenvironmentbenefits,improvedrecognitionandinclusionofappropriatetypesofVRPproductsintradediscussionsmayenablesignificantopportunityforeconomicgrowthandimpactreduction,aswellasfasterscale-upthroughtechnologyandknowledgetransferopportunities.176Chapter8–DiscussionofkeyinsightsInresponsetothesebarriersandchallenges,thereisapushtodistinguishbetweenproductinnovation(e.g.design)andprocessinnovation(e.g.remanu-facturing),astherearedifferentopportunitiestoinfluenceandaffecteach(DelRío,Carrillo-Hermosilla,andKönnölä2010).Whereproduct-levelinnovationtendstobedrivenmorebycustomerandcostpressures,environmentallegislation,andcompliancewithinternalfirmpolicy(TriebwesterandWackerbauer2004),process-levelinnovationtendstobemoreaffectedbycustomerpressure(versusenvironmentallegislation)(TriebwesterandWackerbauer2004),andtheneedtocomplywithexistingregulation(delRíoGonzález2005).Bothtechnologypolicyandenvironmentalpolicyoffercomplementaryopportunitiestoencourageenvironmentally-preferabletechnologyandsystems(delRíoGonzález2009,DelRioGonzalez2004).DelRio,Carrillo-Hermosilla,andKönnölä(2010)presentanexcellentcompilationofframeworkconditionsforpolicythatinvolvesacombinationofapproachestobalanceandaccommodatethediverseconditions,characteristics,andstakeholderswithincirculareconomyandVRPinnovations.Thereisaclearneedtobalanceshort-termenvironmentalinterestsalongsidetheneedformoreradicalsystemicchangetomitigatesuboptimaltechnologicallock-in(Kemp2000,DelRioGonzalez2004);inadditionitisessentialthatthelimitsofpolicy,suchasthepotentialtocreatepowerfulinterestgroupsthatcanperpetuatetechnologicallock-in,beacknowledged(DelRío,Carrillo-Hermosilla,andKönnölä2010).Policymeasuresthatareknowntosupportandfacilitatethesupply-pushofeco-innovationviatechnologydevelopment,includeresearchanddevelopmentsubsidies;incontrast,policymeasuresthatenabledemand-pullvianewmarketcreationincludepublicprocurement.TheadvancementandenhancementofScience,TechnologyandInnovation(STI)systemsisofparamountimportanceonmostnationalagendasasakeyrequirementtofacilitatemeaningfuleconomicgrowth.StrategiesandinvestmentsfortheSTIsystemsofbothdeveloped/industrializedanddeveloping/newlyindustrializedeconomiesneedtobeexpandedtoconsidertheadditionalanduniquerequirementsofVRPproductionsystems;alongsidetraditionalSTIsystemenhancements,developmentoftechnology,investment,industry-institutecollab-oration,laborforceskills,andR&DthatsupportVRPproductionprocessesareessentialstrategiesforpursuingthepotentialbenefitsofanoptimizedTheoreticalHighscenarioforeachdiverseeconomy.Governmentregulationscanactasapositiveinfluenceinguidingproductdevelopmentdecisionstowardcircularconsiderations.ADirectiveoftheEuropeanUnion(2000/53/EC),forexample,laysoutexplicitguidelinesstipulatingthatautomotivemanufacturersmustaccountforeaseofdisassembly,reuse,collection,andrecyclingofcomponentsattheend-of-lifeduringtheirinitialdesignprocesses,aswellasworkwithmaterialmanufacturerstoincreasethequantityofrecycledmaterialsusedinnewvehicles(EuropeanCommission2000).Thisdirectivealsooutlinestheintermediateprocessesthatmustoccurbetweentheendofavehicle’susefullifeandtherecoveryofitsembodiedvalue.Inthisexample,governmentalregulationdoesnotsolelyincentivizebycreatingriskofnon-compliance,italsoinfluencesbyprovidingbase-levelguidelinesthatassistaffectedindustryplayersindetermininghowbesttomeetsuchregulations.Inadditiontospecificgovernmentregulations,globalorganizationsaredevelopingmetricsandindicators(e.g.input-outputratios,utilityvalues,andrecyclingefficiency)tocreatenewvaluesthatwillworkinconjunctionwithlegislationandpolicytoinfluencecompaniestowardengagingwithVRPproductsandsystems(refertoSection8.4.3).Globally,therearealsosignificanteffortstoidentifyanddefinecirculareconomyindicatorsthatcanbeusedtotrackprogressinthetransitionawayfromlinearindustrialmodels,includingtherecent-ly-adoptedCircularEconomyMonitoringFrameworkfortheEU(EuropeanAcademiesScienceAdvisoryCouncil2016,Bourguignon2016,EuropeanCommission2018).Hundredsofindicatorsarebeingstudied:frommaterialflows,energybalance,andresourceefficiency,towastetreatmentandmanagement.Whilesuchmetric-basedprogramsremainvoluntary,producers—and,importantly,investors—areacknowledgingthebenefitsofenvironmentally-considerateperformanceconsideringevolvingconsumerdemandsthatfavorconservation-minded,low-impactproducts.Inaddition,thesemetricsandtheassociatedemergenceofgreenproductlabelingmethod-ologiesareincreasinglybeingintegratedintoinformationthatcanbeaccessedbycustomersandconsumers,withthepotentialtoinfluence177Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomytheirpurchasingdecisions.Intheseways,outsidepartiescansignificantlyinfluencetheintegrationofVRPproductsintotheindustrialeconomybyreshapingthecustomerexpectationsandmarketopportunitiesuponwhichproductdevelopersseektocapitalizeandaroundwhichtheirproductsaredesigned.InlookingspecificallytowardspolicyinterventionstofacilitateVRPswithinacirculareconomy,thetargetingofradicalsystemicchangemustbeapriorityforpolicy-makers,butthismustbecombinedwiththefacilitationofincremental(process-level)innovations.ApplyingthecallbyNorberg-Bohm(2000),acombinationoftechnologyandenviron-mentalsectorandsystempolicyapproachesisessentialfortargetingsystembarrierstocirculareconomy,andthemoreisolatedbarrierstoVRPs.Inaddition,policiesneedtocombinesector-specificinsightswithcross-sectoralperspectives:manycirculareconomyandVRPopportunitiestendtobemorealignedwithanduniquetoproduct-type,butchangestothelargercirculareconomysystemcanprovideefficiencyopportunitiesacrosssectors(e.g.sharedreverse-logisticsand/orcollectionsysteminfrastructure)(HeatonandBanks1997).Thestyleofregulationalsoneedstobeinnovation-friendlyinordertoappropriatelyengagestakeholdersindialogueandconsensusviaopen,flexible,andreflectivemulti-stakeholdercollaborations.(Jänickeetal.2000)Informationasymmetrycancreatesignificantchallengesforcollaborativeapproachesonproduct-andprocess-levelinnovations,andeffortstoensuretransparencyandoptimallevelsofinformationareessentialaspartoftheprocessbetweenregulatorsandthosebeingregulated(Jänickeetal.2000).Apolicypriorityfortheeffectivetransitiontocirculareconomymustbetoovercomethecurrentpassivethrow-awaycultureexhibitedbybothconsumersandproducersineconomicsystemsaroundtheworld(Ghisellini,Cialani,andUlgiati2016).Circulareconomyapproacheslargelyevolvedintheworldasawastemanagementstrategy,inresponsetoincreasingconcernsaboutwastemanagementissuesandimpacts(Ghisellini,Cialani,andUlgiati2016,Geng,Tsuyoshi,andChen2010,Yong2007).Inmanyeconomies(typicallyindustrialized),recoveryandrecyclinginfrastructurehasbeeninplaceformorethanthirtyyears(e.g.Germany,Canada),andthishasenabledknowledge,competencies,andefficiencieswell-suitedfortransitioningtocirculareconomy(Ghisellini,Cialani,andUlgiati2016).Incontrast,manyeconomieshavenotyetbeguntoadoptorformalizebasicwastemanagementpoliciesandinfrastructure(Ghisellini,Cialani,andUlgiati2016).China’sapproachtocirculareconomydifferssomewhatfromthetraditionalapproach:althoughstillveryreliantuponlandfillingformunicipalsolidwaste,whichpreventsthemeaningfulclosingofconsum-er-levelmaterialloopsunderthecirculareconomyperspective,theadoptionofnewcirculareconomybusinessmodelsisrequiredbylaw,alongsidetheintegrationofcleanerproductionpracticesandthedevelopmentofeco-industrialparks(Yong2007,Geng,Tsuyoshi,andChen2010,Ghisellini,Cialani,andUlgiati2016).AnessentialaspectofanypolicyapproachistheintegrationoftheinnovationandcomplexityofbothVRPprocessesandproducts;incrementalinnovation(e.g.process)andradicalinnovation(e.g.system)(DelRío,Carrillo-Hermosilla,andKönnölä2010,VelteandSteinhilper2016).Specificapproacheshavebeenassessedwithintheliterature,andmustguidepolicy-decisionsrelatedtoVRPsandcirculareconomy:•Commandandcontrol:Althoughtheyhavedemonstratedgreatereffectivenessatfacili-tatingincrementalchanges(e.g.withinVRPprocessadoptionbyfirms),commandandcontrolapproachesmaybelesseffectiveatradicalsystemicchange(e.g.circulareconomy)thanmarket-basedmechanisms(delRíoGonzález2009,DelRío,Carrillo-Hermosilla,andKönnölä2010).Aparticularpriorityforpolicy-makersmustbetheassessmentofexistingpoliciesandregulationsthatpreventorinhibitproducerengagementwithVRPs,and/orconsumeradoptionofVRPs.•Voluntaryagreements:Appealingtoindividualstakeholdersastheyallowforlonger-termplanninganddialogue.However,therearerisksthatdesiredimpactandoutcomesmaynegatedforseveralreasons:whereasymmetricalinformationexistsbetweenparticipatingactorsvoluntaryagreementsmaybelesseffective(DelRío,Carrillo-Hermosilla,andKönnölä2010);inaddition,theoutcomesofvoluntarystandardsagreementstendtobedistributed(refertoSection8.4.3).178Chapter8–Discussionofkeyinsights•Market-basedinstruments:Oftenmosteffectiveatenablingademand-pulleffecttofacilitateadoptionofinnovativeproductsinamarket,inthecaseofVRPsthesecanincludeinformation-sharing,eco-labelling,financialincentives,andenvironmental-awarenessraising(DelRío,Carrillo-Hermosilla,andKönnölä2010).•Financialinstruments:Oftenmosteffectiveatfacilitatingasupply-pusheffecttofacilitatetheadoptionofinnovativeprocessesbyproducers,inthecaseofVRPsthesecanincludetechnol-ogy-focusedR&Dsubsidies,low-interestloans,investmentsubsidies,andthedevelopmentandexchangeofbestpracticestolimitlearningcurverequirements(DelRío,Carrillo-Hermosilla,andKönnölä2010).Inaddition,theadoptionofappropriateinstrumentsthatrewardpositiveexternalities(e.g.pollutionreduction)mayhelpfirmstoovercomethepressuretofocusonprofits(Ghisellini,Cialani,andUlgiati2016).AmajorchallengefacingtheadoptionofVRPprocessesandproductsistherequiredintegrationofproducerandconsumerperspectives.Acombinedapproachofintegratedandcomple-mentarytechnologyandenvironmentalpolicyisrequired(DelRío,Carrillo-Hermosilla,andKönnölä2010).EffectivepolicyapproachesforVRPsshouldconsiderandincorporatethefollowingcharacteristics:•Technology-focus:TofacilitateVRPprocessadoption,firmsmustfirsthaveconfidencethatthemarketwilladopttheresultingVRPproductsbeforetheywillinvestintransfor-mationoftheirbusinessmodelandproductionprocesses.Technologicalassistanceandtrainingprograms,canhelptofacilitateinterest,comfort,andabilitytotransitiontowardscirculareconomyandVRPs,andtomitigatetheriskofasymmetricalinformationacrosscirculareconomystakeholders(DelRío,Carrillo-Hermosilla,andKönnölä2010).•Environment-focus:GiventhelikelihoodofassociatedeconomicgrowththatmayaccompanyVRPadoption,theeffectivenessofVRPsandcirculareconomyinachievingcleanerproductionpracticesandreducednegativeenvironmentalimpactisdependentuponthecapacityofpolicy-makerstorequireproducerstocontinuously-improvetheirenvironmentalperformance,theirenvironmentalresponsi-bility,andtheirengagementofconsumersinfacilitatingreverse-logisticsforVRPs(Ghisellini,Cialani,andUlgiati2016).•Small-mediumenterprise(SME)-focus:SMEsfaceaconcentrationoffinancialandtechno-logicalbarrierstoVRPprocessadoption,butmayalsoprovideanessentiallaunchplatformforgrowthofcirculareconomyserviceprovidersandvalue-chainstakeholders(DelRío,Carrillo-Hermosilla,andKönnölä2010).AdditionalopportunitiesforSMEvalue-chainmemberswhofacilitatetheclosingofproduct-loopswithinthecirculareconomy(e.g.viaoutsourcedreverse-logisticssystems)canalsobeenabledandsupportedwithintechnologyandenvironmentalpolicyinitiatives.{Ponte,2014,‘Roundtabling’sustainability:Lessonsfromthebiofuelindustry}•Strategicnichemanagement:TheprotectionofnicheswithinVRPsystemand/orcirculareconomycanenableearlygrowthbyfacilitatingfinancialflows,stakeholdercollaboration,andnetworkdevelopment.Technologicalnetworkdevelopmentandgrowthstrategiesarecomple-mentarytoenvironmentalpolicies,andfocusonsupportingtheagentswithintheVRPsystemthroughtechnologypolicy,R&Dsupport,andotherinitiativesspecificallyfocusedonaparticularnicheoftheVRPsystem(e.g.fullorpartialservicelifeVRPs;forward-vs.reverse-logistics)(DelRío,Carrillo-Hermosilla,andKönnölä2010).•Publicprocurement:Helpstoestablish/createanewmarketforearlystageproductinnovationsand/orlowratesofadoptionforinnovativeprocesses(DelRío,Carrillo-Hermosilla,andKönnölä2010).Additionalmeasuresmayinclude(1)supportingand/orfacilitatingtheestablishmentofeco-in-dustrialparksthatcanfacilitateproduct,material,andknowledgeflowsamongststrategicsegmentsofwithinandacross-sectorstakeholders;(2)theprovisionofadequateandrequiredinfrastructuretofacilitateproductreverse-logistics,particularlyforSMEactorswithintheVRPandcirculareconomysystemthatdonothavethescaleorcapacitytoefficientlyengageinreverse-logisticsindependently;and(3)systems-levelpromotionandeducationprogramstargetingbothproducers179Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyandconsumers,helpingtoalleviatesomeofthecapacity-burdenfromSMEactors(Ghisellini,Cialani,andUlgiati2016).GiventhateconomiesfacedistinctcombinationsofVRPbarriersandmayhaveuniqueobjectivesforVRPsaspartofaneconomicorenvironmentalagendaarangeofpotentialstrategicinterventionsareavailabletopolicy-anddecision-makers.AsshowninFigure90,differentpolicyprioritiescanleadtoincreasingflowsofVRPproductswithinaneconomy(horizontalplane),and/ortoincreasingcapacityforVRPprocessesandproductswithinaneconomy(verticalplane).Forexample,enhancingEOUproductcollectioninfrastructure,programs,andsystemswillfacilitateincreasedflowsofessentialVRPprocesscoreinputstoVRPproducers,butwilldolittletoincreasethecapacityofproducers,alone;incontrast,supportingeducationandtrainingforimprovedskilledVRPlaborpoolswillcontributetocapacitygrowthforVRPproducers,butwilldolittletoincreasetheflowsofcoreinputs.HighHighLowLowFlowsofVRPproductsCapacityforVRPproductsProd.&dist.offinishedVRPproductsTechnological&processhowImport/exportoffinishedVRPproductsProductknowledge&informationSkilledlaborEffectiveness&efficiencyofcollectionsystemsCollection&reuseofEOUproducts&componentsCustomerperceptionsDifferentiationfromOEMnewDistributionchannelsFreemovementofcoresEducationaboutVRPsCollectioninfrastructureTechnologicalAccessMarketFigure90:DifferentiatedbarrieralleviationstrategiesfordifferenteconomicobjectivesDependingonthespecificconditionsandprioritiesofaneconomy,differentpolicyprioritiesandinstrumentscanbeused,incombinedenviron-mental-technologyapproachesaspreviouslydiscussed.Encouragingandenablingstakeholderawarenessoftheneedforcirculareconomypractices,andthedevelopmentofsystemsandinfrastructuretoenablebasicmaterialandproductdiversionisalogicalstartingpointforanycirculareconomystrategy.Innon-industrializedeconomiesratesofformalandinformaldirectreuseandrepairtendtobehigh,asaformofknowledgeaccumulation,andsuggestingthatthereisconsumer-levelawarenessoftheretainedvalueofproducts,andtheopportunityforproduct-lifeextension(Weeks1975,BellandAlbu1999).Inthelonger-termevolutiontowardsmorecomplexandsophisticatedreverse-logisticssystemsandproductiontechnology,anemphasisonpartialservicelifeVRPsenablesashort-termandtransitionalopportunitytoacquireknowledgeandadvancetechnologicalsystemsnecessaryforcirculareconomy(BellandAlbu1999).180Chapter8–Discussionofkeyinsights8.4.3IntegratedglobalresponsestobarrieralleviationEconomicgrowthwithinthecontextofcirculareconomymaybeanoptionifintegratedandcoordinatedactionbybothglobalNorthandglobalSouthispossible:whereeconomiesintheglobalNorthcanfocusondecouplingproductionimpactsfromeconomicgrowth,andpotentiallyevende-growthstrategies,economiesintheglobalSouthmayinitiategrowthpathwaysthatareinformedandguidedbyplanetaryconstraintsandcarryingcapacitylimits(Ghisellini,Cialani,andUlgiati2016).IndustriesthatareexperiencedinVRPshavebegundiscussionsonthedevelopmentofvoluntarystandardsasameansofaddressingcompetition,trade,andinformationasymmetryissuesaffectinggrowth,performance,andopportunity(Motor&EquipmentRemanufacturingAssociation2016).Inmanycases,thisinterestismotivatedbyfaircompetition:intheabsenceofmarketawareness,information,andstandardization,firmspracticinghighVRPstandardsareunabletocompeteagainstthosemeetinglowerstandards(Ponte2014).Standardsdevelopmentisoftenviewedasaformofvoluntaryregulationthatisincreasinglybeingusedbygovernmentstodelegateresponsibilityfordealingwithandaddressingenvironmentalandsocialissuestoindustry(Ponte2014).Onceestablished,thesestandardseffectivelybecomedefactomandatory,andtheprocessfordevelopingstandardsisoftenexplicitlyspecifiedtoincludemulti-stakeholderperspectivesandsteps(Ponte2014).Giventhesystems-perspectiveofcirculareconomy,voluntarystandardsforVRPsrequireamulti-stakeholder‘collective’approach,withrequiredinstitutionalfeaturesandprocedurestohelpestablishlegitimacyoftheeffort(Ponte2014).Despitepositiveintentions,theoutcomesofindustry-roundtablestandardsdevelopmenttendtobedistributed.TheexperiencesoftheForestryStewardshipCouncil(FSC)andMarineStewardshipCouncil(MSC)demonstratethatacommonemphasisonthe‘globalNorth’oftenresultsinlimitedinvolvementof,andthereforeadoptionby,stakeholdersinthe‘globalSouth’(Ponte2014,MarxandCuypers2010).Inaddition,thefailuretoengageandsuccessfullycertifycomplianceofstakeholdersintheglobalSouthlimitsthepotentialfordesiredoutcomes(Ponte2014).InthecaseofResponsibleSustainablePalmOil(RSPO),thelackofawareness,interest,andconflictingtradeprioritiesledtolowcertificationofhigh-consumingeconomies(India,China,andPakistan);effectively,asavoluntaryinitiative‘opting-out’remainsaviabledecision,albeitonethatthreatensthelegitimacyandsuccessoftheoverallglobalsustainabilityinitiative(Ponte2014,Cheyns2011,Djama,Fouilleux,andVagneron2011,SchoutenandGlasbergen2011).Tobemeaningful,voluntaryagreementsfocusedonthedevelopmentof,andcompliancewithhighstandardsforcirculareconomyandsustaina-bilitymustovercometwokeybarriers:(1)smallcertificationmarketsthatlimitscale,impact,andvalue-chainadoption;and(2)competingstandardsinitiativesthatcandilutethemessage,scale,andeffectivenessofthestandards(Ponte2014).VRPproducersmustbeparticularlycarefulinanyinitiativetowardsvoluntarystandardstoincludesmalleractorsandengagevalue-chainmembersintheglobalSouth.Governmentguidancecanfacilitateaneffectiveandlegitimatestandards-de-velopmentprocess;howeveradditionalnormativepressuresfromNGOsandsocialmovementscanhelptoensureoptimallyinclusiveandrepresentativeinterestsatthetable(Ponte2014).8.4.4DiversionandcollectioninfrastructureAnessentialpartofincreasingcustomeropennesstoandacceptanceofVRPproductsisfirstengagingtheminend-of-lifediversionprogramsandeducatingthemontheimportanceofretainingvaluewithintheeconomicsystem.VRPsarereliantonthediversionandcollectionofEOUproductsforuseasinputstotheprocess;whileindividualcompaniesmayhaveestablishedtheirownnetworksandcollectioninfrastructuretoensuresufficientsupplyofreuseinputs,thiscreatesasignificantandinefficientcost-burdenontheindividualorganization.Otherexamplesofsharedcollectioninfrastructure,suchase-wastediversionandpackagingextendedproducerresponsibility(EPR)programshavedemonstratedtheabilitytobothincreasecollectionratesanddistributethecostsofoperatingthesystem.Therequirementthatthesesystemsbefundedbyindustrycanprovideanincentivetopursuegreatercost-efficiencyandperformanceovertime.WhilenotadvocatingforEPR,thesesystemshavedemonstratedthat181Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomycreativeandsharedapproachestocollectioninfrastructuremayhavesomemeritincaseswheretheobjectiveistoincreasecollectionandretentionofvaluewithinasystem.Whereexistingcollectionand/orrecyclingsystemsarein-place,theycanbeassessedforcharacter-isticsthatwouldalsocontributetoandsupportcollectionsystemsforVRPs.Forexample,theinclusionofspecificproductsunderframeworkdiversionlegislationcanensuretheirstatusasa‘regulated’item,andthiscanfacilitatethepreventionoftheseproductsbeingdirectedtolandfill.Whererecyclingsystemsarealreadyrequiredforspecificproducts(e.g.Ontario’sWasteElectricalandElectronicEquipment(WEEE),andGermany’sEndofLifeVehicleOrdinance),itmaybepossibletoutilizeandshareoverlappingsystemrequirements,suchasdistributedcollectionnetworks(OntarioElectronicStewardship2009,Martens1998).Inadditiontogovernment-initiateddiversionandcollectionsystems,opportunitiesfornewmembersofthevalue-chainarearisingfromthetransitiontocirculareconomy.BusinessesinterestedinpursuingfullservicelifeVRPsfacesignificantcostbarriersrelatedtothereverse-logisticsrequiredforrefurbishmentandremanufacturingactivities,especiallywhentheirproductsaresoldglobally.However,newbusinessesfocusedontheprovisionofreverse-logisticsandquality-controlservicesspecificallyinthecontextofcirculareconomyandVRPsaredemonstratingadditionaleconomicpotentialofthecirculareconomy.278.5Thenecessityofaproduct-systemsapproachSystemcomplexity,andthemanagementofthatcomplexity,isaveryrealconcernforbothindustrydecision-makersandpolicy-makersinthecontextofcirculareconomy.Thecomplexityofasingleproductionoperationoftenfeelssignificanttothosewhotrytoinfluenceand/orenhanceit.Thisismuchmoresointhecaseofaninterconnected,interdependent,dynamic,andevolvingeconomicsystemofindependentproducers,third-partyvalue27Somebusinessmodelssupportthetransitionofindividualbusinessestowardsmorecircularpracticesbyfacilitatingthecollectionoftheirusedproducts/partsaroundtheworldandreturningthemtoadefineddestinationforrefurbishmentandremanufacturing(https://www.c-eco.com/).chainparties,consumers,regulators,economics,andsocio-technicalfactorsimplicitinacirculareconomy.Inmodelingandassessingthecirculareconomysystem,thisiseverapparent.However,thecirculareconomysystemneednotbeanymorecomplexthatothersystemsthathavebeenconsidered,adopted,andmastered,includinghumanhealthandglobaltrade.Ratherthanpermitcomplexitytooverwhelmandstuntthetransitiontocirculareconomy,theperspectiveofSenge(1997)supportsastrategicapproachtoassessingandunderstandingthecomplexityofcirculareconomythatpolicy-makersandfirmsmustface:detailcomplexity,whichoriginatesinthenumberofdetailsthatmustbeconsideredandincorporated;anddynamiccomplexity,whichoriginatesinthefactthatinterventionsinthesystemmaynotproduceexpectedorobviouseffects,andtheseeffectsmayalsodifferbetweenthelocalversusglobal,andtheshort-versuslong-termexperience.Applyingcomplexityperspectivestothecirculareconomy,VelteandSteinhilper(2016)notethatparticularlyforfirms,thecirculareconomycanbebothtoobigandtoodiverseforanysinglefirmtomeaningfullyconnectalltheelements(detailsandlinkages)thatshouldideallybeconsidered.Inaddition,thedynamicchangeswithinthefast-evolvingcirculareconomysystemcanneitherbepredictednorcontrolledbythefirm,leadingtoincreasedsenseofriskandpotentialexposureassociatedwiththepursuitoffirm-levelcirculareconomy.Todesignbothsystemandproductforcirculareconomyeffectively,VelteandSteinhilper(2016)recommendacomplexity-preventionapproach:preventingthechallengebeforeitcan,orneedstobereduced.However,withoutcarefulconsiderationandappliedsystems-perspective,thetraditionalapproachtocirculardesignmayactuallyincreasecomplexity:forexample,designforreparability/remanufacturing/modularity/serviceability/etc.canactuallyincreasethenumberofelementsandconnectionsrequiredatbothproduct-andsystem-levels.Similarly,theclosingofmaterialand/orproductloopsrequiresanincreaseinthenumberoflinksbetweenstakeholdersandsystemagents,buttheselinkscanbediverse,crossingarangeofdifferentlymotivated/orientedstakeholders.Assuch,theperformancemanagementofboth182Chapter8–Discussionofkeyinsightsindividualactorsandsystemperformancecanrequiresignificantresourcesandtime,beyondthecapacityand/orcapabilityofasinglefirm(VelteandSteinhilper2016).Finally,theinterdependenciesofthesystemcanaffectefficiencyandeffectivenessofanysingleactororinitiativewithinthecirculareconomy:theresponsibilitytomanageandoptimizeallnon-linearandunpredictableconditionsofsuchasystemisanunrealisticburdentoassigntoanysinglefirmoractor(VelteandSteinhilper2016).Therefore,whilethecomplexityofthecirculareconomymaybemanageable,theneedtoengageandinitiatecollaborationacrossarangeofstakeholdersanddecision-makersisobvious:wherefirmsmustberesponsibleforaddressingproduct-levelcomplexitywithinaparticularproductdesignandbusinessmodel,thismustintegratewithbroadersystems-levelinitiatestosimplifyandoptimizelinkagesandperformancemanagement–responsibilitiesbettermanagedbyindustrycollab-oratives,theriseofnewserviceproviderswithinthevalue-chain,andgovernments.Itisincreasinglyclearthatthecomplexityofmorecircularproductandeconomicsystemsrequiresamorecomprehensive,non-linearapproachiftheyaretobeoptimizedinpursuitofenvironmentalandeconomicbenefit.Fromtheproductperspective,thereisneedtoexpandtheboundariesbeyondwhatthefirmhasdirectcontrolover,andbeyondwhatistraditionallyconsideredaspartofthedesignprocess.AshighlightedinSection8.2,productdevelopmentresponsibilitymustextendbeyondthepointofproductsaleandmustincludeimportantdesignconsiderationstoaccommodateandoptimizemultipleservicelives,forward-andreverse-logistics,aswellasthesocialandeconomicsystemsthattheproductwillexistwithin.Fromtheeconomy’sperspective,thebenefit-po-tentialenabledviaVRPscannotberealizedwithoutoptimizingthebroadersystemthatVRPproductsexistwithin.Aspectsoftheeconomicsystemthatcannotbecontrolledorinfluencedbythefirm,orwhichrequireamorecentralizedandstandardizedapproachtoensureoptimizedflowsandcapacityforVRPswithinthedomesticeconomy,mustbecomepartofthepolicy-makerspriorityunderacirculareconomyinitiative.Inotherwords,torealizethepotentialofVRPsaspartofacirculareconomystrategy,policy-makersmustfocusonstreamliningandmaximizingtheefficiencyofthebroadersystem,toenableandincentivizeindustrytoinnovateandthrivethroughVRPs.Thefollowingsectionshighlightthekeyinsightsofthe“product”approach,the“systems”approach,andthenecessaryintegrationofbothintoacomprehensiveandrobust“product-systems”approach.8.5.1ProductdesignsystemsrequireexpandedboundariesProductdesignisimportant,butnottheonlydeterminantofcirculareconomypotential.Productdesigngoalsarethemselvesdictatedbytheunderlyingobjectivesandconstraintsoftheproducer,aswellastheconceptualapproachtheytaketoproduction.Implementingsystemcircularityintothebusinessmodel,andultimatelyintotheproductdevelopmentprocess,thereforerequiresacomprehensiveapproach.CurrentlymostVRPsareundertakenasan‘art’notasa‘science’:theyareoftencustomizedforaspecificproductorcomponent,withinalimited©Shutterstock/Kirasolly183Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomysupplychainscope.CustomizedVRPapproachesenablehighlevelsofeffectivenessandefficiencyinthecontextofthatsingleproductorcomponent,butultimatelyinhibitthescale-upofthoseVRPpracticestomoreexpandedapplications,andthelimitthestandardizationofthosepracticesoutsideoftheorganizationfromwhichtheyoriginated.Underthis‘artful’approachtoVRPs,theintensityofVRPseveninwell-establishedmarketsremainslow,andtherealizationofefficiencypotentialislimited.Whilethepursuitofmore‘scientific’,standardizedapproachrequiresacomprehensiveproduct-systemsapproach,thepathtowardsaproduct-systemsperspectiverequiresinvestment.AsdiscussedindetailinSection8.2,thenatureofVRPscreatesanimplicitrequirementtoconsidertheentirelife-cycleoftheproductbeyondthewarranty.However,responsibilityfordesigningcircularityintoproductsandsystemscannotbelefttodesignersalone:acomprehensiveconsiderationfor,andobjectiveof,incorporatingVRPsmustoccurveryearlyintheproductdevelopmentprocess,priortoconceptualizationanddesign.ThedecisiontodevelopVRPproductsmustbeundertakenasastrategicbusinessdecisionandmustbeincorporatedintoeveryaspectofthebusiness,includingproductdesign.Awell-designedVRPproductmustgohand-in-handwithaneffectiveandefficientbusinessmodelformaximizingvalue-re-tentionoftheproduct(e.g.reducingdegradationduringuse-phase),andthereverse-logisticssystemforEOUproducts(e.g.maximizingcollectionrateandcollectionquality).Theproductdevelopmentprocessmustincorporatedesignprinciplesofvaluecreation,valuepreservation,andvaluecollection,alongsidestrategicdesignapproachesthatensureconsiderationoftheentireproduct-system.Thepursuitofthisnewapproachrequiresanoverhaulofbothtechnicalandsocialsystemsthatarepredominantinorganizationsworldwide.Fromasocialperspective,changingproductdevelopmentproceduresrequiressignificantcommunicationandbuy-increationacrosspotentiallyenormousorgani-zationalnetworksandteams:thesecannothappenovernight,andrequiresignificantleadershipandcapitalinvestmenttoaccomplish.Fromatechnicalperspective,productdesigniscurrentlyconstrainedbyexistingtechnologyandtechno-logicalprocesses,andbythedataandinformationthattheproductdevelopmentteamhasaccessto.Adoptinganexpandedviewofproduct-systemboundarieswillbe,alone,ineffective:anexpandedsystems-viewrequiressignificantquantitiesofnewinformationanddatatosupportdevelopmentteamsanddesignengineersintheirpursuit.Inaddition,significantinvestmentinadvancedtechnologywillbeneededtofacilitatehighervalue-retentionandfasteradoptionofVRPproductionapproaches.8.5.2Alleconomiesrequireasystems-perspectiveforcirculareconomyWhilethecirculareconomysuggestsasimplifiedvision,itentailscomplexityandinterconnect-ednessatbothmacro-andmicro-scalesthatmustbeappreciatedandunderstoodbysystemstakeholders.Assuggestedthroughoutthisreport,themechanismsbywhichanindustrializedeconomypursuescirculareconomyandVRPs,maynecessarydifferfromthoseappropriateforanon-industrializedeconomy,largelybecauseofvariedtechnological,infrastructure,market,andregulatoryconditionsthatcanincreasethecostandeffortrequiredtoachievethedesiredtransformation.Giventhesystems-perspectiveadvocatedforcirculareconomyapproaches,inthecaseofnon-industrializedeconomiestherearesomekeysystemconditionsthatcanaffectaneconomiesabilityandinterestinpursuingadoptionofVRPsandothercirculareconomypracticesthatindustri-alizedeconomiesmaytakeforgranted,including:theexistenceofwastediversionandrecyclingregulations;thepresenceofpublicand/orprivateinfrastructuretofacilitatediversionandrecycling;theextentofdomesticproductionandtechno-logicalcapacity;theabilitytoinfluencenatureofimportedproductsviatraderelationships;andtheabilitytoengageandeducatecustomers/usersinthemarket.Whilethesetypesofsystemicchallengesfacebothindustrializedandnon-indus-trializedeconomiesalike,theoptimalstrategiesemployedtoovercomethemlikelydiffer.Forexample,asmentioned,whereanon-industri-alizedeconomyhasastrongrelianceoninformalrepairactivitiesandalowlevelofformalindustrialcapacity(Weeks1975,BellandAlbu1999),theoptimizedcirculareconomystrategywillnotseektodisplacerepairwithhigher-impactVRPsintheshort-term;insteaditwillfocusonimprovingand184Chapter8–Discussionofkeyinsightsenhancingtheefficiencyandvalue-retentionabilitywithintheexistingrepairsystem,andpotentiallyexpandingthatsystemtoachievebetteroutcomesforindependentrepairentitiesandcustomersalike.ThisapproachisconsistentwiththeoverarchingstrategicapproachoutlinedinSection1.2.1(EllenMacArthurFoundation2013a):1.maximizingcollectionandcaptureofmaterialsatthe‘gaps’betweenlifecyclestagesatwhichlosscouldoccur;2.retainingthehighestpossiblevalueofmaterials,oncerecovered;and3.remodelingthelinearsystemthroughinfrastructuredevelopment,processinnovation,andproductinnovationtoincreasetheuseofhigh-valuerecoveredmaterialsasinputsintotheproductionsystem,inplaceofrawinputs.Assuggestedthroughoutthisreport,notallVRPsareappropriateforallproductsoralleconomies:collaborativeinitiativesbetweendomesticindustrydecision-makersandpolicy-makerstoshareinformationandtoidentifyopportunitiesforimprovingcircularityisneeded:viaclosingloopsandmitigatingsystemlosses;andviaimplementingtheadoptionofVRPsandVRPproductsinamannerthatworkswithintheexistingproductionandcollectioninfrastructure.TherelianceofVRPsuponthepresenceandefficiencyofcollectioninfrastructure,asjustoneexample,highlightsthisfact.Toappropriatelyplan,organizeandimplementforcirculareconomy,asystems-perspectiveisessential.Inthecontextofthisstudy,Figure91simplifiesthesystemto(a)knownprimaryproductflows,and(b)fouroverarchingsystemfactorstohighlighthowthecurrentsystemmayneedtobeadjusted:•(A)Regulatoryandaccessbarriers;•(B)Collectioninfrastructurebarriers;•(C)Customermarketbarriers;and•(D)Technologicalbarriers.RecyclingGarbageCustomermarketVRPproducersRecyclingGarbageImportsOEMNewproducersCustomermarketCustomermarketVRPproducersOEMnewproducersOEMnewproducersRepair&directreuseImports(a)SystemwithnoVRPproduction(b)SystemwithVRPproductionImports(A)(A)(B)(C)(D)(A)ExportsExportsExportsModelboundaryModelboundaryFigure91:Overviewofcomparativesystemcomplexity185Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyFromthisperspectivefiveimportantimplicationsbecomeclear:1.ThereisanessentialrequirementforcontinuedOEMNewproduction,withoutwhichVRPswouldnotbepossible.Ifdiffer-entiatedandpositionedappropriately,VRPsmayservetoenablegrowthopportunitiesfortheentireproductsegmentbytargetingandengagingnew,previouslyuntapped,marketsegmentsthatareunderservedbyOEMNewproducts.Fornon-industrializedeconomiesthatdonothaveproductioncapacityforOEMNewproducts,identifyingotheropportunitiestoaccessEOUproductstofacilitatevalue-re-tentionandproduct-lifeextensioninthecontextofaglobalcirculareconomy.2.TheinclusionofVRPsinthesystemincreasescomplexitysignificantly:OEMNewversusVRPproductionprocessesandrequirementsaredifferentiated,andrequiredifferentiatedtechnology,knowledge,andlaborskillrequirements.Duetoregulatoryand/ormarketconditions,VRPproductsaredifferen-tiatedfromOEMproductsintermsofhowtheycanflowfromproducertocustomer;andthereisanessentialrelianceuponcollectionofEOUproductsandcomponentsthroughsecondarymarketsinordertoenabletheproductionofVRPproducts.Fornon-industrializedeconomies,theexpansionofVRPtechnology,knowledgeandlaborskillsisnotpredicatedonpre-ex-istingdomesticindustrialinfrastructure.WheredomesticR&Dfundingmaynotbeavailable,partnershipswithglobally-operatingOEMproducerscanhelptofacilitatethetransferoftechnologyandtheopportunitytoengageinnewvalue-chainrolesaspartofaglobalcirculareconomyVRPnetwork(Weeks1975,BellandAlbu1999).Integratedandcoordinatedactionbyvalue-chainmembersandstakeholdersinbothglobalNorthandglobalSouthisneededtoenableamovementtowardsdecouplingproductionimpactsfromeconomicgrowthineconomiesintheglobalNorth,alongsidesustainability-guidedgrowthpathwaysforeconomiesintheglobalSouth(Ghisellini,Cialani,andUlgiati2016).3.Thereisadistinctdifferenceinhowtheidentifiedsystemconditions(barriers)affectandinfluencethesystemwhenVRPproductionispresent.TheobjectiveofincreasingthescaleandprevalenceofVRPsandVRPproductswithinaneconomyrequiresaholisticapproachthatconsidersthemagnitudeandcauseofbarriersthroughouttheentiresystem,aswellashowthosebarriersmayinteracttocompoundornegateoneanother.Ineconomiesthatcurrentlylacksufficientenvironmentalregulationandprogrammingtorequireandfacilitatewastediversionandrecycling,technology-focusedpolicyinitiativesthatignorethereverse-logisticssupply-chainrequirementsofVRPswillbelesseffectivebecauseessentialflowswithintheVRPsystemarestillconstrained.Similarly,ineconomieswithcomprehensivereverse-logisticssystems,butinsufficientcustomer/userinterestandawareness,supply-stimulatinginitiativeswillbelesseffectivebecausetheydonotaddressthelackofmarketdemandforVRPproducts.Thiscomplexity,ashighlightedbyVelteandSteinhilper(2016)maybeapproachedmeaningfullyviacombinedenvironmentalandtechnologypolicyinitiatives(DelRío,Carrillo-Hermosilla,andKönnölä2010).4.Therearemultiple,diverse,andintercon-nectedstakeholders,eachwithapotentialroletoplayinthetransitiontocirculareconomyandtheuptakeofVRPproduction.Itisessentialtoconsidertheintersectionandinterplayofbarriersandstakeholderswithinthesystem,anddoingsointhecontextofthisstudyenablesadditionalobservationsaboutpotentialsysteminterventions,opportunitiesandresponses:•governmentpolicy-makershaveacentralandpivotalrolerelatedtothepresenceandalleviationofregulatory,accessandcollectioninfrastructure‘flow’barriers,(A)and(B)respec-tively.Thisholdstrueforbothindustrializedandnon-industrializedeconomies;•otherstakeholders,includingindustry,mayhaveanimportantroletoplayinthealleviationofbarriersrelatedtothecustomermarketandtechnologicalcapacity,(C)and(D)respectively.Thisalsoholdstrueforbothindustrializedandnon-industrializedeconomies.186Chapter8–Discussionofkeyinsights5.Thereisanunderlyingorderessentialforthecircularsystemthatmustbeacknowledgedtooptimizestrategicpolicyresponses:•Demandoriginatesinthemarketwiththecustomer;-Inresponsetothatdemandandtheinherenteconomicopportunity,demandwillbemetwithsupplyfromdomesticproductionand/orimports;and-OncetheproductreachesanEOUstage,itwillbedirectedintoasecondarysystemthatwilldictatethemagnitudeofvalueandutilityretentionofthesystem.AnappreciationofthishierarchyiscriticalforthesuccessofVRPswithinanysystem,asitleadstothenecessaryconclusionthatstrategicinterventionsmustbemadewithinthecontextoftheinterconnectedsystem:•Sincedemandoriginatesinthemarketwiththecustomer,barriersthatinhibitthegenerationofawarenessandofdemandforVRPs,suchasaccessrestrictionsthatprohibitVRPproductstoenterthecustomermarket,areparticularlyproblematicforcreatingthebusinesscasefordomesticproducerstoengageinVRPsand/ortoincreaseVRPproductioncapacity.Engaginginvalue-retentioncanincludeallorjustasingleVRPprocessaspartofacirculareconomyinitiative,asmaybemostappropriateintheshort-termfornon-industrializedeconomies.•Therefore,barriersthatrestricttheVRPproducers’accesstotechnologicalcapacity,skilledlabor,processknow-how,and/oressentialinputstoVRPproduction,ultimatelyrestrictproductioncapacityeveninmarketswheredemandmaybeprevalent;and•Finally,wheredemandandaccessexist,thereisanopportunityforOEMsandthird-partyentitiestoinitiatestrategicresponsesthatmakesensefortheirorganization,andwhichcreateopportu-nitieswithinthevalue-chainfornewmembersandcirculareconomyservices.AlthoughsomeOEMsmaybeconcernedaboutthepotentialforcannibalizationoftheirOEMNewproductofferings,itmustbeacknowledgedthatthefailuretoofferVRPproductsisultimatelyamissedeconomicopportunity.Inaddition,thedecisiontopursuetheseopportunitiesneednotnecessarilybeintheformofextensivecapitalinvestmentintoanewVRPproductiondivision:alternatebusinessmodels,includingbutnotlimitedtopartnershipswith‘OEM-certified’third-partyVRPentities,havealreadybeensuccessfullyemployedinmanysectorsandeconomiestohelpmeetdemandforVRPoptions,whilemaintainingbrandintegrityandqualityperceptions.Asobserved,currentapproachestocirculareconomyhavelargelyevolvedfromwastemanagement(environmental),orfromeco-innovation(economicandtechnological)policystrategy(Ghisellini,Cialani,andUlgiati2016,Geng,Tsuyoshi,andChen2010,Yong2007).Bothfosteranappreciationforthecyclicalnatureandpotentialofvalue-retentionwithincirculareconomy,andwhencombined,mayfosterafasterscale-upofVRPadoptionandtransitiontocirculareconomy.ForeconomieswishingtopursuecirculareconomyandVRPsasakeyaspectofaneffectivesystem,acknowledgementoftheunderlyingorderwithinthesystemcanhelptoguidestrategicpolicyopportu-nities,assimplifiedinFigure92.187Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy1.Demandforaproductoriginatesinthemarketwiththecustomer2.Economicopportunityofdemandwillbemetwithsupplyfromdomesticsupplyand/orimports3.EnableaccesstoVRPproductsEducateaboutVRPproductsORDERWITHINTHESYSTEMSTRATEGICPOLICYOPPORTUNITIESSupportdistributionofVRPproductsEnabledomesticVRPproductionEnableimportofVRPinputsEnableimportoffinishedVRPproductsEnable&promoterecoveryofEOUproductsUpdatedwastehierarchytreuseoptionshatrefleretentionofVRPsandmorecomprehensivectsvalueAtEOUaproductwillbedirectedintoasecondarystreamthatwilldictatethemagnitudeofvalueandutilityretentionofthesystemFigure92:InherentsystemorderenablesprioritiesforalleviationofVRPbarriersAsimplifiedapproachtobarriersassessmentandtheroleofgovernmentandindustrymembersindevelopingstrategicresponsestobarrieralleviationisoutlinedinFigure93.188Chapter8–DiscussionofkeyinsightsAretherebarriersthatconstraincustomermarketaccesstofinishedVRPproducts?Aretherebarriersthatconstrainproductioncapacitybyrestrictingproductionactivities,accesstoVRPproductioninputsorprocessknow-howandskilledlabour?AretherebarriersthatconstrainEOUproductrecoverybyrestrictingactivitiestocollectanddivertforreuse,orthatpreventefficiencyintherecoveryinfrastructure?Aretherebarriersthatconstraincustomermarketdemandbypreventingdistri-butionof,perceptionof,interestin,orpositioningofVRPproducts?ArethereBarriersthatconstrainefficiency&optimizationofproductionbyinhibitingthelevelofskilledlabour,cost-effectiveproductioninputs,ororganiza-tionallearning?GovernmentstrategicVRPopportunityassessmentIndustrystrategicVRPopportunityassessmentWheremarketaccessbarriers:•constrainsbothcapacity&flow;•affectsproduction&customermarket;•slowsuptake,andknowledge&technologytransfer.Whereproductionconstraints:•limitsdomesticVRPcapacity;•inhibitscompetitivenessofdomesticVRPproducers;•maynecessitateimports;•maynecessitaterelianceonOEMNew.Wheremarketbarriers:•mayconstraindomesticdemand;•constrainsthebusinesscasefordomesticVRPproducers;•VRPproducts.Whereefficiencyconstraints:•mayrestrictallsystemaspects:access,production,andmarketdemand;•limitsthespeedandmagnitudeofVRPuptakeandadoption;•limitstheachievementofVRPbenefits.Establishingstrategicpriorities:Figure93:Roleofgovernmentandindustrydecision-makersinassessmentofVRPbarriersandstrategicpriorities189Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyAssuggestedthroughoutthisreport,thereisaneedtobalancethetensionbetweenshort-termeconomicprioritiesofgrowthandhumanwell-being,andlonger-termobjectivesofacohesivesocioec-onomicrelationshipwiththeenvironmentviasustainability.Themarginalreductionintheenviron-mentalimpactsofproductionthatareenabledviaVRPsandcirculareconomyprovideanopportunitytobridgebothshort-andlong-term,economic-andenvironmental,objectivesviamaterialefficiencyandproductivity(UNEP2016b).Acceptingthetensionbetweentheseshort-termandlonger-termobjectives,short-termeffortsmustseekoutopportunitiesforincreasedmaterialefficiency,resourceefficiencyandproductivity,includingmarginalreductionintheenvironmentalimpactsofproduction(UNEP2016b).Thismustoccurinparallelwitheffortsfocusedonlonger-termsocialandsystemtransformationinpursuitofsustainableeconomicsystems,includingtheultimatedecouplingofproductionfromnegativeenvironmentalimpacts.1901919ConclusionsMotivatedbyanincreasingawarenessoftheneedtodecoupleescalatingresourceuseandenvironmentaldegradationfromeconomicgrowth,thisassessmenthasinvestigatedthecurrentstate,potentialcontribution,andbarrierstomorebroad-scaleincorporationofVRPswithinindustrialeconomicsystems.Thiscomprehensiveassessmenthasrevealedimportantinsightsthatwillinformthestrategiesanddecisionsofgovernmentsandindustriesaroundtheworld.Theproduct-levelanalysisoffiveproductionprocesses(OEMnew,arrangingdirectreuse,repair,refurbishmentorcomprehensiverefurbishment,andremanufac-turing)fornineproducts,revealedthevaryingdegreesandtypesofbenefitsthatVRPscanoffertothreemajorindustrysectorsoftheglobaleconomy.FourkeyglobaleconomiesofUS,Germany,Brazil,andChina,revealedhowcurrent-stateconditions,aswellasthepresenceandnatureofsystemicbarrierstoVRPs,willaffectthetransitiontocirculareconomy,andtherealizationofeconomicopportunityandenvironmentalbenefitsenabledthroughVRPs.Theneedtotransitiontowardsgreaterresourceefficiencyisclear(UNEP2017,2014,2016a,b).Whileitdoesnotprovideauniversalsolutiontoallsustainabilitychallenges,thecirculareconomyoffersanopportunitytomitigatesomeofthetensionsbetweeneconomic,environmental,andsocialprioritiessetoutbytheUnitedNations’SustainableDevelopmentGoals(UnitedNations2017)bypursuingamodifiedandmoreefficienteconomicsystemthatretainsvalueandeliminatestheinefficiencyofwaste(Geissdoerferetal.2017,Ghisellini,Cialani,andUlgiati2016,Cooperetal.2017,EllenMacArthurFoundation2013b,WorldEconomicForumandEllenMacArthurFoundation2014).Asdemonstratedthroughoutthisreport,whereemployedappropriatelyVRPs,asasubsetoftoolsforthecirculareconomy,canprovideanopportunitytoreducethemarginalimpactsofproductionwhilestillenablingtheachievementofeconomicandenvironmentalenhancement(refertoSection5).Assuch,whereemployedappropriately,theadoptionofVRPsworldwidecansupporttheobjectivesofincreasedsystemcircularityinbothindustrialandnon-industrialeconomies,thedecouplingofeconomicgrowthfromenvironmentaldegradation,andthepursuitofimprovedresourceefficiency(refertoSection7).Whilesomedecouplingtechnologiesandtechniquesarealreadycommerciallyavailableand/orusedinnon-industrialized,developing/newlyindustrializedanddeveloped/industrializedeconomies,increasingthedissemination,adoption,andeconomicviabilityoftheseapproachesremainsachallenge(UNEP2014,2011).Thefollowingfoursectionshighlightthemostsignificantconclusionsresultingfromthisassessment.9.1Value-retentionprocessescreateefficiencyopportunityattheproduct-levelTheinclusionofVRPswithinthedomesticproductionmixofstudiedsampleeconomieshasbeenshowntocreatenet-positiveproduct-levelreductioninnewmaterialrequirement,embodiedmaterialenergy,embodiedmaterialemissions,andinmanycases,processenergyandemissionsaswell.Attheproduct-level,VRPsoffsetenviron-mentalimpactsandallowforcostreduction;inthecaseoffullservicelifeVRPs(e.g.remanufacturingandcomprehensiverefurbishment),newskilledemploymentopportunitiesandcustomerutilityare192Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyalsocreated.VRPsdonotofferequalbenefitsforcirculareconomy,but,alongsiderecycling,areessentialaspectsofacirculareconomystrategy.Basedonthecasestudiesinthisstudy,themostsignificantvalue-retentioncomesfromfullservicelifeVRPsofremanufacturingandcomprehensiverefurbishment,despitetheircurrentlowprevalenceinthemostwell-establishedeconomies.Arrangingdirectreuseandrepairactivities(partialservicelifeVRPs)offeranimportantfunctionofextendingproductutilityatarelativelyminimalimpact.Theseinsightsholdconsistentwhenconsideredforadditionalnon-casestudyproducts(printercartridges,officefurniture,andmobilephones)aswell(refertoSection5.4).ItisimportanttonotethatVRPsarenotnecessarilyappropriateforallproducts,anditisimportantforfirmstocarefullyconsiderthecirculareconomybusinessmodelandVRPadoptionstrategythatisoptimalgiventheiroperatingenvironment.FurtherdiscussionoftherequiredproductandsystemcharacteristicsandconditionsforVRPsisprovidedinSection8.2.4.Inthecaseoftheindustrializedsampleeconomiesstudiedinthisassessment,whenaggregateduptothescaleofaneconomy,theincreasedpresenceofVRPsleadstoanincreaseinavoidedproductionimpactsineverycase.Althoughanextremeexample,theTheoreticalHighscenariosappliedtoeachproductsectorfortheUS,Germany,BrazilandChinahighlightthepotentialbenefitthatcanbeachievedfromanincreaseinVRPsaspartoftheeconomy’sproductionmix.IneconomieswhereVRPsarealreadywell-establishedandaccepted,marketbarrieralleviationthatfocusesonincreasedVRPconsumption,enhancedproduct-systemdesignandimproveddistributionchannelsenablesnewefficiencyandopportunityforimpactreduction.IneconomieswhereVRPsarecurrentlylowornon-existent,thealleviationofaccess,regulatoryandcollectioninfrastructurebarriersleadtobettertechnology,processes,andknowledgefordomesticVRPproducers,thusestablishingasustainableindustrialfoundationthatcansupportthepursuitofcirculareconomy.Asdiscussedthroughoutthisreport,thepursuitofcirculareconomyandVRPscanbesubstan-tiallyaffectedbyarangeofsystemfactorsandconditions,includingproductionandmarketcapacity,forward-andreverse-logisticsinfrastructure,regulatoryconditions,andsocialnormsandculturalattitudesofaneconomy(refertoSection6).Whileeveryeconomymustnecessarilydifferentiateitsapproach,thedistinctionbetweenappropriatestrategiesforindustrializedandnon-in-dustrializedeconomiesisworthnoting,andtheneedtointegrateperspectivesandneedsoftheglobalNorthandglobalSouthmustbeemphasized(Hammond2006,CranstonandHammond2012).Theindustrialemphasisofcirculareconomydoesnotprecludetheengagementofnon-industri-alizedeconomiesinvalue-retentioninitiatives,andtheabsenceofindustrialmanufacturingsystemsdoesnotimplytheabsenceofeconomicsystems;instead,distributedandinformalapproachtovalue-retention,includinginformalrepairandreuseVRPs,arecommon(Weeks1975,BellandAlbu1999).Sustainabilityliteratureoftenemphasizestheneedforeconomicdevelopment,includingsupportandtechnologytransferfromricher,industri-alizedeconomiesoftheglobalNorth(Hammond2006,CranstonandHammond2012).Wherepursuedasacombinedinitiativeofenvironmentalandtechnologypolicytosupporteco-innovation(refertoSection8.4.2),andwhereglobalindustryvalue-chainmembersfrombothglobalNorthandglobalSouthareengagedinvoluntarypursuitofimprovedstandardsandperformance(refertoSection8.4.3),thereissignificantopportunitytonon-industrializedeconomiestofurtherengageinbothdomesticandglobalcirculareconomyopportunities.Thereisnoevidencethateconomicstatusdeterminesacountry’sabilitytosuccessfullyengageinVRPsasastrategyformoresustainableproduction;rather,itisthepresenceandnatureofsystemicbarrierstoVRPsthataffectthespeedatwhichVRPscanbeintegratedandadopted,andtheresultingeconomicandenvironmentalbenefitsrealized.Naturallyeveryeconomywillfacedifferentbarriers,andthereforeitisimportantthattheefficiencyopportunityofVRPsbeassessedwithconsiderationfortheuniqueconditionsspecifictoeacheconomy.Whilethepotentialforefficiencyisreal,themagnitudeofbenefitsandrealisticpathwaytoachievementofgreaterVRPadoptionwillvary,andtheseconsiderationsmustbeincorporatedintostrategicpolicyanddecision-making(refertoSections8.4and8.5).193Chapter9–Conclusions9.2Adoptionofproduct-systemdesignapproachesiscriticalThecauseoflowprevalenceofVRPsinrelatively‘open’industrialeconomiesislargelyattributedtothefactthatmostVRPsarecurrentlyundertakenasan‘art’notasa‘science’.AscientificapproachtoVRPsrequiresaproduct-systemsview,inwhichproductsaredevelopedwithVRPsinmind.Thisinherentlyrequiresanexpansionoftheproduct’s‘systemboundaries’,toconsiderdesignrequirementsthatmaximizevalue-retention,enablemultipleservicelife-cycles,andensureefficiencywithinallforward-andreverse-logisticssystemsandsubsequentVRPs(refertoSection8.2).Productsmustbedesignedinthecontextofanewsetofobjectivesthatincludevalue-creation,value-preservation,andvalue-recovery;andtheseobjectivesmustbeestablishedearlyintheproductdevelopmentprocess,longbeforeproductdesignengineersundertakeconceptualizationanddesignactivities.Theproduct-systemdesignapproachrequiresengagementandbuy-inatalllevelsofdecision-makingwithinanorganizationandmustbeadoptedveryearlyintheproductdevelopmentprocessasakeyrequirementandobjectiveofthedevelopmentprocess.Product-ServiceSystems(PSSs)haveprovidedaninnovativebusinessmodelfoundationforfurtherresearchandexplorationandhavedemonstratedthepotentialforviablecirculareconomybusinessmodelsthatcreatevalueforbothproducersandcustomers/users(refertoSection8.2.1).Ascientificproduct-systemapproachalsosuggestsanenhanceddegreeofstandardi-zationofthequalitiesandoutcomesofVRPs–forexample,standardizationofwhatqualifiesasaremanufacturedversusarefurbishedproduct.ThediversenatureoftheproductsthatVRPsarebeingdesignedforrequiressignificantlydifferentsteps,phasesandprocessestobeundertaken.However,theobjectiveoutcomeshouldbeconsistent,pertheexamplesetthroughtheagreementofglobalvehiclepartsremanufacturers(Motor&EquipmentRemanufacturingAssociation,2016)whichestablishesstandardaspectsofremanufacturing:•astandardized,fullydocumentedindustrialprocess;•yieldssame-as-new,orbetter,conditionandperformanceoftheremanufacturedproduct;©Shutterstock/JKstock194Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomy•alignswithrelevanttechnicalspecifications,includingengineering,qualityandtestingstandards;and•yieldsafully-warrantedproduct.Itisessentialtoacknowledgethattheproduct-systemapproachcannotbestartedfreshfromablank-slate:therearecomplexandcomprehensiveorganizationalandeconomicsystemconditionsthatmustbeadaptedandincorporatedintothenewapproach.Despitebestintentions,educationofproductdesignersaloneisinsufficient:designiscurrentlyconstrainedbytheinformationanddatathatacompanyhasaccessto,andtheincumbentproductiontechnology.Tobestsupportanexpandedproduct-systemapproach,systeminformationanddatarelatedtodistribution,markets,forward-andreverse-logistics,andVRPsmustbeprovidedtoproductdevelopmentanddesignengineers.Inaddition,significantinvestmenttoenhancesystemefficiencyandadoptadvancedtechnology,includingadditivemanufacturing,isrequired.Ultimately,ahighdegreeofdata,understanding,andcomfortwiththeadditionalrequirementsinherenttoaproduct-systemsapproachisessentialforengagingindustryandsupportingthescale-upofVRPswithinaneconomy.9.3Existingreverse-logisticsmustbeenhancedVRPsandrecyclingareessentialaspectsofacirculareconomythat,incombination,optimizetheretentionofvaluewithintheeconomicsystem.WhereVRPsretainthematerialvalueandfunctionalityoftheproduct,recyclingretainsmaterialvalueinthesystemonceproductfunctionalityhasdegraded.Giventhevalue-re-tentionobjectiveofcirculareconomy,VRPsmustbeemployedalongsiderecyclingaspartofacomprehensiveapproachtomaterialefficiency.Inaddition,thesystemsthatgoverntheflows,orreverse-logistics,ofEOUproductsfromthecustomermarketbackintothesystem,mustbeoptimizedandenhanced.Developedandindustri-alizedeconomieshaveinvestedintheachievementofhighlyefficientandoptimizedforward-logisticsthathavefacilitatedsignificanteconomicgrowthunderthetraditionallinearmodel;enhancingthedesign,infrastructure,investment,andextendedvalue-chainmembershiptoachievesimilarlevelsofefficiencyandoptimizationinreverse-logisticsmustbecomeanewpriorityasastrategyforeconomicandenvironmentalimprovements(refertoSections8.4.4and8.5).Manyeconomieshaveembracedrecyclingasanimportantinfrastructuresystem,andmanyhavesetaggressiverecyclingsystemperformancetargets.Fromthisperspective,andliketheacceptedwastehierarchy,whereVRPsensurethatmaterialvalueandfunctionalityareretainedwithintheproduct,oncefunctionalityhasdegradeditistherecyclingsystemthatensuresthatmaterialvalueisretainedwithinthebroadersystem(refertoSection1.3.1).Implicitinthisisthefactthatrelianceonrecyclingalonecanleadtolostvaluewithinthesystemandlosteconomicopportunity.TheinclusionofVRPsasarequirementofacirculareconomystrategy,canleadtoincreasedeconomiccapacityandopportunityatreducedimpact,simplydeferringthearrivalofmaterialintherecyclingsystemuntilafterthefunctionalvalueofaproducthasbeenused-upthroughextendedormultipleservicelives.TheeffectivenessofVRPsandrecyclingarebothdeterminedbytheeffectivenessofreverse-logisticssystemsthatcaptureanddirectEOUproductsandcomponentsbackintotheappropriatereuseorrecyclingmarket.Ineffect,withouttheoptimizedflowofEOUproductsandcomponentsbackintoavalue-retentionprocessthroughreverse-logistics,anystrategytopursuecirculareconomywillbeineffective.Asdiscussed,theoriginofmanycirculareconomyinitiativesaroundtheworldisinthepursuitofasolutiontoawastemanagementchallenge(Ghisellini,Cialani,andUlgiati2016,Geng,Tsuyoshi,andChen2010,Yong2007)(refertoSection8.4.2).Assuch,theestablishmentofappropriatepolicyandinfrastructuretofacilitatewastediversion,collectionforrecycling,andreverse-logisticsforVRPsmustbeatoppriorityforanyeconomyinwhichthesesystemsdonotcurrentlyexist.AshighlightedinSection8.4.4,thesuccessofVRPsandrecyclingisreliantontheeffectiveandefficientdiversionandcollectionofEOUproductsforuseasinputstotheprocess.Collectioninfrastructurecannotbelefttoindustryalone:thesignificantandinefficientcost-burdenisprohibitiveforindividualorganizations.Creativeapproachestocreatingopportunitiesforimprovedefficiencyperformance195Chapter9–Conclusionsofcollectioninfrastructure,whichmaybesharedbymultipleorganizationsand/orindustry,hasbeendemonstratedbyexistinge-wasteandpackagingdiversionprogramsworldwide,andmayexistwithin,orseparatefromEPRlegislationasappropriate.Inmanycases,sharedcollectioninfrastructurecanbeinitiatedwiththesupportofnationalfundingforbotheducationandsystemdesign.Secondarymarketsexistinalleconomiesbutarenotalwaysasefficientorproductiveastheycouldbe.Apolicy-focusontheimplementationof,andefficientperformanceofvalueretentionandEOUcollectionsystemsisanimportantstartingpoint.Inaddition,newbusinessesopportunitieswithinthevalue-chainthatarefocusedontheprovisionofreverse-logisticsandquality-controlserviceshavealreadybeguntodemonstratetheeconomicpotentialofbusinessmodelsforthecirculareconomy.28Itisimportantthatpolicyinitiativesthatfacilitate,encourage,andsupportsuchreverse-logisticsinitiativesbedevelopedinparalleltotheseindustry-ledinitiatives.9.4Markettransformationforvalue-retentionprocessesreliesongovernmentandindustryThecirculareconomysetsoutaframeworkinwhichVRPsworkalongsideotheressentialeconomicandbehavioralstrategiestoreducetheenvironmentalburdenoftheglobaleconomy.However,thisisagrandvision,andsignificantmarkettransformationisrequiredtoachievethepotentialeconomicandenvironmentalbenefitspromisedbycirculareconomy.InthecaseofVRPs,ultimately,responsibilityforscale-upandadoptionrestswitheverydecision-makerontheplanet:fromtheindividualconsumermakinganeverydaypurchasedecision,thebusinessleaderevaluatinghowtoimprovetheclimatefootprintofthecompany,theprojectmanagerestablishingdesignrequirementsfor28Somebusinessmodelssupportthetransitionofindividualbusinessestowardsmorecircularpracticesbyfacilitatingthecollectionoftheirusedproducts/partsaroundtheworldandreturningthemtoadefineddestinationforrefurbishmentandremanufacturing(https://www.c-eco.com/).anewproduct,throughtothepolicy-makerconsideringhowtoplanforeconomicgrowthinthecontextofinternationalGHGemissionsreductioncommitments.Thenextmarkettransformationmustensureashiftinunderstanding,awareness,accessandadoptionofVRPsforeachoneofthesedecision-makers.Therearearangeofopportunitiestohelpkick-startthismuch-neededmarkettransformation,andbothgovernmentsandindustryhaveanimportantroletoplayinhelpingtoincreasetheadoptionofVRPs.AscoveredextensivelyinSection8.5,andhighlightedinSection9.2,industryhasanessentialroletoplayininitiatingandscaling-uptheadoptionofVRPs.Inadditiontoadoptingaproduct-systemsapproachtodevelopment,newinnovationsinbusinessandownershipmodelscanhaveasignificantimpactinthenecessarymarkettransformation(refertoSection8.28.2.2.2).Forexample,thereareincreasingexamplesofbusinessmodelsthatarefocusedontheserviceprovidedbyaproduct,ratherthanontheownershipoftheproduct.Underaservicemodel,ownershipandresponsibilityforvalue-retentionremainwiththeproducer,increasingthelikelihoodofEOUcollectionandrepurposingintoaVRPs,whilestillprovidingvalueandutilitytothecustomer.Inherentinthisapproachisashiftawayfromthetraditionalbusinesscasefocusoncostminimization,profitmaximizationandaccomplishmentofsalestargets,towardsabusinesscasethatemphasizestheservicefee,prolongedcustomerrelationship,andthedurationofserviceprovision–allstronglytiedtohighperformance,value-retention,andutilizationoftheservice-providingproduct.IneconomieswhereaccessandregulatorybarrierstoVRPsexist,alleviationofthesebarriersmustbethetoppriorityofagovernment’sstrategicplantopursuecirculareconomy.However,asmentioned,thepresenceofthesetypesofbarriersoftenoriginatedoutofinteresttoprotecthumanhealthandtheenvironment,andtheseinterestsmustcontinuetobeprotectedinanybarrieralleviationstrategy.196Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyThecirculareconomyencompassessignificantcomplexityinboththedetailsandsystemsthatmustbeconsideredandmanagedbystakeholders,andthatmustbeintegratedwiththecontinuedtraditionalconsumptionmotivesofqualityandperformanceexpectations(refertoSection8.5).Asemphasizedinthecallforanexpandedsystems-view(refertoSection8.5),policy-makersmustcarefullyemployandbalanceseeminglydisparateapproachesandperspectives:integratedenvironmentalpolicyandtechnologypolicytofacilitateandenableeco-in-novationforcirculareconomyandVRPs;theuseofcompliance-based(command-and-control)andmarket-basedpolicyinstrumentstoaddressthealleviationofbarriersandthepromotionofVRPadoption;andacknowledgingthedifferingprioritiesandneedsofeconomiesintheglobalSouthalongsidetheprioritiesandneedsofeconomiesintheglobalNorth.29AnexampleofprocurementpoliciesthataresupportiveofequaltreatmentofVRPproductsistheEC’sGreenPublicProcurement(GPP)CriteriaforFurniture,whichspecifiescriteriaforfurniturerefurbishmentservicesandfurnitureend-of-lifeservices,alongsidecriteriafornewfurniture.Refertohttp://ec.europa.eu/environment/gpp/pdf/toolkit/furniture_gpp.pdfThepresenceofaccessandregulatorybarrierstoVRPsdominatesaneconomy’sabilitytoadoptVRPsandtorealizethebenefitsofvalueretentionwithinacirculareconomy.ThepresenceofaccessbarriersslowsthegrowthofVRPsproductionactivities,andsubsequentlythespeedofproductioncapacityscale-upandtherelatedgrowthincustomerdemandforproductsfromVRPs.WhereproducersareunabletoaccessandengageinVRPs,technologyandknowledgetransferareinhibited,andthebusinesscaseforVRPsisquicklyundermined.Aspreviouslydescribed,barriersthatinhibitmarketawarenessanddemandforVRPsshouldbeconsideredapriority.IntheabsenceofaccesstoVRPsproductoptions,customermarketawarenessispreempted,andthedevelopmentandmaturationofVRPswithinaneconomybecomeincapacitated.Theurgentimplicationofthisscenarioisthatthereislittleabilitytoreducethenegativeenvironmentalimpactsassociatedwiththegrowthoftraditionalproductionactivities.Ineffect,withoutproducerandcustomermarketaccesstoVRPs,anytangibledomesticstrategyforcirculareconomywillbeinvain.Governments,asmajorconsumers,haveanimportantroletoplayinincreasingdomesticadoptionlevelsofVRPs(refertoSection8.4.2):1.EnablingequaltreatmentofproductsofVRPs:themodificationofgovernmentprocurementpoliciesthatmaycurrentlydistinguishand/ordiscriminateagainstVRPs,inordertoenableequaltreatmentandconsid-erationoftheproductsofVRPs,isanessentialfirststep.Forexample,particularlyinthecaseofremanufacturedproductsthatmeetorexceedtheperformancerequirementsofanOEMNewproduct,thisequaltreatmentwouldenableprocurementprofessionalstoconsiderremanufacturedproductsalongsideOEMNewproductoptions29.Giventheunit-levelimpactreductionenabledbyremanufacturing,whereappropriate,theprocurementdecisioninfavoroftheremanufacturedoptionwouldenablereducedenvironmentalimpact,improvedeconomicopportunity,andcostreduction,withoutcompromisingonproductqualityandperformance.©Shutterstock/iQoncept197Chapter9–Conclusions2.ProvidingincentivesassociatedwithVRPs:Formanycompanies,theoverhaulofexistingproceduresinpursuitofproduct-systemdesignperspectivesmayinciteafearofthepotentialforsubstantialshort-termcostandresourceburdens.Theprovisionofincentivestomotivate,rewardandpromotenewindustrypracticesisanessentialfirststeptoguidingatransformationoftheproductdevelopmentprocess.Asdomesticvalue-retentionprocessproductionactivitiesaccrueenvironmentalimpactbenefitstothedomesticeconomy,itmaybeintheinterestofgovernmentstosupportandprovideincentivesforproducersthatengageinvalue-retentionprocessactivities.Thiscanhelptoimproveeconomicsystemstabilityintheshort-term,allowingforvalue-retentionprocessproductioncapacityandexpertisetogrow.Finally,similartootherincentiveprogramsdesignedtopromotemoreenviron-mentalproductchoicesinthecustomermarket(e.g.energyefficientlightbulbs),governmentsmaywishtopromoteandencouragethecustomermarkettoconsiderproductsofVRPsalongsideOEMNewthroughrebateprogramsorotherinitiatives.Thevalidationofunfamiliartechnologiesbygovernmentprogramsmayhelptoalleviatesomeoftheconcernsthataretraditionallyassociatedwithremanufacturingandrefurbishmentbyconsumers.Coordinationbetweenpolicy-makersandindustryisessential:themostefficientsystemswillstillbeineffectiveifproductsarenotdesignedwithVRPsinmind;valueretentionofthemostmaterial-ef-ficientproductswillstillbeminimalwithouteffectivemechanismsforbringingthemintothemarketandrecoveringthematEOU.TohelpguidetheevolutionofbothmarketattitudesandgovernmentpolicythatisappropriatelysupportiveofVRPs,industrymusttakeleadershipinthedevelopmentofindustrystandardsandcertifi-cationsthatcanhelptoovercomeexistingbiasinthemarket(refertoSection8.4.3).Clarificationandstandardizationofthepractices,processesandqualificationthatentaildifferentVRPs,canhelptosupportmoreappropriateinternationaldefinitions.ThereismuchneedforstronggovernmentleadershipinovercomingtheinconsistentandconfusingterminologyanddefinitionsforVRPs,whichremainsoneofthemostsignificantissuesandchallengestoincreasedscaleanduptakeofVRPsineconomiesaroundtheworld.Thesepolicy-relatedbarriersofteneitherdirectlyorindirectlycreatedisadvantage,foravarietyofreasonsthatrangefromconsumerprotectioninterests(e.g.importrestrictions)toenvironmentalprotectioninterests(e.g.productrecyclingtargets).Policylanguagethatbetterreflectsthepotentialembodiedvalueofacore,and/orallowscorestobetreatedasnon-wastematerials,canhelptobettersupporttheimpactreductionpotentialandeconomicopportunitycreatedthroughVRPs–includingreverse-logistics,value-retention,economiesofscaleforVRPs,andacompellingbusinesscaseforVRPs.Goingforward,policydefinitionsofVRPsmustevolvetoalignwith,reflect,andacknowledgewhatispracticedwithinindustry,andthevaluethattheseVRPscreateforsocietyandtheenvironmentalike.9.5FinalwordsThecurrentprevalenceofVRPproductsaroundtheworldislow,butthroughtheadoptionofVRPsithasbeenshownthateconomicopportunity(e.g.viacostreductionandemploymentopportunity)andthereductionofimportantnegativeenviron-mentalimpactsarepossible.VRPsprovidethemostviableandprovenapproachtoenablingindustrialcirculareconomies:itisessentialthattheyformthefoundationofcirculareconomystrategiesofcompanies,industries,andeconomiesaroundtheworld.Despiteveryrealimplementationchallengesthatvaryacrosseachglobaleconomy,aboldandbravechangeisneededifthevalueofVRPsistoberealized,andthepursuitofcirculareconomiesmobilized.Thischangemustentailandembraceproductdevelopmentthatisfortheentireproduct-system;flowsofglobalforward-andreverse-logisticssystemsmustbeconnected,andtheefficiencyofthesesystemsmaximized.Tohelpspurnewlevelsofinterestandadoption,producersandcustomersalikemustbeabletohaveaccesstoagreaterrangeofvalue-retentionprocesstechnologyandproducts;andnewandinnovativebusinessmodelsmustbedeveloped,testedanddeployedtosupportmeaningfulmarkettransformation.Thepursuitofcirculareconomy198Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyisavitalandtangiblestrategyforovercomingthesignificantenvironmentalandeconomicchallengesthatwearefacing.Itistimeforalldecisionmakerstoengagein,andtakeconsciousactionthatwillenable,supportandleadtothelarge-scaleadoptionofVRPsworldwide.199AppendixAOverviewofcasestudyproductsandsectors30MGXCopy.2014.“What’sthedifferencebetweenoffsetprintingversusdigitalprinting”.MGXCopyBlog.https://www.mgxcopy.com/blog/san-diego-printing/2014/05/27/whats-difference-offset-printing-versus-digital-printing/.Accessed24March2017.31Chapman,A.2009.“ProductGroupReport:PrintingPresses:Astudyoftheremanufacturingofoffset&digitalprintingequipmentintheU.K.CenterforRemanufacturingandReuse.www.remanufacturing.org.uk/pdf/story/1p300.pdf.Thisreportutilizesresultsofdetailedanalysisontheselectedthreeproductsectors,andthreeproductsforeachsector,fornewproductionaswellasfourValue-RetentionProcesses(VRPs):arrangingdirectreuse,repair,refurbishment,andremanufac-turing.Theanalysiscoversproduct-leveldetaileddatacollectionandanalysis,aswellasmodelingtoreflectaggregatedmarket-levelimplicationsforeachproductandsector,acrossthefoursampleeconomies(US=A;Germany=B;Brazil=C;andChina=D).Thedatarequiredtocompletethisanalysisnecessarilyincludes:•Volumeofsalesandtrade;and•Economicandenvironmentalimpactsofeachproductandprocess,excludingtheuse-phase,over:-usageCycle,whichincludestheoriginalmanufacturingcycleandsubsequentvalue-retentionprocesses;and-processCycle,whichreflectsonlythevalue-retentionprocesses.Economicandenvironmentalimpactswerecollectedand/orcalculated,byproductandprocess,forkeymetrics:•newmaterialrequirement(kg/unit);•solidwastegeneration(kg/unit);•processenergyrequirement(MJ/unit);•processemissionsgeneration(kgCO2-eq./unit);•relativecost-advantage(%$USD/unit);and•laborrequirement(Full-timeworker/unit).IndustrialdigitalprinterssectorTherearethreeproductsselectedforcasestudies,representingtheIndustrialDigitalPrinterssector:amagneticinkcharacterrecognition(MICR)productionprintingandfinishingProductionPrinter(144images/minute),a4-colorelectrophotographyPrintingPress(84pages/minute),anda4-colordigitalcolorpressxerographyPrintingPress(120-150pages/minute).Specifically,casestudiesinvestigatetheseproductsinthecategoryofdigitalindustrialprinters.Theindustrialprintingsectoriscomprisedofbothtraditional(off-set)anddigitalprintequipment.Offsetprintersrelyonalargelymechanicalprocessthatutilizesetchedmetalplatestoapplyinkontoasheetofpaper;thistraditionalformofprintingistypicallymoretimeconsumingandexpensive,oftenonlyeconomicalwhenproductionreachesbatchsizesof2,000+identicalcopies.30,31Incontrast,digitalprintersuseelectrostaticchargeintheapplicationandfusingoftonerontoasheetofpaper.Digitalprintingismoreeconomicalandfasterthanoffsetprintingandcaneasilyaccommodateprintbatchesassmallasasinglepage.30,31Whilethemarketfordigitalprintersissmallerthanfortraditionaloffsetprinters,thissharecontinuestogrowslowly:thenatureofthemarketissuchthatbothoffsetanddigitalprintersareneededfordifferentfunctions.31Wherevalue-retentionprocessesfordigitalindustrialprinterstakeplace,200Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomythespecializednatureoftheproductsandthespecificelectronicpartsensurethatitislargelytheOEMthatisconductingtheremanufacture,refurbishmentorreuseofthedevice.TheleaseagreementsandpartexchangeprogramsrunbytheOEMslargelyinfluencethereuseofindustrialdigitalprinters.3132Stewart,A.2016.“TheOffset-PrintingDepartment:Alive&WellorintheICU?”QPConsulting.http://quickconsultant.com/offset-alive-well-or-in-the-icu/#more-925.Accessed24March2017.33PerU.S.2013Census,NAICS(333244,333316),reflectingvalueofprintingmachineryandequipmentmanufacturing(333244)andphotographicandphotocopyequipmentmanufacturing(333316).34Est.basedonanestimateofshareofGlobalMarket,whichis$21.5BUSD,perAdams,H.andS.Hill"FundamentalChangeinPrintingEquipmentLeadstoGrowth",2013.http://www.smitherspira.com/news/2013/may/change-in-printing-equipment-leads-to-growth.Accessed25January2017;andestimatedofEuropeshare(45percent),reducedto25percentforGermany,perProductionPrinterMarketbyType.2016.http://www.marketsandmarkets.com/Market-Reports/production-printer-market-29764400.html.Accessed25January2017.35Est.basedonanestimateofshareofGlobalMarket,whichis$21.5BUSD,perAdams,H.andS.Hill"FundamentalChangeinPrintingEquipmentLeadstoGrowth",2013.http://www.smitherspira.com/news/2013/may/change-in-printing-equipment-leads-to-growth.Accessed25January2017;andestimatedofrest-of-worldshare(5percent),reducedto2percentforBrazil,perProductionPrinterMarketbyType.2016.http://www.marketsandmarkets.com/Market-Reports/production-printer-market-29764400.html.Accessed25January2017.36EstimatedperChina-GlobalPrintPowerLeader.2014.http://www.npes.org/newevents/newsroom/content.aspx?topic=China_Global_Print_Power.Accessed25January2017.37"4Spark-IgnitionGasolineEngines."NationalResearchCouncil.2011.AssessmentofFuelEconomyTechnologiesforLight-DutyVehicles.Washington,DC:TheNationalAcademiesPress.doi:10.17226/12924.38Najjar,YousefSH."Alternativefuelsforsparkignitionengines."OpenFuels&EnergyScienceJournal2(2009):1-9.Nationaleconomicreportingonindustrialprintersoftencombinesoffsetanddigitaltechnology;whileoffsetindustrialprintingpresseswerethedominanttechnologyinthepast,theshort-runflexibilityandeconomicsofdigitalprintersinrecentyearshasindicatedtechnologyswitchingbymanyfirms.32TableA-1:Estimated2013marketsizeforindustrialdigitalprintersEconomyA(US)EconomyB(Germany)EconomyC(Brazil)EconomyD(China)Est.2013TotalMarketSizeofIndustrialPrintingEquipment(B$USD)3.78335.38340.43352.33633343536VehiclepartssectorTherearethreeproductsselectedforcasestudies,representingtheautomotivevehiclepartssector:vehicleengines,vehiclealternators,andvehiclestarters.Thevehicleenginerepresentedforthecasestudyisaspark-ignition,internalcombustiongasolineordieselvehicleengines,whichareanessentialpartofthefuelconversionsystemofnon-electricpassengervehicles.AlargemajorityofthevehiclesusedinUnitedStatesutilizespark-ignitionenginesfueledwithgasoline.37Therearemanydifferenttypesanddesignsofspark-ignitionengines,andthetypicalapplicationisasaneworreplacementcomponentinapassengervehicle.Spark-ignitioncombustionenginescomein2and4-strokecategories,canhavemultiplecylinders,andarecommonlyreferredtoas‘gasolineengines’inNorthAmerica,and‘petrolengines’intheUK.38Vehiclealternatorsareusedinmodernvehiclestopowertheelectricalsystemandchargethebatterywhiletheengineisrunning.Vehiclealternatorsareanessentialpartofthevehicleselectricalsystem,enablingtheconversionandstorageofkineticenergycreatedbytheengine.Vehiclealternatorsarerelatively‘standard’indesignandareamongthemostcommonlyremanufacturedvehiclecomponents.39Theelectricstartermotorisanessentialsub-componentofthevehicleenginethatprovidestheinitialchargetoengageandignitethevehicleAppendix201engine,initiatedwiththeignitionkeywhenthevehicleis‘turned-on’.Vehiclestarters,alsocalledvehiclecrankshafts,areanessentialpartofthevehicle’selectricalsystem,responsibleforignitionofthespark-ignitioninternalcombustionengine.Alongsidevehiclealternators,startersaccounted39TheAutomotivePartsRemanufacturersAssociation.2008.http://www.apra.org/.40Est.basedon2013USCensusdata(NAICS336310,336320),formotorvehiclegasolineengineandenginepartsmanufacturingandmotorvehicleelectricalandelectronicequipmentmanufacturing.USCensus:http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ASM_2013_31VS101&prodType=table)Accessed12July2016.41EstimatedGermanyProduction(Total):$91.38BUSD(2014).http://www.statista.com/forecasts/391951/germany-vehicle-part-accessory-manufacture---other-revenue-forecast-nace-c2932.Accessed12July2016.42EstimatedtotalBrazilproduction:51.6BUSD,Per:http://www.statista.com/statistics/295184/revenue-of-the-auto-parts-industry-brazil/.Accessed12July2016.43EstimatedChinaproductionperJosephChow,ChairmanAPRAAsia-Pacific,inpersonalemailcommunication08February2017.44InternationalEconomicDevelopmentCouncil,2013“Creatingthecleanenergyeconomy:Analysisoftheelectricvehicleindustry”.http://www.iedconline.org/clientuploads/Downloads/edrp/IEDC_Electric_Vehicle_Industry.pdf.Accessed09February2017.45JATODynamicsLtd.2016.“FocusonGermany:Electric,Hybrid,andPlug-InHybridVehiclesFY2015MarketOverview”.http://www.jato.com/wp-content/uploads/2016/03/JATO-Market-Focus-Germany-Electric-Hybrid-Plugin-Hybrid-Vehicles-2015.pdf.Accessed09February2017.46InternationalCouncilonCleanTransportation,2015.“BrazilPassengerVehicleMarketStatistics:InternationalComparativeAssessmentofTechnologyAdoptionandEnergyConsumption”.http://www.theicct.org/sites/default/files/publications/Brazil%20PV%20Market%20Statistics%20Report.pdf.Accessed09February2017.47InternationalCouncilonCleanTransportation,2015.“BrazilPassengerVehicleMarketStatistics:InternationalComparativeAssessmentofTechnologyAdoptionandEnergyConsumption”.http://www.theicct.org/sites/default/files/publications/Brazil%20PV%20Market%20Statistics%20Report.pdf.Accessed09February2017.for92percentofrevenuesintheNorthAmericanalternatorsandstartersaftermarketin2005;whilethissharedeclinedoversubsequentyears,theremanufacturingofthesepartsisadominantprocessinthisindustry.39TableA-2:Estimated2013marketsizeforvehiclepartsEconomyA(US)EconomyB(Germany)EconomyC(Brazil)EconomyD(China)Est.2013TotalMarketSizeofRelevantVehicleParts(B$USD)48.44091.44151.642344.643Spark-ignitioninternalcombustiongasolineanddieselvehicleenginesrepresentthevastmajorityofavailablevehicletechnologyoptionsinscenariosmarkets,asdescribedinTableA-2,withtheremainderofthemarketconsistingofelectric,hybrid-electricandplug-inhybridvehicletechnologies.Asthevehiclealternatorandstarteraresub-componentsofthespark-ignitioninternalcombustionvehicleengine,thesemarketsharesareassumedforeachautomotivevehiclepartproductcasestudy.TableA-3:Estimated2013marketshareofinternalcombusionsvehicleenginesEconomyA(US)EconomyB(Germany)EconomyC(Brazil)EconomyD(China)Est.2013MarketShareofVehiclesUsingSpark-IgnitionInternalCombustionEngines99.4%4498.5%4599.8%4699.9%47202Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyHeavy-dutyandoff-road(HDOR)equipmentpartssectorTherearethreeproductsselectedforcasestudies,representingtheHDORequipmentpartssector:HDORengines,HDORalternators,andHDORturbochargers.Specifically,casestudiesinvestigatetheseproductsinthecategoryofconstructionandearth-movingequipment(excludesagriculturalapplications).AccordingtotheUSInternationalTradeCommission(USITC)48andEuropeanRemanufacturingNetwork(ERN),49theHDORsegmentistypicallydividedintoseveralindustriesthatincludeconstructionequipment(back-hoes,excavators),miningequipment(rock-trucks),andagriculturalequipment(combines,tractors).TheHDORenginerepresentedforthecasestudyis3,400horsepower,electronicunitinjection,turbochargedfour-strokedieselengine,withatandemunitconsistingoftwo12-cylinderengineblocks.5048U.S.InternationalTradeCommission.2012.RemanufacturedGoods:AnOverviewoftheU.S.andGlobalIndustries,MarketsandTrade.Washington,D.C.:U.S.:U.S.InternationalTradeCommission.49EuropeanRemanufacturingNetwork.2015.RemanufacturingMarketStudy.EuropeanCommission.50"Products"Machines"Off-HighwayTrucks"MiningTrucks"797BBenefits&FeaturesPowertrain-Engine".CaterpillarWebsite.CaterpillarInc.Archivedfromtheoriginalon2009-12-10.51TheAutomotivePartsRemanufacturersAssociation.2008.http://www.apra.org/.52Caterpillar.2015.Turbochargers.https://parts.cat.com/en/catcorp/turbochargers#facet:&productBeginIndex:0&or-derBy:&pageView:grid&minPrice:&maxPrice:&pageSize:&.Accessed20March2017.53PerU.S.2013Census,NAICS(333120,333131),reflectingvalueofconstructionmachineryandequipmentmanufacturing,andminingmachineryandequipmentmanufacturing.54GermanyTrade&Invest.2016.IndustryOverview:TheMachinery&EquipmentIndustryinGermany.https://www.gtai.de/GTAI/Content/EN/Invest/_SharedDocs/Downloads/GTAI/Industry-overviews/industry-overview-machinery-equipment-en.pdf?v=11Accessed20March2017.55EMIS.Machinery&EquipmentSectorBrazil.2014.https://www.emis.com/sites/default/files/EMIS%20Insight%20-%20Brazil%20Machinery%20and%20Equipment%20Sector.pdf.Accessed20March2017.56FreedoniaGroup,2015.“ConstructionMachineryinChinato2016-DemandandSalesForecasts,MarketShare,MarketSize,MarketLeaders”.http://www.freedoniagroup.com/Construction-Machinery-In-China.htm.Accessed12July2016HDORalternatorsareusedtopowertheelectricalsystemandchargethebatterywhiletheengineisrunning.Alternatorsareanessentialpartoftheelectricalsystem,enablingtheconversionandstorageofkineticenergycreatedbytheengine.Alternatorsarerelatively‘standard’indesignandareamongthemostcommonlyremanufacturedvehiclecomponents.51Theturbochargerisaforced-inductiondevicethatcompressesairandoxygenfordeliveryintothecombustionchamberoftheengine.Turbochargersarecreditedwithincreasingthevolumetricefficiencyoftheengine,enablinggreaterpowerandfuelefficiency,andhencetheyarebothidealfortheextremeconditionsinsideHDORdiesel-com-bustionengines.52HDORdieselcombustionenginesrepresentthevastmajorityofavailableHDORtechnologyoptionsinscenariosmarkets,asdescribedinTableA-3.Asthealternatorandturbochargeraresub-com-ponentsofthespark-ignitioninternalcombustionvehicleengine,thesemarketsharesareassumedforeachHDORpartproductcasestudy.TableA-4:Estimated2013marketsizeforHDORequipmentpartsEconomyA(US)EconomyB(Germany)EconomyC(Brazil)EconomyD(China)Est.2013MarketSizeofHDORConstructionandMiningEquipment($BUSD)36.7B5312.3B5448.0B5559.6B56203AppendixBAssessmentmethodologyConceptualframeworkTohelpfacilitateandsupportmorecirculareconomies,itisimportanttounderstandtheimpactsthatdifferenttypesofinnovationcanhaveuponproducts,businesses,sectors,andeconomicsystems.Giventhebroadrangeofinnovationsthatcaninfluence,andareessentialtocirculareconomies,ahybridapproachutilizingbottom-up(productandprocess-level)andtop-down(econ-omy-level)perspectivesenablesappropriatereflectionofdifferentVRPimpactsacrossproductsystems.Theanalysispresentedinthisreportutilizesahybridofbottom-upandtop-downevaluationstocapturesomeofthemoresignificanteconomicandenvironmentalimpactsofbothinnovation,andbarrierstobroadapplicationsinthecirculareconomy.Thisapproachdoesnotundertakealife-cycleanalysis(LCA)method,howeveritdoesincorporateanattributionalapproachthatidentifiesandaccountsforspecificstatesandimpactsoftherelevantprocessesattheproduct-levelandattheaggregatedeconomy-level(refertothefollowingsections).PerFigureB-1,anoverviewoftheseapproachesisprovidedbelow,andexpandedoninmoredetailinsubsequentsections.Unit-levelassessmentbyproduct,foreachprocess:➢➢newmaterial-requirement;➢➢embodiedmaterialsenergy;➢➢embodiedmaterialsemissions.Unit-levelassessmentbyproductionprocess:➢➢processenergy;➢➢processemissions;➢➢processlabor;➢➢producercost.Economy-levelassess-mentofaggregatedpro-ductionimpacts:➢➢threesystem-basedbarrierscenarios;➢➢foursampleeconomies.PRODUCT-LEVELPRODUCTION-LEVELECONOMY-LEVELFigureB-1:Overviewofconceptualassessmentframework•Product:Attheproduct-level,abottom-upapproachisusedtoassessproductionrequire-mentsandlifecycleimplicationsforasingleindi-vidualproduct,acrosseachVRP.Forexample,thisincludesnewmaterialrequirement(kg/unit),embodiedmaterialsenergyrequirement(MJ/unit),andembodiedmaterialsemissionsimpact(kgCO2-eq./unit)foreveryunitproduced.Comprehensiveempiricaldatacollectionforasampleoftenproducts,representingthreedifferentsectorsisusedtohighlighttheprod-uct-leveleconomicandenvironmentalimpactsofVRPswithinthecirculareconomy(referto204RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomyTable1).AppendixAdescribesthesecasestudyproductsandsectorsingreaterdetail.•Production:Production-levelimpacts(orfactors)layerontheprocess-specificimpactsofproduc-tionforOEMNewandeachVRPonaper-unitbasis.Theseimpactsincludeprocessenergyrequirement(MJ/unit),associatedprocessemissions(kgCO2-eq./unit),thelaborrequirement(full-timeworker/unit),andthecostadvantage(%$USD/unit).Productionimpactsarereflectedinaper-unitbasistosupportandenablesubse-quentaggregationatthemacro-sectorandeconomyscales.Giventhedifferingnatureofproductionacrossglobaleconomies,productionimpactsarereflectedineconomy-specificimpactfactorsforeachoftheexampleproductionregions:Brazil,China,Germany,andtheUnitedStatesofAmerica(US).•Economy:Product-andproduction-levelimpactsperunitareaggregatedtothemacro-sectorandeconomyscalesdifferently,dependingonproductionmix,productionfacilityperformance,aswellasthecountryoforigin.Product-levelimpactdataareincorporatedintoatop-downaggregationapproach,basedonestimatedproductionvolumesforeachcase-studyproductandsectorinaneconomy.ToassessthemagnitudeofimpactthatcurrentcommonbarrierstoVRPsmayhaveuponeconomicandenvironmentalimpactmeasurements,thetop-downapproachnormalizesproductionlevelsacrossfoursampleeconomies(US,Germany,BrazilandChina)underaStatusQuo(currentstate)scenario.BarrierstoVRPsarewelldocumented;thisanalysisextends,throughsensitivityanalysis,understandingofwhichbarrierstoVRPsmostsignif-icantlyconstrainsthetransitiontocirculareconomy.Wheretheimpactsofbarrierscauseinefficiencyand/ornegativeimpactsfordifferentstakeholdersand/ortotheenvironment,policyapproachesmaythenbeusedtoappropriatelyandeffectivelytargetspecificbarriersforalleviation/mediationofboththebarrier,andtheresultingimpact.Twoadditionalbarriers-basedscenariosareutilizedtoexaminetheimpactofdifferentbarrieralleviationinitiativesuponeachofthefoursampleeconomies:theseincludeaStandardOpenMarketforVRPProductsscenario,andaTheoreticalHighforVRPProductsscenario.TheregardingbarrieralleviationscenariosarefurtherdescribedinFigureB-2andfurtheranalyzedinSection7.STANDARDOPENMARKETforVRPproductsscenarioTHEORETICALHIGHforVRPproductsscenario➢➢EacheconomyforecastusingUS-basedStatusQuoScenarioregulatory,market,technologicalandinfrastructureconditionfactors➢➢Eacheconomyforecastwithmaximumpossibleregula-tory,market,technological,andinfrastructureconditionfactors,andUS-basedTheoreticalHighproductionlevelsforVRPproducts(percentshare)STATUSQUOforVRPproductsscenario➢➢CurrentstateofVRPswithineacheconomy,givenknownbarriersINCREASINGBENEFITSOFVRPSWITHALLEVIATIONOFBARRIERSTOVRPSFigureB-2:OverviewofbarrieralleviationscenariosAsystems-viewoftheeconomy,includingproduc-tionofOEMNewandVRPproductsisessential:Understandingtheinterconnectednessandcomplexityofrelationshipsbetweenarangeofsystemvariablesandconditions(factors)ensuresabetterappreciationofcurrent-stateimpacts,andimplicationsoffuturedecision-makingandpolicydirection.Ataminimum,thisstudyaccountsforsomeoftheprimarysystemfactorsthatmustbeconsideredinthecontextofVRPproduction,asdescribedinFigureB-3.AppendixB205STATEOFECONOMY❑❑GrowthrateforproductmarketOPENNESSTOPRODUCTION&TRADEOFVRPPRODUCTS❑❑Import&exportratesoffinishedreuseproducts❑❑Import&exportofcores❑❑Regulatoryconstraintsonproduction,distribution,and/orsaleSTATEOFDIVERSIONCUSTOMER&RECOVERYINFRASTRUCTURE❑❑Productexpectedlife&EOUfall-outrate❑❑EOUdiversiontosecondarymarketrate❑❑EOLdiversiontorecyclingrate❑❑EOLdisposaltoenvironmentrateMARKETREADINESS&MARKETPENETRATION❑❑Demandshare(ofmarket)❑❑Productionshare(ofmarket)❑❑Customer/consumeraccessSTATEOFPRODUCTIONEXPERTISE&INFRASTRUCTURE❑❑Shareofnewmaterialinputs❑❑Shareofreuseinputs❑❑Productionwastedivertedtorecycling❑❑ProductionwastedisposedtoenvironmentFigureB-3:Keyfactorsaffectingvalue-retentionprocessesandproductionsystemsExtensiveeffortwasundertakentoensurearigorousempiricalapproach.Thefollowingsectionsdescribethemodeldevelopmentandmethodologyforboththebottom-up(product-andproduc-tion-level)analysis,andthetop-down(aggregatedeconomy)analysis.Includedaredatacollectionmethods,keyproduct/componentcharacteristicsusedinthemodel,assumptionsusedbetweenthevariousVRPsincluded,anddescriptionofthemodelingprogram.Thefollowingsectionsprovideadditionaldetailsregarding,butnotlimitedto:non-proprietarydatasourcesandapproachtodatacollection;modelingassumptionsandrationale;andadditionalmethod-ologicalinsights.206RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomyTableB-1:SummaryofmodelnotationNotationDescriptionSuB-andsuperscriptnotationtNumberofEconomy-Levelmodelsimulationperiod(t=7)kSampleeconomy,Brazil,China,Germany,andUSjCasestudyproduct(3industrialdigitalprinters;3vehicleparts;3HDORequipmentparts)iProductionprocess:OEMNew,arrangingdirectreuse,repair,refurbishmentandremanufacturingcComponentofthecasestudyproductmMaterialtypesServicelifecycleofproduct(j)viaprocess(i),inagivensimulationoftheProduct-LevelmodelhEnd-of-Life(EOL)routingoptionforfailedcomponents/materialsinProduct-LevelmodelnNumberofproductsimulationsusedforProduct-Levelmodel(n=1000)ExogenousparametersandnotationαTotalweightbymaterialtype(m)forcomponent(c)inproduct(j)inProduct-LevelmodelΥUpstreammaterialintensity,orupstreamwastegenerationgross-upmultiplierinProduct-LevelmodelδBurdenfactorforEOLroutingoptionbymaterial(m)forcomponent(c)inProduct-LevelmodelηNumberofexpectedservicelifecyclesforcomponent(c)inproduct(j)inservicelifecycle(s)gCompoundAnnualGrowthRate(CAGR)forproduct(j)ineconomy(k)inEconomy-Levelmodel(%)λProductionmix(orshare)forproduct(j)viaprocess(i)ineconomy(k)inEconomy-Levelmodel(%)τEmbodiedenergyperunit(product(j)viaprocess(i)ineconomy(k)),globalaverageinMJ/unitωEmbodiedemissionsperunit(product(j)viaprocess(i)ineconomy(k)),globalaverageinkg.CO2-eq./unitφProcessenergy/unit(product(j)viaprocess(i)ineconomy(k)),inMJ/unitφ(α)Processenergy/unit(product(j)viaprocess(i))producedindeveloping/newlyindustrializedeconomies,inMJ/unitφ(b)Processenergy/unit(product(j)viaprocess(i))producedindeveloped/industrializedeconomies,inMJ/unitPEFProcessEnergyFactorenablingacross-economyassessment(PleaserefertoTableB-23)βProcessemissions/unit(product(j)viaprocess(i)ineconomy(k)),inkg.CO2-eq./unitβ(α)Processemissions/unit(product(j)viaprocess(i))fromdeveloping/newlyindustrializedeconomies,inkg.CO2-eq./unitβ(b)Processemissions/unit(product(j)viaprocess(i))fromdeveloped/industrializedeconomies,inkg.CO2-eq./unitPMFProcessEmissionsFactorenablingacross-economyassessment(PleaserefertoTableB-24)πNNon-recyclableProductionWaste/unit(product(j)viaprocess(i)ineconomy(k)),inkg/unitπRRecyclableProductionWaste/unit(product(j)viaprocess(i)ineconomy(k)),inkg/unitAppendixB207NotationDescriptionExogenousparametersandnotationπ(α)Totalproductionwaste/unit(product(j)viaprocess(i))fromdeveloping/newlyindustrializedeconomies,inkg/unitπ(b)Totalproductionwaste/unit(product(j)viaprocess(i))fromdeveloped/industrializedeconomies,inkg/unitPWFProductionWasteFactorenablingacross-economyassessment(PleaserefertoTableB-25)νProcesslaborreq./unit(product(j)viaprocess(i)ineconomy(k)),infull-timelaborer/unitν(α)Processlaborreq./unit(product(j)viaprocess(i))fromdeveloping/newlyindustrializedeconomies,infull-timelaborer/unitν(b)Processlaborreq./unit(product(j)viaprocess(i))fromdeveloped/industrializedeconomies,infull-timelaborer/unitPLFProcessLaborFactorenablingacross-economyassessment(PleaserefertoTableB-26)ψCostadvantage(product(j)viaprocess(i),in%$USDrelativetoOEMNewRFRegulatoryandaccessFactorforproduct(j)viaprocess(i)ineconomy(k)usedinVRPBarrierScenariosinEconomy-LevelmodelTFTechnologicalFactorforprocess(i)ineconomy(k)usedinVRPBarrierScenariosinEconomy-LevelmodelMFMarketFactorforproduct(j)viaprocess(i)ineconomy(k)usedinVRPBarrierScenariosinEconomy-LevelmodelIPImportshareofdemandforproduct(j)viaprocess(i)ineconomy(k)inEconomy-LevelmodelIP(α)Importshareofdemandfromdeveloping/newlyindustrializedeconomiesforproduct(j)viaprocess(i)ineconomy(k)inEconomy-Levelmodel(%)IP(b)Importshareofdemandfromdeveloped/industrializedeconomiesforproduct(j)viaprocess(i)ineconomy(k)inEconomy-Levelmodel(%)EndogenousVariablesDeterminedwithintheModelsMNewmaterialrequirement,bymaterialtype(m)forproduct(j)viaprocess(i),inProduct-Levelmodel(kg/unit)ΓEmbodiedenergyrequirementforproduct(j)viaprocess(i),inProduct-Levelmodel(MJ/unit)ρEmbodiedemissionsforproduct(j)viaprocess(i),inProduct-Levelmodel(kgCO2-eq./unit)DEstimateddemandforproduct(j)viaprocess(i)ineconomy(k),inEconomy-Levelmodel(#ofunits)FFall-outrateofproduct(j)viaprocess(i),basedonexpectedservicelife,inEconomy-Levelmodel(%)CEstimatedunitsavailableforcollectionatendofservicelife/failureeachperiod(t)inEconomy-Levelmodel(#units)IBEstimatedtotalinstalledbaseofproduct(j)viaprocess(i)ineconomy(k)inperiod(t)inEconomy-Levelmodel(#units)XDomesticproductionquantityofproduct(j)viaprocess(i)ineconomy(k)IImportquantityofproduct(j)viaprocess(i)byeconomy(k)I(α)Importquantityfromdeveloping/newlyindustrializedoriginsofproduct(j)viaprocess(i)byeconomy(k)I(b)Importquantityfromdeveloped/industrializedoriginsofproduct(j)viaprocess(i)byeconomy(k)208RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomyBottom-upmodeling:empiricaldatacollectionandproduct-levelanalysisTheempiricalmodelthatformsthebasisfortheproduct-levelanalysis,aswellasasignificantshareoftheempiricaldatacollectedforcasestudyproducts.TheanalysespresentedinSection5.1,andtheproduct-levelresultspresentedinSections5.2and5.3wouldnothavebeenpossiblewithoutthisfoundationalcontribution.Toensurethattheresultsobtainedfromthisanalysiscouldbeproperlyappliedtoindustry-wideconclu-sions,preliminaryproductselectionconsiderationswerediscussedthoroughlywithindustryexperts,reviewedinliterature,andconsideredinthecontextofcurrentmarketconditions.TheresultingcasestudysectorandproductswereselectedlargelybecausethesesectorsareknowntoengageinVRPs,interestedcollaboratingindustrymemberswerewillingtoprovideaccessforon-sitedatacollectionandinterviews,andtheseproductsrepresentedsufficientscalewithinpotentialsampleeconomiestoenablemeaningfulmodelingapproaches.CollectionofdataoncasestudyproductsandprocessesWheremuchofthecurrentliteratureoncirculareconomyandmaterialefficiencyreliesonassump-tionsandsecondarydata,ofprimaryinteresttothisassessmentwasthecollectionoffirst-handdataaboutcasestudyproductsandproduc-tionprocesses.Researcherswereengagedinthecompletedisassemblyandclassificationofconstituentcomponentsandmaterials,aswellasnumerouson-sitevisitswithindustrycollaboratorstoconductcarefulobservationofeachproduc-tionprocessandcommonpracticesforeachcasestudyproduct,whereverpossible.Whereon-siteassessmentswerenotpossibleduetoproprietaryconcerns,industrycollaboratorsprovideddetailedBillofMaterials(BOM)datasetsforproduct-levelmaterialsanalysis,aswellascomprehensiveutilitiesreportstosupportandenableprocessenergyandlaborrequirements,forOEMNewandeachVRPproduction.Eachon-siteassessmentinvolvedmultiplevisits,anddirectinteractionwithalllevelsoftheorganization,fromfront-lineoperators,throughtobusinessunitmanagersandvice-presidents;Italsoinvolvedsupportfromacrosstheorganization,includingoperationsteams,finance,andfacilitymanagement.Giventhesubstantialscopeofthisassessment,insomecasesprocess-baseddatacouldnotbecollecteddirectlyduetothedynamicnatureoftheprocess(e.g.repairoftraditionalvehicleengines).Inthesecases,secondarydatafromrecentLCAandengineeringliteraturewereutilized,andadditionalvalidationwasprovidedthroughreviewbysupportingindustryexperts.Thedatacollectionmethodologyfirstrequiredanassessmentoftheproductandproduct-platformkeycharacteristicsofaveragelengthoffirstservicelife(e.g.uptoEOU),andactualusefullifeoftheproduct-platform(e.g.uptoEOL).Inaddition,itinvolved,thecollectionofprimaryproductandcomponentcharacteristics(e.g.weight,materialtypes,causesoffall-out/failure),typesofVRPsavailableforthatproduct,productionwastegener-ation,andthepotentialreusability(orsalvagerate,e.g.96percent)ofeachproductcomponent,undereachdifferentVRP.Thisalsoincludedmaterialrequirementgross-upestimatestoaccountforproductionbyproductwasteandrecycling,substantiatedbydatafromrelevantLCAliterature.DatacollectionmethodologyAtthematerial-andproduct-levelanalyses,eachproductwasevaluatedseparatelyacrosstherelevantmetrics.Thedatacollectionmethodologyrequiredworkingcloselyon-sitewithfront-lineworkersandmanagementteammembersofindustrycollabora-torstostudybothmanufacturingprocesses,aswellasstandardproceduresandpracticesthroughouteachVRP.Specificproduct-leveldatacollectedincluded:component-levelBillofMaterials(BOM);component-levelproductoverviewandproductplatformassessment;component-levelcharacteris-tics(e.g.materialweight,materialtype,associatedproductionwastegeneration).ThetypesofVRPsusedforeachproduct;component-levelreusabilityassessment(e.g.percentofcomponentretainedviaeachVRP);andproduct-levelservicelifepotential(e.g.numberofyearstheproductisabletobecycledviadifferentVRPs).AppendixB209ComponentcharacteristicscollectedEachproductisassessedatthecomponentlevel,wherecomponentcharacteristicswerecollectedtoperformtheanalysis.Somecomponentscanbereusedformoreservicelivesthanothercompo-nents,asaresultoftheirdesign,thematerialstheyareconstructedof,andthenatureoftheVRPutilized.Byfocusingonacomponent-levelapproach,thetotalmaterialrecirculation,on-av-erage,forthesecomponentsaspartofthelargerproduct,couldbecaptured.AsaprimaryobjectiveofthisstudyistoenabledetailedcomparisonofimpactsacrossdifferentVRPs,thisapproachenabledthenecessarycomparisonatageneral-izable,butdetailedandmeaningfullevel.Foreachcasestudyproduct,datacollectionoriginatedwiththeprimarycomponentsofBOM,andincludedtheminimumfollowingdetails:componentweight,materialtype,reusabilitymechanismaveragenumberofservicelivesviaeachVRP,andmaximumnumberofservicelivesviaeachVRP.ProductcharacteristicscollectedWhilemostoftheproduct-levelanalysisisperformedusingcomponent-leveldata,someproductdataconsiderationswererequiredtoallowforthecomparisonofeachVRPrelativetotheOEMNewversionoftheproduct.Thetwoproductcharacteristicscollectedaretheaverageservicelifeandtheestimatedplatformlifeoftheproduct.Thesetwofactorsareusedmainlytodeterminelimitsofcomponentsreusability.BecausesomeVRPsdonotextendtheproductlifeforanaddi-tionalcompleteservicelife,thesecharacteristicsallowedforamoreaccuratecomparisonoftheresultsacrosseachrespectiveVRP.Product-levelmodeldevelopmentandapproachAsdescribedpreviously,aselectionofproductsfromkeysectorsthatalreadyengageinVRPstosomedegreewereselectedfortheproduct-levelstudy.ThesecasestudyproductsaredescribedinTableB-2.TableB-2:SummaryofcasestudyproductsandprocessesassessedSectorCasestudyproductsStandardprocessesIndustrialdigitalprinters•Productionprinter•Printingpress(#1)•Printingpress(#2)•All;comprehensiverefurbishment•All;comprehensiverefurbishment•All;comprehensiverefurbishmentVehicleparts•Traditionalvehicleengine•Lightweightvehicleengine•Alternator•Startermotor•Nosignificantrefurbishment•Nosignificantrefurbishment•Nosignificantrefurbishment•NosignificantrefurbishmentHeavy-dutyandoff-roadequipmentparts(HDOR)•Engine•Alternator•Turbocharger•All;comprehensiverefurbishment•Nosignificantrefurbishment•Nosignificantrefurbishment210RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomyNewmaterialsourcedMaterialprocessingManufacturingManufacturingProducttransportationUseEndofuse(EOU)Endoflife(EOL)RecyclingordisposalMaterialprocessingNewmaterialsourcedComponentreplacementProcesswaste&failedcomponentsRefurb.RepairDirectreuseReman.Value-retentionprocessesTraditionalProcessMaterialﬂowFigureB-4:Product-levelsystemandflowsforvalue-retentionprocessesTheboundariesofthemodeledVRPsvs.thetradi-tionallinearmanufacturingsystemareillustratedinTableB-4,andcomparisonisonthebasisofasingleunitprocesscycle.ItisimportanttonotethattheseboundariesdonotmatchwithtraditionalLCAsystemboundaries:use-phaseimpactsaswellastransportationimpactsarespecificallyexcludedfromthestudy,asdiscussedingreaterdetailinSection4.4.Asdiscussedpreviously,thewayinwhichaVRPextendsthelifeoftheproductorcomponentswillvary:Wherecomprehensiverefurbishmentandremanufacturingcanprovideacompletenewservicelifetotheproduct(oralmostcompletenewservicelife,inthecaseofcomprehensiverefurbish-ment),arrangingdirectreuse,repairandrefurbish-mentaretypicallyusedtoenablethecompletionoftheoriginallifeoftheproduct.Tocapturetheserelativedifferentiations,TableB-5illustratestheproductlifeofapopulationofeachofthecasestudyproducts(assumesnormaldistri-bution),inwhichtheproductsfall-outofthesystemoverthetypicallifespanduetoarangeofreasons,whereVRPsmaybeintroduced,andtheresultingproductlifeimplicationsofeachVRP.Forexample,reuseandrepairactivitiesenabletheEOUproducttocompletetheoriginalexpectedservicelife(hence,shorterusagecycleoverlappingwiththeoriginalOEMNewproduct’sexpectedservicelifecurve),Inthecaseofremanufacturing,theEOUproductistypicallyrecoveredinthelaterphaseoftheexpectedservicelife(curve)andrestoredtolike-newconditionwhereitwillexperience,atminimum,anadditionalfullyfunctionalservicelife.AppendixB211OEMNewRepairDirectreuseRemanufacturingPOPULATIONOFPRODUCTAverageservicelifecycleTIMEFigureB-5:ExamplemodelforreutilizationofvehiclepartsproductsatEOUthroughvalue-retentionprocesses57PleaserefertotheGlossaryofTerms.Newmaterialincludesamixtureofvirgin(primary)andrecycled(secondary)content.Giventhatthevastmajorityofmaterialsavailableforpurchaseintheglobaleconomyconsistsofsomemixtureofvirginandrecycledmaterials,theassumedratioofvirginandrecycledcontentusedinmodelingisbasedontheglobalaverageforeachmaterialtype,inaccordancewiththeInventoryofCarbonandEmissions(ICE)(HammondandJones2011).TheparametersaffectingproductservicelifeandEOUopportunityforVRPsnecessarilyvariesbyproducttype,country,andmarketinseveralways:thecomplexityanddesigneddurabilityoftheproductorcomponentmayaffectthelengthofitstechnicallifeanditsconditionatthetypicalEOU;dependingontheeconomy,andpotentiallyotherconsumerpreferencesandnormsindifferentregions,someproductsmaybekept‘in-use’throughrepairandreuseactivitiesbeyondtheoriginalexpectedlifethattheyweredesignedfor,asaresultofincomeand/orotherconstraintsthataffectaccesstoOEMNewandotherVRPproducts.Atthemateriallevel,aprimaryadvantageofVRPsisthedirectrelatedreductioninnewmaterialrequirement.57Inotherwords,ratherthanmeetingoneunitofmarketdemandbyusing100percentnewmaterials(OEMNew),thatmarketdemandmaybemetviaaVRPproductthatrequiresasmuchas90percentlessnewmaterialinput,withoutconstrainingdemand.Thiseffectivelyreflectsthe‘newmaterialoffset’amountthatisenabledbymaterialreuseinVRPs;thismaterialreuseresultsingreatermaterialvalue-retentionandmaterial-useefficiencywithinthesystem.Forthesecasestudies,thelifespancharacteristicsofeachcomponentwereassesseddifferentlyforeachVRP.Forremanufacturingandrefurbishment,industrycollaboratorsparticipatinginthestudysupportedtheestimationofthefollowingkeydatapoints:1.ProbabilityofsalvageatEOU(salvagerate);2.Maximumnumberoftimesacomponentcouldbeeffectivelyreused;3.Additionalnewmaterialinputstotheprocess(e.g.replacement);4.Destinationofmaterialsremovedduringtheprocess(e.g.landfillorrecycling);5.ThecauseofcomponentEOU,whichcouldconsistof:•Mechanicalfatigueorfailure;•Hazardlosses;or•Predeterminedfailure(intentionalreplacement);and6.Maximumpotentialservicelifeoftheproduct,afterwhichnoextensionwouldbepossible.212RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomyAdditionalinformationrelatedtopotentialprocessimpactswererequestedfromcollaboratingcompaniesforeachoftherelevantproductsandprocesses,including:totalprocessenergyrequire-ment;laborhoursperunit;andaveragecostadvantagecreated(versusOEMNewproduction)viatheVRP.Thesedatapointsreflecttheprod-uct-levelrequirementsandimpactsofproductionvialinearandVRPs.Product-levelanalysiswasprimarilyperformedatthecomponent-levelfortworeasons.First,inthecaseofremanufacturingandcomprehensiverefur-bishment,differentproductcomponentscanhavedifferentreuse-potential.Inotherwords,withinthesameproduct,somecomponentscanbereusedformultipleservicelives(e.g.chassisorframe),whereasothersmaybelimitedtoonlyasingleservicelife(e.g.software,electronicsystems).ThisdifferentiationisdiscussedfurtherinSection8.2.4.Thecomponent-levelapproachutilizedintheprod-uct-levelmodelensuredthattotalmaterialcirculationforeachcomponent,viatheVRP,couldbeappropri-atelycapturedrelativetoothercomponentsandtheproduct-platformoverall.Inaddition,thisapproachenabledamoredetailedassessmentofvalue-reten-tionandreuse-potentialacrosseachofthedifferentVRPs.Comparisonisassessedonasingleunitprocessbasis:Oneproduct,unitgoingthroughasinglecycleofanOEMNeworVRPprocess.Essentialcomponent-leveldataandinformation,derivedlargelyfromtheBOM,includedmaterialtype,weight(bymaterial),aswellastheassociatedembodiedmaterialenergyandembodiedmaterialemissionsofeach,usingthematerial-basedglobalaveragesfromtheInventoryofCarbonandEnergy(CircularEcology2017,HammondandJones2011).Thepresenceofrecycled-contentatthemateri-als-levelisaccountedforupfront,attheinputstage:forexample,theembodiedmaterialsenergyandemissionsvaluesarereflectiveofglobalaveragerecycled-contentforeachmaterial,andthereforeincludetheadditionalenergyandemissionsasso-ciatedwiththatrecycledcontent,onaper-kgbasis.Anobjectiveoftheproduct-levelassessmentwastogeneralizetheimpactsofOEMNewandVRPproductionofninecasestudyproducts,acrossfacilitiesandeconomies.Assuch,itwasnotpossibletomeaningfullyassumetheoriginofeachmaterial-input,foreachcomponentwithineachproduct:Instead,globalaveragevaluesforembodiedmaterialenergy(MJ/kg)andemissions(kgCO2-eq./kg)impactdatapointswereused(CircularEcology2017,HammondandJones2011).Itisimportanttonote,however,thatfortheprocess-levelanalysis,itwascrucialtoreflectprocessenergyandprocessemissions,fortheeconomythatproductionactivitywasoccurringin.Thus,forproductionactivitiesineachrespectivecasestudyeconomy,process-relatedenergyandemissionsimpactswerebasedoneconomy-specificaspectsofefficiency(generation,aswellastransmissionanddistributionefficiencies)aswellastheimpli-cationsofelectricitygridmixtureintermsofGlobalWarmingPotential(GWP,kgCO2-eq.).Process-relatedenergyandemissionsdataweretakendirectlyfromtheEcoinvent3.3database,utilizingtheaveragevalueforeachcasestudyeconomy.Animportantaspect,whenconsideringcirculareconomyandVRPs,istounderstandwhateventsormechanismsmaytriggertheopportunitytoengageinVRPs.TherearearangeofreasonsthataproductmayreachEOUandfall-outofthemarket,thusbecomingeligibleforanotherservicelifethroughVRPs,asdiscussedingreaterdetailinSection3.1.Specifictothecasestudyproductsassessedinthisstudy,theproduct-levelanalysisincorporatedthreeappropriatereusabilitymechanismsthatarediscussedingreaterdetailinSection4.2.2.ThesimulationprogramusesMATLABtoperformaMonteCarlosimulationonthestochasticmodel,whichenablesoutputresultsofaveragenewmaterialrequirements(inversely,therequiredcomponentreplacement),bymaterialtype,foreachproductionprocess.Duetotheanalysisbeingastochasticmodel,MonteCarloisnecessarytoobtainaverageresults,aswellastoaddressandminimizeuncertaintywithinthemodel.Theprogramtakesthecomponent-leveldataandsimulatesmultipleservicelifecyclesforthecomponentusingrandomly-generatedprobabilities.Inotherwords,thisprocessdetermineswhetherthecomponentwillbereusedintheVRPforanadditionalservicelifecycle.ThereusabilitymechanismsarealsoappliedtosimulatetheprobabilityandimplicationsofthatadditionalVRPservicelifecycle.UsingtheMATLABprogramprocedure,theproductBOMisuploadedintothemodel,andthenumberofsimulations,n,isdefined.Thiscanalsobeconceptualizedasthenumberofproductsthemodelwillrun.Fromthere,eachcomponent,m,isrunthroughmultipleservicelifecycles,i,untilitultimatelyfailsthroughtheassignedreusabilitymechanism,thusreachingEOL.ThisprocedureisrunforeverycomponentoftheBOM,untilallAppendixB213componentshavebeenassessedforeachOEMNewandVRPsimulation.ThisanalysisestimatestheaveragematerialthatreachesEOLthroughoneofthefall-outmechanismsand,inversely,theaveragenewmaterialrequiredtoreplacethatfailedcomponentinaVRP,foreachconsecutiveservicelifecycle.EachproductstartsoutasanOEMNewproductwithoriginalproductandmaterialcompositionnecessarytocompleteasingleoriginalservicelife.Aftertheinitialservicelife,theproductthenbecomeseligibleforVRPs;however,itwillonlyundergoaVRPbasedonwhatisappropriateforthatproductandbasedontherelevantconditionsofthesector.Forexample,inthecaseofremanufacturing,somecomponentsmaynotbeeligibleforanadditionalservicelifecycle:relativetothewholeproduct,thesecomponentsmaynothaveretainedsufficientoverallvaluetojustifyremanufacturingthem;alternately,theremaybeanintolerableriskofproductfailureifcertaincomponentsweretobereusedintheprocess.Thisrigorousapproachtotheproduct-levelanalysisenablesamorerealisticunderstandingof:(1)thereusabilityofproductcomponentsfromanoriginalproductdesignstandpoint;and(2)theinefficien-ciesthatcanexistwithinVRPsthatarerelatedtothedesignandnatureofproductcomponents.Product-levelmethodologyandmodelThefollowingsectionsdiscussanddescribethemodeling,assumptions,methods,anddatautilizedintheproduct-levelanalysis,aspresentedintheReport.Specifically,thefollowingsectionsextendReportSection4.2.(bottom-UpModeling:EmpiricalDataCollectionandProduct-LevelAnalysis),andSection5(product-LevelBenefitsofVRPs).Toensurethattheresultsobtainedfromthisanalysiscouldbeproperlyappliedtoofferbroaderandmoregeneralizedinsights,potentialcasestudyproductswerediscussedthoroughlywithindustryexperts,reviewedinliterature,andconsideredfromamarketsizeperspective.Tocompletetheanalysisintherespectivetime,itwasdeterminedthatthreeproductswouldbeanalyzedfromeachsector,foratotalofnineindividualproductcasestudies.Theproductsselectedareconsideredrepresentativeofindustryactivities,accordingtoandassuggestbyindustrycollaborators.Keyconsiderationsinformingtheselectionofbothproductsandsectorsincludedbutwerenotlimitedto:theavailabilityofdataandwillingnessofindustrycollaborators;currentandpotentialtechnologicalgrowthwithintheindustrysectorsbeingstudied;thesizeofproductmarket,whichneededtobeofmeaningfulsignificancewithinthestudiedeconomies;andthepresenceofVRPsandactivitiesfortheseproducts,ineachofthestudiedeconomies.Process-specificassumptionsVRPsarecomplex,andcurrentlydifferbyindividualproductdesign,facility,company,andeconomy.AlthoughsignificanteffortshavebeenmadetostandardizesomeVRPs,thenatureofeachindi-vidualproductrequiresatailoredapproach,evenifwithinamorestandardizedVRPprocess.However,forthepurposesofthisstudy,generalizationsandassumptionswererequired.WhiletheprimaryIRPReportcontainsthedefinitionsandscopeofeachVRPconsideredbythestudy,thefollowingsectionsprovidegreaterdetailregardingthespecificVRPassumptionsthatwereincorporatedintotheprod-uct-levelmodel.ReusabilitymechanismsThreereusabilitymechanismsareincludedintheproduct-levelanalysis.Thesemechanismsreflectedthetypicalcauseoffailuresatthecompo-nent-levelandenabledthemorerealisticmodelingofthelikelyreuse/replacementpotentialofeachcomponent,bybothweightandmaterialtype,andbyeachVRP.OneofthethreeprimaryreusabilitymechanismsoutlinedbelowwasassignedtoeachcomponentwithintheBOMwithintheproduct-levelmodel:•Fatigue:Appliestocomponentsthattypicallyfailduetowearovertime.Thesecomponentshaveadurabilitycurveappliedtotheirusefullife.Someexamplesofcomponentslikelytofailduetofatigueincludeshafts,andothermechan-icalcomponentsthatexperiencefatigue.Intheproduct-levelmodelthesecomponentsareaccountedforusingWeibulldistributionandanalysis.•Hazard:Appliestocomponentsthattypicallyfailduetomisusebytheuserorshippingdamages(e.g.hazardousfall-out).Examplesofthistypeofcomponentincludesstructuralcomponentssuchasproducthousingsorframes.Intheproduct-levelmodelthesecomponentsarerepresentedusingacumulativeexponentialdistributionovermultipleservicelifecycles.214RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomy•Predetermined:The‘predetermined’mechanismappliestocomponentsthatarereplacedbasedonatime-scheduleorotherexternalindicatorsdeterminedbytheOEM,andnotasaresultofdirectmeasurementofcomponentperfor-manceorfailure.Thesecomponentscanincludebushings,bearings,andotherwearcomponentsthatwillbereplacedaspredeterminedbythemanufacturer.Thismechanismusesastep-distri-butionovermultipleservicelifecycles,wherethecomponentwillbeused/reuseduntilitreachesitspredeterminedend-of-life,afterwhichitisdivertedintowasteorrecyclingstreams.OEMnewproductionNewproductionisusedasthebasecasefortheanalysis.TocomparetherelativeenvironmentalandeconomicimpactsofVRPs,OEMNewproductsareassumedtohaveasingleservicelife:theoriginalintendedservicelife.Theanalysisexcludestheuse-phaseimpactsofthecasestudyproducts,andassuch,theimpactsofthatsinglenewproduc-tioncyclereflecttheenvironmentalandeconomicimpactsofoneunitofOEMNewproduction.wherenoreuseorrecyclingprocesseswillbeusedafterthetypicalusagecycleiscomplete.ArrangingdirectreuseProductsthatundergoarrangingdirectreuseareassumedtocometotheendoftheirusefulnesstoanoriginaluser/ownerpriortothecompletionoftheiroriginalintendedservicelife,andthrougharrangingdirectreuseareabletocompletethatoriginalintendedservicelife,offsettingtherequire-mentforanewreplacementunit.Itisassumedthatarrangingdirectreuseactivitiesrequirenoadditionalmaterialorenergyinputs,anddonotgeneratewasteoremissionswithinthearrangingdirectreuseprocess.Althoughtheindustrial-izedarrangingdirectreuseprocesslikelycreatessomewasteandresourcerequirements,theseareassumedtobeinsignificanttotheanalysis.Anexampleofarrangingdirectreusewouldbeacasewheretheoriginalalternatorsalvagedfromanauto-mobileafteranaccidentmightbeundamagedandmaybedirectlyreusedwithoutmodification.Componentandmaterialutilizationinarrangingdirectreuseassumesanormaldistributionoverthetypicalproductservicelife.TableB-6showsthatveryearlyintheproductservicelifetheproductwillhavehighervalue,andthusismorelikelytobedirectlyreused.Thefurthertheproductservicelifeextendspastthepeakofthenormaldistribution,theproductisdiminishingvalueandutility,suggestingthatthereisdecreasingvalueforarrangingdirectreuseascustomersmaynotwanttoinvestinaproductthatmayfailshortlyafterpurchase.!PotentialforarrangingdirectreuseIncreasedvalueforarrangingdirectreuseDecreasedvalueforarrangingdirectreuseProbabilityofdirectreuseProductservicelifeTypicalservicelifeFigureB-6:ProbabilityofarrangingdirectreusedistributionovertypicalservicelifeAppendixB215RepairProductsthatundergorepairareassumedtohavesomecomponentfailurepriortothecompletionoftheiroriginalintendedservicelife.Throughrepair,theproductcancompletetheoriginalintendedservicelife,thusoffsettingtherequirementforanewreplacementunit.Inmanycases,theneedforrepairisexpectedbybothmanufacturerandowner,andsoforthepurposesofgeneralization,themodelassumesthesekindsoffailurestobepartofthepredeterminedreusabilitymechanism.Thisassumptionwasconfirmedininterviewswithrelevantindustryexperts.Therepairprocessisassumedtoonlycompletetheoriginalintendedservicelife,notextendit.Generally,repairwillincludereplacementofatypicalfailedcomponentwithanewone,afterwhichtheproductisreturnedtotheoriginalownertocompleteitsservicelife.Giventhenewmaterialinputsrequiredbytherepairprocess,themodelalsoassumestheincursionofwastematerials,embodiedenergy,andembodiedemissionsspecifictothenewmaterialadded.However,whiletherepairprocesslikelyincursadditionalprocessenergyandprocessemissions,intheabsenceofverifiabledata,itwasdeemedthattheseprocess-specificimpactswerenegligiblewithintheanalysis.Similartoarrangingdirectreuse,componentandmaterialutilizationintherepairprocessisassumedtofollowanormaldistributionoverthetypicalservicelifeofaproduct.AsdepictedinTableB-7,productsearlyintheirservicelifearelesslikelytofailandneedrepairoperations;incontrast,astheproductagestowardstheendofitsintendedservicelife,valueandutilitydecreasestothepointwherethecostsofrepairmaynotbeworththemarginalservicelifeextensiontheyoffer.!PotentialforrepairlesslikelytoneedrepairDecreasedvalueforrepairProbabilityofrepairProductservicelifeTypicalservicelifeFigureB-7:Probabilityofrepairdistributionovertypicalservicelife216RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomyRefurbishmentTherefurbishmentprocessisassumedtostartwhenaproduct/componentreachesend-of-use(EOU)eitherwithinorattheendofaparticularservicelife.Refurbishmentfollowsarigorousprocessthatislikeremanufacturingapartfromtwocharacteristics,whichareassumptionswithinthemodel.Giventhattheproductisatleastpartiallydisassembledduringrefurbishment,component-levelreusabilityandimpactsareassessedseparatelyandthenre-ag-gregatedtoreflecttheaverageexpectedimpactsattheproduct-level.Duetotheloweracceptancethresholdforrefurbishment,modulesandcompo-nentsusedinrefurbishmentmaynotmeet“as-new”qualityspecifications.Assuch,componentsthatarereusedthroughtherefurbishmentprocessarelikelytohaveahigherprobability(orrate)ofreuse,andahigherprobabilityofbeinglowerquality.Intheabsenceofahigherthresholdforqualityspeci-fications,thecomponentisassumedtohavefeweradditionalservicelives.Thisassumptionisappliedonlytocomponentsthatareassignedtothefatiguereusabilitymechanism.Thenewmaterialrequirements,associatedembodiedenergyandemissions,processenergyandemissions,andrelatedproductionmaterialwastewereallmeasuredforeachcasestudyproduct/component.RemanufacturingDuetotherobustnessoftheprocessand,bydefi-nition,theproductidentitybeinglost,remanufac-turinggeneratesproductsthatareequivalenttotheOEMNewversioninbothperformanceandexpectationofafullnewservicelife.Similartotheapproachusedforrefurbishingactivities,themodelfirstanalyzeseachreusabilitymechanismandimpactsatthecomponentlevel.Component-levelimpactsarethenreaggregatedtoreflectaverageexpectedimpactsattheproduct-level.Thenewmaterialrequirements,associatedembodiedenergyandemissions,processenergyandemissions,andrelatedproductionmaterialwastewereallmeasuredforeachcasestudyproduct/component.CalculatingmaterialrequirementsforVRPsAprimaryadvantageofcirculating/recirculatingproducts/componentsisthereductioninrequirednewmaterialsenabledbytheVRP.Withsomeinputssourcedthroughacircularsystem,therequirementfornewmaterialinputsisoffset,alongwithasso-ciatedwaste,energy,andemissionsimpactsofextractionandprocessingactivities.TobestreflectmaterialreusethroughVRPs,andtocapturethepotentialmultipleservicelivesenabledviaVRPs,acomponent-levelapproachisutilized.Thefollowinggeneralformula,Equation1,isutilized:Eq.1WhereMisthenewmaterialrequirementofprocessi(OEMNew,arrangingdirectreuse,repair,refurbishment,remanufacturing)foreachmaterialtype,assuminganaveragemixofprimaryandsecondarymaterialcontent;αisthematerialweight,Υistheupstreammaterialintensity(e.g.processingand/ormachiningscrap)orwastefactor,δistheend-of-lifeburdenmultiplier(waste=100%,0<RecyclingEfficiency<100%)andηrepresentsthenumberofexpectedservicelifecycles.Subscriptsj,m,c,s,andhrepresenttheproduct,materialtype,component,servicelifecycle,andend-of-liferoute,respectively.Thenewmaterialrequirementforeachmaterialandeachcomponentiscalculated,andthenaggre-gatedovereachconsecutiveservicelife.Thelengthandnumberofcomponentservicelives,materialreusability,andotherassumptionsarediscussedingreaterdetailinthefollowingsections.Theextensionofmaterialrequirementstoreflectassociatedembodiedenergyperproduct()andembodiedemissionsperproduct()iscalculatedlinearlyasanextensionofEquation1.Withmateri-al-basedembodiedenergyrequirementsreflectedviaτ(MJ/kg)andassociatedembodiedemissionsreflectedviaω(kgCO2-eq./kg),theenvironmentalimpactsassociatedwiththematerialrequirementsofdifferentprocessesaredescribedinEquations2and3.AppendixB217Eq.2Eq.358ICEDatabase,fromtheCircularEcologywebsite:http://www.circularecology.com/(HammondandJones2011).59Valueswerebasedon“Typical”,“General”,and/or“R.O.W.”classificationinICEDatabase(HammondandJones2011).60Embodiedenergyandembodiedemissionsestimatesforprintedcircuitwerederivedfrom(Kemnaetal.2005).EmbodiedenergyforcopiertotalPCBestimatedtobe3,300kWh/kg.ValuesobtainedtosupportthecalculationofEquation2andEquation3aretakenfromtheInventoryofCarbonandEnergy(ICE)database,fromCircularEcology(HammondandJones2011).58ThesevaluesandselectedsupportingassumptionsfromtheICEdatabasearereflectedinTableB-3.TableB-3:Generalembodiedmaterialenergyandemissionsvaluesusedinproduct-levelmodelMaterialTypeAssumedRecycledMaterialContent59(%)EmbodiedEnergy(τ)(MJ/kg)EmbodiedEmissions(ω)(kgCO2-eq/kg)%EmbodiedEnergyfromEnergySource57(%Electricity/%Other)%EmbodiedCarbonfromSource57(%Electricity/%Other)Steel59%20.11.5N/AN/AStainlessSteelN/A56.16.2N/AN/ACastIron0%25.02.0N/AN/ACopper37%42.02.7N/AN/AAluminum33%155.09.263.6%/36.4%57.2%/42.8%Brass60%44.02.687.0%/13.0%86.5%/13.5%PrintedCircuitBoard(PCB)600%11,880.01,723.4N/AN/ASource:InventoryofCarbonandEmissions(ICE),(HammondandJones2011)Product-levelmodelassumptionsIndustrialdigitalprintersProduct-levelassumptionsusedformodelingcasestudyindustrialdigitalprintersarepresentedinTableB-4throughTableB-7.TheestimatedaverageservicelifeachievedforeachoftheVRPprocesseswasdeterminedininterviewswithindustryexpertswhowerefamiliarwitheachmodelofOEMNewindustrialdigitalprinter,andtherelatedVRPversions.GiventhatallVRPsforthesecasestudyproducts,excludingrepair,areperformedbytheOEM,externalservicelifeestimatesfortheseproductsweredeemedlessrelevantandunneces-saryforthepurposesofthisstudy.Forthepurposesofclarification,theservicelifeprovidedbyrefur-bishmentofcasestudyindustrialdigitalPrintingPress#1andPrintingPress#2reflectsanassumed90percentoftheservicelifefortheremanufac-turedversion,asvalidatedbyindustryexperts.218RedefiningValue–Themanufacturingrevolutionremanufacturing.Refurbishment,repairanddirectreuseinthecirculareconomyTableB-4:ProductmodelparametersandVRPassumptionsforIndustrialDigitalProductionPrinterCaseStudy:IndustrialDigitalProductionPrinterProductModelValue-RetentionProcessAssumptionsEstimatedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew7.010.0%10.0%Remanufactured7.0399.2%;98.5%;97.7%Refurbished7.0199.3%Repair3.5199.8%Arrangingdirectreuse3.51100.0%TableB-5:ProductmodelparametersandVRPassumptionsforIndustrialPrintingPress#1CaseStudy:IndustrialPrintingPress#1ProductModelValue-RetentionProcessAssumptionsEstimatedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew9.010.0%10.0%Remanufactured8.0492.3%;82.8%;76.9%;71.6%Refurbished8.1192.7%Repair4.5198.2%Arrangingdirectreuse4.51100.0%ReportReferencesTableB-6:ProductmodelparametersandVRPassumptionsforIndustrialPrintingPress#2CaseStudy:IndustrialPrintingPress#2ProductModelValue-RetentionProcessAssumptionsEstimatedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew9.010.0%10.0%Remanufactured8.0385.4%;83.0;80.6%Refurbished8.1196.5%Repair4.5198.2%Arrangingdirectreuse4.51100.0%TableB-7:ProductmodelparametersandassumptionsforcasestudyIndustrialDigitalPrintersCaseStudy:IndustrialDigitalPrintersProductModelAssumptionsAvg.ProductWeight(kg/unit)#ofComponentsperProduct61%ComponentsModeledwithCum.Exp.Distribution(Hazard)%ComponentsModeledwithWeibullDistribution(Fatigue)%ComponentsModeledwithStepDistribution(Predetermined)ProductionPrinter111510076.0%19.0%5.0%PrintingPress#146349779.4%7.2%13.4%PrintingPress#2248020274.8%9.4%15.8%61GivenBOMcomplexityandindustrycollaborationconstraints,#ofcomponentsperproductarebasedonactualBOMdata,reflectaminimumof80percentbyweightofthetotalproduct,andaccountforthemajormaterialtypesusedintheproductionprocess.Thisapproachallowsfortheassumptionthatcasestudyproductsarerepresentativeofsimilarproductsforthepurposesofassessingmaterialandembodiedimpacts,aswellasprocessingimplications.62PerUSDOT(U.S.DepartmentofTransportationFederalHighwayAdministration2016).63Perconsumerreports(Bartlett2009).VehiclepartsProduct-levelassumptionsusedformodelingcasestudyvehiclepartsarepresentedinTableB-8throughTableB-14.Averageexpectedlifeofpersonalvehiclesis150,000miles/life,62andaveragemilesperyeardriveninpersonalvehiclesis12,476miles/year.63Assuch,150,000/12,476isanestimatedaveragelifeinyearsof12.0pervehicle.Asthisassessmentisfocusedontheindi-vidualproductsthatarepartoftheentirevehiclesystem,thelifeofthevehicleisusedasaproxyforestimatingthelifeofthevehiclepartsproductsusedforcasestudy.Giventhatremanufacturingleadstoafullnewservicelifeoftheproduct,theremanufacturedversionandtheOEMNewversionareassumedtoofferequalaverageproductservicelivesof12.0years.Itisassumedthatthearrangingdirectreuseand/orrepairoftheseproducts,eventswhichoccurpriortocompletionofthefirstservicelifeoftheproduct,haveservicelivesequalto50percentofthefullservicelife(partialservicelife)enabledviaOEMNewand/orremanufacturingproductionprocesses.219Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTableB-8:ProductmodelparametersandVRPassumptionsforVehicleEnginesCaseStudy:VehicleEngineProductModelValue-RetentionProcessAssumptionsEstimatedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew12.010.0%15.0%Remanufactured12.0583.5%;52.0%;44.6%;40.3%;36.5%Refurbished–––Repair6.0191.3%Arrangingdirectreuse6.01100.0%TableB-9:ProductmodelparametersandVRPassumptionsforVehicleAlternatorsCaseStudy:VehicleAlternatorProductModelValue-RetentionProcessAssumptionsEstimatedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew12.010.0%10.0%Remanufactured12.0476.7%;43.9%;27.3%;16.7%Refurbished–––Repair6.0180.0%Arrangingdirectreuse6.01100.0%TableB-10:ProductmodelparametersandVRPassumptionsforVehicleStartersCaseStudy:VehicleStarterProductModelValue-RetentionProcessAssumptionsEstimatedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew12.010.0%10.0%Remanufactured12.0477.9%;57.1%;54.6%;52.6%Refurbished–––Repair6.0192.7%Arrangingdirectreuse6.01100.0%220AppendixBTableB-11:ProductmodelparametersandVRPassumptionsforVehiclePartsCaseStudy:VehiclePartsProductModelAssumptionsAvg.ProductWeight(kg/unit)#ofComponentsperProduct61%ComponentsModeledwithCum.Exp.Distribution(Hazard)%ComponentsModeledwithWeibullDistribution(Fatigue)%ComponentsModeledwithStepDistribution(Predetermined)VehicleEngine1366113.1%41.0%45.9%VehicleAlternator71127.3%54.5%18.2%VehicleStarter43810.5%57.9%31.6%HDORequipmentpartsProduct-levelassumptionsusedformodelingcasestudyHDORequipmentpartsarepresentedinTableB-12throughTableB-15.TheestimatedaverageservicelifeachievedforeachoftheVRPprocesseswasdeterminedininterviewswithindustryexpertswhowerefamiliarwiththeOEMNewHDORcasestudyequipmentparts,andtherelatedVRPversions.GiventhatallVRPsforthesecasestudyproducts,excludingrepair,areperformedbytheOEM,externalservicelifeestimatesfortheseproductsweredeemedlessrelevantandunneces-saryforthepurposesofthisstudy.Forthepurposesofclarification,theservicelifeprovidedbyrefurbish-mentreflectsanassumed90percentoftheservicelifefortheremanufacturedversion,asvalidatedbyindustryexperts.TableB-12:ProductmodelparametersandVRPassumptionsforHDOREnginesCaseStudy:HDOREngineProductModelValue-RetentionProcessAssumptionsAssumedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew3.010.0%15.0%Remanufactured3.0492.8%;74.4%;37.7%;67.6%Refurbished2.71–Repair1.5191.9%Arrangingdirectreuse––100.0%221Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTableB-13:ProductmodelparametersandVRPassumptionsforHDORAlternatorsCaseStudy:HDORAlternatorProductModelValue-RetentionProcessAssumptionsServiceLifePerIndustryExpert(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew3.010.0%10.0%Remanufactured3.0971.6%;52.2%;37.7%;27.5%;19.3%;12.0%;6.5%;3.0%;1.1%Refurbished–––Repair1.5172.7%Arrangingdirectreuse––100.0%TableB-14:ProductmodelparametersandVRPassumptionsforHDORStartersCaseStudy:HDORStarterProductModelValue-RetentionProcessAssumptionsAssumedServiceLife(Years)Est.#ofServiceLifeCycles(η)Avg.MaterialReusePerComponentPerVRPCycle(1-Υ)(byweight)Avg.Prod.WasteGross-UpRateonNewMaterialInputs(δ,byBOMweight)OEMNew3.010.0%10.0%Remanufactured3.0591.5%;68.4%;49.3%;40.4%;37.9%Refurbished–––Repair1.5183.3%Arrangingdirectreuse––100.0%TableB-15:ProductmodelparametersandassumptionsforHDOREquipmentPartsCaseStudy:HDOREquipmentPartsProductModelAssumptionsAvg.ProductWeight(kg/unit)#ofComponentsperProduct61%ComponentsModeledwithCum.Exp.Distribution(Hazard)%ComponentsModeledwithWeibullDistribution(Fatigue)%ComponentsModeledwithStepDistribution(Predetermined)HDOREngine15,3231080.0%100.0%0.0%HDORAlternator491233.3%50.0%16.7%HDORTurbocharger75650.0%50.0%0.0%222AppendixBSimulationproduct-levelprogrammodelAsthenatureofthemodelisstochastic,aMATLABprogramtoperformaMonteCarlosimulationtoobtainanestimatednewmaterialrequirementfortheaveragecomponent,bymaterialtype,duringasingleVRPservicelifecycle.Inordertodeterminewhetherthecomponentwillbereusedforadditionalservicelives,theprogramimportsthecompo-nent-levelreusabilityandmaterialinformationtosimulatethatcomponentovermultipleservicelivesagainstrandomgeneratedprobabilities.Utilizingthereusabilitymechanisms,assignedbasedonthecharacteristicsofeachcomponent,theprobabilityofreuseforeachadditionalservicelifeisassessedandcomparedtotherandomly-generatedproba-bilitytodeterminewhetherthecomponentwillfailandrequirereplacement.TheMATLABprogramflowforcomponentanalysisisdescribedfurtherinFigureB-8,basedonEquation1.Component1:cServicelifecycle1:ηRandvs.failuremechanismResultscollectionEndSimulation1:nStartComponent(c,η)FailureprobabilityFigureB-8:MATLABprogramflowchartPerFigureB-8,oncetheproductBOMdataisimportedintothemodel,theuserthendefinesthenumberofsimulations,orrepresentativeproducts,(n=1000)thatthemodelwillrun.Eachcomponent(c)isrunthroughmultipleservicelifecycles(η)untilitfails.ComponentfailureisdeterminedforeachcomponentwithintheBOMthroughthecompar-isonofarandomdistributionvariabletothereus-abilitymechanismdistributionforeachspecificcomponentandservicelife.Themodelthenreturnstothenextcomponentandrepeatstheprocess.Aftereachofthecomponentshavebeenassessed,theprogramstorestheresultsfortheproduct,andmovesontothenextsimulation.InterpretingoutputsofthemodelTheoutputsoftheprogramarereflectedasanesti-mationofmaterialthatgoestoend-of-lifethrougheachconsecutiveVRPprocess.Theproductstartsoutwiththeoriginalmaterialcompositionnecessarytocompleteasingleintendedservicelife.Aftertheinitialservicelife,theproductcanundergoanyoneoftheVRPs.EachVRPhasvaryinglevelsoffailure/reusabilitywithinthecomponentanalysis.Forexample,inthecaseofremanufacturing,somecomponentsmaynotbereusedforanadditionalservicelifebecausetheydonothaveenoughoverallvaluewhencomparedtothelargerproduct,or,becausetheremaybetoomuchriskofprod-uct-levelfailureifthecomponentsarereused.Whenthereisnoreuseofthecomponent,itisassumedthatthecomponentwillgotoend-of-life(EOL)forrecyclingorintothewastestream.Thisapproachtotheanalysishighlightsthereusabilityofcompo-nentsfromanoriginalproductdesignstandpoint,andhighlightsinefficiencieswithinthedifferentVRPsaffectingthereuseofcertaincomponents.Theresultsofproduct-levelmodeling,whichincludeaveragenewmaterialrequirementsforeachcasestudyproductandprocess,areincludedinSection5.223Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyMethodologyforconnectingprocess-levelandeconomy-levelmodelsTostandardizethebaselineassessmentofcasestudyproductsandproductionprocesses,theprocess-levelmethodologyhasproduction-unitbasis.Inotherwords,theprocess-levelrequire-mentsandimpactsforasinglecasestudyproductunit,byeachproductionprocess,weredeter-mined.Theassessmentofprocess-levelunit-pro-ductionimpactsandrequirementsinvolvedon-siteempiricaldatacollectionwithcollaboratingindustrymembers.Incaseswherecertainproduct-leveldatawasnotavailable,theauthorsreferredtorelevantLCAliteratureforadditionalinsightandguidance.Theproduct-unitbasisofprocess-levelimpactandrequirementmeasurementsensuredthattheseimpactscouldbeaggregated,basedondomesticproductionandimportvolumes,toreflecttheover-archingimpactsandrequirementsofOEMNewandVRPproductionactivitiesforstudiedproductsandeconomies.TheobjectiveofthisassessmentwasnottoconductacomprehensiveLCAforeachcasestudyproduct,rather,toproviderepresentativedatacollectionandanalysisforstudiedproductsandsectorstoinformandfurtherthediscussionaboutVRPadoptionamongstindustry-leadersandpoli-cy-makersalike.Thefollowingsectionsprovideanoverviewofdetaileddata,parametersandassump-tionsrequiredfortheprocess-levelmodel.Process-levelproductionimpactandrequirementfactorsForprocess-relatedenergyrequirementandemissionsgeneration,thefollowinginformationispresentedfortheUS,whichwasutilizedasthebase-casecomparisonforestimationacrossscenarioeconomies.ImpactfactorstorelateandreflectdifferingconditionsinsampleeconomiesarediscussedfurtherinTableB-23throughTableB-26.Process-levelenvironmentalimpactsProcessenergyrequirement(MJ/unit)isbasedupontheat-the-meter(gate-to-gate)productionprocess-cycleenergyrequirement(MJ/unit),byproduct,empiricallycollectedforUSproduc-tionactivities.Withinthemathematicalmodelingpresentedinsubsequentsectionsprocessenergyrepresentedasφ.Empiricallycollectedobserva-tionsanddatareflectthatthevastmajorityofenergyusedintheproductionprocessesforcasestudyproductsiselectricinnature.Forthepurposesofthisassessment,processenergyisassumedtobeintheformofelectricity.Thus,at-the-meterprocessenergyvaluesarethenmultipliedbytheelectricityinfrastructureefficiencyfactorforeacheconomytodetermineanestimatedtotalprocessenergyrequirement.Thisapproachalsoinformsthecalcu-lationofprocess-relatedemissions.Processemissionsimpact(kgCO2-eq./unit)werecalculatedbymultiplyingprocessenergyrequire-ment(MJ/unit)bytheeconomy-specificGWP100afactor(kgCO2-eq./MJ)formedium-voltagemarketgroupelectricity.Withinthemathematicalmodelingpresentedinsubsequentsectionsprocessemissionsisrepresentedasβ.ThesedatawerederivedfromtheEcoinvent3.3database,whichutilizedtheIPCC2013methodology.Theauthorsappreciatetheimplicationthatemissionsimpactsare,thus,necessarilyconservativeestimates.Theprocess-level(gate-to-gate)energyandemissionimpactsforcasestudyindustrialdigitalprinters,vehicleparts,andHDORequipmentpartsarereflectedinTableB-16,TableB-17,andTableB-18respectively.ThedatashownbelowreflectassumptionsandimpactsfortheUSonly.Economy-specificcondi-tionsaffectingprocessenergyrequirementarediscussedinthefollowingsections,andtheelec-tricityinfrastructureefficiencyfactorsforeachsampleeconomyarepresentedinTableB-23.Economy-specificconditionsaffectingprocessemissionsarediscussedinthefollowingsections,andassociatedemissionsfactorsforsampleeconomiesarepresentedinTableB-24.224AppendixBTableB-16:Per-unitprocessenergyandemissionsassumptionsforcasestudyindustrialdigitalprintersAt-the-MeterProcessEnergy(MJ/Unit)ElectricityInfrastructureEfficiencyFactor(US)64ProcessEnergyRequirement(φ)(MJ/Unit)GWP100aEmissionsFactor(US)65ProcessEmissions(ϐ)(kgCO2-eq./Unit)ProductionPrinterOEMNew3,224.22.5378,179.60.183589.7Reman1,388.12.5373,521.60.183253.9Refurb502.62.5371,275.20.18391.9Repair0.02.5370.00.1830.0ArrangingDR0.02.5370.00.1830.0PrintingPress#1OEMNew95,375.12.537241,464.30.18317,443.0Reman39,622.52.537100,521.40.1837,246.5Refurb29,707.22.53775,366.40.1835,433.1Repair0.02.5370.00.1830.0ArrangingDR0.02.5370.00.1830.0PrintingPress#2OEMNew39,395.82.53799,946.20.1837,205.1Reman14,309.52.53736,302.90.1832,617.1Refurb5,852.72.53714,848.10.1831,070.4Repair0.02.5370.00.1830.0ArrangingDR0.02.5370.00.1830.064Forclarificationonelectricityinfrastructureefficiencyfactordetermination,pleaserefertoTableB-23.65ForclarificationonGWP100aemissionsfactordetermination,pleaserefertoTableB-24.225Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTableB-17:Per-unitprocessenergyandemissionsassumptionsforcasestudyvehicleparts66At-the-MeterProcessEnergy(MJ/Unit)ElectricityInfrastructureEfficiencyFactor(US)67ProcessEnergyRequirement(φ)(MJ/Unit)GWP100aEmissionsFactor(US)68ProcessEmissions(ϐ)(kgCO2-eq./Unit)VehicleEngine69OEMNew4374.02.53711,096.70.183800.0Reman1530.02.5373,881.60.183279.8Refurb-2.537---Repair0.02.5370.00.1830.0ArrangingDR0.02.5370.02.3700.0VehicleAlternator70OEMNew261.02.537662.20.18347.7Reman34.92.53788.50.1836.4Refurb–2.537---Repair0.02.5370.00.1830.0ArrangingDR0.02.5370.00.1830.0VehicleStarter71OEMNew196.12.537497.40.18335.9Reman26.22.53766.50.1834.8Refurb–2.537---Repair0.02.5370.00.1830.0ArrangingDR0.02.5370.00.1830.066PerIndustryExperts,itisassumedthatthereisnorefurbishmentperformedoncasestudyvehiclepartsproducts.67Forclarificationonelectricityinfrastructureefficiencyfactordetermination,pleaserefertoTableB-23.68ForclarificationonGWP100aemissionsfactordetermination,pleaserefertoTableB-24.69Casestudyresultsforvehicleengineswassupportedby,and/orinformedbymax.replacementscenariofindingsbySmithandKeoleian(2004).70Casestudyresultsforvehiclealternatorswassupportedby,and/orinformedbyfindingsbyKim,RaichurandSkleros(2008).71Casestudyresultsforvehiclestarterswereinformedbyfindingsforthevehiclealternator,byKim,RaichurandSkleros(2008).Theseresultswereevaluatedempiricallyandadjustedif/wherenecessarytoreflectvehiclestarterconditions.226AppendixBTableB-18:Per-unitprocessenergyandemissionsassumptionsforcasestudyHDORequipmentparts72At-the-MeterProcessEnergy(MJ/Unit)ElectricityInfrastructureEfficiencyFactor(US)73ProcessEnergyRequirement(φ)(MJ/Unit)GWP100aEmissionsFactor(US)74ProcessEmissions(ϐ)(kgCO2-eq./Unit)HDOREngineOEMNew475077.81.472699415.32.3701657782.0Reman166179.51.472244651.42.370579882.6Refurb124634.61.472183488.62.370434912.0Repair0.01.4720.02.3700.0ArrangingDR–––––HDORAlternatorOEMNew2269.61.4723341.42.3707919.8Reman303.51.472446.72.3701058.9Refurb–––––Repair0.01.4720.02.3700.0ArrangingDR–––––HDORTurbochargerOEMNew3460.91.4725095.12.37012076.7Reman462.71.472681.22.3701614.7Refurb–––––Repair0.01.4720.02.3700.0ArrangingDR–––––72Perindustryexperts,itisassumedthatthereisnoarrangingdirectreuseforcasestudyHDORequipmentpartsproducts;thereisalsonorefurbishmentofHDORalternatorsandHDORturbochargers.73Forclarificationonelectricityinfrastructureefficiencyfactordetermination,pleaserefertoTableB-23.74ForclarificationonGWP100aemissionsfactordetermination,pleaserefertoTableB-24.Process-levelselecteconomicimpactsAssessmentofselecteconomicimpactsofOEMNewandVRPproductionactivitieswerealsocentraltotheprocess-levelmethodologyandassessment.Specifically,theeconomicimpactsofinterestincludedproductionwastegeneration(impliedcosttofacility,andreflectionofinefficiency),laborrequirement(full-timelaborer/unit),andtheaveragecost,relativetoanOEMNewversionoftheproduct,tothebuyer/userofthecasestudyproduct(percent$USDrelativetoOEMNew/unit).Theselecteconomicimpactsforcasestudyindustrialdigitalprinters,vehicleparts,andHDORequipmentpartsarepresentedinTableB-19,TableB-20,andTableB-21,respectively.Withinthemathematicalmodelingpresentedinsubsequentsectionsnon-recyclableproductionwaste,recyclableproductionwaste,laborrequire-ment,andaveragecostrelativetoOEMNewarerepresentedbyπN,πR,ν,andψrespectively.Pleasenotethatthedatashownbelowreflectsassump-tionsandimpactsfortheUSonly.Recyclableandnon-recyclableproductionwastefactorsarederivedfromestimatesbyindustryexperts.ProductionwastefactorsforVRPprocessesreflectonlywastegeneratedbythe227Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyremovaloffailedcomponents(ifapplicable),plustheadditionofreplacementnewcomponents/materialswhicharespecifictothatproductandprocess.Thesematerial-basedrequirementvaluesarederivedfromtheoutputsoftheproduct-levelmodeldescribedpreviously.Thesearedividedintorecyclableandnon-recyclablecategories,foreachmaterial-type,atthecomponentlevelaccordedbycasestudyproductBOMdata.Laborrequirementestimatesarebasedonactuallaborhoursrequiredtoproduceasingleunitofeachcasestudyproduct,perinterviewswithindustrycollaborators.Thesevaluesarereflectedintermsoffull-timeequivalency,whichassumes40-hours/week,50-weeks/year,ortheproductivityofasinglelaborerintheproductionofasinglecasestudyproductunit.TableB-19:SelecteconomicassumptionsforcasestudyindustrialdigitalprintersProductionWaste(Non-Recyclable)(πN)(%productweight/Unit)ProductionWaste(Recyclable)(πR)(%productweight/Unit)LaborRequirement(ν)(Full-TimeLaborer/Unit)Avg.CosttoBuyer/User(ψ)(%$USDofOEMNew/Unit)ProductionPrinterOEMNew3.000%7.000%0.0069100.0%Reman0.027%0.063%0.010981.6%Refurb0.024%0.056%0.003534.7%Repair0.003%0.007%0.002010.0%ArrangingDR0.000%0.000%0.000020.0%PrintingPress#1OEMNew3.000%7.000%0.1220100.0%Reman0.159%0.371%0.184581.6%Refurb0.150%0.350%0.135056.3%Repair0.036%0.084%0.00835.0%ArrangingDR0.000%0.000%0.000020.0%PrintingPress#2OEMNew3.000%7.000%0.0683100.0%Reman0.291%0.679%0.103326.3%Refurb0.087%0.203%0.075611.6%Repair0.036%0.084%0.00475.0%ArrangingDR0.000%0.000%0.000020.0%228AppendixBTableB-20:Selecteconomicassumptionsandimpactsforcasestudyvehicleparts66ProductionWaste(Non-Recyclable)(πN)(%productweight/Unit)ProductionWaste(Recyclable)(πR)(%productweight/Unit)LaborRequirement(ν)(Full-TimeLaborer/Unit)Avg.CosttoBuyer/User(ψ)(%$USDofOEMNew/Unit)VehicleEngineOEMNew1.500%13.500%0.00002934100.0%Reman0.150%1.350%0.0000642585.6%Refurb––––Repair0.001%0.009%0.0000085520.0%ArrangingDR0.000%0.000%0.0000000050.0%VehicleAlternatorOEMNew1.000%9.000%0.00000118100.0%Reman0.075%0.675%0.0000025862.8%Refurb––––Repair0.022%0.198%0.0000003420.0%ArrangingDR0.000%0.000%0.0000000050.0%VehicleStarterOEMNew1.000%9.000%0.00000089100.0%Reman0.058%0.522%0.0000019481.7%Refurb––––Repair0.058%0.522%0.0000008920.0%ArrangingDR0.000%0.000%0.0000000050.0%229Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTableB-21:SelecteconomicassumptionsandimpactsforCaseStudyHDOREquipmentParts72ProductionWaste(Non-Recyclable)(πN)(%productweight/Unit)ProductionWaste(Recyclable)(πR)(%productweight/Unit)LaborRequirement(ν)(Full-TimeLaborer/Unit)Avg.CosttoBuyer/User(ψ)(%$USDofOEMNew/Unit)HDOREngineOEMNew1.500%13.500%0.07900100.0%Reman0.096%0.864%0.1730076.9%Refurb0.286%2.574%0.0254854.5%Repair0.098%0.882%0.003045.0%ArrangingDR––––HDORAlternatorOEMNew1.000%9.000%0.00025100.0%Reman0.040%0.360%0.0005657.6%Refurb––––Repair0.030%0.270%0.000015.0%ArrangingDR––––HDORTurbochargerOEMNew1.000%9.000%0.00039100.0%Reman0.060%0.540%0.0008533.9%Refurb––––Repair0.010%0.090%0.000015.0%ArrangingDR––––Top-downmodeling:macro-dataandeconomy-levelanalysisThedynamicsofasystemmodelthatrepresentsanentireeconomyarecomplexandhavebeenreasonablysimplifiedtoallowforgeneralizationwithinthismodel.Whilethecalculationofprod-uct-levelstocksandflowsislargelylinear,therearecallsintheliteraturehighlightingtheimportanceofaccountingforsomeofthekeyfactorsthatinfluenceandaffectconsumerbehavioruponthegrowthandtransformationofproductmarkets(Mylan2015,c.f.Peres,Muller,andMahajan2010,SubramanianandSubramanyam2012,Weitzel,Wendt,andWestarp2000,YorkandPaulos1999).Inthiscase,allmodelsimulationbeginswiththeproductmarket:Thetotalquantityandrepresent-ativesharesofaproduct,byeachproductionprocesstype,includingOEMNew,arrangingdirectreuse,repair,refurbishmentorcomprehensiverefurbishment,andremanufacturing.Becausetheobjectiveistosimulatetheinfluenceofdifferentconditions(oftenbarriers)uponthevariousproductstocksandflowswithinamarket,allmarketsareassumedtostartwithastock/quantity,orinstalledbaseforthespecificcasestudyproduct,thatreflectstheactualsizeofthereferenceeconomy.TheconditionsofeacheconomyaffecthowthatinstalledbaseissharedbyOEMs(New)andVRPproducers,aswellashowthosemarketsharesareexpectedtoevolveoveraperiodoftime.230AppendixBAsimplifieddescriptiverepresentationofthetop-downmodelispresentedinFigureB-9,below.Toreflectgrowth,marketevolution,andcompoundingcomplexityinarealisticandmean-ingfulway,thesescenarioprojectionsaresimulatedoveraseven-yearperiod.Thissimulationperioddoesnotreflectasuggestedoroptimalcirculareconomytransformationtimeline,assuchacomprehensivetransformationmustbegroundedintheactualconditionsofeachindividualeconomy,andmustreflecttheprioritiesofeachindividualinitiative,someofwhichmayrequiresignificantlymore(less)timetoaccomplish.Basedonexpecteddemand,OEMNewandVRPversionsofaproductaresuppliedeitherbydomesticproducers,orviaimports(top-centerandtop-leftofFigureB-9).Domesticproducersrelyonavarietyofinputstoproduction,includingrecycledandvirginmaterials,aswellasdomestically-orimported-reuseinputs(cores).Inadditiontothefinishedproduct,otherproductionoutputsmayincludematerialsdirectedintoarecyclingmarket,ormaterialsthataredisposedintotheenvironment(bottom-centerandbottom-leftofFigureB-9).Asdescribedpreviously,repairactivitiescantakeplacewithintheservicelifeofaproductandreturntheproducttoitsoriginalowner.Therepairprocessmayrequirevirginand/orrecycledmaterialinputs(viapartsreplaced),andresultsinproductwastematerialsthatmaybedirectedintorecyclingmarketsordisposedintotheenvironment(top-centerofFigureB-9).Alternately,EOU/EOLproductsmayfall-outofthein-useproductstock(market)becomingavailableforcollectionanddiversion(top-rightofFigureB-9).TheseproductsmaybedivertedintoasecondarymarketforVRPs,intoarecyclingmarket,ordisposedintotheenvi-ronment(bottom-rightofFigureB-9).ExportRecyclingmarketSecondarymarketRecyclingmarketDisposaltoenvironmentDisposaltoenvironmentRecyclingmarketDisposaltoenvironmentVirginmaterialsRecycledmaterialsVirginmaterialsDomesticcores/reuseImportedcores/reuseImports(Developed/industrializedeconomies)In-useproductstock(Installedbase)Maintenance&repairDomesticproduction(New,directreuse,refurbished,remanufactured)RecycledmaterialsImports(Developing/newlyindustrializedeconomies)Collection&diversion(New,arrangeddirectreuse,refurbished,remanufactured)DemandedproductCollectedEOUproductNewinputsReuseinputs/outputsRecyclinginputs/outputsGarbageConnectedrecyclingflowsConnectedreuseflowsNewdemand(New,arrangeddirectreuse,refurbished,remanufactured)FigureB-9:Descriptiveeconomicsystemmodelutilizedfortop-downanalysisPleasenotethatthearrowswithinthediagram,reflectpresenceanddirectionalityofsystemfactorsandflowsonly,anddonotsuggestthemagnitudeinanyway.Forexample,materialsdirectedintotherecyclingmarketmaylaterbeusedinproduc-tion,howevertheseflowsarenotquantifiedbythemodel.231Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyAnoverviewofthecomprehensiveanalyticalmodelthatwasdevelopedfortheeconomy-levelassess-mentisprovidedinFigureB-10.Asdepicted,modelingcalculationsstartedwiththeinstalledbase(stock)oftheproductinthemarket(top-leftorangebox)andtheestimatedmarketshareofproductbyOEMNewandVRPprocess(top-centerbluebox).Fromthesestartingpoints,othervalueswithinthemodelwerederived;Asimpactsofproductionwereassessedonaper-unitbasis,theaggregatedecon-omy-levelresultspresentedinSection7arelargelybasedontheTotalFinishedDomesticProduction(centergreenboxes),ImportsfromDevelopedandDevelopingEconomies(centergreenboxes),andProductionLevelsofRepair(center-rightgreenboxes).Est.marketshareofproduct,andOEMNeworVRPprocessStartingstockofproduct(byProcess)inthemarket(t=0)Installedbase(stock)ofproductinthemarketTotaldomesticproductdemandDemandforproducts(repair)ProductsavailableforcollectionatEOUEquivalentproductstosecondarymarketEquivalentproductstorecyclingmarketEquivalentproductsdisposedtoenvironmentImportedproductsDomesticsupplyofproductsTotalfinisheddomesticproductionExportedproductProductionlevel(repair)Productionlevel(OEMNew,reman,refurb,directreuse)NewmaterialrequirementDomesticreuse(core)inputrequirementdisposedtoenvironmentImportedreuse(core)inputrequirementEmployment/laboropportunityEmbodied&processemissionsgenerationEmbodied&processenergyuseCostadvantageProductionby-productdivertedtorecyclingImportsfromdevelopingeconomiesImportsfromdevelopedeconomiesMarketdemandformulasInstalledbase/stockformulasProduction&supplyformulasResourceorimpactformulasProductionby-productDemandforproducts(OEMNew,reman.,refurb.,directreuse)FigureB-10:Overviewofcompreheniveanalyticalsystems-modelmechanicsforeconomy-levelassessmentDemandandmarketsharemodelingIntheabsenceofcomprehensivemicro-dataforeacheconomy,asimplifiedapproachwasusedtomodeltheevolutionofmarketshareforeachproduct,byOEMNewandVRPproduction.Projectedmarketdemandforeachcasestudyproductbasedwasontwokeyparameters.First,demandwaspartiallyestimatedusingtheexpectedimplicitgrowthofthemarket,basedonthehistoric(2010–2015)five-yearcompoundannualgrowthrate(CAGR)performanceoftheproductcategory,foreachrespectiveeconomy.Second,theevolvingmarketshareofeachproduct,byprocesstype,wasanimportantconsiderationthatenabledthereflec-tionoftwodifferenttypesofdemand:newdemand,whichoriginatesfromcustomersthatpreviouslyhadnotparticipatedintheproductmarket;andreplace-mentdemand,whichoriginatesfromthefall-outofanEOUOEMNeworVRPproductfromthemarket,forwhichthecustomernowrequiresareplacement.Thisapproachenabledthereflectionofdifferenti-atedvalue-retentionenabledbyeachVRP.232AppendixBThemodelassumesthatthetotal‘installedbase’or‘in-stock’marketforthecasestudyproductcanbedividedintorelevant‘marketshares’thatreflecteachoftheavailableproductionprocesses:OEMNew,arrangingdirectreuse,repair,refurbishmentorcomprehensiverefurbishment,andremanu-facturing.Inmosteconomies,thepracticesoftraditionalOEMNewproductionandrepairarecommonlyacceptedandunderstood:assuch,itisassumedthatthemarketsharepercentageforrepairisconstant.Incontrast,thedynamicnatureofthemodelensuresthatanincreaseindemandforVRPproductswilloffsettheequivalentdemandforOEMNew.Inotherwords,andespeciallyinthecaseofnewdemand,itisassumedthatanynewdemandnotsatisfiedbyaVRPproductwillinsteadbesatisfiedbyanOEMNewproduct,andassuchthequantityofOEMNewproductdemandedisdeterminedvianet-subtractionofVRPdemandfromtotalcasestudyproductdemand.ItisimportanttonotethatthemodelaccountsforrepairactivitiesdifferentlythanotherOEMNewandVRPactivities.OEMNew,arrangeddirectreuse,refurbishedandcomprehensively-refurbished,andremanufacturedproductsrequireacomplexsupplychainwithextensiveinfrastructureandstakeholders;incontrast,repairedproductsfollowamoresimplisticflow(PleaserefertoFigureB-9).Itisassumedthattherepairprocessonlytemporarilyremovesaproductfromtheeconomyandthattherepairedproductisreturnedtoitsoriginalowneroncetherepairprocessiscompleted.Assuch,demandfor,andassociatedrequirementsoftherepairprocessaremodeledseparatefromdemandfortheotherVRPproductsthatentertheeconomyviaamorecomplexsupplychain.Themodelassumesthatonceallrepaircycleshavebeencompleted,theproductwillfailandberemovedfromthein-useproductstock,tobereplacedinthenextcycle.Inthiseconomy-levelmodel,theinfluenceofnetworkeffectisreflectedinasimplifiedmanner:asthenumberofVRPproductsinthatmarketincreases,itbecomesrelativelymoresignificantwithinthemathematicalfunction,andcandemon-stratesomedegreeof‘acceleration’.Inotherwords,thelargerthesizeofthestartingmarket,thelargertherelativemarketshare,andthemoresignifi-canttheabsoluteimpactofthegrowthrateuponactualproductvolume.Whiletherearemanymorecomplexandcomprehensivewaystomodelthediffusionofinnovation,thisapproachenablesageneralized,butrealisticreflectionofmarkettrans-formationprojections.Withineachsingle-yearperiodoftheseven-yearsimulation,demandisestimatedbasedonrealproductsectorgrowthprojectionsandmarket-levelconditions.Datafromthepreviousperiod(year)informscalculationsforthenextperiod(e.g.productsthatreachEOUandfall-outinperiod1,arereplacementdemandinperiod2),andtheimplicationsofthesedynamicsarecompoundedtodemonstratetheevolutionofeachproducteconomyoverthetotalseven-yearsimulationperiod.Thisformofmarketsharemodelingensuresthatthesumofallsharesdoesnotexceed100percent,andaccomplishestheneedtobalancetheimpactofincreasing(decreasing)demandforOEMNeworVRP,ascompetingproductionprocessoptionsbecomerelativelyless(more)attrac-tiveintheeconomy.(Sterman2000)Themodelassumesconstantparametervaluesovertime,withtheexceptionofthesizeoftheinstalledbase,orin-usestockoftheproduct,whichisdeterminedendogenouslybythemodel,asafunctionofthestartingin-useproductstockintheeconomy,plustheadditionofnewproduct(demand),minusthoseproductsthatfall-outoftheeconomyduetofailureorreachingend-of-use(EOU).Productsthatfall-outofthein-useproductstockoftheeconomyaredirectedtoVRPs(EOU),ortorecyclingordisposal(EOL).ModelingthesupplychainAllmarketsizeanddemandestimateswithinthemodelreflectconditionsofeachactualeconomy,determinedthrougheconomicreportsandmarketresearchdatasets.Intheinterestsofaccountingforconsumptionbehaviors,themodelthusalsoaccountsfortheextenttowhichdemandissuppliedbydomesticproduction,orbyimports.Aprimaryimplicationofimportsisthat,whiletheyenablethesatisfactionofdomesticdemand,theyalsoresultintheallocationofbothimpactsandbenefits(asmeasuredinthisassessment)totheproducingeconomy,oreconomyoforigin.Inotherwords,increaseduptakeofVRPproductsinaneconomyonlyaccomplishesdomesticimpactreductionifatleastsomeofthoseVRPproductsareproduceddomestically.Fromaglobalperspective,itisimportanttonotethatincreasedadoptionof233Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyVRPproducts,regardlessoforigin,cancontributetooverallimpactreduction,howeverthismaynotcontributetotheaccomplishmentofdomesticobjectives,suchascarbonemissionsreduction.Assumptionsregardingthesplitbetweendomesticproductionandimportaredeterminedexogenoustothemodel,baseduponcurrenttradebalanceconditionsforeacheconomy.Importandexportratesareheldconstantoverthemodelingperiodandareincorporatedtoreflecttheinherenttrade-re-latedpoliciesthatwouldenableorhinderimportofcoresandfinishedVRPproductstosupplydomesticdemandandenableorhinderexportofcoresandfinishedVRPproductsasamechanismforincreaseddomesticproductioncapacity.Itisassumedthatdomesticsupplyaccountsfortheremainingbalanceofdemand(1–ImportRate),thatthereisnostockpilingintheeconomy,andthatthereisnotradeofarrangeddirectreuseorrepairedproducts.ModelingproductionandproductionimpactsThroughthederivationoftotaldomesticproduc-tionlevels,themodelapproximatesproductionrequirements(inputs),aswellasthegenerationofby-productmaterialsthatareeitherdirectedintoarecyclingstreamordisposedofintotheenviron-ment.AlthoughtheOEMNewandVRPproduc-tionactivitiescandiffersignificantly,themodelsimplifiesproductioninputsintothreecategories:newmaterialinputs(inclusiveofaveragerecycledcontent),importedcoreinputs,anddomestical-ly-sourcedcoreinputs.Therelativeshares(percentofasingleunit)ofeachoftheseinputsshouldvarybyproductandproductionprocess,aswellastheeconomyinwhichtheactivityisoccurring.Asoneoftheprimaryobjectivesofthisassessmentistoquantifytherelativeimpactsofdifferentproduc-tionprocessesunderdifferentmarketconditions,thisgeneralizationisnecessaryandsufficient.Tounderstandtheaggregateimplicationsofcumulativeeconomicproduction,amass-balanceapproachisutilized.Giventhatinputsarepresentedassharesofthefinishedproduct,aconstraintwithinthemodelrequiresthatthesumofallproductioninputmaterials(percent)isequalto1.Allmaterial75Stockpilingreferstotheaccumulationofgoodsormaterials,potentiallyforintendedfutureuse.Althoughstockpilingisacommonpractice,itwasnotpossibletoadequatelyreflectthediverserangeofstockpilingpracticesandimplicationswithinthisassessment.inputshareparametersareexogenoustothemodelandwerederivedfromthecomponent-levelandproduct-levelanalysesdescribedpreviously.Similarly,specificenvironmentalandeconomicimpactmetricsarecalculatedusingimpactfactorsthatweredeterminedperunitforeachdifferentproductionprocess.Theseimpactmetricscontributetogreaterunderstandingofrelativeenvi-ronmentalimpacts(positiveandnegative)acrossOEMNewandVRPproductionactivities.Asdescribedpreviously,theimpactfactorsofinteresttothisstudyinclude:newmaterialoffset,produc-tionwastegeneration,embodiedmaterialenergy,embodiedmaterialemissions,processenergyrequirement,processemissionsgeneration,costadvantage,andemploymentopportunity.Modelingend-of-useandcollectionThepremiseofcirculareconomyisthecyclingofmaterials(technicalandbiological)throughasystemtoretainvalueandmitigateloss.Assuch,modelingthemanagementofproductsandmaterialsoncetheyreachtheend-of-use(EOU)stageisanessentialaspectofacircularsystemmodel.Inthiscase,themodelonceagainstartswiththeactualinstalledbaseofthecasestudyproduct,byprocesstype,andappliesadiscardorfall-outratetoestimatehowmanyofthatparticularproduct(viaprocesstype)willreachtheEOUstageinthatperiod.Thefall-outrateandquantityofproductreachingEOUisestimatedasafractionoftheinstalledbase,inaccordancewiththemethod-ologyofElshkakiandGraedel(2013).Inthiscase,thefall-outrate,reflectedas1/LinwhichListheexpectedlifetimeoftheproduct,ismultipliedbythetotalsizeoftheinstalledbaseofthemarketforeachproductandprocesstype.ItisimportanttonotethatEOUmayrefertoapointatwhichtheproductcannolongerbeusedduetoperformancedegradation,orthatthecurrentownernolongerwishestoretaintheproductforavarietyofreasons.Whentheproductbecomes‘availableforcollec-tion’themodelassumesthatitleavestheeconomicmarket(noEOUproductstockpiling75orstorage)andwillenteroneofthreepossibleflows:(1)routingtosecondarymarketforreuseviaaVRPapplication;234AppendixB(2)routingtorecyclingmarket;or(3)disposaltotheenvironment.Theroutetheproductwilltakeisbasedoncollectionprobabilitieswhichareestimatedasafunctionofproduct-andeconomy-levelfactorsthatarereflectiveof,butarenotlimitedto:easeofcollection,stateofcollectionandcollectioninfra-structure,costofcollectionanddiversioninthemarket,presenceofsupportingdiversionregula-tions,socialnormsandattitudestowardsdiversion,presenceofrelatedreturnincentives(e.g.coredeposit),andotherbarrierstodiversionsuchastheprohibitionofreuse.Themodelutilizescollec-tionprobabilitiesandamass-balanceapproachtodeterminethequantitiesofEOUproductsthatfollowdifferentflows.Forsimplicity,itisassumedthatthereisnolossthatisnot‘captured’withinthemodel:the‘disposaltoenvironment’flowreflectsthoseproductsthataredeliberatelydirectedintothegarbagestream,aswellasthosethatare‘lost’tothesystembecausetheydonotentereitherthesecondarymarketortherecyclingmarket.ItisalsoimportanttonotethatthereisanecessaryqualitydiscountthatisappliedtoEOUproductsdirectedintothesecondarymarket.ThisdiscountreflectsthecommonconditionthatsomerecoveredproductsdonotmeetthenecessaryqualitystandardsforVRPs,withthelow-qualitydifferentialbeingroutedintothewastestreaminstead.Economy-levelmethodologyModelingframeworkToreflecttherangeofconditionsthatexistineconomiesaroundtheworld,fourrepresentativesampleeconomies—Brazil,China,GermanyandtheUS—wereidentified,eachwithdifferingconditionsandbarriersthataffecttheadoptionandgrowthofVRPs.Primarybarriercategoriesfocusonchallengesinregulatorypolicy,technologicalcapability,marketconditions,andcollectionsystem(reverse-logistics)infrastructure.OpeneconomyforVRPsRegulatory&accessbarriersTechnologicalbarriersMarketbarriersCollectionbarriersRegulatory&accessbarriersTechnologicalbarriersCollectionbarriersRegulatory&accessbarriersTechnologicalbarriersCollectionbarriersRestrictedeconomyforVRPsRegulatory&accessbarriersTechnologicalbarriersCollectionbarriersIncreasingbarrierstovalue-retentionprocessesandproductsMarketbarriersMarketbarriersMarketbarriersModifiedfrom(UNEPIRPBeijingWorkshopandNasr2016,UNEPIRPBerlinWorkshopandNasr2016)FigureB-11:Spectrumofbarrier-conditionsandbarrier-alleviationscenariosTheoverarchingapproachtomodelingandaccountingfordifferentsystemicbarrierstoVRPsisdescribedinFigureB-11,whichreflectstherangefromnobarrierstoVRPs(green),increas-inglythroughtomanybarrierstoVRPs(red).Forthepurposesofthisassessment,eachrepresent-ativeeconomywasthenconsideredintermsofthepolicy,technological,andeconomiclitera-turesurroundingitsindustrialsystems,andratedonaspectrumofbarrierpresenceandseverity.Consideredinconjunctionwiththeproduct-levelimpactsdiscussedinSections5.2and5.3,these235Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomybaselineeconomicmodelsprovidethesocioeconomiccontextsinwhichtheimpactsofbarrieralleviationonVRPperformanceandadoptionpotentialwereprojected.Thepotentialforarrangingdirectreuse,repair,refurbishingandremanufacturingisdependentlargelyonproducttypeanddesign,materialcomposition,andthepresenceofappropriatetechnicalknowledgeandinfrastructuretosupporttheseactivities.Assuch,thepotentialmaterialeffi-ciency,or‘reusableshare’ofasingleunitoftheproductisunlikelytochangeacrossmarkets;andassuch,theseper-unitmaterialefficiencyvaluesareheldconstantacrossthemarketeconomiesrepresentedinthisreport.Whatmaychangefromoneeconomytoanotherrelatestotechnicalproductionefficiency:themagnitudeofproductionwasteandassociatedrequirementfornewmaterialinputs;thelaborrequiredtocompletetheprocessforasingleunit;theassociatedenergyrequire-mentoftheproductionprocess,reflectiveoftheefficiencyofinfrastructureinthateconomy;andtheemissionsassociatedwiththatenergyconsump-tion.Thesefactorsarepresentedingreaterdetailinthefollowingsections.BarrieralleviationscenariosAswithanyformofinnovation,asignificantdeter-minantofsuccessinVRPadoptionisthedegreetowhichthebarriersprecludingthegrowthoftheseprocessinnovations(VRPs)arealleviated.Topredicthowthecirculareconomymightbeenabled,consideringthemyriadinteractionsofinhibitingfactors,baselineeconomicmodelswerecombinedwithproduct-levelVRPmodelstosubsequentlyprojecttheevolutionoftheindustrialeconomyoveraseven-yearperiodunderthreedifferentscenariosforbarrieralleviation(refertoFigureB-12).Thesescenariosaremodeledasfollows:•StatusquoforVRPproducts:IndustrialeconomiesinallrepresentativemarketscontinuetogrowandadoptVRPsattheircurrentrate,withallinhibitingfactorsheldconstant,ulti-76TheuseoftheUSexampleasStandardOpenMarketisnotareflectiononthereputationandperformanceofotherprogressivecountries,butratheranecessaryconditionforthesomeoftherequiredmodeling.ThisdecisionwasduetotheIndustrialDigitalProductionPrintercasestudysector,whichisaffectedbyBaselConventionrulesthatconstrain(ifnotvolume,thentheeaseof)theexchangeoftheseunitsforuseinVRPsattheinternationallevel.WhilenotacommentaryonthevalueoftheBaselConvention,theabsenceofsimilarconstraintsmadetheUStheleast-constrainedsampleeconomywithinthestudy.matelymaintainingcurrentrateofeconomicandenvironmentalperformance.•StandardopenmarketforVRPproducts:Eachrepresentativeeconomyisforecastedtogrowunderregulatory,trade,economic,andtechnologicalconditionsthatareequivalenttothoseoftheStatusQuoUnitedStatesassess-ment.76Moderateexistingbarrierintensityismetwithsimilarlymoderateinterventionstowardalleviation.•TheoreticalhighforVRPproducts:Barrieralleviationisprojectedasapriorityinallrepresentativemarkets,reflectingwidespreadacceptanceofandinvestmentinatransitiontothecirculareconomy.Researchanddevel-opmentoftechnologies,businessmodels,andpolicyinitiativestosupportVRPsproceedatanincreasedrateandintensityrelativetothecontemporaryUSbaselinecase,andtheshareofproductionactivityacrosseachVRPissettoreflecttheTheoreticalHighUSproductionshare.Thisscenarioisdeliberatelysettoestablishanextreme,positive,scenarioforVRPs.Itisimportanttonotethattheuseofaseven-yearsimulationperioddoesnotsuggestthatthisisasufficientoroptimatetransformationperiodforindustrializedornon-industrializedeconomies.Thetransformationtocirculareconomyiscomplexandrequirescomprehensiveandintegratedengage-mentofgovernment,industry,andvalue-chainstakeholders,andassuchexpectationsofthetransformationtimelinemustbefirmlygroundedintheindividualconditionsandprioritiesofeveryrespectiveeconomy.Thesescenariosreflecttherangeofmarketevolutionpossibilitiesthatmayresultfromdifferentlevelsofconceptualacceptanceofandinvest-mentinthecirculareconomyconcept,asboththeindustryandthedemandsuponitcontinuetogrow.TheresultsoftheseprojectionsarethusintendedtoprovideinsightsintohowtoaddressbarrierfactorinteractionsinpursuitofgreaterVRPadoption.Aspreviouslymentioned,toreflectgrowth,marketevolution,andcompoundingcomplexityina236AppendixBrealisticandmeaningfulway,thesescenarioprojec-tionsaresimulatedoveraseven-yearperiod.Thisdurationperiodwasselectedbecauseitensuredthatsystemicchangescouldbeobservedover77AmultilateralagreementunderArt.11oftheBaselConvention(OECDDecisionC(2001)107/Final)allowsforsuchmovements;however,certainproceduralrequirements,suchasaPICprocedure,apply.78OECD.2015TradeFacilitationIndicators.http://www.oecd.org/trade/facilitation/indicators.htmtime,withoutanunrealisticassumptionthattherewouldbenoothersignificantendogenouschangesinaneconomy.STANDARDOPENMARKETforVRPproductsscenarioTHEORETICALHIGHforVRPproductsscenario➢➢EacheconomyforecastusingUS-basedStatusQuoScenarioregulatory,market,technologicalandinfrastructureconditionfactors➢➢Eacheconomyforecastwithmaximumpossibleregula-tory,market,technological,andinfrastructureconditionfactors,andUS-basedTheoreticalHighproductionlevelsforVRPproducts(percentshare)STATUSQUOforVRPproductsscenario➢➢CurrentstateofVRPswithineacheconomy,givenknownbarriersINCREASINGBENEFITSOFVRPSWITHALLEVIATIONOFBARRIERSTOVRPSFigureB-12:OverviewofbarrieralleviationscenariosAswithanystrategicinitiative,therearethreecriticalstages:First,establishabaselinetounderstandtherealityofthe‘currentstate’;Second,clearlydefinetheobjectiveortarget,sothatthevisioncanbearticulated;andfinally,establishanimplementationplanwithclearlydefinedstepsandmilestonesthatenableprogressfromthecurrentstatetowardthedesiredfuture.InthecaseofVRPs,theStatusQuoandTheoreticalHighscenariosreflectthefirstandsecondstages,respectively.TheStandardOpenMarketforVRPproductsscenarioofferssomeinsightintopotentialimplementationplans–viapolicydecisionsandsysteminterventions–thatmayguidepolicymakersandindustrydecisionmakersinthedevelopmentofappropriatestrategiesfortheircountry’sspecificconditionsandneeds.Withineachofthesebarrieralleviationscenariosseveralsystem-basedfactorsweredeterminedandapplied:RegulatoryFactors,whichreflectthepresenceandrelativeextentofregulatory-baseddifferentiationand/ordiscriminationagainstcasestudyproductsproducedviaVRPs,whichalsodifferacrosscasestudysectorswithineachoftherepresentedeconomies;MarketFactors,whichreflectrelativecustomer-baseddifferentiationand/ordiscriminationagainstrefurbishedandremanu-facturedproductsacrossrepresentedeconomies;andTechnologicalFactors,whichreflecttherelativedegreeofsystemictechnologicalbarriersacrosseachoftherepresentedeconomies.CollectionInfrastructureFactorswereheldconstantineacheconomy,acrosseachscenario.RegulatoryandaccessfactorsRegulatoryandaccessfactorsaredifferentiatedbycasestudysector,asarangeofregulatorybarriersexistspecifictodifferentsectors,producttypesand/ormaterials.Forexample,theBaselConventionappliestocasestudyindustrialdigitalprinters,thuspotentiallyrequiringadditionalproce-duralrequirementsforthemovementofaffectedrepaired,refurbished,andremanufacturedindus-trialdigitalprintersbetweenSignatorycountries(e.g.US)andcountriesthatarebothSignatoryandParty(e.g.Germany)77.RegulatoryFactorsaredeterminedquantitativelybasedonacombinationoftheOECD’sTradeFacilitationIndicators78for237Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyeachrepresentedeconomy,andtheWorldBank’s2015EaseofDoingBusinessIndex79.TheOECDTradeFacilitationIndicatorsweredevelopedtohelpcountriesalleviateproblematicborderproce-duresandreducetradecostsandreflectrelativeeaseoftradeacrossOECDcountriesacrossarangeoftradefactors.TheWorldBankEaseofDoingBusinessIndexrankseconomies,relativetoeachother,onthebasisandpresenceofbusi-ness-friendlyregulations:countriesarerankedoutofapossible190,withascoreof‘1’reflectingthemostbusiness-friendlyconditions.Thesemetricswerenormalizedandmultipliedtodetermineappro-priateRegulatoryandaccessfactorsforeachrepresentedcountry,byappropriatecasestudysectors(refertoTableB-31).MarketfactorsMarketfactorswithintheeconomy-levelmodelreflectaqualitativeaverage‘discount’thatmightbeappliedbycustomersandbusinessestorefurbishedandremanufacturedgoodswithinaneconomy,andwhichthereforeconstrainsdemandfortheseVRPoptions.Thisdiscountreferencesexpectationsandperceptionsaboutproductquality(e.g.productsviaVRPsashavinglesserqualitythanthatofanOEMNewoption),aswellasmarket-basedpref-erencesfor‘new’productsasstatussymbolsandindicatorsofaffluenceorprestige.EconomiesthathavehadgreaterexposuretoVRPsandoptionsareassumedto‘discount’refurbishedandreman-ufacturedproductstoarelativelesserdegreethanwouldbeineconomieswithlittletonoexposuretoVRPs.Inotherwords,Marketfactorsaregreaterforthoseeconomiesthatcurrentlyfacethegreatestmarketconstraints.TechnologicalfactorsTechnologicalfactorsreflecttherelativebench-markingscoresfromtheOECD’sScience,79WorldBank.2015EaseofDoingBusinessIndex.http://data.worldbank.org/indicator/IC.BUS.EASE.XQ.80OECD.Science,TechnologyandInnovationOutlook2016.http://www.oecd.org/sti/oecd-science-technology-and-innovation-outlook-25186167.htmTechnologyandInnovationOutlook2016report,whichreflectsthedegreetowhichnational-levelscience,technologyandinnovation(STI)policies,instruments,andsystemsarecontributingtogrowth80.Fortherepresentedeconomies,relativescoresfromtheSTIOutlook2016reportareaggre-gatedintofivecategoriesdescribingthecurrentstatusoftherelativeSTIsystem(refertoTableB-30).ImportshareFinally,tradeconditions,specificallyimportratioassumptionswererequiredtosimulateStandardOpenMarketandTheoreticalHighscenarios,particularlyforeconomiesthatcurrentlyenforcesomedegreeofimportrestrictionsagainstVRPs.ForthesescenariostheimportshareforOEMNewproductsforeacheconomywasheldconstant;intheStandardOpenMarketforVRPproductsscenario,importratiosforVRPsweresetequaltothatoftheequivalentproductfortheUS;intheTheoreticalHighscenario,importshareswereeithermain-tained(Developed/industrializedeconomies),orsettoanassumed20percentshare(Developing/newlyindustrializedeconomies)(refertoTableB-32andTableB-33).Economy-levelmodelAllmodelsimulationbeginswiththeproductmarket:Thetotalquantityandrepresentativesharesofacasestudyproduct,byeachproductionprocesstype,includingOEMNew,arrangingdirectreuse,repair,refurbishmentorcomprehensiverefurbish-ment,andremanufacturing.Anoverviewofthecomprehensiveanalyticalmodelthatwasdevelopedfortheeconomy-levelassess-mentisprovidedinFigureB-13.238AppendixBEst.marketshareofproduct,andOEMNeworVRPprocessStartingstockofproduct(byProcess)inthemarket(t=0)Installedbase(stock)ofproductinthemarketTotaldomesticproductdemandDemandforproducts(repair)ProductsavailableforcollectionatEOUEquivalentproductstosecondarymarketEquivalentproductstorecyclingmarketEquivalentproductsdisposedtoenvironmentImportedproductsDomesticsupplyofproductsTotalfinisheddomesticproductionExportedproductProductionlevel(repair)Productionlevel(OEMNew,reman,refurb,directreuse)NewmaterialrequirementDomesticreuse(core)inputrequirementdisposedtoenvironmentImportedreuse(core)inputrequirementEmployment/laboropportunityEmbodied&processemissionsgenerationEmbodied&processenergyuseCostadvantageProductionby-productdivertedtorecyclingImportsfromdevelopingeconomiesImportsfromdevelopedeconomiesMarketdemandformulasInstalledbase/stockformulasProduction&supplyformulasResourceorimpactformulasProductionby-productDemandforproducts(OEMNew,reman.,refurb.,directreuse)FigureB-13:Overviewofcompreheniveanalyticalsystems-modelmechanicsforeconomy-levelassessmentInstalledbase,demand,andavailableforcollectionIntheabsenceofcomprehensivemicro-dataforeacheconomy,asimplifiedapproachwasusedtomodeltheevolutionofmarketshareforeachproduct,byOEMNewandVRPproduction.Initialmarketshare,orproductionmixpercentage(%),wasestimatedforeachproductbyproductionprocess(OEMNewandVRP)basedonavailabledatafromeachsampleeconomy.Usingestimatedtotalsizeoftheinitialinstalledbased(),astartingvolumeforeachproduct(j)byproduc-tionprocess(i)wasdeterminedforeachsampleeconomy(k).Ineachofthesimulationperiods(t=7),installedbasewasadjusteddynamicallytoaccountforproductsreachingtheendofservicelifeandbecomingavailableforcollection,andtheproductsenteringtheeconomyasaresultofnewdemand.Thefollowingequationsprovideahigh-leveldescriptionofthemodelingapproachreflectingproductflowintoandoutofeachsampleeconomy.Projectedmarketdemandforeachcasestudyproductbasedwasontwokeyparameters.First,demandwaspartiallyestimatedusingtheexpectedimplicitgrowthofthemarket,basedonthehistoric(2010–2015)five-yearcompoundannualgrowthrate(CAGR)performanceoftheproductcategory,foreachrespectiveeconomy(refertoEquation4a)Asdepicted,expecteddemand()isafunctionofdemandquantityinthepreviousperiodandtheexpectedproductsegmentgrowthrate(),whichisheldconstantthroughoutthesimulation.AsdescribedbyEquation4b,afterperiodt=1,thecalculationofdemandalsoincludesthereplace-mentquantityforunitsthathavefallenoutofthemarketineachpreviousperiod(refertoEquation6),basedontheassumptionthattheowner/userhasaneedthatmustbefulfilledbyOEMNeworVRPproductoptionthatisseparatefromtheprojectedsectorgrowthrate.SuB-andsuperscriptnotationsi,239Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyj,k,andtrepresentproductionprocess,product,economy,andsimulationperiod,respectively.Expecteddemandisfurtherdisaggregatedbyproductionprocess(i),usingaconstantparameterforestimatedproduction/demandmixforOEMNewandeachVRP(),perEquation5.Eq.4aEq.4bEq.5Theproductsthatbecomeavailableforcollec-tioneachperiod(),asaresultofreachingexpectedendofservicelifeorexperiencingfailure,areestimatedusingEquation6.Thefall-outrate()andquantityofproductsbecomingavailableforcollectioneachperiodisestimatedasafractionoftheinstalledbase()duringthepreviousperiod,inaccordancewiththemethodologyofGraedelandElshaki(2013).Inthiscase,thefall-outrate,reflectedas1/ηinwhichηistheexpectedservicelifeoftheproductgivenitsproductionprocess(OEMNewversusVRP),ismultipliedbythetotalsizeoftheinstalledbaseofthemarketforeachproductandprocesstype.ItisimportanttonotethatEOUmayrefertoapointatwhichtheproductcannolongerbeusedduetoperformancedegradation,orthatthecurrentownernolongerwishestoretaintheproductforavarietyofreasons.Eq.6Asintroducedbriefly,theinstalledbasequantityofeachproduct(j),byeachproductionprocess(i),inthesampleeconomy(k),reflectsasimplefunctionoftheflowsintoandoutoftheeconomy:theinstalledbasequantityfromthepreviousperiod,plusnewproductintroducedthroughdemand,lessproductsthatfall-outofthemarketandbecomeavailableforcollectionattheendoftheirservicelife(refertoEquation7).Eq.7ToaccommodatethesimulationofdifferentVRPbarrierconditionswithinthemodelviaVRPbarrierscenarios,thecalculationofestimatedinstalledbase(perEquation7)wasfurtherenhancedtoincorporatetheeffectofeconomy-levelregulatoryandaccessfactors(),technologicalfactors(),andmarketfactors(),asshowninEquation8.PleasenotethatEquation8isonlyusedinthefirstsimulationperiod(t=1)toestablishthedemandconditionsthatarethenincorporatedintosubsequentsimulations(T=7).ItisalsoimportanttonotethattheseVRPbarrierfactorsareassumedtoonlyberelevantforVRPprocessesofrefurbishmentandremanufacturing.Althoughthisassumptionmaynotreflectabsoluteconditionsacrossvariedeconomiesandsocialnorms,forthepurposesofsimplificationthisassumptionwasnecessaryandjustifiableatthehigh-level.Asrepairisawell-estab-lishedVRPpracticeacrossalleconomies,researchandinterviewswithindustryexpertssuggestthattherearefew-to-noVRPbarrierswhich,ifallevi-ated,wouldincreasethenumberofproductrepairsbeingdemandedinaneconomyduringagivenperiod.Similarly,witharrangingdirectreuse,perresearchandindustryexperts,therearefew-to-noVRPbarrierswhich,ifalleviated,wouldincreasethenumberofproductsdemandedforarrangeddirectreuseinaneconomyduringagivenperiod.AdiscussionoftheVRPbarrierfactorsisincludedinmoredetailinSection1.7.Eq.8AsshowninEquation8,regulatoryfactorsreflectconditionsspecifictotheproduct(j)andthesampleeconomy(k);technologicalfactorsreflectconditionsspecifictothesampleeconomy(k);andmarketfactorsreflectconditionsspecifictotheproductionprocess(i=refurbishedorreman-ufacturedonly)andthesampleeconomy(k).AsfurtherdescribedinTableB-28andTableB-29,thesefactorsarenormalizedandsettoequal1()intheStatusQuoscenario.ForsubsequentStandardOpenMarket,andTheoreticalHighscenarios,thesefactorsaremodifiedaccordinglytoreflectthechangingscenarioconditions(pleaserefertoTableB-29).240AppendixBThemodelaccountsfortheextenttowhichdemandissuppliedbydomesticproduction(),orbyimports(),perEquations9and10,respec-tively.Aprimaryimplicationofimportsisthat,whiletheyenablethesatisfactionofdomesticdemand,theyalsoresultintheallocationofbothimpactsandbenefitstotheeconomyoforigin.Inotherwords,increaseduptakeofVRPproductsinaneconomyonlyaccomplishesimpactreductionand/oreconomicopportunityifatleastsomeofthoseVRPproductsareproduceddomestically.Assumptionsregardingthesplitbetweendomesticproduc-tionandimportaredeterminedexogenoustothemodel,baseduponcurrenttradebalancecondi-tionsforeacheconomy81.Importandexportratesareheldconstantoverthemodelingperiodandareincorporatedtoreflecttheinherenttrade-relatedpoliciesthatwouldenableorhinderimportofcoresandfinishedVRPproductstosupplydomesticdemand,andthatenableorhinderexportofcoresandfinishedVRPproductsasamechanismforincreaseddomesticproductioncapacity.Theincorporationofimportshareofdemand()enablesthesimulationofchangingaccessconditionswithinsampleeconomiesundertheStandardOpenMarketandTheoreticalHighVRPbarrieralleviationscenarios.ThisisdiscussedfurtherinthefollowingsectionsandimportsharevaluescanbefoundinTableB-32andTableB-33.Itisassumedthatdomesticsupplyaccountsfortheremainingbalanceofdemand(),thatthereisnostockpilingintheeconomy,andthatthereisnotradeofarrangingdirectreuseorrepairedproducts.Eq.981ImportandexportdatawassourcedfromtheObservatoryofEconomicComplexityforthebaseyear2015forBrazil(2015a),China(2015b),Germany(2015c),andtheUS(2015d).Eq.10Finally,theimportshareofdemandisfurthersplitwithinthemodeltoaccountfortheshare(quantity)ofimportscomingfromdeveloping/non-industri-alized/newlyindustrializedeconomies(),andtheshare(quantity)ofimportscomingfromdeveloped/industrializedeconomies().Thisisaccomplishedbyincorporatingestimatedimportshare(%)byorigin,perEquations11and12.81ImportsharevaluescanbefoundinTableB-32andTableB-33.Eq.11Eq.12AggregatingimpactsofconsumptionThecumulativeenvironmentalandeconomicimpactsofconsumptionreflecttheaggregateimpactofdomesticproductionandtheconsump-tionofimports.Asallimpactfactorswerenormal-izedtoreflectaper-productbasis,theaggregationofimpactsisestimatedusingalinearfunctionbasedonthetotalquantityofproducts.Asmentionedpreviously,environmentalandeconomicimpactfactorsarediscussedanddescribedingreaterdetailinthefollowingsections.Theprimaryaggregatedenvironmentalandeconomicimpactsofconsumption,accountingforOEMNewandVRPproductionandconsump-tionmixforeachsampleeconomy,areoutlinedinEquation13throughEquation18.AbriefsummaryofnomenclatureusedintheaggregationofimpactformulasisalsoprovidedinTableB-22.Forsimulatedaggregationthemodelassumesseveneconomy-levelmodelsimulationperiods(T=7).241Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTableB-22:SummaryofnomenclatureforaggregatedimpactformulasNotationDescriptiontModelsimulationperiod,1:7(Set=T)kSampleeconomy,Brazil,China,Germany,andUS(Set=K)jCasestudyproduct(3industrialdigitalprinters;3vehicleparts;3HDORequipmentparts)iProductionprocess:OEMNew,arrangingdirectreuse,repair,refurbishmentandremanufacturingXDomesticproductionquantityofproduct(j)viaprocess(i)ineconomy(k)IImportquantityofproduct(j)viaprocess(i)byeconomy(k)IaImportquantityfromdeveloping/newlyindustrializedoriginsofproduct(j)viaprocess(i)byeconomy(k)IbImportquantityfromdeveloped/industrializedoriginsofproduct(j)viaprocess(i)byeconomy(k)τEmbodiedenergyperunit(product(j)viaprocess(i)ineconomy(k)),globalaverageinMJ/unitωEmbodiedemissionsperunit(product(j)viaprocess(i)ineconomy(k)),globalaverageinkg.CO2-eq./unitφProcessenergy/unit(product(j)viaprocess(i)ineconomy(k)),inMJ/unitφaProcessenergy/unit(product(j)viaprocess(i))producedindeveloping/newlyindustrializedeconomies,inMJ/unitφbProcessenergy/unit(product(j)viaprocess(i))producedindeveloped/industrializedeconomies,inMJ/unitPEFProcessEnergyFactorenablingacross-economyassessment(PleaserefertoTableB-23)Processemissions/unit(product(j)viaprocess(i)ineconomy(k)),inkg.CO2-eq./unitaProcessemissions/unit(product(j)viaprocess(i))fromdeveloping/newlyindustrializedeconomies,inkg.CO2-eq./unitbProcessemissions/unit(product(j)viaprocess(i))fromdeveloped/industrializedeconomies,inkg.CO2-eq./unitPMFProcessEmissionsFactorenablingacross-economyassessment(PleaserefertoTableB-24)πNNon-recyclableProductionWaste/unit(product(j)viaprocess(i)ineconomy(k)),inkg/unitπRRecyclableProductionWaste/unit(product(j)viaprocess(i)ineconomy(k)),inkg/unitπaTotalproductionwaste/unit(product(j)viaprocess(i))fromdeveloping/newlyindustrializedeconomies,inkg/unitπbTotalproductionwaste/unit(product(j)viaprocess(i))fromdeveloped/industrializedeconomies,inkg/unitPWFProductionWasteFactorenablingacross-economyassessment(PleaserefertoTableB-25)νProcesslaborreq./unit(product(j)viaprocess(i)ineconomy(k)),infull-timelaborer/unitνaProcesslaborreq./unit(product(j)viaprocess(i))fromdeveloping/newlyindustrializedeconomies,infull-timelaborer/unitνbProcesslaborreq./unit(product(j)viaprocess(i))fromdeveloped/industrializedeconomies,infull-timelaborer/unitPLFProcessLaborFactorenablingacross-economyassessment(PleaserefertoTableB-26)242AppendixBEq.13Eq.14Eq.15Eq.16Eq.17Eq.18Factorsenablingacross-economyandacross-scenarioassessmentInaddressingincreasinglyinteractiveglobaleconomies,itisoftendifficulttoinformindustrialandpolicydecisionsacrossmultiplecontextsinasingle,uniformmanner.Eachconstituentoftheglobaleconomyexistswithinauniquespaceonabroadspectrumofsocioeconomicandindus-trialdevelopment.Thetechnologiesavailableto,processesusedin,andmanagementstrate-giesemployedbyeachthereforeinherentlydiffer,creatingvaryingdegreesofflexibilityinandbarrierinhibitionoftheadoptionofVRPs.EachconstituentthusdemonstratesauniqueprofileofeconomicandenvironmentalperformancethatmustbeconsideredwhenexploringthecurrentroleandfuturepotentialofVRPs.Tobetterunderstandtheimplicationsoftheseconditionsandbarriers,fourcountriesrepresentativeofdifferentpointsonthisspectrumofdevelopment—andforwhomsoundindustrialsystemsdatawereavailable—wereselectedtoserveasthebasisofmodelingandanalysis:•UnitedStatesofAmerica(US)•Germany(DEU)•Brazil(BRA)•China(CHN)Thereweretwodifferentkindsoffactorsdevelopedtosupportandenableeconomy-levelmodelingthatwasappropriatelyreflectiveofthevariedconditionsacrosssampleeconomies,andundereachofthebarrieralleviationscenarios:•Environmentalandeconomicimpactfactors:Thesefactorsaffectacross-economyassess-mentandwereappliedineachoftheVRPbarrieralleviationscenarios(seebelow).ThesefactorswereappliedasmultipliersversustheUSbaseimpactdatatoreflectdifferingconditions,andthereforeenvironmentalandeconomicimpacts,ofeacheconomy.Thesefactorsinclude:ProcessEnergyFactor,accountingforelectricityinfrastructuredifferencesbyeconomy;ProcessEmissionsFactor,accountingfordifferingelec-tricitygenerationgridmixineacheconomy;ProductionWasteFactor,accountingfordifferingtechnicalproductionefficiencyconditionsandwastediversioninfrastructure;andLaborProductivityFactor,accountingfordifferinglaborproductivity–andthereforedifferinglaborrequirements–withineachsampleeconomy.•VRPbarrieralleviationscenariofactors:Thesefactorsaffectacross-scenarioassess-mentandwereappliedtoeacheconomytoreflectchangingVRPbarrierconditions.Thesefactorswereappliedasmultiplierstovariousvolume-basedparameterswithintheecono-243Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomymy-levelmodel,foreachsampleeconomy.VRPbarrieralleviationscenariofactorsincluderegu-latoryfactors,technologicalfactors,andmarketfactorsthatcapturehigh-levelbarriercondi-tionsforeacheconomy,undertheStatusQuo,StandardOpenMarket,andTheoreticalHighbarrieralleviationscenarios.Thefollowingsectionsdescribethecalculationoftheseimpactandscenariofactors,andthewayinwhichtheywereusedwithinthemodel.EnvironmentalandeconomicimpactfactorsProcessenergyfactorThisanalysisdeliberatelyomitsconsiderationofuse-phaseenergywithineacheconomy,asthatrequirementwouldbeequalacrosseach;anewautomobileengineproducedintheUnitedStates,forexample,wouldreasonablyusethesameamountofenergyduringitsuse-phaseasitwouldinanothereconomy.Rather,themostsignificantdiffer-encesinenergyrequirementslieintheproductionprocess.Thus,bymitigatingtherequirementfor10082WorldEnergyCouncil.https://www.wec-indicators.enerdata.eu.Accessed15March2017(WorldEnergyCouncil2015).83PerEcoinvent3.3datasetdocumentation,Marketgroupforelectricity,mediumvoltageforperiod2015-01-01to2016-12-31usingIPCC2013method.Accessed08May2017(Ecoinvent3.32016).percentnewmaterialinputsandinsteadleveragingalready-existingcomponentsorproducts,VRPsofferreducedper-unitenergyrequirementsintheproductionphase.Inthisrespect,thedifferencesofefficiencyinthegeneration,transmission,anddistributionofenergyusedforindustrialproductioncanhavesignificanteffectsonmaterialefficiency—i.e.howmuchofaproductcanbemade(orre-made)fromagivenamountofenergyinputmaterials—andalsoontheenvironmentalimpactsofconsumingthatenergy.TheinteractionbetweentheseefficiencymeasureswasexaminedviatheWorldEnergyCouncilandrevealedrelativeenergyefficiencyfactorsforeachrepresentativeeconomy.Thesefactorswereusedtoaccountforthecumulativeenergy(gener-ation,transmission,anddistribution,includinglosses)requiredtocompleteeachprocesswithineachsampleeconomy.Thisapproachenabledaccountingforenergyinfrastructureefficiencywiththeprocess,andsothateachrepresentativeeconomymaybeassessedrelativetoeachotheronalevelplatform(refertoTableB-23).TableB-23:ProductionprocessenergyfactorandefficiencycomparisonacrossscenarioeconomiesUSGermanyBrazilChinaEfficiencyofPowerGeneration(%)8242.0%41.9%67.9%41.4%Efficiencyoftransmissionanddistribution(%)8293.9%96.3%84.9%93.8%ProcessEnergyFactor2.53702.47941.73472.5751GWP100aprocessemissionsfactorEnergyefficiencyfactorsareinherentlyrelatedtothegreenhousegas(GHG)emissionsforwhichindustrialproducersareresponsible.Foreachunitofenergy(heremeasuredinmegajoules[MJ])requiredformanufacturing,aproportionalamountofGHGemissions(kilograms[kg]ofcarbondiox-ide-equivalent[CO2-e]gases)willbecreated.Theseemissions—aswellastheamountofenergyrequiredtocompleteproductionprocesses—areofcourserelatedtotheparticularenergygridandprocesstechnologyportfoliosuponwhicheachrepresentativeeconomyrelies.Estimatedproduc-tionprocessemissionsarethereforecalculatedbasedcountry-specificproductandprocessenergyrequirementandenergyinfrastructuredatafromtheEcoinvent3.3database,83andsimilarlynormalizedtoaUS-basedbaseline,asshowninTableB-24.244AppendixBTableB-24:ProductionprocessemissionsfactorandgenerationcomparisonacrossscenarioeconomiesUSGermanyBrazilChinaGWP100a(kgCO2-e/MJ,IPCC2013)830.18290.18700.05890.3244GWP100aProcessEmissionsFactor11.020.321.77ProductionwastefactorThegenerationofproductionwastebyproductisreflectedasameasureofproductionefficiency;thegreaterthetechnologicaldevelopmentandskilllevelofaworkforceandfacility,andthegreaterthesizeoftheoperation,therelativelylessproduc-tionwasteisgeneratedperunit.Itisnecessarilyassumedthatdevelopedeconomiesexhibitgreaterproductionefficiency,andthereforegeneratelessproductionwastebyproduct,thandevelopingeconomies.Correspondingtotheserelationshipsisanotherconventionofmaterialefficiencyinmanufacturing:themorewastebyproductcreatedrelativetothematerialembodiedinthefinalproduct,thegreaterthenewmaterialquantityaprocesswillrequiretocompletethatprocess.Inaddition,thepresenceofrecyclingand/ordiversionregulationsforindustrialfacilitiesrepresentsanopportunitytoreducewastebyproduct;inversely,theabsenceofrecyclingand/ordiversionregulationsforindustrialfacilitiesrepresentsthepotentialforhigherlevelsofwastegeneration.Giventheexistenceandviabilityofsecondaryrecyclingmarketsforprimaryproductionmaterials,includingsteelandaluminum,itisassumedthatrecyclableproductionwastefactorswillbeconstantandequivalenttoUSconditionsfordevelopedmarkets(e.g.Germany)(1.0),andincreasedby20percentforBrazilandChina(refertoTableB-25).Eachoftherepresentativeeconomiesconsideredherearesufficientlyindustrializedtohaverobust(ifnotformalized)scrapmaterialmarkets,andassuchitisassumedthatproducersinalleconomieswillbemotivatedtorecycleapplicablematerialsintheirproductionwastestreamwhereverpossible.Variationinwastegenerationisattributedtothepresence(orabsence)ofindustrialrecyclingregu-lations,technologicalefficiency,andthesophis-ticationofwasteandrecyclinginfrastructureforindustrialproductionsectors.TableB-25:ProductionwastefactorcomparisonacrossscenarioeconomiesUSGermanyBrazilChinaProductionWasteFactor1.01.01.21.2LaborproductivityfactorSufficientaccesstoskilledlaborisawell-refer-encedbarriertocost-effectiveadoptionofcircularproductionprocessesinbothdevelopedanddevel-opingmarkets.Toadequatelyreflectthecompar-ativeproductivityofdifferenteconomies,alaborrequirementfactorwascalculatedusingtheGDPvalueofmanufacturingoutput(in2014USDollars)createdperpersonworkinginmanufacturing.ManufacturingValue/PersonEmployedisamanu-facturingsectorproductivitymeasureutilizedattheinternationallevel,namelybytheOrganisationforEconomicCo-operationandDevelopment(OECD)andtheUSBureauofLaborStatistics.Thisemploy-mentproductivityfactor(refertoTableB-26)repre-sentstherelativeproductivityoffull-timeequivalentemployeesacrossdifferenteconomiesandenablestheestimationofemploymentpotentialindifferentmarketsbasedupontheircurrent-statelaborpool.245Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTableB-26:LaborRequirementfactorcomparisonacrossscenarioeconomies84USandGermanymanufacturingsectorproductivitydatafromUSCongressionalResearchService,andOECD(Levinson2013,OECD2017).85BrazilmanufacturingsectorproductivitydataderivedfromUSCongressionalResearchService,andCIAWorldFactbook(CIA2015,Levinson2013).86ChinamanufacturingsectorproductivitydataderivedfromUSCongressionalResearchService,andPetersonInstituteforInternationalEconomics(Lardy,Levinson2013).87GDPfromManufacturing/PersonEmployedinManufacturingisaManufacturingSectorProductivitymeasureutilizedattheinternationallevel,namelybytheOECD,andtheUSBureauofLaborStatistics(OECD2017,U.S.DepartmentofLabor2015).EconomyA(US)84EconomyB(Germany)84EconomyC(Brazil)85EconomyD(China)86Mfg.GDP/PersonEmployedinMfg.(2014)(USD)87$128,560$100,584$27,769$57,833LaborProductivityFactor10.780.220.45Together,thesefactorsnotonlyprovideabaselineunderstandingofhoweachrepresentativeeconomycurrentlyperforms,butalsorevealareasinwhicheacheconomymightneedtoimproveinordertosupportthecirculareconomyandsuggesthowtheadoptionofVRPsmightunfold,giventheparticularitiesofeacheconomiccontext.Brazil,forexample,appearstooutperformitscounterpartsinenergyefficiencyandemissionsproduction,butissignificantlyunderperforminginhumancapitalandproductivity,relatively.Inthissense,afocusonVRPsthatincreasetherecoverablevalueofEOUproductsthroughpreservingformandfunctionwhileminimizingtheintermediatestepsrequiredtoextractthatvaluemaybeofgreaterbenefitthanthosethatpreservevaluebyavoidingprocessenergyrequirements.Inanycase,thepotentialtoaddressthesediffer-encesineconomicperformancethroughincreasedscaleofVRPshingesentirelyuponthemyriadbarriersthatpresentlyconstraintheindustry’stransformationalwillingnessandability.Itisthesebarriers—and,ultimately,thedegreetowhichtheycanbealleviatedthroughshiftsinindustrialparadigmandgovernmentalpolicy—thatwilleitherunlockorinhibitthetransitiontoamorecircularglobaleconomy.EnvironmentalandeconomicimpactsofimportedproductsFinally,inassessingtheenvironmentalandeconomicimpactsofconsumption,theoriginofimportedproductswasanimportantconsideration.Usingimportquantityandimportquantityestimatesbyeconomyoforiginthatwerebasedonimportshareofdemand(refertoEquations11and12),theaggregatedenvironmentalandeconomicimpactsassociatedwithimportedproductsweredeter-minedusingaverage,andrepresentativeenvi-ronmentalandeconomicimpactsfactors(refertoTableB-27).246ReportReferences247TableB-27:ProcessimpactfactorsforimportedproductsProcessImpactFactorDeveloping/NewlyIndustrializedImportOriginEconomyValueDeveloped/IndustrializedImportOriginEconomyValueProcessEnergyFactor(φ)Average(Brazil;China)Average(Germany;US)GWP100aProcessEmissionsFactor(ϐ)Average(Brazil;China)Average(Germany;US)ProductionWasteFactor(πN,πR)Average(Brazil;China)Average(Germany;US)LaborProductivityFactor(ν)Average(Brazil;China)Average(Germany;US)BarrieralleviationscenariofactorsThebarriersusedtoreflectcurrentstateandallevi-ation-potentialfactorsarepresentedinTableB-28andaredescribedinfurtherdetailsubsequently.ItisimportanttonotethattheseFactorsareonlyappliedinthecontextofrelevantVRPs(e.g.nottoOEMNewsegment):giventhatrepairisawell-es-tablishedoptionineveryeconomy,theseFactorsarenotappliedtotherepairsegment;inaddition,giventhattherearelittletonointerventionsthatmayyieldgreaterdemandforarrangingdirectreuseproductsinaneconomy,theseFactorsarenotappliedtothearrangingdirectreusesegment.PleaserefertoEquation8foradditionalclarification.FurtherdescriptionoftheapproachandsourcesthatinformthefactorspresentedinTableB-28andTableB-29areincludedinthefollowingsections.ThevaluesinTableB-28informthesimplifiedrepresentationofcurrentstateVRPbarrierswithinsampleeconomies,andcolorsrepresentrelativebarrierfactorssimilartothemodeldepictedinFigureB-9.ThevaluescontainedinTableB-28arefurtherclarifiedandexplainedinthefollowingsections.TableB-28:OverviewofrelativebarrierfactorsincurrentstateBarrierFactorApplicationBrazilChinaGermanyUSRegulatoryandAccessFactorsVRPVehicleParts0.280.180.860.91VRPIndustrialDigitalPrinters0.280.180.660.91VRPHDOREquipmentParts0.280.180.860.91TechnologicalFactorAll0.090.110.50.54MarketFactorsRefurbishedProducts0.80.50.950.95RemanufacturedProducts0.250.250.750.75IntheStandardOpenMarketandTheoreticalHighScenarios,theserelativebarrierfactorsaremodifiedtoreflectchangingVRPbarriersineacheconomy,accordingtoestablishedscenarioconditions.AsummaryoftheVRPbarrierfactorsthatareincor-poratedintothemodel,viaEquation8,areoutlinedforeachVRPbarrierscenarioinTableB-29.248Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyTableB-29:OverviewofVRPbarrierfactorsforallVRPbarrieralleviationscenariosCurrentStateGlobalBarrierAlleviationScenariosStatusQuoStandardOpenMarketTheoreticalHighSCENARIOTARGETMarketFactor(Refurbishing)0.951.00MarketFactor(Remanufacturing)0.751.00RegulatoryFactor–VRPVehicleParts0.911.00RegulatoryFactor-VRPInd.DigitalPrinters0.911.00RegulatoryFactor–VRPHDORParts0.911.00TechnologicalFactor0.541.00USMarketFactor(Refurbishing)0.951.01.001.05MarketFactor(Remanufacturing)0.751.01.001.33RegulatoryFactor–VRPVehicleParts0.911.01.001.10RegulatoryFactor–VRPInd.DigitalPrinters0.911.01.001.10RegulatoryFactor–VRPHDORParts0.911.01.001.10TechnologicalFactor0.541.01.001.85GermanyMarketFactor(Refurbishing)0.951.01.001.05MarketFactor(Remanufacturing)0.751.01.001.33RegulatoryFactor–VRPVehicleParts0.861.01.051.16RegulatoryFactor–VRPInd.DigitalPrinters0.661.01.371.51RegulatoryFactor–VRPHDORParts0.861.01.051.16TechnologicalFactor0.501.01.092.01BrazilMarketFactor(Refurbishing)0.801.01.191.25MarketFactor(Remanufacturing)0.251.03.004.00RegulatoryFactor–VRPVehicleParts0.281.03.263.59RegulatoryFactor–VRPInd.DigitalPrinters0.281.03.263.59RegulatoryFactor–VRPHDORParts0.281.03.263.59TechnologicalFactor0.091.06.1611.43ChinaMarketFactor(Refurbishing)0.501.01.902.00MarketFactor(Remanufacturing)0.251.03.004.00RegulatoryFactor–VRPVehicleParts0.181.05.105.62RegulatoryFactor–VRPInd.DigitalPrinters0.181.05.105.62RegulatoryFactor–VRPHDORParts0.181.05.105.62TechnologicalFactor0.111.04.959.18AppendixB249TechnologicalVRPBarrierFactorsThefactorsusedtoreflectcurrentstateandpotentialtechnologicalconditionsarereflectedinTableB-30andsimilarly,thefactorsusedtoreflectcurrentstateandappliedimportshareconditionsforscenariosarepresentedinTableB-32.TechnologicalFactorsweredeterminedasarelativemeasureoftheOECDScience,Technologyand88PerOECDScience,TechnologyandInnovationIndustryOutlook2015,scoresforUS,Brazil,ChinaandGermany(OECD2015a).Innovation(STI)industryoutlookforeacheconomy.88ThebenchmarkingundertakenbytheOECDincor-porates23differentmeasures,categorizedintothesixcoreareasofcompetency,perTableB-30below.ThescoresincludedinTableB-30reflectthenormalizedindexof2011performanceofeachnationalSTIsystemsrelativetothemedianOECDvalues,usinganindexmedianof100.TableB-30:OverivewoftechnologicalVRPbarrierfactorsandinputstocalculation88STICompetencyAreaUSGermanyBrazilChinaUniversitiesandPublicOutreach83.3113.325.031.7R&DInnovationinFirms112.5117.513.352.5InnovativeEntrepreneurship145.0113.3-10.0-50.0ICTandInteractInfrastructure141.387.56.7-8.3Networks,clustersandTransfers55.0112.546.762.5SkillsforInnovation125.0108.015.060.0Average(All)110.3108.716.124.7Average(Available)107.999.317.521.8HighestPossibleScore200200200200TechnologicalFactor0.540.500.090.11RegulatoryandaccessVRPbarrierfactorsRegulatoryFactorswerecalculatedbycombiningtwodifferentmetrics,accountingforspecificecon-omy-levelconditionsofthestudiedsectors:TheOECDTradeFacilitationPerformanceIndicator,andtheWorldBankEaseofDoingBusinessIndex.TheOECDTradeFacilitationPerformanceIndicatorsareasetof11differentindicatorsthatfortherangeofborderproceduresfrommorethan160countriesofvariedincomelevels,geographicalregionsanddevelopmentstages47.AsshowninTableB-31,theaverageindicatorscoreforeacheconomyisnormalizedforusewithinthecalculationoftheRegulatoryFactor.Averagetradefacilitationperformancecoversscoresacrossarangeofrelevantareasincluding,butnotlimitedto:Informationavailability;involve-mentofthetradecommunity;advancerulings;appealprocedures;feesandcharges;documents;automation;procedures;internalborderagencycooperation;externalborderagencycooperation;andgovernanceandimpartiality.IneconomieswherethereareVRP-specificconditionsthatreducetheeaseofVRPproducttrade,aProduct/SectorVRPTradeWeightingof<1.0isassumedfortheStatusQuoscenario(refertoTableB-31).TheWorldBankEaseofDoingBusinessIndexisarankingofeconomiesbasedontheireaseofdoingbusiness,withahigheaseofdoingbusinessrankingindicatingthattheregulatoryenvironmentismoreconducivetothestartingandoperatingofalocalfirm(WorldBank2015).TherelativeEaseofDoingBusinessisaconstructreflectingdifferent250Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyoperationalaspectsofbusinessinaneconomy,includingtheeaseofstartingabusiness,dealingwithconstructionpermits,gettingelectricity,registeringproperty,gettingcredit,payingtaxes,enforcingcontracts,tradingacrossborders,andseveralotherfactors.Foreachofthese,economiesarerankedrelativetooneanother,from1–19089PerOECDTradeFacilitationIndicators,2015scoresforUS,Brazil,ChinaandGermany(OECD2015b).90GiventheimpactofBaselConventiondefinitionsuponthemovementofcasestudyindustrialdigitalprintersbyexporters,PartiestotheBaselConventionhaveanadditionalVRP-relatedbarriertotradeofindustrialdigitalprinters,perinterviewswithindustryexperts.Assuch,theProduct/SectionVRPTradeFactorforGermany,BrazilandChinaaccountsforthisadditionalVRPbarrier.91PerTheWorldBankDoingBusiness,EconomyRankingsforUS,Brazil,ChinaandGermany(WorldBank2015).92EachnormalizedOECDAvg.TradeFacilitationIndicatorsscoreandnormalizedWorldBankEaseofDoingBusinessIndex(2015),wasmultipliedbytheProduct/SectorVRPTradeandVRPDomesticBusinessWeightings,respectively,foreachcasestudysector,andthendividedby2toenablecontinuednormalization.(reflectiveof190economiesforwhichthereissufficientdata).IneconomieswherethereareVRP-specificconditionsinhibitingtheengagementofbusinessesinVRP-relatedproductionactivities,aProduct/SectorVRPDomesticBusinessWeightingof<1.0isassumedfortheStatusQuoscenario(refertoTableB-31).TableB-31:OverviewofregulatoryandaccessVRPbarrierfactorsandinputstocalculationUSGermanyBrazilChinaOECDTradeFacilitationPerformanceAvg.Score(2015)891.71.61.51.4OutofPossibleScore2222Normalized0.850.800.750.70Product/SectorVRPTradeWeightingVehiclePartsTrade110.50.5IndustrialDigitalPrintersTrade9010.50.50.5HDOREquipmentPartsTrade110.50.5WorldBankEaseofDoingBusinessIndex(2015)9171412180OutofPossibleScore190190190190Normalized0.960.930.360.58Product/SectorVRPDomesticBusinessWeightingVRPVehiclePartsDomesticBusiness110.50.01VRPIndustrialDigitalPrintersDomesticBusiness110.50.01VRPHDOREquipmentPartsDomesticBusiness110.50.01FactorCalculation92RegulatoryFactor-VehicleParts0.910.860.280.18RegulatoryFactor-IndustrialDigitalPrinters0.910.660.280.18RegulatoryFactor-HDOREquipmentParts0.910.860.280.18AppendixB251Import-basedVRPbarrierfactorsToreflecttheimplicationsofVRPproductimportswithinsampleeconomiesunderthedifferentVRPbarrieralleviationscenarios,importshareofdemand()isincorporatedforeachscenarioasoutlinedinTableB-32.Itisimportanttonotethatimportshareofdemandisorganizedbyproductsector(IndustrialDigitalPrinters,VehicleParts,andHDOREquipmentParts),aswellasbyOEMNew,refurbished,andremanufacturedVRPs,asappropriateinthecontextofimport.Currentstate,orStatusQuoscenariovaluesforimportshareofdemandforOEMNewproductsarebasedondataforeachsampleeconomyfromtheObservatoryofEconomicComplexity(2015).Currentstate,orStatusQuoscenariovaluesforimportshareofrefurbishedandremanufacturedproductsarederivedfromtheUSInternationalTradeCommission(USITC)(2009,2012),theEuropeanRemanufacturingNetwork(ERN)(2015),andinter-viewswithindustryexperts.IntheStandardOpenMarketscenario,importshareofdemandforBrazil,ChinaandGermanyaresettotheStatusQuoimportshareofdemandoftheUS,asestablishedbytheconditionsofthisparticularscenario.Finally,intheTheoreticalHighscenario,theimportshareofdemandforGermanyisreturnedtoitsStatusQuostate,howeverthoseofBrazilandChinaareincreasedto20percenttoreflectconditionsforwhichtradeofVRPproductshasreachedagreatershareoftheproductsreachingthemarketplace.TableB-32:SummaryofimportshareassumptionsacrossglobalbarrieralleviationscenariosCurrentStateGlobalBarrierAlleviationScenariosStatusQuoStandardOpenMarketTheoreticalHighUSImportShare–Veh.PartsOEMNew21.4%21.4%21.4%21.4%ImportShare–Veh.PartsReman20.8%20.8%20.8%20.8%ImportShare–Ind.PrintOEMNew91.6%91.6%91.6%91.6%ImportShare-Ind.PrintRefurb21.9%21.9%21.9%21.9%ImportShare-Ind.PrintReman21.9%21.9%21.9%21.9%ImportShare-HDORPartsOEMNew35.1%35.1%35.1%35.1%ImportShare-HDORPartsRefurb53.0%53.0%53.0%53.0%ImportShare-HDORPartsReman53.0%53.0%53.0%53.0%GermanyImportShare–Veh.PartsOEMNew57.5%57.5%57.5%57.5%ImportShare–Veh.PartsReman15.8%15.8%20.8%15.8%ImportShare–Ind.PrintOEMNew61.5%61.5%61.5%61.5%ImportShare-Ind.PrintRefurb16.9%16.9%21.9%16.9%ImportShare-Ind.PrintReman16.9%16.9%21.9%16.9%ImportShare-HDORPartsOEMNew82.0%82.0%82.0%82.0%ImportShare-HDORPartsRefurb48.0%48.0%53.0%48.0%ImportShare-HDORPartsReman48.0%48.0%53.0%48.0%252Redefiningvalue–Themanufacturingrevolution.Remanufacturing,refurbishment,repairanddirectreuseinthecirculareconomyCurrentStateGlobalBarrierAlleviationScenariosStatusQuoStandardOpenMarketTheoreticalHighBrazilImportShare–Veh.PartsOEMNew12.8%12.8%12.8%12.8%ImportShare–Veh.PartsReman0.0%0.0%20.8%20.0%ImportShare–Ind.PrintOEMNew70.5%70.5%70.5%70.5%ImportShare-Ind.PrintRefurb0.0%0.0%21.9%20.0%ImportShare-Ind.PrintReman0.0%0.0%21.9%20.0%ImportShare-HDORPartsOEMNew3.4%3.4%3.4%3.4%ImportShare-HDORPartsRefurb0.0%0.0%53.0%20.0%ImportShare-HDORPartsReman0.0%0.0%53.0%20.0%ChinaImportShare–Veh.PartsOEMNew11.0%11.0%11.0%11.0%ImportShare–Veh.PartsReman0.0%0.0%20.8%20.0%ImportShare–Ind.PrintOEMNew99.6%99.6%99.6%99.6%ImportShare-Ind.PrintRefurb0.0%0.0%21.9%20.0%ImportShare-Ind.PrintReman0.0%0.0%21.9%20.0%ImportShare-HDORPartsOEMNew8.1%8.1%8.1%8.1%ImportShare-HDORPartsRefurb0.0%0.0%53.0%20.0%ImportShare-HDORPartsReman0.0%0.0%53.0%20.0%Finally,theimportandexportfactorsthatareheldconstantwithintheeconomy-levelmodelarepresentedinTableB-33.ThisoffersfurtherclaritywithregardtothedataandimplicationsofEquations11and12,whichaccountforthequantityandimplicationsoftheoriginofimportedproducts.Inadditon,assumptionsregardingthedestinationofdomesticproductionoutputs–eitherintothedomesticmarket,ortoexport–arealsopresentedTableB-33.TableB-33:ImportandexportfactorsheldconstantwithinmodelperiodConstantImportandExportFactorsDestinationofDomesticProductionOutputsImportOriginSharetoDomesticMarket(X)SharetoExport(1-X)ImportfromDevelopedEconomies(I(α))ImportfromDevelopingEconomies(I(b))USVehiclePartsOEMNew83.2%16.8%45.0%55.0%VehiclePartsReman90.6%9.4%23.8%76.2%IndustrialDigitalPrintersOEMNew51.8%48.2%40.0%60.0%IndustrialDigitalPrintersRefurb96.2%3.8%25.0%75.0%IndustrialDigitalPrintersReman96.2%3.8%25.0%75.0%HDOREquipmentPartsOEMNew51.6%48.4%45.7%54.3%HDOREquipmentPartsRefurb68.4%31.6%7.7%92.3%HDOREquipmentPartsReman68.4%31.6%7.7%92.3%AppendixB253ConstantImportandExportFactorsDestinationofDomesticProductionOutputsImportOriginSharetoDomesticMarket(X)SharetoExport(1-X)ImportfromDevelopedEconomies(I(α))ImportfromDevelopingEconomies(I(b))GermanyVehiclePartsOEMNew89.6%10.4%91.2%8.8%VehiclePartsReman89.6%10.4%23.8%76.2%IndustrialDigitalPrintersOEMNew44.3%55.7%59.9%40.1%IndustrialDigitalPrintersRefurb96.2%3.8%25.0%75.0%IndustrialDigitalPrintersReman96.2%3.8%25.0%75.0%HDOREquipmentPartsOEMNew15.3%84.7%71.5%28.5%HDOREquipmentPartsRefurb15.3%84.7%7.7%92.3%HDOREquipmentPartsReman15.3%84.7%7.7%92.3%BrazilVehiclePartsOEMNew98.4%1.6%50.7%49.3%VehiclePartsReman98.4%1.6%0.0%0.0%IndustrialDigitalPrintersOEMNew88.9%11.1%41.9%58.1%IndustrialDigitalPrintersRefurb98.8%1.2%0.0%0.0%IndustrialDigitalPrintersReman98.8%1.2%0.0%0.0%HDOREquipmentPartsOEMNew97.7%2.3%70.1%29.9%HDOREquipmentPartsRefurb97.5%2.5%0.0%0.0%HDOREquipmentPartsReman97.5%2.5%0.0%0.0%ChinaVehiclePartsOEMNew99.0%1.0%77.6%22.4%VehiclePartsReman100.0%0.0%0.0%0.0%IndustrialDigitalPrintersOEMNew8.0%92.0%66.5%33.5%IndustrialDigitalPrintersRefurb100.0%0.0%0.0%0.0%IndustrialDigitalPrintersReman100.0%0.0%0.0%0.0%HDOREquipmentPartsOEMNew96.4%3.6%75.9%24.1%HDOREquipmentPartsRefurb100.0%0.0%0.0%0.0%HDOREquipmentPartsReman100.0%0.0%0.0%0.0%25510ReportreferencesADEME.2014.Panoramadel’offrederéparationenFrance:Actualisation2014.Agrawal,VishalV,AtalayAtasu,andKoertVanIttersum.2015.“Remanufacturing,third-partycompetition,andconsumers’perceivedvalueofnewproducts.”ManagementScience61(1):60-72.Agrawal,VishalV,AtalayAtasu,andSezerÜlkü.2016.“Modularupgradabilityinconsumerelectronics:Economicandenvironmentalimplications.”JournalofIndustrialEcology20(5):1018-1024.Agrawal,VishalV,andSezerÜlkü.2012.“Theroleofmodularupgradabilityasagreendesignstrategy.”Manufacturing&ServiceOperationsManagement15(4):640-648.Allen,Tim,andAlanThomas.2000.PovertyandDevelopmentinthe21stCentury:Oxford.Allwood,JulianM.2014.“Squaringthecirculareconomy:Theroleofrecyclingwithinahierarchyofmaterialmanagementstrategies.”InHandbookofrecycling,445-477.Elsevier.Anderson,DavidM.2004.Designformanufacturability&concurrentengineering:howtodesignforlowcost,designinhighquality,designforleanmanufacture,anddesignquicklyforfastproduction:CIMpress.Ardente,Fulvio,andFabriceMathieux.2014.“Identificationandassessmentofproduct’smeasurestoimproveresourceefficiency:thecase-studyofanEnergyusingProduct.”Journalofcleanerproduc-tion83:126-141.Ashford,N.1993.“UnderstandingTechnologicalResponsesofIndustrialFirmstoEnvironmentalProblems:ImplicationsforGovernmentPolicy.”InEnvironmentalStrategiesforIndustry:InternationalPerspectivesonResearchNeedsandPolicyImplications,editedbyK.FischerandJ.Schot,277-307.Washington,DC:IslandPress.Atasu,Atalay,VDanielRGuideJr,andLukNVanWassenhove.2010.“Sowhatifremanufacturingcannibal-izesmynewproductsales.”CaliforniaManagementReview52(2):56-76.Atasu,Atalay,MiklosSarvary,andLukNVanWassenhove.2008.“Remanufacturingasamarketingstrategy.”ManagementScience54(10):1731-1746.B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