A massive shift is occurring in the green automotive sector as more and more companies are starting to reconsider traditional linear models in favour of the economic and environmental benefits of a circular economy. Let’s have a look a circularity 101.
By Carter Hammett
The automotive industry is undergoing a massive shift towards green initiatives that focus on sustainable practices driven by government regulations, a more enlightened consumer and a neverending barrage of environmental concerns. While the automotive sector contributes up to 10 per cent of industrial emissions, in recent years a slew of eco-friendly practices have been introduced with the goal of reducing carbon emissions. Green automotive practices are playing an emerging yet critical role in the future of sustainable vehicles.
One of these is the growing awareness of the circular economy (CE). In relation to cars, The World Economic Forum (WEF) describes CE as a “shift from the take-make-dispose’ model to one focused on maximizing vehicle lifespan, remanufacturing parts and recycling materials like steel and battery metals. This approach reduces waste and carbon emissions while boosting profitability, aiming for a sustainable closed looped system for manufacturing.”
Indeed, with our current models and throwaway culture, we put incredible strain on our public health, our ecosystems and communities. We operate within a linear economy which starts as resource exploitation, ending as something to be disposed of.
In a circular economy, the process is bombarded by the six R’s: retain, recover, refurbish, remanufacture, repurpose and/or recycle. A circular economy asks us to consider our resources and determine better ways to use them in ways that benefit both the economy and the environment.
With this mindset, resources and materials are kept in circulation over a longer period of time, allowing investment to be made for recycled products which can then be repurposed and used to create optimized items once more.
According to sources like rematec.com, customers benefit from lower costs due to the fact that remanufactured parts are more cost- effective than originals. Furthermore, the automotive supply chain needs to observe several variables in order to reduce pollution. A sampling of these include, well-to-wheel emissions, reduction of waste disposal due to replacement parts, particulate matter released from brakes and tires and reduction of CO2 emissions.
One area that Canada excels at is in automotive recycling and dismantling. The Automotive Recyclers of Canada (https://autorecyclers.ca) states that up to 80% of end-of-life weight is recovered, including both plastics and metals for reuse. ARC also provides quality recycled OEM parts thereby cutting the need for material extraction.
Key examples of Canada’s automotive circularity include component remanufacturing including engines, clutches and alternators, thereby extending their lifespan while cutting waste. Canada also plays an important role in dismantling with advanced methods in digital inventories and fluid recovery.
Another area of growth is automotive remanufacturing. Canada’s parts manufacturing sector grew to over $10 billion in GDP in 2023. Investment in auto remanufacturing is a key area of growth as part of the federal $25 billion investment since 2020.
So, when a part like an engine, powertrain or battery is damaged or has reached its end-of-life, used parts acquire an extended life through the magic of remanufacturing. These parts are often better than new since companies are able to incorporate quality upgrades into the new components. ARC claims there is virtually no difference to the remanufactured pieces and that it takes 80% less energy to remanufacture a component than it does to produce a new one.
The average Canadian keeps their car for up to 11 years. This is a massive opportunity for Canadian remanufacturing companies since an increase in demand for spare parts will naturally evolve out of this. From a green perspective, remanufacturing is an excellent concept since steps like material extraction, along with material and parts manufacturing, are substantially reduced through the art of manufacturing.
Other key circular economy examples include innovative design which incorporates materials that are easier to separate, reclaim and recycle at end-of -life. Another example focuses on a shift towards vehicle sharing and service-based models that maximize the so-called “usage intensity” of trucks and cars. Still another variable is the fact that more companies are starting to remanufacture parts which create more affordable choices instead of new parts.
The World Business Council for Sustainable Development (wbcsd.org) states a circular economy substantially reduces our carbon footprint from production, garbage and landfill while increasing profits on a per- vehicle basis by up to 20 times due to interventions like remanufacturing and extending life cycles.
It all sounds good in theory but there are a number technical, regulatory and cost barriers, especially in Canada, where high costs of battery recycling, a reliance on OEM parts over remanufactured ones and splintered, provincially-specific Extended Producer Responsibility (EPR) policies continue to cause irregularity and slow a national strategy down to a glacial pace..
The Council of Canadian Academies states that waste management, is a provincial responsibility so there is no harmonization between provinces and differing time lines vary from province-to-province.. This affects national adaptability, especially when it comes to EV batteries. On the same topic, end-of-life battery management costs are often prohibitive since they are driven by logistics and distribution costs.
There’s also a lack standardized data available on the management of EV batteries, making it expensive to recycle and transport them efficiently.
Despite these issues, Canada has made some notable progress in specific areas, especially in the high diversion rate for EOL tires.
On a global level, meanwhile The World Economic Forum has in recent years introduced the Circular Cars Initiative (CCI) which is hastening the change over to circularity, along with the cooperation of 30 global value chain players.
To date decarbonization has largely focused on electrification but emissions exist within vehicle materials as well, and this will gradually become more important as evidence-based data becomes more accepted. Certain circular practices like vehicle sharing, remanufacturing and smart charging are proving themselves to be effective when lowering economic and environmental impact.
Creating business value from circularity is proving itself a challenge across al all sectors and this requires greater industry commitment along with a cross-pollination of partnerships and collaboration to create real corporate buy-in and therefore real impact. But with a global chorus of voices, policies and community pressure, the shift to a global automotive circular economy may be closer than we think.