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Circular Procurement Playbook Highlights Circular Economy Benefits
- 1. A Circular Procurement Playbook Cuno van Geet, Rijkswaterstaat, Netherlands & Mervyn Jones, SGR Ltd, UK 23 May 2018
- 3. Why the need for a change? 80 100 120 140 160 180 200 1996 1998 2000 2002 2004 2006 2008 2010 2012 Input prices Output prices Manufacturing input (energy & commodities) and output prices 2000 = 100 90% 30% Source: ONS; World Economic Forum (2014) Towards the Circular Economy: Accelerating the scale-up across global supply chains
- 4. Why a circular economy?
- 5. Why economy?
- 6. Measuring economic outcomes • Makes the business case to stakeholders: link to Morning Session https://www.sustainablepurchasing.org/summit18/sessions/making-the-business-case-measuring-the-economic-outcomes-of-sustainable-purchasing • Builds the evidence base for future activity and policy • Forecasting as well as backcasting • Reporting return on investment Payback typically 2-3 years +ve NPV ROI >100:1
- 7. Rethinking our approach Use DisposeBuy Waste Products Circular procurement Waste contracts Resources Waste User Waste manager Supplier Product as a service Buy – sell back Buy - resell
- 8. Revenue models • Lease • Rental • Pay-per-use • Sell-buy-back • Product-service combination + Risk-benefit sharing SOURCE: IMSA (2015)
- 9. Five circular revenue models HIGH(ER) RESIDUAL VALUE SELL-BUY BACK (B2C) LOW(ER) RESIDUAL VALUE PRODUCT/SERVICE COMBINATION SHORT(ER) TECHNICAL LIFESPAN LONG(ER) TECHNICAL LIFESPAN PAY- PER-USE LEASE ‘USE’ CAN BE EASILY DEFINED ‘USE’ CANNOT BE EASILY DEFINED SELL-BUY BACK (B2B) RENT SOURCE: COPPER8 (2017)
- 10. EU benefits of circular economy Sources: EU, Welsh Governemnt, Ellen McArthur Foundation, Club of Rome, TNO, WRAP European Union € 324 ($385) billion (www.rebus.eu) The Netherlands €7,3 billion 54,000 jobs Sweden 3% trade balance 15,000 jobs United Kingdom ~€30 billion 200,000 jobs Denmark GDP 0.8–1.4% 7,000-13,000 jobs Finland GDP 0.33-0.66% 15,000 jobs France GDP 0.33-0.66% 100,000 jobs Spain GDP 0.33-0.66% 100,000 jobs Wales ~€2 billion 30,000 jobs
- 11. Your views on the circular economy Ice breaker
- 12. ‘The ‘best’ circular option? Exercise or C2C Lifespan
- 13. ‘The ‘best’ circular option? or Low Energy Asphalt Asphalt with high % recycled materials Exercise
- 14. ‘The ‘best’ circular option/ or Mushrooms cultured on local collected coffee grounds Organic/EKO mushrooms Exercise
- 15. Circular value creation Four main types of value creation: • Sourcing value Direct - financial Indirect – resource efficiency • Environmental value • Customer value • Informational value …but also other types including social value
- 16. Circular procurement is.. an approach to delivering sustainability goals that recognises the role that public bodies can play in supporting the transition towards a circular economy. Circular procurement can be defined as the process by which public authorities purchase works, goods or services that seek to contribute to closing energy and material loops within supply chains, whilst minimising, and in the best case avoiding, negative environmental impacts and waste creation across their whole life-cycle.
- 17. Multiple policy drivers Drivers Categories Sustainable materials management Waste prevention Design & materials choice Utilisation & lifetime optimisation Repair, reuse & remanufacturing Recycling & end-of-life Business Cost reduction Servicisation Value networks Collaborative Strategies Textiles & clothing Electrical & ICT Furniture Food Construction Transport Packaging Environmental Carbon, conservation, waste, raw materials, emissions, energy efficiency Production & consumption Process efficiency, consumption patterns Economic Cost savings, growth Social Employment, skills, civil society Health Toxicity, risk, well- being, quality of life Circular business models sourcing use disposal
- 18. Circular procurement depends on policy translated into practice through clients and budget holders. Circular clients Circular procurement needs circular clients!
- 19. Circular procurement opportunities OPTIMISE PRODUCT LIFETIMES REDUCE PROCESS WASTE ENCOURAGE RECYCLINGIMPROVE COLLECTIONS ENCOURAGE REUSE INVEST IN INFRASTRUCTURE DESIGN BETTER PRODUCTS DEVELOP MARKETS FOR RECYCLED MATERIALS
- 20. Circular procurement case studies Cuno van Geet
- 21. Caterpillar remanufacturing Cat REMAN | The Remanufacturing Process
- 22. 22 The Netherlands • 16,7 million Inhabitants • 40.000 km2 • 12 provinces • 410 Municipalities • $87 (€73) billion public procurement • Downstream large European rivers • Surrounded by industrialized areas of Belgium and Germany
- 23. 23 20 March 201423 10-05-2012 Rijkswaterstaat, Netherlands Main road network 1925 miles Main waterways 4970 miles Main watersystem 40390 miles founded in 1798
- 24. Workwear & textiles Sustainable Global Resources Ltd 24 • Encourages innovation in design • Reduces carbon impacts • Reduces toxicity • Increases durability • Increases reuse and recycling at end of life • Rawicz Hospital, Poland – nurses Uniforms • Herning, Denmark – emergency services uniforms • Rijkswaterstaat, Netherlands – lock-keepers uniforms • Nurses uniforms – Wales, UK
- 25. ICT & electricals Sustainable Global Resources Ltd 25 • Design for repair • Recycled content • Multiple REBMs - e-recovery, take-back, pass/sell on • Lifetime optimisation • CO2 reduction • End of Life – resource security • Utrecht, Netherlands – IT take- back; secure reuse • Schiphol Airport, Netherlands – lighting as a service • BZK, Netherlands – e-recovery, IT-donations • UniGreenScheme, UK - Lab equipment re-sale and re-use
- 26. Construction Sustainable Global Resources Ltd 26 • Design for deconstruction • Recycled content • Multiple REBMs • Public private partnerships • CO2 reduction • End of Life - closing material loops • Refurb & maintenance • Cost savings • Brummen, Netherlands - circular Town Hall • Netherlands – DBFM, Rapid circular contracting • BAR HQ, Portsmouth, UK – Whole Life Costing & BIM • Viaduc de Millau, France - BFOT
- 27. Transport Sustainable Global Resources Ltd 27 • Bremen, Germany - public / private car sharing scheme • Barcelona, Spain - electric vehicles • Dutch Government – car sharing & leasing models • REBM - Mobility as a service • Lower carbon footprint • Improved air quality • Innovation – public-private partnerships
- 28. Food & catering Sustainable Global Resources Lt • Waste prevention • Storage & preparation • Plate waste • Reuse • Recycling - composting • Nutritional & healthy diets • Ghent, Belgium - catering contracts • Torino, Italy - healthy sourcing • Copenhagen, Denmark - organic • UK Public sector catering, waste prevention, HAFS • Rijkswaterstaat, Netherlands - food waste recycling
- 29. Packaging • Performance as a priority • Packaging contains, protects, transports, labels, markets and preserves • Grocery accounts for around 60% of UK packaging usage • Substantial improvements of primary product packaging by right-weighting in metal, glass and plastic containers • Specify recycled content in packaging where appropriate
- 30. 30 Furniture & FM Sustainable Global Resources Ltd 30 • Cambridge NHT, UK – hospital beds • ProRail, Netherlands – furniture and carpeting • London, UK – office mobile asset management • Public Health Wales, UK – desk reuse & repurposing • REBM – furniture as a service • Resource efficient design • Circular products & C2C • Lifetime optimisation • Reuse opportunities • SME opportunities • Community benefits
- 31. Furniture – 486 items Carpets – 1213 m2 – 44% reuse & recycling Impacts – 33 tonnes CO2e • 20kg saving per chair – 10.5 tonnes landfill diversion – 6 new jobs 3 temporary jobs – Transportation ↓77% Circular furniture procurement - PHW
- 32. Procurement & products Mervyn Jones
- 34. Why? • Helps to select product groups for circular procurement pilots with high opportunities for success • A successful pilot helps scaling up to more pilots Various ways • How to determine high-potential product group: o complexity - lifetime o spent - risk o risk - scope o Scope - influence Selecting high-potential product groups
- 35. Well-suited products for circular procurement: o Average product complexity o Average technical lifetime Product complexity and technical lifetime PRODUCT COMPLEXITY TECHNICAL LIFETIME THE HIGHER THE PRODUCT COMPLEXITY, THE HARDER TO RE- USE EXISTING MATERIALS AND COMPONENTS LOW COMPLEXITY AND LOW TECHNICAL LIFETIME? RE-USE ON A MATERIAL LEVEL THE LONGER THE TECHNICAL LIFETIME, THE HARDER TO CLOSE THE CIRCLE AFTER THE PRODUCT LIFETIME
- 36. Exercise What are the high-potential product groups for your organisaton? Spend • How big is your market? Risk • What level of risk does this category pose? Scope • What scope have you to improve sustainability? Influence • What influence have over this amrket and supply chain?
- 37. PRODUCT COMPLEXITY TECHNICAL LIFETIME Well-suited for circular procurement: o Average product complexity o Average technical lifetime Product complexity and technical lifetime
- 38. The categories shown represent 42% of embodied product emissions. 7% 22% Designing out waste hotspots Product groups circled green scale well and are significant Product groups circled red indicate impact and require more research All product groups shown contribute more than 5% to UK hotspots.
- 39. Products – summary of options • Waste prevention options • Design of products - recycled content - ease of repair, reuse & recycling • Utilisation and functional life optimisation - repair and reuse options - failure rates • Disposal - take back, remanufacture - sell-on - recycling
- 41. What next? 41 Curtis Bok house by Wharton Esherick. Gulph Mills, Pennsylvania, 1935
- 42. Mervyn Jones Sustainable Global Resources, UK mervyn@sustainableglobalresources.co.uk Cuno van Geet Rijkswaterstaat, Netherlands cuno.van.geet@rws.nl Thank you Further information from:
Notes de l'éditeur
- We are becoming more familiar with the concept of Circular Economy through the championing by organisations such as the Ellen MacArthur Foundation and the implementation programmes of organisations like WRAP in the UK and the Rijkswaterstaat in the Netherlands. The transition from traditional linear produce-consume-dispose models potentially has multiple benefits in terms of reducing costs and impacts (environmental & social) from production and consumption. National policy benefits go hand in hand with organisational benefits: reducing commodity price pressures Resilience - limiting exposure to price volatility & reducing country/availability risks developing domestic, circular industries that reduce dependency on imports This slide shows that since 2003 the resource limits and rapid growth in global demand erased the decline in commodity prices achieved over the previous century (see Figure 2). Commodity price volatility is now a key economic concern. However, this does not imply that future commodity price increases are inevitable. However they and exposure to them (e.g. volatility) are inevitably more likely for both producers and consumers unless we adopt different strategies for growth.
- A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life. It also provides resilience through: Sustainable consumption & production Decoupling resources from growth Market driven – creates wealth, jobs and growth Delivers accountability at all levels Meeting future demand A study conducted by McKinsey1 shows that the circular economy offers major opportunities for Europe. The circular economy could generate between €300-350 billion in material savings alone in Europe, which could also lead to the creation of over 2 million new jobs2. To avoid moving the problem along the chain as so often happens. This is why municipalities are so important in driving the approach and why they stand to benefit substantially from adopting a circular approach. Real wages have been stagnant or falling for several decades. This has resulted in intense competition among companies selling products and services, and in an unfavorable market position for environmentally or socially benign products (these often cost more). The 3 billion new customers entering the market in the next 20 to 30 years will put an enormous pressure on the resource base if we continue along our current, linear ways.
- Aim: Introducing five revenue models Work form: Plenary presentation To dicuss: Five revenue models (as shown on slide)
- Pragmatically, it also depends on the view of the city and / or sector and /or organisation, i.e. a workable definition with rationale and reference to the project definition
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- Available time: 20 minutes Aim: Creating an overview of high-potential product groups per organisation Work form: Create duos per participating organisation. Participants brainstorm – per organisation – on high-potential product groups Participants share their high-potential product groups with the group
- WRAP study: Environmental Assessment of Consumer Electronic Products, 2009 http://www.wrap.org.uk/recycling_industry/information_by_material/electrical_and_electronic_products/index.html UK Sales data from GFK Jan-Dec 09 - 36” LCD TV = 9.09m units sold (32.1b MJ total) Other data for products spanning Q4 2008-Q3 2009 Mobile = 27.1m sold (4.8m MJ total) Lawn strimmer = 398k sold (4.4m MJ total) laptop computer = 6.2m sold (8.4m MJ total) Washing machine = 2.5m sold (8.5m MJ total)