‘The circular economy must be a conscious choice’: in conversation with Walter Stahel

Walter Stahel is an author, keynote speaker, mentor, researcher and teacher, widely considered a pioneer of the circular economy. Walter is the author of several prize-winning academic papers and pioneering books including The Limits to Certainty (1989/1993), The Performance Economy (2010) and The Circular Economy, a user’s guide (2019). Walter Stahel is Scientific Committee Member of WRF’23 and we sat down with him to talk about the current state of the circular economy and how to further advance the transition towards a sustainable management of natural resources.

You have been a strong advocate of the circular economy since the 1970s, and a lot has happened since your 1977 report ‘The Potential for Substituting Manpower for Energy’ for the Commission of the European Communities.  What are the areas that you still see as under-explored or not yet fully understood in the circular economy conversation?

I think the global commons is something that in the last decade or 20 years has really got worse, if you look at space or oceans. We are overusing the global commons to a point where they become inoperable. The second point is that we have always talked about waste prevention, emissions and global warming, but we have not been fully aware of the anthropogenic mass problem, which is now bigger than the biomass. The problem with resource use is that it is very dissipative, which means that in order to produce 1 kilogram of something, you need to move a huge amount of earth or by-products that you don’t need. We have to find ways to fulfil needs without these huge rucksacks, as Friedrich Schmidt-Bleek called them. In the case of gold, for instance, it is 500,000 kg.

We can no longer afford this. If we continue this way, we are really pushing nature off the cliff and biodiversity with it. For both these two problems (global commons and new anthropogenic mass), nobody’s in charge, nobody governs it and most people and politicians are not aware of it. I think these are really the two fundamental changes since I started in the mid 70s.

We are overusing the global commons to a point where they become inoperable

What governance mechanisms or institutions do you think could help us meet these challenges?

Broadly taken, organizations could help governing the global commons, but if the process is blocked at the UN level, who would that be? This is what happened to the proposal to have an international law for space, including wavelengths, which goes back to 1992 and was never implemented because the United States blocked it.

With the issue of the new anthropogenic mass, we have a different sort of problem. In the industrialized regions we have an abundant volume of infrastructure and objects,  but in the less developed regions, people are still lacking basic infrastructure for health, education, and transport, which will have to be developed. As long as the distribution of resources is over the price mechanism, then obviously the industrialised countries can afford to buy and waste more than the people who live in the regions where resources are really needed.

So again, who would be the authority that would, for example, decide if it was more important to build bigger motorways in Germany or to build reliable transport routes in Africa? At the moment, the whole resource question is ruled by those who can afford it and then of course the North will always win against the South. It is a governance issue at the global level and we don’t have an authority for that. It’s the developing countries which need to build infrastructure for the basic needs of their population that should be given priority. But this would change the whole trade issue and the price issue of resources.

At the moment, the whole resource question is ruled by those who can afford it.

At the World Resources Forum, we have been diving into the topic of a fair international circular economy transition. One major issue concerns the effects of countries in the Global North shifting to a circular economy on partner countries which have been providing raw materials in the current globalised linear economy. What is your approach on this topic?

The circular economy is not business as usual, it’s a disruptive idea, and therefore it needs a conscious motivation and choice. Even in Europe, I’m not sure that we have a vision that is based on this kind of conscious choice. If you look at what happened this year with the energy supply, we have completely thrown out any question about global warming because the only important consideration has become to ensure energy supply security. And, again, that is not global governance, it is each nation for itself. The other issue is globalization versus intelligent decentralization. Globalization worked as long as everything worked according to schedule, just in time. How? Outsourcing production of materials and exploitation of resources. The big challenge is to have a holistic view that takes into account the different aspects of sustainability.

The big challenge is to have a holistic view that takes into account the different aspects of sustainability.

What about those countries whose economies currently depend on the extraction of raw materials?

For this type of countries, there is another disruptive or even revolutionary idea. Nation states that control these resources should license companies to mine, but the resulting molecules should remain property of the nation states. In this way, mining companies would act as a service industry to the nation states, which would then deal with the commercialization of these molecules and atoms. And they could, of course, just sell them, but then we would have the same problems of today: high volatility of prices. Otherwise, they could rent them out, which would provide a more constant income stream. It would also force the whole supply chain to adopt the same attitude, because if you rent molecules it means you have to give them back. So, if you put them in objects, you have to maintain the ownership of these objects.

This whole discussion on the recovery of atoms and molecules is connected to what you name in your recent book ‘Circular Economy – A User’s Guide’ as the Era of ‘D’. In this era, the objective is to maintain the highest value and purity of stocks of atoms and molecules. How is this applied to two materials as steel and plastics?

When you look at plastics, it is the expensive engineering plastics that can be depolymerized and re-polymerized, while for the cheap consumer plastics we do not have that ability, so we need to research into a new kind of plastic that can be really used in an eternal loop. We need basic science into circular chemistry, circular metallurgy, and circular ceramics.

Steel is used to manufacture a huge range of products. So, as long as we don’t have green steel, we cannot produce green products. The issue of green steel is central. There are several ways that have been researched to solve this problem, such as through green hydrogen, which implies green electricity to produce green hydrogen to produce green steel. But this means a revolution in the steel industry, because it will have to rely much more on collecting clean scrap sorted by the different alloys than on the mining industry. This means that a circular economy basically jeopardises the mining industry and the waste management industry. So, we already have two major players who are against the circular economy because it puts them out of business.

Couldn’t the mining industry and waste management industry also find new ways to deliver value in the circular economy?

Circular economy must be a conscious choice and we must find ways to convince all partners that they can still make a business out of it. This is easy for products that can be rented or sold as a service, but it’s much more difficult for the mining industry, for example, if the government switches to license to mine. And the same holds for waste managers, which are currently involved in the “green production” of cement through burning huge amounts of waste, which in Switzerland is imported from abroad. Is burning waste really clean production, when we should have no waste at all? But then, if we don’t have any waste, will cement production ever be low-carbon? In the future, innovation (by Holcim) into calcined clay cement may reduce the CO2-footprint of cement by 50%.

Circular economy must be a conscious choice, and we must find ways to convince all partners that they can still make a business out of it.

At the moment, everybody would like to be green and sustainable. That’s great, but we need to have a much more holistic view of what we can achieve in what domains. And then we need to be honest that there are limits and, in some areas, we will simply not be able to do it. To build infrastructure, in many cases we need cement and concrete. For buildings, we can probably switch to other materials, such as timber and steel. We need to be more selective in what materials we use. If there is only one material that can fulfil a certain function, then we shouldn’t hesitate to use it, but we should be more open and possibly not leave it again to the market prices which materials we use for what application. Currently, there is no holistic view that takes into account the governance issues and the optimal use with regard to the new anthropogenic mass issue. We have a huge challenge in front of us.

So the selection of materials at the design stage has a key role to play, right?

Just take the lithium-ion batteries. Now everybody talks about recycling. Well, recovering that lithium is great but there are many dissipative uses. You have two grams of lithium ions in each vape (electronic cigarettes). If you multiply that with the amount of production, you realise it’s about 10 tons annually of lithium that will never make it into recovery operations because people don’t realise it’s a product that contains valuable material. I don’t think we can educate the consumers to know all this, so we have to regulate the industry not to use these high-tech materials in disposable products because we will never be able to recover the atoms and molecules.

Coming to the era of ‘R,’ central to the circular economy, where are we standing in the implementation of R strategies (e.g. reduce, repurpose, repair, remanufacture)?

One issue is on the user-owner side. The Japanese have an old tradition of repairing things in such a way that the repaired object has more value than the new one. If they have a broken ceramic dish, they glue it together with a glue that contains tiny amounts of gold so that the newly repaired dish is actually much more interesting and valuable, also from an aesthetic point of view, than the new one. The same concept can be applied to textile. There is one company in Europe, which is now offering the owner-users the choice of whether it should be an invisible repair or a visible repair. I think that is an excellent approach because then you make the owners aware that they can show that this is repaired, that they are caring and looking after their belongings. This is on a personal level and I think we still have a lot to do to show people there are options and you can be proud to have something repaired or, as they say now, ‘re-loved’. Or pre-loved if one buys a ‘used’ object.ually of lithium that will never make it into recovery operations because people don’t realise it’s a product that contains valuable material. I don’t think we can educate the consumers to know all this, so we have to regulate the industry not to use these high-tech materials in disposable products because we will never be able to recover the atoms and molecules.

Looking at current trends in European cities, however, it often looks as if repair shops are getting less rather than more.

In the repair trade, the big problem is the cost of labour, because the objects are produced in countries like Vietnam or China with very low labour costs, but they are repaired in, say, Europe or even Switzerland, with very high labour costs.  If we want to counteract the labour cost issue, we have to stop taxing labour. In most places, however, labour taxes count for over 50% of total state income. Now it’s obvious that if we drop this tax, labour becomes much cheaper for repair and remanufacturing. But where do the States get the money from? They would have to tax resource consumption, waste, and emissions. This would be another disruptive change, because manufacturing would become much more expensive, even manufacturing abroad, because we would tax the objects that are imported in the same way.

Would this be an opportunity to also foster ‘remanufacturing’, which you define as the most advanced stage of the era of ‘R’?

We are very bad at selling the knowledge of remanufacturing. For example, remanufacturing diesel engines is about 40% cheaper than manufacturing new engines. For a manufacturer, this doesn’t sound very interesting. But if you tell the manufacturer that the remanufacturing plant has a return on investment that’s five times the ROI of a manufacturing plant, that’s much more interesting for them. It means they can actually be more profitable by producing less. When Caterpillar in 1995 started to remanufactured diesel engines as a pilot, they realized it was possible and even financially feasible, but it would be much more profitable if the engines were designed from the beginning for remanufacturing. So we need a holistic view in this small universe on how we can make sure that everybody wins, aware that this is a conscious decision to maintain assets and not simply a broken engine that goes to waste.

We are very bad at selling the knowledge of remanufacturing.

Shifting taxes from labour to resource use is something you and others have been advocating for a long time already. Why is it not happening?

If this was the case, the whole national economy based on GDP growth and consumption as a measure of success, would need to be rethought. Rethinking economics is something that economists hate, because as soon as you switch, problems are created. At the moment, we have something that more or less works for most of us. But if we start changing something, it’s like a cardhouse, then the whole thing might collapse, and you would have to rebuild it. So, we first need the vision of what the new cardhouse would look like, before we demolish the old one. At the moment, nobody has a vision of what 2050 would look like. Everybody says it will be zero carbon, but as I said, with the issues of the global commons and the new anthropogenic mass, carbon may actually not be the topic that saves the world, that is mankind’s existence on this planet.

Does the vision for 2050 imply everything used as product-as-a-service, or will we still continue selling things in the economy of the future?

If you are willing to care for your belongings, then buying textiles, cars or other products makes sense. Products-as-a-service often suffer from a problem of moral hazard, and one of the striking examples is e-scooters in cities. If they’re owned by individuals, they have a lifespan twice as long as those that are free floating, which are open to vandalism and abuse. On the other hand, when somebody wants to have new stuff all the time, such as handbags, jewellery, or accessories, then the object as a service is much more feasible and sustainable. You can have a new handbag every week, you are always fashionable, and you don’t create derelict handbags.

I don’t think we can say that one solution is better than the other. If you own something, you normally care for it, or you can be hopefully educated to care for it. If you use somebody else’s object, then people normally don’t feel concerned. And this can kill the best intentions. This is why the autolib e-car sharing system in Paris collapsed. It was perfect, except that they hadn’t calculated that somebody needs to clean and repair these cars because the users will not care for them, and will refuse to rent dirty cars.

The other variable is money. If you buy something that is of good quality, it costs money, but then you can extend the service life through repairs, reconditioning and remanufacturing for a long time. If you rent something for 20 years, it’s definitely much better for everybody involved, but the problem is after 20 years. If you are for example a school renting a carpet, and after 20 years the Ministry of Education has no money, then your carpet disappears. Whereas if you had bought the same carpet 20 years ago, you would have a carpet dirty and in a bad condition, but you would still have a carpet. Especially with public procurement, nobody knows what money will be available in 20 years’ time so public entities often prefer to buy low quality stuff that is not really sustainable, but it gives them the security that they will have it. So again, there are very different topics that we have to take into consideration if it’s better to buy or to rent or lease.

Let’s conclude with the theme of WRF’23, Rethinking Value – Resources for Planetary Wellbeing. What do you think we need to urgently rethink?

We don’t want to go to a planned economy like it was in the Soviet Union, for example, because that is not efficient. There are certain areas we cannot leave to the free market because they will lead to abuse. So I think what we need on a global, national, and regional level is a discussion in which direction we should develop. Sufficiency is one of the three conference tracks of WRF’23 and we should learn to distinguish between needs and wants.  Everybody should have access to the resources to satisfy their basic needs, but we should accept that we may have to give up some of our wants. There is enough stuff for a man’s needs, but not for a man’s wants (Mahatma Gandhi). We have to find ways to make available the resources for the people who need them. And convince the others that they can live happily by giving up some of their wants.

Walter Stahel

Walter R. Stahel is the former Head of Risk Management at the Geneva Association (Switzerland), a respected business advisor, and the founder and director of the Product-Life Institute (Geneva, Switzerland) Europe’s oldest sustainability-based consultancy and think tank. Stahel’s pioneering research and collaborative work in the field of sustainability stretch back several decades – firmly establishing him as one of the subject’s founders. Currently, he is visiting professor at the Faculty of Engineering and Physical Sciences at the University of Surrey (UK) and was guest lecturer at Université de Montréal and the graduate department of Tohoku University (Japan). An alumnus of ETH, the Swiss Federal Institute of Technology (Zurich, Switzerland), Stahel is the author of several prize-winning academic papers and pioneering books including The Limits to Certainty (1989/1993), written with Orio Giarini and published in six languages, The Performance Economy (2010) and The Circular Economy, a user’s guide (2019).

Interview by Emanuele Di Francesco, World Resources Forum