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Circular Approach Can Cut Automakers’ Carbon Intensity 75%, Resource Consumption 80%

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  • Feb 3, 2021

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A circular economy approach to auto manufacturing could cut the sector’s per-passenger life cycle carbon emissions by 75% and its “non-circular” resource consumption 80% while driving “transformative solutions for the automotive industry,” write two consultants from Accenture and one executive from the World Economic Forum in a recent post for the WEF blog.

“The automotive industry is dramatically overshooting its estimated carbon and resource budgets,” write Accenture’s Wolfgang Machur and Alexander Holst and the WEF’s Christoph Wolff. “At the same time, car-based mobility is set to grow globally by around 70% by 2030 (both in terms of passenger kilometres and predicted vehicle stock in a business-as-usual use scenario).”

So while major manufacturers begin setting ambitious targets to decarbonize their operations and electrify their products, “it becomes clear that it will take more than phasing out the combustion engine to drastically reduce carbon emissions. It will be critical to leverage circular economy strategies for transforming products, as well as the way those products are used.”

The three authors say new ways of doing business in the auto industry are beginning to emerge, with more online sales, shorter lease periods, most materials in a vehicle now recyclable, and more cars “built to last and to be repaired”. But a recent Accenture study found there’s much more to be done to minimize the industry’s lifetime carbon emissions and resource consumption, aiming for full circularity by 2035 and what the consultants call “net positivity in the system” by 2040.

“We need to raise our ambitions on circularity and build a new automobility ecosystem that seeks not merely to do less harm but rather to enable new sustainable opportunities,” said Machur, manager of Accenture Strategy’s sustainability practice.

The post points to Renault as an automaker that plans to phase out new car manufacturing at its oldest plant in Flins, France, then transform the site into a “re-factory” operating at every stage of the vehicle life cycle. “Extending vehicle lifetime, providing a second life for parts, and recycling as well as new innovations will be at the core of these activities,” said Jean-Philippe Hermine, the company’s vice-president of strategic environmental planning. “With the re-factory, we are also reaffirming our industrial footprint in France and are working with our unions to maintain the jobs that were originally dedicated to car manufacturing.”

Accenture recommends a series of process steps to make that kind of transition work:

• Adopting a circularity framework that pushes beyond “doing less harm” to drive toward a truly sustainable global economy;

• Setting the right incentives for circularity by realigning a company’s profit motive “away from selling products towards selling mobility and other services”;

• Fostering circular vehicle design, life cycle management, and end-of-life processing with new data standards, reporting frameworks, and transparency measures;

• Piloting “radical solutions” that will help “leapfrog” today’s product development cycles;

• Securing policy support for systemic transformation.

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