INTERVIEW WITH PROFESSOR WALTER R. STAHEL “THE PERFORMANCE ECONOMY”
PERFORMANCE ECONOMY
Walter R. Stahel (born June 5, 1946) is a Swiss architect, graduating from the Swiss Federal Institute of Technology Zürich in 1971. He has been influential in developing the field of sustainability, by advocating 'service-life extension of goods - reuse, repair, remanufacture, upgrade technologically' philosophies as they apply to industrialized economies. He co-founded the Product Life Institute in Geneva, Switzerland, a consultancy devoted to developing sustainable strategies and policies, after receiving recognition for his prize winning paper 'The Product Life Factor' in 1982. His ideas and those of similar theorists led to what is now known as the circular economy in which industry adopts the reuse and service-life extension of goods as a strategy of waste prevention, regional job creation and resource efficiency in order to decouple wealth from resource consumption, that is to dematerialize the industrial economy.
The circular economy has been adopted by the state-owned-and-run China Coal industry as a guiding philosophy. In the 1990s, Stahel extended this vision to selling goods as services as the most efficient strategy of the circular economy. He described this approach in his 2006 book “The Performance Economy”, with a second enlarged edition in 2010 which contains 300 examples and case studies. He currently works closely with the Ellen MacArthur Foundation on further promoting his ideas with economic actors.
In 2005, Stahel was nominated as member of the "Consumer Commission" of Ministerprasident (PM) Oettinger, head of the Government of Baden-Wuerttemberg, Germany, and heads its section on sustainable development. In 2007 he was appointed to the Editorial Board of the Chinese Journal of Population, Resources and Environment. Stahel has been serving in a number of functions for the European Commission. From 1988 to 2014, he was Head of Risk Management Research of The Geneva Association, a think-tank of the world insurance industry. In 2005, Stahel was nominated Visiting Professor at the Faculty of Engineering and Physical Sciences of the University of Surrey at Guildford. On 1 November 2012, he was awarded an honorary degree award of Doctor of the University (DUniv) by the same university.
Later in November 2012, Stahel was nominated Full Member of the Club of Rome, based in Winterthur. In 2016, he was nominated as the first Visiting Professor of Institut EDDEC (Environnement, Développement Durable et Economie Circulaire), a joint academic institution of Université, HEC and Polytechnique de Montréal. On 3 May 2016, he was awarded a Doctorate honoris causa by the Université de Montréal.
You have been defending for a long time the concept of the circular economy as the basis of a more sustainable society. Thus the circular economy, says: "is one that is restorative and regenerative on purpose, and that seeks to ensure that products, components and materials maintain their maximum utility and value at all times, distinguishing between technical and biological cycles. It is conceived as a continuous positive development cycle that preserves and improves natural capital, optimizes resource yields and minimizes system risks by managing finite reserves and renewable flows. "
Walter R. Stahel (born June 5, 1946) is a Swiss architect, graduating from the Swiss Federal Institute of Technology Zürich in 1971. He has been influential in developing the field of sustainability, by advocating 'service-life extension of goods - reuse, repair, remanufacture, upgrade technologically' philosophies as they apply to industrialized economies. He co-founded the Product Life Institute in Geneva, Switzerland, a consultancy devoted to developing sustainable strategies and policies, after receiving recognition for his prize winning paper 'The Product Life Factor' in 1982. His ideas and those of similar theorists led to what is now known as the circular economy in which industry adopts the reuse and service-life extension of goods as a strategy of waste prevention, regional job creation and resource efficiency in order to decouple wealth from resource consumption, that is to dematerialize the industrial economy.The circular economy has been adopted by the state-owned-and-run China Coal industry as a guiding philosophy. In the 1990s, Stahel extended this vision to selling goods as services as the most efficient strategy of the circular economy. He described this approach in his 2006 book “The Performance Economy”, with a second enlarged edition in 2010 which contains 300 examples and case studies. He currently works closely with the Ellen MacArthur Foundation on further promoting his ideas with economic actors.
In 2005, Stahel was nominated as member of the "Consumer Commission" of Ministerprasident (PM) Oettinger, head of the Government of Baden-Wuerttemberg, Germany, and heads its section on sustainable development. In 2007 he was appointed to the Editorial Board of the Chinese Journal of Population, Resources and Environment. Stahel has been serving in a number of functions for the European Commission. From 1988 to 2014, he was Head of Risk Management Research of The Geneva Association, a think-tank of the world insurance industry. In 2005, Stahel was nominated Visiting Professor at the Faculty of Engineering and Physical Sciences of the University of Surrey at Guildford. On 1 November 2012, he was awarded an honorary degree award of Doctor of the University (DUniv) by the same university.
Later in November 2012, Stahel was nominated Full Member of the Club of Rome, based in Winterthur. In 2016, he was nominated as the first Visiting Professor of Institut EDDEC (Environnement, Développement Durable et Economie Circulaire), a joint academic institution of Université, HEC and Polytechnique de Montréal. On 3 May 2016, he was awarded a Doctorate honoris causa by the Université de Montréal.
QUESTIONS TO PROFESSOR WALTER R. STAHEL FOR THE OSICO BLOG
You have been defending for a long time the concept of the circular economy as the basis of a more sustainable society. Thus the circular economy, says: "is one that is restorative and regenerative on purpose, and that seeks to ensure that products, components and materials maintain their maximum utility and value at all times, distinguishing between technical and biological cycles. It is conceived as a continuous positive development cycle that preserves and improves natural capital, optimizes resource yields and minimizes system risks by managing finite reserves and renewable flows. "
QUESTIONS
What do you think about this new approach and paradigm, which breaks completely over our traditional way of acting, both economically and socially?
A circular society driven by poverty or scarcity is as old as mankind, it has always existed in society, and will continue to allow people to survive in less developed countries. But this is often a non-monetary approach, a circular society more than a circular economy.
In regions characterised by societies of affluence, circular economy has suddenly become a ‘must have’ issue in politics and industry, comparable to sustainable development some years ago. There is thus a danger that the objective of the concept – to maintain the value and utility of stocks of natural, human, cultural and manufactured assets for the longest period of time possible – will be diluted or replaced by green washing.
Economists trained on industrial economics of creating value added through production flows are obviously at a loss with this concept of maintaining value by managing the quality and quantity of stocks of objects and molecules.
In affluent societies, we have a new challenge to create a circular economy driven by motivation. But many politicians and economic actors fear changes that are seen as imposed from external sources, the not-invented-here syndrome. Extending the service-life of objects, be they infrastructure, buildings, investment or consumer goods, will considerably reduce the production volume of new replacement objects and the end-of-life waste volumes, but is contrary to mainstream economic thinking.
What main objectives pursues the model that represents the circular economy?
A circular industrial economy of manufactured objects and materials is about economics and innovation. It can be actively stimulated through technologic, social and policy innovation and thrives on science and technology research to increase the service-life of objects and molecules, which increase its competitiveness. A shift to a circular economy will create local jobs of all skill levels and re-industrialise regions, as well as drastically reduce CO2 emissions (by 66% on a national level), the consumption of energy, material and water resources, and end-of-pipe waste volumes.
In a circular industrial economy, opportunities for innovations include novel reusable materials, reprogrammable components and new fields of research such as circular chemistry, as well as technologies to clean up the legacy waste of the last fifty years, such as plastic in the oceans. The objective is to find de-bonding technologies which enable preserving the economic value of material stocks by recovering pure atoms and molecules, to replace waste management strategies of recycling. In parallel, social innovation is needed to motivate owner-users of objects to focus on enjoying the use of, and caring for, their assets, rather than replacing them. Personal motivation of owner-users – you and me – to develop a personal relationship with objects can greatly extend the service-life of objects and enhance people’s quality of life.
What do you think are the real obstacles that the circular economy has so that it can deploy all its effectiveness in our economy and society?
The circular economy is quite and invisible: marketing and publicity play a small role because supply and demand meet, or find each other, locally. But this is an obstacle in the promotion of the opportunities offered by the circular economy, which are only known to SMEs and fleet managers doing it. Spreading the knowledge of these economic and technological opportunities to all class rooms and board rooms is one of the challenges in promoting the circular economy.
The circular economy of scarcity was a necessity. But in a society of abundance, the players of the circular economy need a motivation not to consume, not to replace existing wealth with replacement assets. The use phase – what I call the era of R, for reuse, repair, remanufacture – starts at the Point of Sale and is controlled by the owner-users of objects – you and me. Educating and motivating people to enjoy the use of, and take care of, the assets in their possession or control, is a key driver.
In order to profit from a circular industrial economy, manufacturers have to adapt their business model by extending their commercial activity beyond the point of sale into the use phase of objects, through renting and leasing (sharing) strategies, or buy their objects back from the owner-users, what Apple has started doing with iPhones. Changes in technology and system design in favour of circularity will now follow automatically in manufacturing simply to maximise profits.
The era of D – recovering atoms and molecules of end of service-life objects through de-bonding – has huge opportunities for Science and Technology innovation in two fields: Cleaning up the legacy waste of synthetic materials commercialised over the last fifty years, witness plastic in the oceans, and inventing easily reusable molecules in a circular chemistry and reprogrammable components to prevent a repetition of this legacy problem.
What is the role of civic communities in this change? Circular society is the non-monetary form of the circular economy. Lighthouse examples are repair cafés in Europe and market places to give away food before its shelf-life ends and to exchange used goods in working condition exist in most countries. As culture is regional, civil communities have to adapt the concepts of the circular economy to fit local needs, conditions and customs.
What measures or incentives do you think should be made to facilitate the transit to this new economy?
Policymakers have giant levers to foster the change, by removing regulation which protects the linear industrial economy and represent obstacles for circularity. One key issue is to stop taxing labour, work, and start taxing emissions and consumption of non-renewable resources. A second is that policymakers should focus on value, stewardship and liability, rather than on protecting the environment. If waste is defined as objects with no positive value and no liable owner, changing policy from anonymous producer responsibility to individual corporate producer liability will force producers to internalise the end of their service-life costs of their objects and materials – similarly to the polluter pays principle.
As about a third of GDP is paid for by public authorities and governments, through public procurement and subsidies, an adoption of the principles of the circular economy in public procurement would be another powerful driver of change. Buying primarily goods as a service, for instance, has proved to be a source of innovation in start-up companies. NASA thus provided the incentive to create the reusable Falcon 9 rockets by Space X in the USA, and the French authorities to build the pont de Millau in France as a Private Finance Initiative, at zero cost to the taxpayer.
In his opinion, "in the circular economy, the process or less important element is that of recycling, reuse is much better". Why?
Economics tells us that the value of an object is higher than the sum of the value of the embodied materials – otherwise the concept of value added is wrong. And the second law of Thermodynamics tells us that each step of industrial activity, including recycling, increases entropy, dilutes the stocks and purity of resources. Reuse and repair maintains objects and embodied resources dominantly in their original state.
The environment profits from sufficiency solutions. Reuse and repair are best done locally, where the objects and their clients are. The do not need packaging, nor distribution centres, long distance transport and shopping malls. The environmental footprint of reuse and repair is thus minimal.
Repair and remanufacturing are labour and skill intensive, creating jobs where people live. By contrast, ‘recycling’ was mostly done by shipping mixed wastes to countries like China, a fact that has come to light when China banned the imports of mixed wastes last year.
The objective of the circular industrial economy is to maintain the value and utility of stocks of natural, human, cultural and manufactured assets for the longest period of time possible. A recent study by the consultancy Material Economic for the Swedish Recyclers’ Association has shown that recycling enables to reduce waste volumes, but most of the economic value is lost. Even recycling steel or aluminium scrap, which is very successful (70 to 90 percent) if measured in tonnes for one cycle, only maintains about a third of the original value of the material, measured in Swedish Krona. The era of D thus embodies huge opportunities for profits in the era of D.
By contrast, reuse of objects allows maintaining their use value (utility), remanufacturing in some cases even creates objects of a higher quality than new.
Walter Stahel 1 May 19
----------------------------------------
What do you think about this new approach and paradigm, which breaks completely over our traditional way of acting, both economically and socially?
A circular society driven by poverty or scarcity is as old as mankind, it has always existed in society, and will continue to allow people to survive in less developed countries. But this is often a non-monetary approach, a circular society more than a circular economy.
In regions characterised by societies of affluence, circular economy has suddenly become a ‘must have’ issue in politics and industry, comparable to sustainable development some years ago. There is thus a danger that the objective of the concept – to maintain the value and utility of stocks of natural, human, cultural and manufactured assets for the longest period of time possible – will be diluted or replaced by green washing.
Economists trained on industrial economics of creating value added through production flows are obviously at a loss with this concept of maintaining value by managing the quality and quantity of stocks of objects and molecules.
In affluent societies, we have a new challenge to create a circular economy driven by motivation. But many politicians and economic actors fear changes that are seen as imposed from external sources, the not-invented-here syndrome. Extending the service-life of objects, be they infrastructure, buildings, investment or consumer goods, will considerably reduce the production volume of new replacement objects and the end-of-life waste volumes, but is contrary to mainstream economic thinking.
What main objectives pursues the model that represents the circular economy?
A circular industrial economy of manufactured objects and materials is about economics and innovation. It can be actively stimulated through technologic, social and policy innovation and thrives on science and technology research to increase the service-life of objects and molecules, which increase its competitiveness. A shift to a circular economy will create local jobs of all skill levels and re-industrialise regions, as well as drastically reduce CO2 emissions (by 66% on a national level), the consumption of energy, material and water resources, and end-of-pipe waste volumes.
In a circular industrial economy, opportunities for innovations include novel reusable materials, reprogrammable components and new fields of research such as circular chemistry, as well as technologies to clean up the legacy waste of the last fifty years, such as plastic in the oceans. The objective is to find de-bonding technologies which enable preserving the economic value of material stocks by recovering pure atoms and molecules, to replace waste management strategies of recycling. In parallel, social innovation is needed to motivate owner-users of objects to focus on enjoying the use of, and caring for, their assets, rather than replacing them. Personal motivation of owner-users – you and me – to develop a personal relationship with objects can greatly extend the service-life of objects and enhance people’s quality of life.
What do you think are the real obstacles that the circular economy has so that it can deploy all its effectiveness in our economy and society?
The circular economy is quite and invisible: marketing and publicity play a small role because supply and demand meet, or find each other, locally. But this is an obstacle in the promotion of the opportunities offered by the circular economy, which are only known to SMEs and fleet managers doing it. Spreading the knowledge of these economic and technological opportunities to all class rooms and board rooms is one of the challenges in promoting the circular economy.
The circular economy of scarcity was a necessity. But in a society of abundance, the players of the circular economy need a motivation not to consume, not to replace existing wealth with replacement assets. The use phase – what I call the era of R, for reuse, repair, remanufacture – starts at the Point of Sale and is controlled by the owner-users of objects – you and me. Educating and motivating people to enjoy the use of, and take care of, the assets in their possession or control, is a key driver.
In order to profit from a circular industrial economy, manufacturers have to adapt their business model by extending their commercial activity beyond the point of sale into the use phase of objects, through renting and leasing (sharing) strategies, or buy their objects back from the owner-users, what Apple has started doing with iPhones. Changes in technology and system design in favour of circularity will now follow automatically in manufacturing simply to maximise profits.
The era of D – recovering atoms and molecules of end of service-life objects through de-bonding – has huge opportunities for Science and Technology innovation in two fields: Cleaning up the legacy waste of synthetic materials commercialised over the last fifty years, witness plastic in the oceans, and inventing easily reusable molecules in a circular chemistry and reprogrammable components to prevent a repetition of this legacy problem.
What is the role of civic communities in this change? Circular society is the non-monetary form of the circular economy. Lighthouse examples are repair cafés in Europe and market places to give away food before its shelf-life ends and to exchange used goods in working condition exist in most countries. As culture is regional, civil communities have to adapt the concepts of the circular economy to fit local needs, conditions and customs.
What measures or incentives do you think should be made to facilitate the transit to this new economy?
Policymakers have giant levers to foster the change, by removing regulation which protects the linear industrial economy and represent obstacles for circularity. One key issue is to stop taxing labour, work, and start taxing emissions and consumption of non-renewable resources. A second is that policymakers should focus on value, stewardship and liability, rather than on protecting the environment. If waste is defined as objects with no positive value and no liable owner, changing policy from anonymous producer responsibility to individual corporate producer liability will force producers to internalise the end of their service-life costs of their objects and materials – similarly to the polluter pays principle.
As about a third of GDP is paid for by public authorities and governments, through public procurement and subsidies, an adoption of the principles of the circular economy in public procurement would be another powerful driver of change. Buying primarily goods as a service, for instance, has proved to be a source of innovation in start-up companies. NASA thus provided the incentive to create the reusable Falcon 9 rockets by Space X in the USA, and the French authorities to build the pont de Millau in France as a Private Finance Initiative, at zero cost to the taxpayer.
In his opinion, "in the circular economy, the process or less important element is that of recycling, reuse is much better". Why?
Economics tells us that the value of an object is higher than the sum of the value of the embodied materials – otherwise the concept of value added is wrong. And the second law of Thermodynamics tells us that each step of industrial activity, including recycling, increases entropy, dilutes the stocks and purity of resources. Reuse and repair maintains objects and embodied resources dominantly in their original state.
The environment profits from sufficiency solutions. Reuse and repair are best done locally, where the objects and their clients are. The do not need packaging, nor distribution centres, long distance transport and shopping malls. The environmental footprint of reuse and repair is thus minimal.
Repair and remanufacturing are labour and skill intensive, creating jobs where people live. By contrast, ‘recycling’ was mostly done by shipping mixed wastes to countries like China, a fact that has come to light when China banned the imports of mixed wastes last year.
The objective of the circular industrial economy is to maintain the value and utility of stocks of natural, human, cultural and manufactured assets for the longest period of time possible. A recent study by the consultancy Material Economic for the Swedish Recyclers’ Association has shown that recycling enables to reduce waste volumes, but most of the economic value is lost. Even recycling steel or aluminium scrap, which is very successful (70 to 90 percent) if measured in tonnes for one cycle, only maintains about a third of the original value of the material, measured in Swedish Krona. The era of D thus embodies huge opportunities for profits in the era of D.
By contrast, reuse of objects allows maintaining their use value (utility), remanufacturing in some cases even creates objects of a higher quality than new.
Walter Stahel 1 May 19
List of the books related to this topic
The Circular Economy – a user’s guide
by Walter R. Stahel, with a foreword by Dame Ellen MacArthur, Routledge, London, May 2019. https://www.routledge.com/The-Circular-Economy-A-Users-Guide-1st-Edition/Stahel/p/book/9780367200176 and the following translations of The Circular Economy for Beginners (shorter and easier to read):
Economia circolare per tutti. Concetti base per cittadini, politici e attori economici. by Walter R. Stahel,Edizioni Ambiente, Milano, March 2019, www.edizioniambiente.it
Sirkulær økonomi – fra strategi til praksis.
by Walter R. Stahel, e-book translated and to be published by SINTEF, Trondheim, in May 2019.
Economía Circular para todos- Conceptos básicos para ciudadanos, empresas y gobiernos, by Walter R. Stahel, e-book translated and published by Isostenible, https://isostenible.com/ to be published in May 2019.
----------------------------------------
José Esteban Gabarda Balaguer, Leader “Advanced Leadership Foundation”
Comentarios
Publicar un comentario