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The Mobility Industry and Road to Full Circular Economy
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About 20% of global CO2 emissions are attributed to road transportation, giving it a strong social responsibility. We have already seen significant gains in efficiency and achievements in CO2 reduction, particularly among German carmakers. Still, the newly discussed emission reduction levels will not be achievable without further significant efforts being made. If the world has to reach a target of less than 1.50C of global warming, the mobility industry will play a huge role. By 2030, the mobility industry needs to target around a 50% reduction in net-carbon emissions. However, it will not be an easy goal since we also anticipate mobility demand to increase by 75-80% globally in the same period. For decades, the mobility industry has integrated circular economics into its business practices. The industry’s approach to circularity to address climate change and resource depletion needs exponential focus in the next few years.
Sustainable cars should be powered by green electricity; circular economy principles need to govern both the manufacturing and use phase
Automotive manufacturers have already set ambitious goals towards carbon neutrality (achieving net-zero CO2 emissions) in the next two decades. They have started aligning their strategies with an ever-accelerating push for electrifying their entire portfolio. As we move towards reaching a tipping point for the adoption of electric vehicles, it’s clear that it will take a lot more than getting rid of the combustion engine vehicles to reach our goals.
Leveraging strategies pertinent to the circular economy for transforming the product, i.e., transition from ICE vehicles to battery-electric vehicles (BEVs), is the first piece of the puzzle. The second piece of the puzzle in achieving net-zero CO2 emissions will be the way it is used. As we move ahead, World Economic Forum (WEF) and various participants from the industry are already looking to define systematic, progressive targets that the mobility ecosystem can look towards achieving.
Transformation pathways that can propel the mobility industry towards a fully circular economy
Today, most automotive materials are recyclable. Vehicles are designed in a way to last, as well as to be repaired. These are all critical aspects of circularity. The industry must strive for higher goals. We are slowly but surely witnessing a shift away from traditional business models focused on production and sales. Vehicles are increasingly bought online and flexibly “subscribed” to for shorter periods. The revenue pools are shifting towards the use phase, and circularity is slowly gaining momentum.
Relevant stakeholders of the mobility ecosystem need to raise their ambition and, with the support of policymakers, build a new mobility ecosystem that focuses not only on doing less harm but also on opening up new sustainable opportunities. We need to fundamentally reimagine our entire value chain to reduce lifetime carbon emissions and resource consumption.
In principle, there are four main transformation pathways to increase circularity. These are mainly centered on energy decarbonization hinged upon achieving net-zero emissions across the entire lifecycle. Materials circularity focuses on enabling energy resource recovery and closing material loops, lifetime optimization wherein focus has to increase the overall lifecycle of the vehicle and its components, and finally, utilization improvement by ensuring efficient vehicle use over time and occupancy.
Exhibit 1 presents key Transformation Pathways that will form the basis of this article to highlight strategies and promising solutions for achieving circularity.
A balanced approach to all four transformation pathways is the key. Focusing only on one transformation pathway, such as energy decarbonization, misses out on the “low hanging fruits” of other transformation pathways and might make interventions more expensive. More importantly, the double benefit of improving both carbon and resource efficiency needs to be considered. For instance, making utilization improvement, lifetime extension, and materials circularity can ultimately complement energy decarbonization.
Levels of circularity and an overall roadmap for the mobility ecosystem can guide us towards an ideal scenario of net-positivity
The roadmap presented in Exhibit 2 for circularity ranges from single-owner use and disposal (Level 0) to an aspirational goal of a mobility ecosystem with net positive impact (as shown under Level 5, i.e., net positivity in the system).
Each level can be determined based on the characteristics of both the product and its use. Hence, both the manufacturer and the owner of the vehicle are responsible for achieving circularity.
Collectively, these strategies have the potential to reduce carbon emissions by up to 75%. And reduce non-circular resource consumption by up to 80% per passenger-kilometer for a battery-electric vehicle. However, these changes won’t be achievable overnight. Operationalizing solutions will be challenging because their elements are so closely interconnected. It is not worth pursuing individual solutions only.
Circularity requires implementing solutions across the value chain to achieve environmental impact and create business value. Collectively, we need to raise our goals on achieving circularity and build a new ecosystem that seeks not merely to do less harm to the environment but rather to enable new sustainable opportunities.
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