Defining the role of transport in the circular economy

Today, the world economy consumes more than 100 billion tons of materials every year – minerals, ores, fossil fuels, crops, and trees. The materials used by the global economy have grown fourfold since 1970—much faster than the population, which has doubled. Between 2018 and 2020, the consumption of natural resources jumped by more than 8%, but resources reuse fell from 9.1% to 8.6%. This means that, between the signature of the Paris Climate Agreement in 2015 and COP26 last year, 70% more virgin materials were extracted than what the Earth can safely replenish. 

As we mark Earth Day and prepare for COP27 in November, the circularity model is emerging as a  promising avenue to achieve more responsible and sustainable development.  Reducing resource extraction and consumption by making the global economy more circular could significantly contribute to the Paris agreement goal of keeping temperatures within 1.5 degrees Celsius of pre-industrial levels. Yet, only a third of countries' climate pledges mention the circular economy as part of their carbon emissions reduction strategy.

The circular economy model

The circular economy is a new and inclusive economic paradigm that aims to minimize pollution and waste, extend product lifecycles, and promote the sharing and repurposing of physical and natural assets.  In short, this model departs from the mainstream ‘take-make-dispose’ approach and seeks to reduce resource consumption by redesigning industrial systems to be restorative and regenerative by intention.

While circularity is already commonplace in certain industries such as packaging, the transport sector still has a long way to go. The production of components going into vehicles—steel, plastics, glass, aluminum, rubber, paints, etc.—remains a resource- and carbon-intensive process. To turn this around and reduce its environmental footprint, the sector will need to rethink asset utilization, components production, and lifetime optimization in a fundamental way.

Utilization improvement

On average, cars sit idle for more than 90% of their time, and only 1.5 of the typical five seats are occupied, making it a significantly underutilized asset. Innovative business models that embrace Mobility-as-a-Service (MaaS), such as ride-sharing, help increase asset utilization.

However, to fully embrace circularity, transport must look beyond MaaS business models to combat all forms of waste. Recycling end-of-life tires, for instance, is a significant challenge. Around one billion tires reach the end of their useful lives each year. About 65% of them are collected for reuse. About 70% of those are recycled to recover their materials, while the remaining 30% are used for energy recovery. Tire manufacturers are now offering their customers innovative service packages that include maintenance, real-time tire condition monitoring, and other services, all of which can help optimize the life span of tires and decrease resource utilization.

On the freight side, there is also potential. In the United States, the Bureau of Transportation Statistics disclosed that, in 2019, one out of four trucks ran empty. That figure reaches 27% in Europe and 40% in Asia. Statistics show that open or partially empty trucks travel 29 million miles worldwide. Digitalization and innovative business models can change this by connecting trucking operators and clients in real time—a much more efficient way of matching supply and demand than your traditional phone call or Excel spreadsheet.

Material circularity

By transitioning toward a circular economy and making consistent efforts to reduce waste, emissions from the materials used in vehicle manufacturing could be reduced by 70% by 2050, or 285 million tons of CO2 equivalent. 

The average vehicle today weighs 1.4 tons. Designing vehicles to be more lightweight so that fewer materials are needed to make them, and less energy is needed to power them would reduce 89 million tons of CO2 equivalent per year by 2050.

This transition would involve promoting resource-conscious practices such as remanufacturing engines or retreading tires to keep them in use. As an example, the process of remanufacturing an engine—in other words, restoring it to make it as close to new as possible—generates 85% less carbon than making a new one from scratch. This strategy would help reduce 38 million tons of CO2 equivalent per year by 2050.

Lifetime optimization

Every year, millions of vehicles reach the end of their life. The poor management of ELVs hurts the environment, and cause millions of tons of materials to go to waste.

There are two major ways to address the issue. First, making vehicles last longer would cut 208 million tons of CO2 equivalent per year by 2050. Second, the sector needs to become a lot more efficient in how it uses and reuses materials. While we are still far away from cars becoming a source of valuable materials at the end of their lives, initiatives to close the loop during the production phase are ongoing. For example, some automotive manufacturers are starting to return the aluminum scrap generated during the car manufacturing process back to aluminum producers so it can be recycled into products of similarly high value, without any loss of quality. This simultaneously reduces energy use and carbon emissions, as recycling aluminum requires only 5% of the energy needed for producing primary aluminum.

A framework that enables and incentivizes circular product systems is key for decarbonization.  Although various initiatives are emerging to implement circularity in transport, efforts remain sporadic. Technology promises to accelerate the transition by opening new opportunities and making the circular economy more cost-effective for the transport industry. Much of the work remains to be done, but the possibilities are certainly exciting.