Chapter 1
Value-Retention Processes within the Circular Economy

Jennifer Russell1 and Nabil Nasr2*

1Virginia Tech, Blacksburg, Virginia, USA

2 Golisano Institute for Sustainability at Rochester Institute of Technology, New York, USA

*Corresponding author: nzneie@rit.edu

Abstract

The circular economy offers a framework for transforming wasteful and inefficient linear systems into cascading systems that retain the inherent value of products, reduce negative externalities, and improve resource-efficiency. The cycling of technical nutrients within a circular economy can be achieved through product value-retention processes (VRPs) that include direct reuse, repair, refurbishment, and remanufacturing. Product case studies reveal that VRPs offer differing degrees of process and resource-use intensity, and as such, each contributes different economic and environmental benefits and circularity. Value-retention and impact metrics, measured relative to new product options, include new material use (kg/unit), energy use (MJ), emissions (kg CO2-eq.), production waste (kg/unit), cost advantage (% $USD/unit), and employment opportunity (Full-time Laborer/unit or FTE/unit). When compared to a traditional new product, all VRPs create significant resource efficiency and circularity opportunities. When compared to other VRPs, Partial Service-Life VRPs (direct reuse and repair) require significantly fewer resources, and thus result in relatively lower environmental and economic costs than Full Service Life VRPs (refurbishment and remanufacturing); However, more intensive Full Service Life VRPs ensure relatively greater utility, service-life, and value for the customer. Because of these differences, VRPs may be adopted strategically to pursue a range of business and policy objectives.

Keywords: Circular economy, value-retention processes (VRPs), resource efficiency, market transformation, remanufacturing, refurbishment, repair, direct reuse

1.1 Introduction

The full potential value of the circular economy goes beyond the recycling of materials in their raw form; in the circular economy, value is ultimately embedded in our ability to retain the embodied and inherent value of product material, structural form, and ultimate function. Capturing, preserving, and re-employing this value not only offsets virgin material requirements, but also reduces required production activities and instills new value altogether by ensuring the completion of, and/or potentially extending a product's expected life. In this respect, value-retaining production processes that include arranging direct reuse, repair, refurbishment, comprehensive refurbishment, and remanufacturing (hereafter referred to as value-retention processes or VRPs) are essential for improving industrial system circularity.

Through the deployment and scaling of VRPs worldwide, important environmental and economic objectives of increased system circularity, and the decoupling of economic growth from environmental degradation, can be successfully pursued. There is no single solution that is at once universally applicable, socially equitable, economically efficient, and environmentally healthy. As such, it is critical, to understand the different ways in which these processes may interact within and affect categorically diverse economies.

The International Resource Panel (IRP), a branch of the United Nations Environment Programme (UNEP) investigated each of these VRPs, including their role in the current industrial paradigm, and their potential to impact the future of the circular economy [1]. This assessment helped to shed light on the contribution that VRPs can make to the pursuit of enhanced resource efficiency and the reduction of environmental impacts associated with primary material production and traditional linear manufacturing. Some of the major insights and outcomes of this IRP Report are covered within this chapter.

1.2 Overview and Evaluation of Value-Retention Processes

VRPs are distinctively different from, and far less understood than recycling. VRPs help to ensure the offset of virgin material requirements, the collection and reuse of valuable materials, and the retention of embodied and inherent value, by ensuring the completion of, and/or potentially the extension of a product's expected service life. Expanding the use of VRP practices can offer substantial and verifiable benefits in terms of resource efficiency, circular economy, and protection of the global environment. However, their intensities and adoption globally have been limited due to significant technical, market infrastructure, and policy barriers.

1.2.1 Defining Value-Retention Processes

One of the main challenges facing VRPs around the world, as corroborated via international market access negotiations [2] and the US International Trade Commission (USITC) [3], is the wide range of definitions and interpretations of different VRPs. There are often multiple issues at stake, including common terminology differentiations made within and across sectors, as well as regulations focused on protecting consumer interests in certain countries. For example, while the VRP activity called 'reconditioning' in the electronics industry (as preferred by the Professional Electrical Apparatus Recyclers League), 'rebuilding' by the Federal Trade Commission, and 'remanufacturing' under a definition accepted by the WTO, the intent for each of these terms is the same: ". the process of returning the electrical product to safe, reliable condition ." [4]. Alternately, the medical sector typically uses the term 'refurbishment' for the same VRP that the aerospace sector would use the term 'overhaul' to describe; In fact, both definitions are clearly describing what would be considered 'remanufacturing' in other sectors.

Given the potential for confusion, the 2018 IRP Report [1] distinguished between each of the VRPs, and adopted VRP definitions and terminologies that are consistent with internationally recognized sources (where they exist) that include, but are not limited to, the Basel Convention Glossary of Terms (Document UNEP/CHW.13/4/Add.2) [7] and Directive 2008/98/EC [8] (Figure 1.1).

Figure 1.1 Definitions and structure of value-retention processes within this report.

1.2.1.1 Arranging Direct Reuse

Arranging direct reuse refers to: "The collection, inspection and testing, cleaning, and redistribution of a product back into the market under controlled conditions (e.g. a formal business undertaking)" [7] (Figure 1.2). Arranging direct reuse does not include reuse that occurs mostly through the undocumented transfer of a product from one consumer to another. Under arranging direct reuse, no disassembly, removal of parts, or addition of parts occurs. Only those products that are in sufficient working condition, not requiring any component replacement or repair, and to which quick and easy aesthetic touch-ups can be performed, qualify as arranging direct reuse products. These products are not guaranteed to meet original specifications and are typically offered to the market at a significant price discount, with no, or at least a much-modified, product warranty.

Figure 1.2 Descriptive summary of arranging direct reuse process.

Arranging direct reuse becomes possible when a product reaches the end of its useful service life prematurely: the owner may require an upgraded product, may no longer need the product, or may have a change in preferences. Alternately, the usage/service requirement rate may have been less than expected during the products service life. In any case, although the product has reached end-of-use (EOU), it has not yet fulfilled its expected life or potential life. Arranging direct reuse enables the product to continue to maintain productivity through use, instead of being prematurely discarded into a waste or recycling system.

1.2.1.2 Repair

Repair refers to: "The fixing of a specified fault in an object that is a waste or a product and/or replacing defective components, in order to make the waste or product a fully functional product to be used for its originally intended purpose" [7] (Figure 1.3). Repair activities include those required for known product issues, which enable the product to complete its original expected life. They also include the maintenance of a product that if left unmaintained, would have a constrained service life and/or utility.

Figure 1.3 Descriptive summary of repair process.

Repair activities are performed at the product-level: an otherwise functional product must have some worn or damaged parts removed and new parts added for it to continue functioning for the duration of its expected life. Rather than the entire product being discarded into a waste or recycling stream due to a worn or damaged part, repair activities bring the entire product back to its original functioning capacity for the continuation of the product's expected life.

1.2.1.3 Refurbishment & Comprehensive Refurbishment

There are differing degrees of refurbishment activity that yield differing levels of material value retention and product utility: Refurbishment and Comprehensive Refurbishment (Figure...