If Ellen MacArthur is the dame of the circular economy, Walter R. Stahel (born June 5, 1946) can be well awarded the title of father of this economic model. Stahel has been influential in developing the field of sustainability, by advocating “service-life extension of goods – reuse, repair, remanufacture, technological upgrading” philosophies as they apply to industrialised economies. If waste is one half of the circular model, with its closed loops and matter reincarnation, product life is the other half. Service-life extension of goods as a strategy of waste prevention, product-as-a-service and resource efficiency through the dematerialisation of the industrial economy are the pillars of his thought. Stahel devoted his life to developing those concepts, funding in 1982 the Product Life Institute in Geneva, Switzerland, a consultancy devoted to promote these ideas. His books The Performance Economy (Palgrave, 2010) is a huge collection of case studies where production and consumption performances are taken into account showing how performance is a key indicator for real circular businesses. Now that the circular economy is a trending philosophy he is back on the scene and works closely with the Ellen MacArthur Foundation on further promoting his ideas with economic actors. Renewable Matter has interviewed him to better frame what the circular economy is and product life in 2017.
You are one of the founding fathers of the circular economy. What is your definition?
“An economy focused on managing stocks of human, natural and manufactured resources, maintaining the value of the stocks as assets, extending the service-life of objects and technologically by upgrading the manufactured stock as long as feasible.”
When did you realize that the linear economy was not the right development philosophy?
“In 1973, when Europe was suffering the first oil price shock and experiencing rising unemployment. I recommended the European Commission to research the potential for substituting manpower for energy. And we started to look at matter. The conclusion of the 1976 report [for the EC] by Geneviève Reday and myself was the definition of the circular economy as it still stands today. In 1981, we published the report as a book, Jobs for Tomorrow.”
Today there is frenzy around the concept of the circular economy. What are the risks? Can we face something similar to what happened with all the greenwashing that follow the introduction of the concept of the green economy?
“The main risk to the circular economy is scientific and technological progress. If a superior technology is developed for goods – e.g. word processors versus typewriters or electric versus petrol cars – the old objects may still be reusable in another geographic context (countries without national electricity grid). If a superior technology is developed for materials – e.g. the Two-Teams project to manufacture paper (an innovative methodology to process paper promoted by The Confederation of European Paper Industries – CEPI, editor’s note) versus traditional paper making – recycling processes may be jeopardised. The success of a circular economy for consumer goods depends on caring, on people developing a new relationship with goods – function instead of fashion, a teddy-bear instead of a chewing-gum attitude. Caring is a pre-requisite for managing any capital, be it natural, cultural, human or manufactured assets.”
You worked a lot on the topic of performance economy. What are the key assumptions?
“I defined the Performance Economy in papers and articles in the 1990s as Functional Service Economy, and published the concept in my 2006 book The Performance Economy to make it accessible to a wider audience. The Performance Economy sells the use of goods as services – e.g. hotels, taxis and public transport – as well as molecules as service – e.g. chemical leasing. By retaining the ownership of goods and their embodied resources, economic actors are forced to internalise all costs of risk and of waste, which provides a strong economic incentive for loss and waste prevention. In exchange, economic actors gain a resource security for the future. The Performance Economy is the most sustainable business model of the circular economy – in terms of social, ecologic and financial terms – but implies an unlimited liability for the performance of goods and materials.”
You have also carried out serious research around product life concept, and you also have a working group focusing on that. What should product designers do today when they approach the design of a new product?
“Designers, including architects, have two limitations. They dream of immortality – which means things have to be new, unique and fashionable; and designers lose control over their goods at the point of sale. One can design a car, which will last for fifty years, but if the buyer loses control of the brand new car and crashes the vehicle against a wall, product-life is short. The best approach for designers is to develop systems solutions, physical objects as modular concepts with standardised components and virtual/digital instead of hardware solutions. In many cases this is a completely new challenge.”
Do you think researchers and designers are well aware of the product life extension philosophy?
“Product-life extension and the circular economy are concepts unknown to the schools and universities training economists and engineers for manufacturing optimisation – and to the experts leaving these schools. Many SMEs and fleet managers such as railways, airlines and armed forces have embraced the knowledge and know-how of products’ life extension. One major challenge is to transfer this knowledge into all classrooms and boardrooms to speed up the shift to a circular economy.”
Fashion and planned obsolescence are two key enemies of a circular economy model. How can we overcome the artificial early death of goods?
“Technical solutions to overcome this are modular concepts with standardised components; commercial solutions are renting or leasing goods instead of selling them. If ownership remains with the manufacturer or a fleet manager, fashion and obsolescence will bankrupt the owner – and he will be careful not to invest in such goods. Consumers turned users have a number of different solutions; to engage in repair cafés and similar social innovations in order to decouple themselves from manufacturers; or to exclusively rent or lease objects, such as handbags or garments, which also provides a high flexibility and choice; or to buy goods with a life-long guarantee – dozens exist in the market today.”
Product-as-a-service is a key element of the circular economy: what are the main challenges in terms of ownership and legal framework related to shifting from ownership consumption to renting/leasing/sharing?
“The key elements to a circular economy are reuse and service-life extension loops for goods – e.g. eBay, repairs and remanufacturing, which are options open to the owner-user – and recycling loops for materials, an option open to waste managers. Products as a service are a business model of the Performance Economy, which enable to intensify the utilisation of goods but necessitate retaining their ownership. This is exclusively an option of manufacturers (like Rolls Royce selling power by the hour instead of jet turbines) or fleet managers (airlines, shipping lines selling mobility services).”
Don’t you think that if we only use goods as service we lose some financial assets, therefore families might get poorer?
“People should buy goods that increase in value, e.g. houses, but rent goods, which decrease in value, e.g. cars, smartphones. Families will therefore increase their financial assets in the long term by following this rule – let somebody else lose money on disposable goods. The Internet of Things is built on using goods as services – people already live deeply in a service economy without the feeling of getting robbed.”
What is your opinion on the EU Circular Economy Package?
“The EU Circular Economy Package is still based on the old linear economic thinking, which needs to be replaced by stock or asset consideration. On the resource side, it should promote resource preservation, not waste management strategies; it should strictly give preference to reuse and service-life extension of goods and components (stocks), following the objectives of the 2008 EU Waste Directive, and consider waste recycling (flow) as the last option. Consequently, the package should design incentive policies to turn today’s environmentally motivated waste managers into economically motivated resource managers, building up markets to return used goods and components back to manufacturers for reuse/remanufacturing. Objectives expressed as recycling percentages (flows) should be replaced by maximum annual resource loss percentages (stock losses) – for short-lived goods these are worlds apart. On the social side, it ignores the job creation potential and the mechanisms to exploit this potential for waste prevention and regional and local development. And it ignores the key necessity to provide tools to shift the knowledge and know-how of the circular economy from SMEs and fleet managers to all classrooms and corporate boardrooms – a circular economy Erasmus programme for students and managers.”
Product-Life Institute, www.product-life.org