The process of making cars lends itself to applying circular economy principles since it requires a large quantity of high value components and materials that are worth recovering and using again. There is a growing demand for recycled car parts, particularly when they are cost competitive. Renault has coined the term ‘short-loop recycling’, in which the whole recycling loop – from collection to transformation – remains in the automotive sector. It complements the company’s well-known remanufacturing of engine parts and batteries.
Renault Group designs and builds vehicles and parts for sale in 125 countries, and sold more than three million vehicles in 2016. The company realised early on that pursuing circular economy objectives made good business sense as a strategy for optimising resource use and minimising environmental impacts. Renault’s circular economy strategy is multi-pronged and includes remanufacturing of engine parts, creating a ‘second life’ for electric batteries, and increasing the ‘short-loop’ recycling of raw materials in the sector, which is the focus of this case study.
To pursue the idea of short-loop recycling, Renault set up an experimental platform for end-of-life vehicle (ELV) recycling called Innovative CAR REcycling 95% (ICARRE 95), supported by the EU LIFE Programme. The high-level goal was to be completely closed loop, inputting materials from ELVs into new vehicles at the same level of performance as those derived from virgin sources. Short-loops are set up to recycle raw materials such as steel, copper, textiles, and plastics, keeping them as much as possible in the local automotive industry. Currently, 36% of the total mass of a newly produced Renault vehicle in Europe is made from recycled materials, and 85% of an ELV is recyclable.
However, the supply chain for recycled plastic is poorly developed, and the lack of a predictable and secure stream of materials creates difficulties in planning manufacturing operations. In this context, Renault’s basic motivation for pursuing such a strategy is to secure a stable supply of materials to manufacture its cars as economically and with as low an environmental impact as possible. The longer-term goal is to lower the cost of recycled versus virgin materials, thus creating positive revenues for all players in the supply chain.
There are also legislative drivers at play. The processing and disposal of ELV are subject to the provisions of a European Directive that requires handlers to reuse 95% of ELVs overall (85% by reuse & recycling and 10% by energy generation). Focusing on plastic has the greatest potential to improve the current ELV recycling ratio.
Renault’s short-loop cycle programme highlights the four building blocks of the circular economy:
Circular design and production
- Designers use feedback from maintenance activities and analysis of ELVs to develop design criteria, such as material choices and assembly protocols, which help increase future vehicle remanufacturing and recycling
New business models
- The company incentivises customers to increase collection rates, e.g. B2B discount scheme for remanufactured components if return is guaranteed
- Possible implementation of a bonus or deposit scheme
- Collection system already exists from remanufacturing operation
- Previously retained material to recycle internally, but now looking to external sources to keep up with demand
Enablers and favourable conditions
- Advances in material sorting technology
- Existence of an ecosystem that had to be adapted, rather than created
- Collaborative approach (see infographic below)
- Education and skill development
It is worth amplifying one element of this last building block: the need for collaboration. Circular thinking views the economy as an ecosystem of businesses, shifting away from throughput as a measure of economic health and focusing instead on the optimisation of the system as a whole. In this light, Renault’s approach to accessing its raw materials is no longer just about procurement, but is focused on coordination and collaboration across the industry. The diagram below shows the relationships that maintain quality and value in Renault’s use of polypropylene.
Polypropylene is just one of many materials for which Renault has developed short-loop initiatives. Another promising idea is taking shape in the form of the Afiler Project, a collaboration with an automobile recycling company (Indra), a clothes and fabric manufacturer (Filature du Parc) and an automobile seating company (Adient). The project has created a material that can be used in the upholstery of car seats using fibres recovered from seat belts.
Looking to the future, Renault plans to increase the amount of recycled plastic in its vehicles from the current level of 15 - 20%. The company also hopes to expand the initiative of recycling plastics from ELVs beyond Europe to other markets such as Brazil and India. These two countries together have a combined vehicle production of over 750,000 units. To achieve the same 20% recycled plastic content currently contained in the European-produced Espace, would require a supply of more than 200,000 tonnes of recycled plastic in these markets.
Finally, to help embed circularity long term in the company, Renault wants to build knowledge and capabilities around the topic of short-loop recycling by sponsoring research topics, developing skills in its workforce and promoting the topic in education.