Large material and economic value is lost in the way Europe manages its end-of-life materials

There are significant value losses in the use of steel, aluminium, and plastics in the European economy, reveals a study by Material Economics. These materials lose as much as 59 per cent of their original material value (the value of the material when it was produced) after every use cycle, despite being seen as some of our most circular materials.

Preserving value in EU industrial materials’ is a pioneering study supported by EIT Climate-KIC and RE:Source. The report takes an economic value perspective on material flows and assesses Europe’s use of steel, plastics, and aluminium in terms of Euros instead of tonnes. It concludes that as much as €87 billion is lost every year for these three materials in total.

”The Material Economics study is unprecedented and will help increase understanding of the quite abstract concept of circularity, giving an economic value to end-of-life materials which are still treated as waste,” says Sira Saccani, Director of Sustainable Production Systems at EIT Climate-KIC.

Axel Elmqvist is a project manager at Material Economics and part of the team that wrote the report. Below, Axel answers some questions about the report and its results.

The report focuses on the economic value of the materials. Why did you choose this metric?

The debate around recycling has primarily been held in terms of how many tonnes or cubic metres of a material is recycled. This is highly relevant, but only focusing on volumes and flows leaves several important questions unanswered.

What type of questions is the volume-perspective unable to answer?

For instance, it does not say anything about quality downgrading occurring during the use-phase or how much primary materials production can actually be replaced by recycled materials with today’s recycled materials’ quality. Only looking at volumes may also give the impression that our material use is more circular than it actually is. Taking a material value perspective on the recycled materials instead paints a different picture, which is something we want to illustrate and explore in this report.

You have looked at steel, aluminium, and plastics. Why are these three materials important?

We chose these three materials for several reasons. These are some of the most commonly used materials and are all cornerstones of our modern society. These materials are also highly recyclable, compared to cement or other materials that are more difficult to recycle. In addition, the primary production of these materials is CO2 intensive, while improved recycling can reduce these emissions significantly. For instance, recycled aluminium requires only five per cent of the energy used in primary production. These materials are also important for Europe’s economy as several leading companies are European.

These materials lose €87 billion in material value after one use cycle. Would it be possible to fully retain that loss?

It will never be possible to retain the entire value that is lost today. We are literally sending out billions of pieces of materials into the economy every year. It will never be economically viable or practically feasible to collect all of them while also avoiding corrosion and other material losses on the way. However, it is important to look closer and study that number, which is remarkably high.

How should these €87 billion then be interpreted?

The €87 billion is simply the difference between the price of which the recycled material can be sold for, and the original value of the primary material, adjusted for unavoidable process-related costs such as remelting. If 100 per cent of the materials were to be recycled, and if the recycled materials were of the same high quality as the primary material, the value loss would have been 0.

The €87 billion can be interpreted as a potential revenue for an improved recycling system. If we were to recycle more of the materials, and recycle them in a way that retains the original quality the recycled materials would be worth a lot more. Today we see several companies working with advanced sorting technology and Artificial Intelligence (AI) to improve recycling, and new business models are emerging that rely on circular flows of material and products. Products being designed with circularity and recycling in mind is also an important part of the solution.

I would also like to emphasise that these €87 billion is a potential revenue opportunity, not a potential profit opportunity: Improving the recycling system will require investments and additional costs. However, as we develop a more and more cost-effective recycling system, it will be possible to capture an increasing part of the €87 billion in a profitable way.

Are there other benefits from recycling than retained material value and reduced environmental impact?

Yes, increased and improved recycling comes with opportunities for new green jobs within Europe and greater strategic autonomy when imported primary materials are replaced by recycled materials from Europe. This is of even higher importance today, given COVID-19.

Who do you think will benefit from the results you have presented in the report?

We hope the results will have an impact on several levels, perhaps mainly for decision- and policymakers in Brussels. We believe that this kind of analysis is key to fully understanding the current state of our materials management system and what is needed to build a more circular economy in Europe. We also believe that entrepreneurs in search of exciting business opportunities could also draw benefit from the results in their business development processes.

 

Read the report

 
Location