Circular Economy

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Circular Economy (essay/Report) – ASSESSMENT 2


A circular economy according to World Economic Forum (2015) is an industrial system that is regenerative or restorative by design and intention. It replaces the concept of end-of-life with restoration and shifts towards the usage of renewable energy. Additionally. The circular economy eliminates the use of chemicals that are toxic, which return to the biosphere and impair their reuse, and aims at wastes elimination through the superior design of products, materials, and models of business (World Economic Forum 2015). The traditional linear production is an alternative to the Circular economy which keeps the resources for a longer time possible in use, extracts the maximum value of resources while it is in use, and then regenerates product after recovering materials at end of each product service life. From the onset of the industrial revolution which marked the beginning of the modern practices in industrial production, the manufacturing paradigm has been majorly dominated by the linear production model. In this model, the raw materials are extracted from the natural resources in different countries and then transported to the manufacturing plants in different countries in Europe, China, and the United States, and then processed into different products (Santiago 2014). The final processed products are then shipped to different destinations where they are used and later discarded and finally replaced by newer products. However, rising resource prices recently have resulted in economic pressure on the linear production model. Moreover, fewer new deposits of resources are being discovered and manufacturers are facing augmented cost pressure in obtaining their basic raw materials (Santiago 2014). See appendix 1 for the rising cost of resources

a) The current linear situation

Because of the aforementioned trends in commodity price increase and depletion of resources, several companies need to start adopting a regenerative manufacturing model where products and their components are reused several times. The essay chose French automaker Renault which has strong linear characteristics.

Renault Company is a French multinational manufacturer of vehicles established in 1899 and produces a wide range of vans and cars (Renault 2015). In the past, the company manufactured auctorial vehicles, buses/coaches, tanks, tractors, and trucks. In 2013, it was the 11th biggest automobile manufacturer globally by volume of production and Renault-Nissan Alliance being the further largest group of the automobile. In 2013 alone, Renault-Nissan Alliance sold 8.3 million cars globally, which is equivalent to selling 1 car in every 10 cars manufactured globally (Renault 2015).

In manufacturing their automobiles, Renault Company operates in a linear model of production. The raw materials used include virgin steel which forms the bulk and petroleum based products (vinyl and plastics). Given that resources are continuously being depleted and fossil fuel prices continue to rise, Renault Company has adopted the usage of lightweight materials from petroleum to make their automobiles fuel-efficient and more pronounced (Renault 2015).

During the manufacturing process, the assembly plant which is the final phase in the manufacturing process is supplied with components by more than 4000 suppliers from outside, including suppliers owned by the company, and are brought by railroad or by trucks for assembly (Renault 2015).

In the assembly line, most of the work is done by robots than humans. Completed assembled vehicles are then painted using different paints before interior assembly made by wiring, interior lights, dash panels, seats, headliners, door and trim panels, speakers, radios, and glass. Once complete, the automobile proceeds to receive final trim components like gasoline, anti-freeze, tires, and battery. Eventually, it is checked, the engine is started and audited before released to the market (Renault 2015).

The automobiles manufacture by Renault like other vehicles uses fossil fuel as impact on the natural environment. They mostly use green energy, are made of steel, and release toxic gases into the atmosphere. The end products of these products if not recycled leak back to the system. If only in 2013 the number of vehicles manufactured by Renault- Nissan was 8.3 million, therefore the quantity of emitted toxic gases released waste materials and stalled vehicles that need recycling are enormous. This calls for a circular economy as a model of production. Moreover, it creates several externalities such as health treatment from harmful gases released into the atmosphere, the need to incur extra costs of buying fuel, servicing the vehicle, and paying for the insurance (Renault 2015).

b) The re-designed circular model

Because of the volatile resources market and worries of resource depletion, the need for a new economic model for Renault’s automobile company is eminent. Renault Company needs to find ways of reusing their products and components. The regenerative design or the circular economy which restores global climate .............

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