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Climate and Environment

The circular economy is a critical leverage point for auto supply chains across the board – including steel, aluminium and battery supply chains. Circular economy interventions can significantly reduce emissions, as well as demand for new mining and its associated environmental harms and risks of human rights abuses. Furthermore, recycling can also significantly reduce production costs for automakers. 

The potential for reduction in emissions and raw material demand through recycling, reuse, material efficiency and other strategies is huge. One ton of recycled steel saves 1.49 tons of iron ore and avoids burning more than half a ton of coal over the production of new steel; recycling aluminium uses 95% less energy than producing primary aluminium. In the case of batteries, recycling can reduce GHG emissions by 38% and holds the potential for 25-55% reductions in mining demand by 2040 for cobalt, copper, lithium, and nickel. 

Automakers must maximize the benefits that increasing the recycled content of their vehicles can bring by implementing comprehensive circular economy interventions across their steel, aluminium and battery supply chains.

What can automakers do?

  • Set and disclose targets on the recovery rates and the use of secondary/scrap metals in their production cycles.
  • Integrate circular design and improved recyclability of steel, aluminium and batteries into their automobile design and manufacturing processes.
  • Implement efficient closed loop processes to maximize the amount of recycled metals used in their manufacturing processes.
  • Implement and support broader circular economy and material efficiency interventions, including lightweighting vehicles, fabrication loss reduction and lifetime optimization through repair, refurbishment and other strategies.