DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS • 127
facturing by definition restores a component to an ‘as new’ condition, it would
be viable to use components again in new products, provided the dimensionality
and design is consistent over product generations. This would save significant
costs as both the raw material value and most value added from manufacturing
the components are retained. This opportunity resembles Ricoh’s business model
for office printers.
By leveraging the circular economy building blocks and utilising both these
opportunities, the Danish machinery sector could gradually adopt remanufacturing and
refurbishment. A conservative estimate is that half of all product components could be
addressed for remanufacturing. Until 2020, they would likely focus on sales to secondary
markets, while by 2035, 15–50% of remanufactured components could be used in new
products rather than sold to a secondary market. Figure 31 gives an overview of the
estimated potential adoption rates and value creation estimated on a component level
for two machinery products, wind turbines and pumps. Overall, this would contribute to
net value creations of 1–3% as share of overall product costs by 2020, increasing to 4–9%
by 2035. These findings give a directional view of the magnitude of this opportunity for
Denmark. They rely by necessity on a number of assumptions, the most important of
which are detailed in Appendix B. It should be emphasised that the estimates take into
account the significant challenges of remanufacturing and refurbishment of long-lived
equipment, such as liquid pumps and wind turbines.
Figure 31: Estimated potential adoption rates and value creation in wind turbines and
pumps in the Denmark pilot
Ranges, adoption rates and value estimated on a per component basis
2020 2035
Adoption rate per
2-15% (0%) 10-70% (2-15%)
addressable component 1
Additional value created
per component
20-50% 25-50%
64% of components
addressable for
remanufacturing
(by value)
Net value created per
component
1-7% 2-25%
Adopotion rate per
addressable component1
5-10% (0%) 30-50% (10-15%)
Additional value created
per component
15-35% 25-40%
65% of components
addressable for
remanufacturing
(by value)
Net value created per
component
1-4% 5-15%
1 Adoption rates in brackets indicate ‘business as usual’ scenario
SOURCE: Expert interviews; Ellen MacArthur Foundation
Scaling up this value creation to the full machinery sector including pumps, wind turbine
and other machinery, it is estimated that businesses could create a net value of EUR 150–