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Paving the Way: EU Policy Action for Automotive Circularity

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Paving the Way: EU Policy Action for Automotive Circularity In Collaboration with SYSTEMIQ Paving the Way: EU Policy Action for Automotive Circularity CIRCULAR CARS INITIATIVE JUNE 2021 Images: Getty Images, Unsplash Contents Foreword from the European Commission 3 Foreword from the Circular Cars Initiative 4 Foreword from the World Economic Forum and SYSTEMIQ 5 Executive summary 6 1 Why EU policy action for circular cars is needed now 9 2 Policy action can mitigate barriers and strengthen drivers of 11 automotive circularity 3 How a set of policy development principles guides the way 13 4 What policy-makers should do to enable circularity 17 4.1 Create cross-cutting market enablers 18 4.2 Reshape the economic incentives 23 4.3 Harmonize and strengthen existing measures 29 5 Conclusion 37 Appendix 39 Appendix A: Summary of automotive circularity policy landscape 39 Appendix B: National circular economy monitoring frameworks 43 and metrics Appendix C: Evaluation of the End-of-Life Vehicles Directive 44 (ELV Directive) and impact of vehicle exports Appendix D: Overview of selected circularity-related policies 46 Acronyms 56 Contributors 57 Acknowledgements 58 Endnotes 59 © 2021 World Economic Forum. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. Paving the Way: EU Policy Action for Automotive Circularity 2 June 2021 Paving the Way: EU Policy Action for Automotive Circularity Foreword from the European Commission Adina Vălean EU Commissioner for Transport The European Green Deal is the European Union’s this. In the context of the European Green Deal and answer to the climate crisis and continuing resource COVID-19 recovery, EU policy -makers are now at exploitation. It lays out solutions for transitions to a a defining moment as they work to pave the way fundamental transformation of our economic systems, towards automotive circularity. operating within our planetary boundaries and aligned with a 1.5°C scenario. This means decoupling The Circular Cars Initiative EU policy action resource use and economic activity and embracing roadmap provides a timely and compelling resource efficiency as a competitive advantage. synthesis of the policy ideas that will inform and inspire EU-level policy-making. This will fuel our The automotive industry is at the center of this new efforts to further advance the circular economy growth paradigm, generating over 7% of Europe’s agenda with a view to reduce the EU consumption GDP. However, road transport also accounts for footprint and double our circular material use some 20% of total carbon emissions in the EU,1 rate in the coming decade. The automotive while consumption of transport products and sector can support it with accelerating the use services in the EU requires approximately 1460kg of of circular materials, higher value-retention primary raw materials per person, each year. processes, and improve the utilization of vehicles. However, we are fully aware of the complexity Electrification of vehicle fleets is gaining pace at of this effort, which cannot be underestimated. unprecedented speed. In parallel, we need circular System interlinkages, structural and political approaches to enable decarbonization and to reduce lock-ins, as well as questions on economic and the automotive industry’s dependence on primary social effects need to be duly considered. materials. However, the industry still has a long way to go, as existing market barriers hinder the fast We welcome the contribution of the CCI and look uptake and implementation of circularity principles. forward to engaging with industry stakeholders to shape an ambitious European Green Deal agenda Policy action is urgently needed to create conducive for a modern, resource-efficient and competitive framework conditions for circular material and economy where there are no net emissions of product use and for services. The European greenhouse gases in 2050 and where economic Commission has an ambitious roadmap to act on growth is decoupled from resource use. Paving the Way: EU Policy Action for Automotive Circularity 3 Foreword Christoph Wolff Thomas Deloison Global Head of Mobility Director, Mobility, World and Member of the Business Council for Executive Committee, Sustainable Development World Economic Forum The automotive industry is a driver of Europe’s The CCI takes a systemic approach to automotive economic value creation, competitive sovereignty, sustainability, accounting for the build, the use and and societal wellbeing. But road transport the dismantle phase. It explores how technology is also responsible for 20%2 of Europe’s and business levers can maximize the resource greenhouse gas emissions and emissions value of cars, minimize life-cycle emissions, and from vehicles’ materials are expected to unlock new opportunities. In 2020, CCI established account for 60% of the total vehicle life-cycle its state-of-the-art knowledge on the fundamentals emissions by 2040.3 The European Green of automotive circularity: materials, business Deal and COVID-19 recovery provide a unique models, and a policy research agenda. In 2021, opportunity for the European automotive value building on this, CCI is kickstarting two proofs of chain to accelerate the transition to a resource- concept, making a nascent taxonomy actionable, efficient, low-carbon future. Technology and and building policy dialogues with decision makers. policy have to align on a common pathway for this transition to master the next decade. The policy workstream of the CCI, led by SYSTEMIQ, leverages the community’s industry, The Circular Cars Initiative (CCI) is a partnership regulatory, and scientific expertise to co-shape between stakeholders from the entire automobility policy positions that will set the scene for further ecosystem that leverages circularity principles uptake of circular materials, products, and services. to minimize total life-cycle emissions, with a The EU Policy Action Framework outlined in this special emphasis on manufacturing and material report will help policy-makers and industry players to emissions. The initiative’s overarching goal is to accelerate the transition to a circular economy in the facilitate the transition towards an automobility automotive industry. system that is convenient, affordable, and firmly grounded within a 1.5°C climate scenario. The We wish to thank SYSTEMIQ, under the leadership CCI represents the first organized industry of Matthias Ballweg, Tilmann Vahle and Marie effort that targets the carbon and resource Wehinger, for their extensive community engagement impacts of vehicle materials across all life-cycle and thought partnership on the policy stream. We are phases. It complements existing initiatives also appreciative of the ongoing work of Alexander that drive the electrification or efficiency of Holst and Wolfgang Machur from Accenture urban mobility, such as the Forum’s Global Strategy, and Eric Hannon from McKinsey & New Mobility Coalition (GNMC), or WBCSD’s Company. Promising years lie ahead for automotive Transforming Urban Mobility (TUM) programme. circularity, driven by industry and policy collaboration. Paving the Way: EU Policy Action for Automotive Circularity 4 Foreword from the World Economic Forum and SYSTEMIQ Maya Ben Dror Lead, Future of Mobility, Matthias Ballweg Centre for the Fourth Head of Mobility and Industrial Revolution, EU Policy, SYSTEMIQ World Economic Forum In 2020, the fundamental work of the CCI scaled and holistic automotive circularity that is showcased the pathways, solutions, and impacts of cognizant of the life-cycle impacts of vehicles – a circular automotive transition. In 2021, the CCI is including recycling and value-retention processes focusing on the acceleration and operationalization (e.g. remanufacturing and refurbishment) as of this transition. Policy action can help close well as mobility assets’ utilization maximization existing market gaps and even leapfrog to a (e.g. through shared mobility and efficient fleet sustainable automotive industry. management) – will achieve the desired carbon and resource efficiency, while creating business value. The CCI’s policy work, led by SYSTEMIQ, currently focuses on actions by European Union The results of this work have been made possible (EU) institutions. It aims to capture the window of through dozens of touchpoints with CCI community opportunity created by the European Green Deal members and external experts, who provided and COVID-19 recovery. Among other activities, it invaluable insight that informed the positions builds on the CCI’s initial policy research agenda, formulated in this paper. It complements existing and on SYSTEMIQ’s System Change Compass initiatives that are driving the shift to zero emissions work, which was created, together with the Club vehicles and mobility systems, such as the of Rome, to guide the way towards a systemic Forum’s Global New Mobility Coalition (GNMC). implementation of the European Green Deal. The We thank the many contributors to this work and EU already has a robust legal basis that can readily intend to continue harnessing the power of the foster novel automotive circularity. Moreover, CCI’s engaged community of industry leaders and progress achieved in Europe may be replicated in regulators to drive towards circularity in automotive. similar legislation and approaches across the globe. Building on this EU policy roadmap, the CCI Current EU policy for circular cars, for the most community
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