As conversation hots up over the energy transition, Jean Miyeli, Segment & Sustainability Strategy Director for Eaton Electrical, EMEA, examines why circular economy thinking will be increasingly influential in the electrical industry.
The ‘Consumer Society’ – a phrase popularised in the 1960s – has shaped our shopping habits for decades. Buy, use and throw-away, is an established routine that affects raw material sourcing, supply chains, and waste management.
All that is changing however, with the realisation that this approach could affect the global climate and the earth’s finite stock of natural resources. One way or another, all businesses must respond to environmental concerns.
In the electrical industry, our customers are asking far more detailed questions than they have ever done previously about the environmental impact of products. Good for the planet, but is it good for business?
The ‘all-electric’ lifestyle
Electrification essentially means switching away from the direct use of fossil fuels such as oil and gas, so it involves customers investing in products that include electric vehicles and electric vehicle chargers, electric heating systems, and similar items.
This switch is part of the energy transition which means replacing fossil-fuelled commercial electricity production with generation from less carbon-intensive sources, as well as generating more energy at the domestic level from assets like rooftop solar panels.
Homeowners, commercial building owners and property developers need to think about how to approach the energy transition, including how the electrical infrastructure in both new and retrofitted buildings supports additional loads and manages different electricity flows.
An ‘all electric’ lifestyle involves EV chargers, solar inverters, heat pumps, battery energy storage systems and the digital systems that tie them together. This is good for business in the electrical sector, with a caveat: the circular economy must prevail.
What is the circular economy?
In the circular economy products are kept in use for as long as possible through repair, recycling, and redesign, so they can be used again and again. It means refurbishing, reusing, repurposing, and redistributing products several times before they reach end-of-life recycling.
It involves a new approach to developing, manufacturing, and supporting products, with the emphasis on resiliency and an eye to remanufacture. Closed loop manufacturing which involves using digital techniques to make optimum use of materials is becoming increasingly important, too.
The scale of transformation involved in implementing the circular economy is vast and far-reaching because it affects the entire industrial value chain from material sourcing to end-of-life strategies. It’s about much more than simply product recycling.
Capturing value
Undoubtedly, it is expensive to implement a circular economy approach in any industry, but in the electrical industry there is very practical value to be gained on top of the vital environmental benefits that will accrue.
This is because many of the products that underpin the energy transition are of a new type, most of them far more complex than those with which we are currently familiar, and some based on very valuable raw materials like rare earth metals.
As a society, as businesses, and as the consumers who buy electrical products for our own use, we will prefer to avoid disposing of these higher-value products quickly. The preference will be for circularity to make the most of the raw materials they contain.
This will certainly affect supply chains at every stage, from procurement to wholesaling to retailing. What it will also do, of course, is limit the consumption of natural resources.
The regulatory imperative
Governments across Europe, and in other parts of the world, are already making laws and developing regulations to force the pace of the energy transition and encourage the practice of circular economy techniques.
In the European Union, Member States must comply with laws emerging from the Fit-for-55 and RePowerEU legislative programmes that cover virtually all aspects of sustainability, with the emphasis on reducing fossil fuel use. The same is true in European countries outside the EU, too.
Deadlines for the phase-out of petrol and diesel fuelled vehicles are a good example of how regulation will lead to carbon reduction, and EV-ownership will encourage building owners along the route of electrification because of the need to charge EVs.
It is easy to see how circularity will take root in the vehicle manufacturing industry. Markets are already emerging for derated vehicle batteries that cannot be used for mobility any longer but are perfectly suited to static application for storing energy in buildings.
Good for planet and business
The circular economy is a logical approach that most people understand, and we need to make it happen in practice. A sustainable electrical manufacturing and supply industry will be an asset in a low carbon world.
Sustainability and the energy transition - driven by governments via regulation, by consumers via their preferences, and by the financial markets via environmental, social and governance (ESG) investing - will reshape our world and reshape our businesses in ways that we’re only just now fully comprehending.
But one thing is clear: the answer to that question about whether it’s good for the planet or good for business must be a resounding: ‘good for both’