Exploring Heterodox Economics, Mainstream Economics, Finance, Computing, Environmental Sustainability, and Emerging Technologies. This Blog also promotes awareness of a Modern Universal Paradigm known as Transfinancial Economics (via page links) which is arguably the most advanced, and most "scientific" form of Economics of its kind.
Saturday, 7 June 2014
Intellectual property is putting circular economy in jeopardy
Manufacturers like BMW, Apple and Nikon could accomplish far more if they worked with independent businesses, instead of against them
Why isn't BMW recycling more of its own cars in Europe? Even if they wanted to, they probably couldn't. Photograph: Bloomberg/Bloomberg via Getty Images
I watch as workers at BMW's Recycling and Dismantling Centre fish around for an alternator under the hood of what must have been a mid-sized saloon- except this car doesn't have a bonnet anymore. In fact, this car doesn't have much of anything anymore. Its skeletal remains picked clean of most detachable components, this car is one of about 6,000 BMWs recycled at the centre every year.
The international car manufacturer has been disassembling cars in Landshut, Germany since 1994. For a brand of luxury cars, the disassembly centre is surprisingly low-tech. No scientists with clipboards swirling reclaimed motor oil around in beakers. No lab-coated boffins testing car components. Instead, the centre is a familiar industrial mix of overalls, forklifts, and stripped-down cars, just like every other scrap facility I've been to in my life.
But this recycling centre is pretty unique for BMW. After all, BMW makes cars; they don't usually unmake them. Still, in order to meet European environmental standards, BMW has to prove that their cars are 85% recyclable and reusable. So, BMW runs a European recycling plant, where they recycle concept cars, prototypes, and crash-test specimens - cars with components that, for intellectual property reasons, can't be reused.
The 6,000 cars recycled here are just a drop in the bucket compared to what BMW ships worldwide: nearly 1.8m cars in 2012 alone. So, why isn't BMW recycling more of its own cars in Europe, where programmes—like the circular economy—have driven home the profound importance of recycling and reuse at the manufacturer level?
The short answer: even if they wanted to, they probably couldn't.
Like all mass-produced products, BMWs are everywhere: in Manchester, in Stuttgart, in Metz. When those cars come to the end of their useful lives, they don't drive themselves back to the recycling centre in Landshut. The cars stay in Manchester, in Stuttgart, and in Metz. BMW would never be able get all their products back to a single collection centre.
And BMW isn't the only one.
I've spoken with a lot of companies that are interested in circular economy principles and they're all saying the same thing. They want to recycle their own goods. Even more than that, they'd like to repair and refurbish their products for resale (reusing old products is more profitable and more green than making new ones, even from recycled material). But manufacturers just haven't been able to get enough of their own products back from consumers. The products are just too dispersed.
IKEA can't put a collection bin in every community where someone bought a sensibly-priced bed. Philips can't send a company representative door-to-door to collect the nation's broken kettles. And BMW can't run a scrap-yard in every city where someone's purchased a car.
Luckily, they don't have to.
There's a legion of recyclers, refurbishers, and repairers that could do it for them - millions of small businesses already on the ground in Manchester, in Stuttgart, in Metz, and in every other city around the globe. And those small-scale, independent businesses are much more efficient at reuse than their manufacturing counterparts.
So while BMW will never be able to recycle all its own cars, the open market can do that and more. In California, there's a small business that specialises in BMW recycling. They repair, refurbish, and resell car parts directly back to the public, and there are thousands more small, independent scrap-yards like them.
That's the circular economy at work, and it works so well in the automobile market. Thanks to a vast ecosystem of independent refurbishers and recyclers, very little goes to waste. Instead, every valuable bit of the car is repaired and resold. Only when something is beyond salvage does it get melted down for recycling, where the material finds a new life again. This thriving open market is the reason why it will always be easier (and sometimes cheaper) to find another muffler for your Ford Fiesta than it will be to find a replacement circuit board for your iPad.
The trouble is, most manufacturers don't embrace the open markets, especially when it comes to reuse. Reusing and repurposing devices may require technicians to reverse engineer them, to hack them, and to digitally unlock them. Repairing modern machinery requires access to diagnostic codes, circuit schematics, and replacement parts that manufacturers zealously protect. And refurbishing can require access to proprietary tools that manufacturers have been historically reticent to share.
At the BMW recycling centre, technicians showed us a tool they had developed to drain oil from the shock absorber, so the oil could be reused. A useful innovation. But when a member of my tour group asked if BMW sold it to other refurbishers, the man holding the tool looked confused, as though the suggestion was patently absurd. That tool was their intellectual property; it was developed by BMW for BMW. And the patent they filed for the tool ensures that no-one else can invent something similar. Never mind that BMW only recycles only a tiny fraction of their own cars.
And that's how something like intellectual property can strangle the circular economy. Information and innovation are the currency of circularity, but sharing either with independent businesses is not something that manufacturers have been willing to do.
Those policies might seem good for manufacturers in the short run, but building walls around products —around intellectual property— is self-defeating. Apple could make hundreds of millions if it sold replacement parts to the public, just as BMW could certainly find a wider market for their proprietary tools. And, as the price of raw materials continues to skyrocket, working hand in hand with the small businesses that already process their products just might mean manufacturers would be able to reclaim the materials they need for remanufacturing.
Imagine how much more manufacturers could accomplish if they worked with the open market, instead of against it. The market opportunity is immense in providing tools and services to the thousands of small businesses that specialise in reuse, refurbishment, repair, and recycling. An inclusive ecosystem is the best shot we have at closing the loop. Without them, we won't reach the economies of scale that the circular economy needs.