PAPERS PRESENTED AT THE EUROPEAN FORUM FOR MANUFACTURING ON THE COMMISSION’S CIRCULAR ECONOMY ROADMAP &

REMANUFACTURING WITH DIRECTOR KESTUTIS SADAUSKAS

CHAIRED BY JO LEINEN MEP ON TUESDAY 5 MAY 2015

Jo Leinen

Member of Parliament

This evening’s Roundtable with the European Commission will

concentrate on The EC Circular Economy Roadmap and

Remanufacturing.

It is therefore a special pleasure to welcome the key figure on policy

development on the Circular Economy KESTUTIS SADAUSKAS who

is the Commission’s Director for Green Economy

His task is to support the transformation of the European Union into a

Circular Economy that

- uses its resources efficiently

- and decouples economic growth from environmental impact and

resource use

His Directorate General aims at enhancing competitiveness through

eco-innovation, promotion of recycling and progressive waste

management, as well as addressing the impact of chemicals and I am delighted to invite him to address us

Kestutis Sadauskas

Director Green Economy

European Commission

Mr Sadauskas explained that the new circular economy package was

due to be tabled in October at the earliest (but, in any case, in 2015).

The focus is, inter alia, on smart regulation. This may mean that it does

not require new pieces of legislation but look at the existing range of

policy instruments that already cover consumption, production and

waste.

He stressed that the Commission remains very focussed on waste and

that will not disappear. European citizens were disposing of around 5

tonnes of waste every year and there was a desire to ensure that the all

useful material in that would be drawn out. In this context, the

Commission was looking at targets and economic instruments. In

particular, Mr Sadauskas pointed to instruments employed by

some Member States which sought to make landfill uneconomical (i.e. Germany). The balance to be struck is

to encourage those with high dependency on landfill to move away from it and drive further action in

countries that were moving away from landfill.

The Commission would also be looking seriously at the issue of waste prevention. This was not an area that

has been sufficiently addressed in the past. How we produce, consume, market forces and competitiveness

were all important components of this, but also how we can best use the resources that we already have. This

would require consistency and perseverance, clarity and targets. Manufacturing was the sector where DG

Environment was expecting much progress to be made.

The recently published roadmap will form the general basis of public discussion, with a more detailed Action

Plan outlining activity to deliver within this Commission’s mandate to be worked out later. The Commission

is currently in listening mode.

Susanne Baker

Senior Climate & Environmental Policy

EEF

Manufacturing is central to delivering a circular economy:

manufacturers produce and select materials, design and manufacture

products, and have the ability to harness the value of materials and

products once they have seemingly reached the end of their useful

life and extend, or reintroduce them back into productive use through

their unique relationship with their customers, expertise in supply

chains and innate capacity to innovate.

Indeed, for manufacturers, the circular economy presents an

opportunity to leverage a competitive edge by adopting resource

efficient business model which can help companies differentiate

themselves in the market place and form stronger relationships with

customers. These business models can also lead to cost savings

through material, water and energy efficiency. Designed correctly,

they can help companies generate new revenue streams.

Furthermore, they can support the recovery of strategically important materials.

EEF will soon be publishing its views on the measures needed to foster a competitive, circular economy in

Europe. This paper focuses on one element: the regulatory barriers to innovative and resource-efficient

business models.

A 2014 survey of EEF members revealed that a significant number thought that regulation was acting as a

barrier to action, with smaller companies more likely than large ones to think that regulation is unsupportive

(40% of companies with a turnover under £2m reported that regulation was a barrier compared to over 32.8%

of companies with a turnover over £50m). The evidence is perhaps clearest for those involved in

remanufacturing. For example:

Current end-of-use regulations promote recycling rather than the adoption of more valuable

approaches such as remanufacture. For example, the End of Life Vehicles Directive offers no credit to

vehicle manufacturers that remanufacture, making recycling more attractive.

EEF has received a number of representations from companies highlighting concerns about the impact

of the REACH Regulation on their ability to remanufacture. Disclosure obligations under Article 33 of

REACH and potential future restrictions on substances (through the Authorisation or Restriction

processes) that may be present in older products present legal risks for the companies concerned. The

impact of this on the use of legacy spare parts is now well known and we welcome the Commission’s

efforts to simplify Authorisation for legacy parts to enable repair and servicing to continue. But other

barriers remain. For example, if a company cannot get the required information from the original

supply chain to check whether a product or part contains chemicals recently identified as being of high

concern, then it has little option but to recycle it.

Despite explicit exemptions for spare parts in the Restriction of Hazardous Substances for Electrical

and Electronic Equipment (RoHS) Directive, it is also creating problems for remanufacturers. RoHS

has recently been added to the CE Directive. To retain CE marking, any deviation in the

manufacturing process requires companies to revalidate. If a substance is substituted the product also

has to be reassessed to retain the CE mark. This creates an obvious tension for those involved in

remanufacturing. A misinterpretation or legal ruling could cause a major disruption to the business

model.

The waste legislative framework can also complicate or hinder reverse logistics. For example, if a

manufacturer of an electrical product wanted to take it back and repair it, it would have to register its

site as a designated collection facility and become a licensed waste carrier. There is also a risk that, in

future, if substances in the products are considered hazardous, sites accepting product for repair or

remanufacturing may also have to be registered accordingly. Even companies returning/receiving low-

risk products, such as office furniture, would be caught up to some degree. With the economics of

reverse logistics already a barrier, this is regarded as overly bureaucratic and expensive.

The Energy using Products (EuP Directive) can create further barriers. Remanufactured components

may not be as energy efficient as those of a more recent design. The EuP Directive is continually

revised to lower the energy consumption of priority products. It is not explicitly clear how

remanufactured products are treated under this framework which creates legal uncertainty.

The sum of this legislative environment increases the likelihood of product having to be scrapped rather than

being serviced and remanufactured. It needs to be clearer, simpler and more predictable.

We urge the Commission to review, through REFIT, the existing stock of legislation to create an enabling

legislative framework that rewards circular practices, not constrains them. That provide incentives for

business model innovation, not additional burdens that dampen competitiveness.

Peter Bartel

Chairman

APRA Europe

The importance of circular economy for the automotive aftermarket:

For service and maintenance of motor vehicles, the automotive industry

has to provide the relevant spare parts to the aftermarket. These service

parts have to be available for decades after the original parts were

developed and produced. Market demands, even for older vehicles,

quality spare parts at a reasonable price. Often, this is only possible

with a remanufactured product.

The customer has, when purchasing a remanufactured spare part, the

right to return the defect used part out of his vehicle. The reverse

logistic process, back to the supplier is supported by financial

incentives.

Cores are the raw material for the next remanufacturing cycle. Within

the European Community about 10% of the technical spare parts in the

automotive aftermarket are remanufactured.

The automotive aftermarket and future challenges:

Motor vehicles are progressively getting more complex using specific production processes and a higher

diversity of materials. Many of these specific production processes will not be available in future decades. For

example today the life-cycles of semiconductors is less than the production life of a vehicle. we can expect

that in the future the production costs of new spare parts will dramatically increase.

Without remanufacturing, spare parts for a reasonable price will not be available. Relatively new cars will be

scraped as maintenance is getting unaffordable and prohibitive for the customer.

Today the preferred end of life treatment of motor vehicles is shredding. Actual processes are highly efficient

to reach the legally requested demands. But most of the material besides iron, aluminium and copper are lost.

Future need to recover strategic elements cannot be achieved with today’s recycling technology.

The remanufacturing Process:

A remanufactured part fulfils a function which is least equivalent compared to the original part. It is restored

from an existing part, using standardized industrial processes inline with specific technical specifications. A

remanufactured part is given the same warranty as a new part and it clearly identifies the part as a

remanufactured part and states the remanufacturer.

Social and environmental benefits of remanufacturing:

In the remanufacturing process, the failed part is used as raw material for the production. Remanufacturing

has positive impacts on:

Environment

reducing potential of CO2 emissions by 400Kt (only EU 28)

saving natural resources – up to 85% of raw material – using only 55% of the energy compared to that

of producing a new unit

Safety

Remanufactured products fulfil the equivalent function and are warranted as the ‘original product’

Employment

32.000 jobs are offered (only EU 28)

Economy

Best choice for the end user by offering the best quality at a reasonable price compared with a new

unit

How to make circular economy fit for success – Policy recommendations:

1. The used part, intended to be remanufactured, is the raw material for remanufacturing. This

part should be handled and declared as valuable raw material within reverse logistics. An

official guideline for transport and customs declaration is missing.

2. The reverse logistic process is supported with financial incentives, a surcharge. Various tax

authorities are tempted to consider the core surcharge as an income, turnover. If we are

committed to the circular economy surcharges should be free of tax/VAT.

3. Cars have become more and more ‘computers on wheels’. While technology innovations

provide better emissions control as well as more safety and comfort, they make it challenging

to service or repair a vehicle and to remanufacture the parts.

4. The right to repair, including the access to technical information has to be extended for the

automotive remanufacturing.

5. To ensure that strategic elements and materials stay in the production cycle, remanufacturing

should be positioned as preferred end of life treatment in related legal guidelines.

APRA is a global association with over 1.000 member companies with a combined revenue of approximately

25 billion Euros. The association’s objectives is to promote the general business interests of the

remanufacturing industry as a whole and to foster the spirit of circular economy in pursuit of a better

environment. It also provides members with forums, exhibitions and workshops to interact and consult with

each other on issues affecting the entire industry.

Matthew Bulley

Managing Director

Caterpillar Reman Europe

Dear Honourable Members of the European Parliament, Ladies and

Gentlemen,

It’s a great pleasure to be with you tonight and share our expertise and

experiences with remanufacturing. When you received the invitation,

you might have asked yourself: what is remanufacturing? Is it just

another way of saying recycling? Or refurbishing? Well,

remanufacturing is a process that Caterpillar has been doing for

decades already. And it is an important component of the circular

economy – a concept that is very much debated here in Brussels at the

moment.

So what is remanufacturing: for Caterpillar, remanufacturing is a

process of returning an end-of-life, broken or blemished products or

components to “same as new” working condition or better, in a manufacturing environment, with the same

warranty. Remanufacturing is based on an exchange system – or reverse logistics whereby you return a

used component (core) in return for our remanufactured product. Typical remanufactured products include

engines and engine components, hydraulic components, transmissions, final drives, and steering clutch and

brake groups among others. We Remanufacture more than 6500 different products!

At Caterpillar, when we remanufacture, we do the following processes:

Inspection of the component of its salvage-ability and then refund the “core deposit”. The core

deposits establish a strong consumer incentive to return cores. (We receive back more 97% of all

potential core).

Complete disassembly of the core into its constituent parts, cleaning using environmentally-friendly

processes, then inspection for remanufacturability.

The individual parts are remanufactured to exact specifications to ensure that they provide the same

quality, reliability and durability as they did when they were new – using as much original material

as possible.

Inclusion of all appropriate engineering updates since the component was originally manufactured.

The component is tested, painted and made ready for sale as a Cat Reman product, with the same

warranty as a new one.

Caterpillar Reman components are therefore not repaired goods – repairs usually are simple fixes for a

specific problem. Cat Reman parts are not rebuilt or refurbished – a rebuild normally retains the component

identity, restores to near original condition with the re-builder assuming the warranty liability.

Remanufacturing conserves most of the energy consumed in the original manufacturing process, and has

many other advantages for the circular economy. When we compare a remanufactured cylinder head with

a new one, we have a:

• 86% Safety Advantage

• 61% Less Greenhouse Gas

• 93% Less Water Used

• 86% Less Energy Used

• 99% Less Landfill Space

• 99% Less Material Used

For all those reasons, we believe remanufacturing should be fully recognized in the European

Commission’s circular economy approach, which is not the case today. Reman is between reuse and

recycle, and it works. Reman should also be mainstreamed in Commission activities. For an example, we

should retain the ability to remanufacture engines in the Non Road Mobile Machinery engine emissions

legislation - being reviewed now - for the full life of these machines; otherwise we will end-up legislating

obsolescence instead of promoting the circular economy… I thank you for your attention and look forward

to our discussion.

Paul Ellis

Environmental Regulation Manager

Kingfisher plc

Kingfisher plc, Europe’s largest home improvement retailer, is

committed to sustainability and to achieving a truly circular economy

Kingfisher welcomes the Commission initiative on the Circular

Economy, and is ready to play its role as a committed stakeholder.

We strongly believe that a more circular economy is good not just for

the environment but also for business: circularity means money to be

saved, and money to be made. As the Commission itself acknowledged

in last year’s Circular Economy Communication, moving towards

circularity could save European industry up to €630bn a year by 2030

as well as increase the EU’s GDP by around 3.9% by creating new

markets and products in areas such as re-manufacturing.

Circular economy: what it means for Kingfisher:

For Kingfisher, a true circular economy is all about the five “R’s”: Reduce, reuse, repair, recycle, rental and

we are actively working to integrate these five elements in our business.

Our words are backed up by action: Kingfisher runs its own sustainability programme, Net Positive. As part

of this programme, Kingfisher has committed to, amongst other things, achieving 1,000 products with closed-

loop credentials by 2020, and to meeting the target of no substances of concern in Kingfisher products by

2020. Already today, eco-product sales make-up over 20% of our sales revenue, with a 50% target by 2020.

This means that we have a high level of knowledge in terms of feasibility, opportunities and obstacles, for

implementing such a circular economy strategy at European level. For instance, to help our companies we

developed our Closed-Loop Calculator, a practical and simple tool to identify those products in our ranges

that already have closed-loop credentials, and those which are likely candidates for further improvements.

Our initial observations for a sound legislative package “A” definition of what constitutes a closed-loop

product, and a closed-loop value chain is indispensable. The Commission definition in last year’s Circular

Economy Communication being rather broad, the upcoming legislation needs to help address this

fundamental issue, so that we are all aligned on what we are working towards.

We also need to ensure we create coherence between legislation and avoid additional measures at national

level. This means that we must take care not to jeopardise the potential of the circularity by REACH:

Currently, when the secondary (recycled) plastic is put onto the market it is classed as a new material and is

thus subject to REACH legislation if put into products entering the EU. However, because we cannot properly

trace the feedstock plastic that is used in recycled materials, it is impossible to know the chemical content

thereof –which in turn means that we cannot live up to REACH amends. This clearly is a key conundrum that

needs addressing.

Further, member state product safety law will have to be aligned to the package, with no extra-legal obstacles

imposed, as currently is the case in many member states on for example REACH.

Finally, we should also acknowledge that there are limitations to applications, at least for now. These

limitations are within quality, consumer choice and cost: as retailers, we need to make sure that our products

are not just functional, so of an appropriate grade of materials, but also attractive to our customers in terms of

variety of choice and price.

Kingfisher has identified four main areas of focus for the upcoming Circular Economy Package:

Political recognition that using recycled materials over virgin materials is a priority, acknowledging

that this also, for feasibility, means exempting these materials from REACH, at least in the short-term.

Globally aligned restrictions so that EU rules cannot be circumvented by producing outside Europe as

is currently the case. We want to keep manufacturing jobs in Europe, not drive them away.

A standard definition of what “closed-loop” entails so that we are all working to the same standards,

and no national derogations will apply, increasing hassle for manufacturers and sellers, and lessening

impact for Europe at large.

A common approach to member state waste streams so that we can, medium- and longer-term,

develop a recycle material collect system that allows us to classify the source plastics going into

recycled materials, which in turn would make it feasible for REACH to also cover these recycled

plastic compositions.

Kingfisher is Europe’s largest home improvement retail group and the third largest in the world. Kingfisher

operates over 1,200 stores in 11 countries in Europe and Asia, including key EU markets. We employ nearly

70,000 people worldwide and close to six million customers shop in our stores every week, and many more

online. Our five household names are: B&Q, Brico Dépot, Castorama, Koctas, Screwfix.

Kerstin Enchsson

Global Director Parts

Volvo Construction Equipment

Ladies and Gentlemen,

I am representing Volvo Construction Equipment and I am delighted to

be with you this evening.

Remanufacturing is a key element in Volvo Construction Equipment’s

aftersales business and fully in line with AB Volvos key values:

Quality, Safety and Environmental care

In the next minutes I will

1) Shortly summarize benefits of the Remanufacturing business for

various stakeholders

2) Continue with mentioning Volvo CEs key requirements on the

circular economy/ Reman business

3) And Conclude by putting this in perspective to ongoing

discussions about the need for a replacement engine derogation as part of the new EU-exhaust

emission regulation proposed by the European Commission

So, what are the benefits of Remanufacturing business?

It drives sustainable employment in Europe

Is more labor intensive than new production

Increases need for high skilled and high tech employment in mature markets

Drives need for high tech workshop equipment

It increases efficiency and reduces cost

Remanufacturing is done in standardized industrial processes

Allows for continues knowledge transfer from Reman tech to product development to further

enhance product performance

Reduces total cost of ownership for equipment owners – remanufactured components have a price

advantage compared to new components; quality is (at least) as good as new component

Reduces cost in infrastructural/ housing projects due to lower machine cost per ton/hour

It is an environmental friendly and sustainable business

High raw material and energy efficiency: about 80-85% of raw material is reused

Valuable materials are made to last as long as possible

Worn out materials are collected and brought back to plants (let us say: hopefully) in a way that

prevent oil and other fluids to leak

Remanufacturing processes secure that all dangerous residuals inside the worn out component are

taken care of in a correct way

Volvo CEs key requirements for a sustainable and viable Remanufacturing business going forward I want

to highlight:

Define clear industry standards to ensure unified product standards and definitions – this can be

product quality standards, core handling standards or simply a definition that cores are no (hazardous)

waste

In order to quality ensure production, the product itself and the producer, we strongly believe in

certification of manufacturers

Advantages of certification of Remanufactured component producers are:

o Producers of components take their responsibility through the entire life-cycle of the product (from

initial production to scrapping)

o Product quality stays consistent, even if the component is remanufactured many times

o All players in the market fulfill environmental rules in handling worn out components – a good

example is that old engines and gearboxes are treated in a way that oils and other fluids are

prevented to leak

o The audit trail is kept through the entire life-cycle of the product

Customer benefits: customers can purchase a high quality product at an attractive price point which has a

minimized environmental impact – those advantages make our customers successful in the market and

lead to strong marketing arguments

Certified producer benefits: adherence to EU standard leads to increased trust by the market place – being

a certified producer should be a quality assurance attribute and proof to have minimized environmental

impact

Another important requirement Volvo CE wants to put forward is to:

Give access to other markets/ third countries by allowing import and export of

o remanufactured components – classified “same as new”

o worn out components (“cores”) to ensure necessary infill in remanufacturing plants and/or secure

save scrapping in case components are no longer in shape to be remanufactured.

Special focus should lay on Turkey, which is a market close to EU with enormous importance for

Construction Equipment manufactures

The last point I want to make tonight is in relation to an ongoing file of this House, currently being debated in

the ENVI Committee:

And that is how a viable Remanufacturing business is connected and highly dependent on the need for a

derogation provision for replacement engines in the new EU-exhaust emission regulation for non-road mobile

machinery, led by Mrs Gardini.

For our customers it is of key importance to have access to replacement engines, which includes

Remanufactured engines. Replacement engines ensure high machine uptime, reduced cost of operations and

finally also reduced cost for society. A viable Remanufacturing business ensures in addition above mentioned

benefits of employment, cost efficiency and environmental care. Not having this derogation at all, or as some

have proposed; to include a too limiting timeframe, would run contrary to the EU’s drive towards a Circular

Economy and resource efficiency.

We therefore strongly support to include the existing 97/68/EC replacement engine derogation in the new EU-

exhaust emission regulation proposed by the European Commission.

Thank you very much for your attention.

The Volvo Group is one of the world’s leading manufacturers of trucks, buses, construction equipment and

marine and industrial engines under the leading brands Volvo, Renault Trucks, Mack, UD Trucks, Eicher,

SDLG, Terex Trucks, Prevost, Nova Bus, UD Bus, Sunwin Bus and Volvo Penta.

Volvo Construction Equipment, one of the world’s leading providers of products and services to the

construction industry under the brands Volvo, SDLG and Terex Trucks, and strives to become the world

leader in sustainable transport solutions. Revenues 2014: 53 bn SEK (~6 bn EUR). About 15.000 employees

work for Volvo CE around the globe.

José Inacio Faria

Member of Parliament

Dear stakeholders, colleague Members of the European Parliament,

I am here today to share my views with you on where the European

Union stands today in innovation.

Today, the European Union imports half of the raw-materials it

consumes. If we correct this, the productivity of resources we use every

day could increase at least by one third, representing annual savings of

at least 250 billion euros in material costs and 2 million jobs that are not

being created. Simultaneously, waste and carbon emissions would be

greatly reduced.

Europe is thus at a loss. The European Union needs a new

reindustrialisation based on innovation. One that improves the situation

of businesses and citizens alike. One that allows Europe to retain its

role as the largest market in the world. And one which is conductive to

the smart, sustainable and inclusive growth guidelines of Europe 2020

strategy, preserving the European social model and, last but not least,

our environmental commitments.

Innovation and circular economy are inseparable. This marriage enables material value to stay within circular

loops as long as possible while reducing waste creation; energy prices will decrease as the sector becomes

increasingly independent from carbon emission taxes; materials become lighter, cheaper, reusable and their

productivity is expected to grow in two-digit figures until 2030, having an impact in European

competitiveness as companies reduce purchase of expensive and limited raw materials.

The momentum for circular economy is now: a landmark Commission Communication on circular economy

was released in September last year, a Parliament resolution is being discussed as of now and the proposal for

the Circular Economy Package is set to be released later this year.

However, it would be wrong to assume that the innovation momentum is something of now; it has begun long

ago.

While there was an effort to reduce the budget of virtually all areas of EU activity, research saw its funding

increase in 30% for this Multiannual Financial Framework. This is a strong statement that innovation is a big

bet for the 2014-2020 cycle, with the Horizon 2020 as its flagship. And a big part of this investment has to do

with circular economy.

Stepping up from the old framework programme, more money is being conducted to innovation now than

ever before, in material science, eco-innovation, raw material supply or carbon emission reduction.

Discussions in the European Parliament last year ensured 20% of the Horizon 2020 funds should be allocated

to small businesses, to make sure that big and small operators embrace reusability and circularity of materials.

New financial instruments are being created to benefit innovative companies in Europe: guarantees are being

offered by the European Investment Fund to banks that lend to ground-breaking projects, equity funds with

EU participation are investing in innovation and a new financial tool for research-performing enterprises,

InnovFin, is to be the access-to-finance tool for the Horizon 2020 project as soon as it is fully operational.

However, many challenges are present in making the most of circular economy and innovation.

Member States have made the commitment of allocating 3% of their GDP to research and development

expenditure. Currently, the net research expenditure in Europe is below 1.5% of the EU GDP, and has been

decreasing since 2008. The United States invest almost 3% and Korea invests more than 4%. Inside Europe,

discrepancies are enormous: while Sweden and Finland allocate over the 3% target, many Southern countries

are still far from that.

Resources in perfect conditions leave the EU to be disposed of in oceans, landfills or incinerated into

dangerous particles we all breathe. We could do more with fewer resources, make them last longer. But that

cannot be attained if the success rate for the biggest EU research programme remains at such low levels, with

about 90% of projects not being eligible.

Cuts on the Horizon 2020 budget, late payments, lack of information, all make it difficult to believe in

innovation in Europe. Companies need predictability when they are to make large investments in innovative

ideas; and the money is probably not enough to face all the current demand, jeopardising possible good ideas

under budget constraints.

Dear ladies and gentlemen, we have little time left and great benefits to choose the way of circular economy.

If we do the right thing, if we break market barriers and cut red tape, if Member States allocate enough

funding to innovation, an estimated EU GDP boost of 3.9% in novel sector and job creation can be achieved.

The European Parliament will defend Horizon 2020 and will keep on working with other institutions on the

new legislative texts that are underway, such as the Circular Economy Package and the Ecodesign Directive.

We have everything for the beginning of a new era in innovation, if we meet our goals with concrete action.

And I want to do it.

Sylvie Feindt

Director Environmental Policy

Digital Europe

Used goods shipped for repair are not waste and should never be

classified as such. The repair / reuse model is already today and integral

part of the circular economy. To make repair and remanufacturing

economically viable electronics companies utilize regional repair

facilities, often co-located with productions sites. As supply and

production chains of the electronics industry are global, so is repair and

remanufacturing. Consequently, it is essential that the Basel Convention

Technical Guidelines allows for the shipment as non-waste of used

products and parts for testing, repair and refurbishment to centralized

repair facilities that are very often established in ‘non-OECD’

countries. If the guidelines don’t make this distinction the commercial

model for refurbished goods would be undermined (as shipping parts

for repair and re-use as waste would be too administratively heavy and

costly) and then new parts will be used instead of refurbished ones,

dramatically increasing the cost of repair and increasing environmental cost.

Parties to the Basel Convention are currently preparing new Technical Guidelines to clarify the

circumstances under which used electronic products and parts will qualify as ‘waste’ or ‘non waste’. Whi le

the electronics industry agrees to the overall objective of stopping illegal shipments of e-waste, it also

encourages parties to the Convention to recognize testing, repair, refurbishment and re-use to be essential

practices that extend the useful life of products, reduce e-waste generation, conserve material resources and

advance sustainable business practices in line with the circular economy thinking.

The importance of a legitimate and economically viable remanufacturing business

Trans-­‐border shipments for repair allow complex capital equipment to be repaired and reused, and

sometimes upgraded, thus giving the equipment a longer lifetime. Early waste generation is prevented,

in line with the waste hierarchy. If the electronics industry was to ship used products as hazardous

waste, this would be an extremely burdensome operation costing up to 50% more compared to shipping

as non waste.

Given that repaired products compete with new products, the increased cost for repairing theses products,

which for most multinationals involves utilizing a regional network of specialized repair hubs, would

render their repair / refurbishment / remanufacturing economically unviable. Customer and producer

preference would be given to ‘replacement by new product’. Rather than being shipped and repaired,

these products will be scrapped and recycled, a high volume of functioning equipment (both near-new

and older) will enter the waste stream prematurely and unnecessarily.

Functionality tests will be performed once the units reach the repair facility where complex tools and

machines are provided to test often very complex goods and / or parts. All used EEE shipped by OEMs or

by third parties on their behalf are properly packaged to avoid physical damage.

In total, according to the DIGITALEUROPE survey, about 118.000 tons of devices and parts are shipped

trans-boundary per year for the purposes of repair and refurbishment globally. In comparison to the 10

million tons of WEEE generated in the EU annually, this amount seems tiny. Repair and refurbishment of

these products represents a multi-billion Euro business involving companies of all sizes around the world.

Global repair and remanufacturing flows

Drawing from the result of the GIGITALEUROPE survey, it has become clear that the majority of the

shipments from EU-Member States go towards Western and Eastern Europe. A portion of the used

products / service parts are also shipped to the Asian-Pacific region as well as North and Central

America. These facilities not only contribute to waste prevention, but also generate skilled jobs. A system

of regional repair hubs is necessary because the required expertise and know-how cannot be found or

made available in every country.

Shipments for testing, repair, refurbishment and re-use of parts and equipment comprise movements of

valuable assets that are monitored – the progress of each individual product or part shipped for testing

and repair is documented along the entire servicing process to protect its reuse value and to avoid any

diversion of the equipment to the illegal waste trade. Parts that a clear waste are not shipped but scrapped.

The importance of the adoption of guidelines

Without trans-boundary shipment there is no repair, and the remanufacturing model does not work.

Therefore industry urges the European Commission and the Member States to lead the work for the

drafting and adoption of the Technical Guidelines including harmonized criteria for making non-waste

determinations enjoy wide support. such criteria including the proper packaging, a valid contract between

exporter and importing facility, a declaration of intent, etc. should also help support authorities, in

particular those developing countries, to distinguish shipment of used goods from illegal waste shipment.

Marco Franza

Remanufacturing Project Leader

CNH Industrial

What are the barriers preventing manufacturers adopting and growing

circular business models and remanufacturing? Which legal barriers

are hampering action? How can consumer confidence be strengthened?

And what is the role for public procurement, if any. What incentives can

be introduced to encourage action? Can data and information leverage

more activity?

ENCOURAGING ACTION BY BUSINESS & SMEs

Being a global enterprise CNH Industrial acts to create long-term value

for the Company, its stakeholders and the society as a whole. As such,

sustainability is a key factor to the Corporate Governance of CNH

Industrial where top management takes a direct and active role in

ensuring that the Company operates accordingly.

In this framework circular economy offers significant opportunities for growth requiring a holistic approach

aimed at fostering a successful implementation for different stakeholders along the industrial value creation

chain.

According to the outcomes of the stakeholder engagement activities conducted in 2014 in both European

Middle East and Africa and Latin America Regions, remanufacturing is considered a relevant aspect.

CNH Industrial’ stakeholders believe it is important to reduce raw material usage and CO2 emissions, cutting

costs by reusing recoverable materials, avoiding waste and extending remanufacturing to other sectors. In

North America Region remanufacturing is an expanding industry, especially throughout the US. However, in

order to ensure reliable and consistently high quality end products and streamline the technical specifications

of processes stakeholders feel those more effective standards should be pursued.

By regenerating, or remanufacturing, worn components (cores), CNH Industrial reduces waste, reuses

materials, and encourages the recycling of recoverable materials. Offering a full range of original spare parts

to cover the entire life cycle of all products, CNH Industrial has alongside a broad selection of

remanufactured parts. All CNH Industrial brands in fact can offer more environmentally friendly products,

like-new quality, and good value, since remanufactured parts save the customer an average 30% on the

purchase price. Furthermore, by avoiding the extraction of new raw materials, it is possible to reduce both

energy use and greenhouse gases. Indeed, the reconditioning and reuse of components reduces environmental

impact by contributing to diminishing the use of raw materials by about 1,200 tons per year, with a

corresponding cut in CO2 emissions.

In particular the remanufacturing process of cores ensures reliability of the product and reduced vehicle

downtime at competitive prices for customers granting the same standards of operational performance as new

products, triggering a virtuous cycle of savings in raw materials and reducing materials going to landfill.

As previously stated many stakeholders are involved in the remanufacturing process: customers, (dealerships)

propose remanufacturing solutions (salvage cores) and fit remanufactured parts on vehicles suppliers, which

remanufacture cores and grant the same operational performance as new products.

CNH Industrial Parts and Service Department manages the overall process, from the collection of cores from

the dealerships to the stocking and retailing of remanufactured products to the end customers, being also in

charge of logistics processes and training programs to dealers.

CNH Industrial offers a full range of original spare parts to cover the entire life cycle of all products,

alongside a broad selection of remanufactured parts. All CNH Industrial brands can thus offer more

environmentally friendly products, like-new quality, and good value, since remanufactured parts save the

customer an average 30% on the purchase price.

When talking a further development for Remanufacturing Process several priorities should be taken onboard

in order to accelerate the transition to a circular economy:

Raise consumers’ confidence through:

o Definition of what is a Reman and develop relative standards (CE alike concept)

o Definition of what is a Core

Improving the administrative burden through:

o Managing the return of core process for Extra EU countries (ie. Ukraine; Brazil)

o Supporting measures to enhance the return of cores process

Those are key factors which would be crucial to improve in order to make the all supply value chain more

reliable towards the customers, supporting the creation of a circular-friendly and more sustainable

environment.

Sigrid Linher

Energy & Environment Manager

Orgalime

The starting point for any successful Circular Economy Package (CEP)

is waste policy

We need and Orgalime supports a strict landfill policy (product

policy measures do not deliver if waste appliances are still land filled)

We support collection targets and realistic increased recycling and

recovery targets – to improve access to secondary raw materials

We support harmonised treatment standards, European and

international ones, to improve the qualities of recycling

Any policy measure can only be as successful as it is

properly followed up by implementation, market surveillance and

enforcement.

The lack of market surveillance and enforcement of the EU’s waste

policy acquis and the

still considerable implementation gaps between Member States remain

key barriers for resource efficiency and circularity today.

There are in our view additional ingredients to making waste policy a modern one –

Let me just quote three:

First, a modern European waste policy should work with market realities & keep an open mind for

shaping long standing concepts against such new realities:

Example 1: The case of Extended Producer Responsibility (EPR): it was created at times when waste was a

pure cost that had to be borne by someone; for certain waste streams, and WEEE in particular, this “waste as

a cost thinking” has for a long time been surpassed by a “waste has a value reality”. As a result, only 1/3

of WEEE is running through the official WEEE producer take back schemes, 2/3 are running outside these

schemes for economic reasons and are handled by other actors than traditional producers – these flows are

not reported or accounted for in EU waste statistics.

A modern waste policy, and especially if the EPR concept were reshaped, should reflect such fundamental

new realities and “catch all such flows and actors” to ensure that all WEEE collected is also reported and

properly treated at the end of life stage. The 2012 recast WEEE DI has opened up for it, the first CEP

unfortunately lagged behind.

Example 2: The increased use of ICT in manufacturing (Industry 4.0/smart manufacturing trend) brings

entirely new possibilities to tap environmental potentials, quickly and

efficiently, including for the sustainable use of resources:

The use of automation and control equipment in recycling for example immediately leads to better

waste sorting and better qualities of recycled materials.

A Danish producer of wind turbines increases efficiencies of 25000 wind turbines through

predictive maintenance: each of the turbines is equipped with sensors. Every day, the 25000 turbines

installed send their performance and diagnostic data, which allows the producer to precisely plan

maintenance and inspection. These may then be carried out during times of lower demand, be planned

according to weather conditions. Wind turbines down-times are reduced considerably. The lifetime of

parts is increased, the need for spare parts reduced, less waste is generated. It allows for more efficient

generation of green energy.

This trend and the gains that could come from such synergies with the upcoming digital agenda has not been

sufficiently reflected in the debate today.

Example 3: Studies confirm that consumers increasingly change appliances although they are still fully

functional. Consumer behaviour towards circular business models is essential - though consumer

expectations and behaviour remain the weak if not missing link.

Second, a modern European waste policy should build on the Internal Market, Europe’s strength:

Linking product and waste policy per se bears the risk of de-harmonisation: waste policy represents

minimum harmonisation which allow stricter national measures - product

requirements however require full, maximum harmonisation across the EU.

Requiring Member States to take national product design measures, as the first CEP did through the

proposal for a modified article 8 of the Waste DI, risks 28 different product standards in the EU. This not

only creates confusion - it no doubt is a barrier to the free circulation of goods in the EU.

Also, the increasing inconsistencies of waste policy with other policies, especially chemicals policy,

weaken the internal market. In addition, such inconsistencies are a hindrance for circularity as such by

creating confusion and conflicting policy objectives:

Example: The new rules for shipments of used EEE in the recast WEEE Directive hinder the

refurbishment of electrical and electronic equipment, since certain items can only be legally shipped during

the warranty period.

Example: preparing for new restrictions of substances used in EEE: preparatory substance evaluations are

running in parallel under two legal instruments, RoHS and REACH and they are carried out according

to different, insufficiently coordinated methodologies, including the risk of environmental burden shifting

over the life cycle.

Example: Access to spare parts is essential for circularity, however the REACH regulation - opposite to

sector specific chemicals legislation such as RoHS or EoLV- doesn’t contain a horizontal spare parts

exclusion. This results in REACH authorisation requirements for the manufacturing and use of certain spare

parts in the EU - a costly and time consuming process even under an authorisation light format. The other

consequence of ignoring the “repair as produced principle” under REACH can be that spare parts need to

comply with restrictions adopted after the POM of the initial product that it belonged to. This in return

requires a re-design of the spare part and most likely the entire initial product including retesting. Again, at

least a complex, costly, time consuming process, at worst, technically impossible. What would be the

consumer’s reaction? Repair already today is often more costly than buying new.

There may be good reasons for all these decisions, which we do not challenge per se. However, these

examples demonstrate that a modern waste policy can no longer be pursued as a standalone issue or a

standalone objective - waste policy needs to work consistently together with other policies and also respect

its boundaries.

Quantities are important but they are not sufficient: we need to bring more innovation, more

quality to the waste sector and to manufacturing as a whole

Harmonised (European and international) treatment standards are one element, so are improved consistencies

with other EU environment policies, as mentioned before. Setting quality standards for secondary raw

materials are another one, though missing to date. Finally, a truly new impetus for increased circularity

would in our view come from the deployment of resource efficiency technologies in practice: Herewith,

I virtually “close the loop” to my earlier point of Industries 4.0/smart manufacturing developments and the

resource efficiency potentials stemming from this trend:

Why not shaping a modern waste and resource efficiency policy, including circularity, through Europe’s

cutting edge technologies and thereby create synergies with the EU´s Industrial, Energy policy, jobs and

growth agenda?

Nicholas Morley

Director

Center for Remanufacturing & Reuse

The Centre for Remanufacturing and Reuse (CRR) is run by the

sustainability consultancy Oakdene Hollins Ltd. The Centre is the

leader of the European Remanufacturing Network

(www.remanufacturing.eu), a co-ordination action funded by Horizon

2020 which has as partners six of the most active and experienced

research and consulting organisations in remanufacturing. These

include Linköping University, Circle Economy, VTT, University of

Strathclyde, TU Delft, Fraunhofer and Grenoble INP. This project will

carry out market studies, analyse standards requirements, develop

ecodesign tools, grow capacity in remanufacturing innovation and

disseminate information on remanufacturing.

The CRR is currently privately funded, having been started in 2007

with seed funding from the UK Department of Environment, Food and

Rural Affairs. Using this funding it scoped the current and future opportunities in remanufacturing, carried

out product and market studies, developed analytical tools to determine suitability of products for

remanufacturing and a number of related activities. Examples of privately funded work range from a study

on the Malaysian remanufacturing industry, sponsored by the US Government as part of free trade initiatives

within the Asia-Pacific Economic Co-operation Forum (APEC), to case studies on individual remanufactured

products, including carbon footprinting.

The mission of the Centre is to promote remanufacturing where it can be shown to be environmentally

beneficial, and it is one of the contributors to the significantly higher profile of remanufacturing today

compared to ten years ago. It has has a wealth of information on remanufacturing publicly available at

www.remanufacturing.org.uk.

Remanufacturing has been shown to be an important component of the circular economy, for example

through research by McKinsey management consultants and by the Ellen MacArthur Foundation. It is an

“inner loop”, where value and functionality of the product is maximally retained. It substitutes materials with

jobs, typically more skilled than would be created by recycling operations. These jobs typically reside closer

to the national markets than with recycling, where it is easier to export materials to, for example, the Far East

for processing. It typically is more resource efficient than recycling, as it resides at a higher level of the waste

hierarchy. In many cases it is also more profitable than the production of the original equipment.

Remanufacturing is perhaps only 2-3% of manufacturing activity. There is therefore substantial scope to

increase the degree of within manufacturing using this approach to perhaps 5-10% at least, depending on the

degree of ambition. Based on our research we believe that the following three groups of activities are

required in order to achieve greater remanufacturing. One is a “push” activity to create a greater supply of

remanufactured goods, two are “pull” activities that will create greater demand for remanufactured products

and so stimulate the sector.

Making the case for remanufacturing to companies, consumers and policy makers.

Companies are suspicious of an activity that might cannibalise their sales of new products. Without

information potential of remanufacturing, and how it can boost sales and profits whilst minimising resource

use, companies will be slower in taking up the concept. Policy makers require information on the size and

significance of the sector, for example with respect to job creation potential, in order to determine the priority

of interventions to promote it compared to other circularity actions such as recycling or product longevity.

The size of the prize in terms of resource efficiency improvements, reduction in the need for primary raw

materials, and increased material circularity is needed to be calculated. Such studies have been carried out by

the CRR for individual nations such as the UK and Scotland, but not yet for the European Union as a whole.

Examples of specific actions required include a pan-European market study that includes identification of

sectors where remanufacturing could be increased; case studies of successful remanufacturing businesses.

For individual companies, design tools can help them to produce products that are more suitable for

remanufacturing. Decision support tools can help companies to decide whether their product ranges are

suitable for remanufacturing in the first place.

An exciting aspect of remanufacturing is how the case for remanufacturing is being successfully made by

several business-orientated organisations such as the Ellen MacArthur Foundation.

De-risking the purchase of remanufactured products. Many purchasers believe that remanufactured products are second hand and are therefore second rate. Some

companies claim to remanufacture products but simply are selling reused products without the disassembly,

replacement of worn components, re-assembly and testing that forms part of the generally accepted process

of remanufacturing.

For business purchasers of remanufactured products, standards are an important way or re-assuring the

business that the product is a genuinely remanufactured product. For example

- British Standard 8887-2 defines remanufacturing, reconditioning and recycling so that the terminology may

be used accurately and not to disguise inferior operations. Remanufacturing is the “gold standard” of reuse

activities and it implies that the product has been brought back to an as-new condition with a warranty to

match.

- British Standard 8887-220 defines the remanufacturing process. A company complying with this standard is

able to demonstrate that it is carrying out genuine remanufacturing and should therefore produce “as new”

product. Other standards exist as subsidiary standards, applying the remanufacturing standard to specific

product groups, such as computer servers.

Action by the European Commission could be to commission the production of a CEN standard on

remanufacturing, both definition and process, and then to sponsor or otherwise subsidise the uptake of the

standard by SMEs.

For consumers, other measures are required in order to build confidence in remanufactured products. This

might include a label, or trust in the brand, but many successful performance-based business models may use

new or remanufactured product at the discretion of the performance provider.

Market development. Public and private procurement is an important way in which demand for

remanufactured product can be created. Remanufactured products are usually cheaper than new products

if purchased individually and therefore have the benefit of saving public authorities and companies

money. Remanufactured products are also enablers of business models such as leasing, rental or

servitisation, since remanufacturing allows the product to be used and reused for service performance,

whilst increasing profitability for the company offering the service.

Since remanufacturing standard is available, it is possible to build in the requirements of the standard into

public procurement criteria. Hence GPP criteria can include opportunities for remanufactured products. It is

hoped that companies committed to accelerating the circular economy will also participate in specifying

remanufactured products for purchase, not just public procurers.

Lastly, since the growth of remanufacturing is governed by the degree to which companies can recover “core”

– the used product, it is important that there is increased harmonisation of waste regulation across Europe.

Unlike recycling, which typically occurs within countries, remanufacturing can be extremely specialised, with

only one or two facilities serving the whole of Europe. Therefore there is increased shipment of used products

across national boundaries compared to recycling. A cause of increased cost and administration has been

identified as the different waste definitions between European countries and how core may or may not be

defined as waste depending on interpretations of waste regulations.

Ludmilla Schlageter

Vice President Government Affairs

Siemens Healthcare

Medical Device Refurbishment worldwide at a glance:

26% of the world refurbished medical device market is Europe & RCA1

I

Introdction Refurbishment at Siemsn Healthcare

Siemens Healthcare is welcoming the discussion on the topic and is

aware and active in the consultations regarding the Roadmap to a

Circular Economy Strategy. The following policy paper is exclusively

written to highlight the challenges of the Refurbishment Business of

Siemens Healthcare regarding the Circular Economy. Siemens

Healthcare has and will provide its views in a more holistic approach on

the complete package. For the purpose of this paper, Siemens

Healthcare focuses on their practice in Refurbishment.

Refurbishment in Siemens Healthcare is a business for more than 14 years. Already in 2001 Siemens

Healthcare founded an own Business Unit and made an effort to maximize the functional and economic life of

medical systems and thus saving resources and raw materials. Siemens Healthcare Refurbished Systems has

set up special trade in programs and carefully selects these pre-owned Siemens systems.

Refurbishment in its own already saves approximately 20.000 tons CO2 per annum this equals approximately

CO2 emission of 5.700 three-person households. Definition of medical device refurbishment

Definition of medical device refurbishment

Refurbishment has a definition provided by DITTA1, the Global Diagnostic Imaging, Healthcare IT and

Radiation Therapy Trade Association:

Refurbishment is defined as the process to restore used equipment or systems into a condition of safety and

effectiveness comparable to when new. This includes actions such as: repair, rework, update and replacement

of worn parts with original parts. All actions are performed in a manner consistent with product specifications

and service procedures as defined by the manufacturer for that equipment or system without significantly

changing the equipment’s or system’s performance, safety specifications and/or changing intended use as in

its original registration. or Siemens Healthcare this means:

For Siemens Healthcare this means:

We select the systems carefully according to their condition, service history and age.

We de-install the systems by qualified personal in a non-destructive way to ship them to one

of our refurbishment facilities – systems are still in working conditions.

1 Refurbishment of medical devices – Contribution to a Circular Economy, DITTA, January 2015.

We refurbish the systems including disinfection, cleaning, painting, worn parts replacement,

software update and quality test identical to a new system and confirmation of a valid license

(e.g. CE).

We install the refurbished systems and perform a start-up and system performance check like

for a new system.

We offer one year warranty and minimum five year spare parts availability for our

refurbished systems.

Contribution to the Circular Economy – Refurbishment contributes to the three pillars of sustainability:

Environment: Refurbishment saves energy, resources and raw material. Refurbishment prevents waste generation.

Economy: Refurbished medical equipment, worth around 130 million euros, was sold in the EU1 Refurbishment extends the economic life time of medical devices

Society/Patients: Refurbishment contributes strongly to increased access to affordable healthcare. Refurbished Systems provide healthcare providers with high quality and low cost equipment thus increasing the overall quality of healthcare for EU citizens.

Critical barriers preventing growth of circular economy business:

Restriction of Hazardous Substances (RoHS): RoHS does not take into account that medical devices have a global market. Products destined for refurbishment are sold in EU and USA mainly but are sourced mostly outside EU. RoHS is going to create a shortage of refurbished equipment in EU which will impact Healthcare and the profitability of the Siemens Healthcare business.

Medical Device Directive (currently being re-casted into Medical Device Regulation (MDR)): Medical Device Regulation could have a serious impact on refurbishment. Being a global market, used medical devices are sourced from all over the world. In Europe, the request of refurbished medical devices is higher than the availability of used equipment eligible for refurbishment. The only way to satisfy hospital and citizens needs is to source used Medical devices from outside EU, but the Medical Device Regulation makes it difficult, if not impossible.

Waste of electrical and electronic equipment (WEEE): During the discussion of legislation WEEE medical device refurbishment business faced some barriers regarding shipment of previously used medical devices (Annex VI, 2 (b)).

Basel – Technical Guidance on transboundary movements of e-waste: Basel convention could limit the trans-boundary shipment of used medical devices for refurbishment from OECD to non-OECD countries and vice versa.

What would we like from EU stakehlders?

What would we like from EU stakehodelrs?

We need a clear understanding of medical device refurbishment/remanufacturing by the policy makers.

Siemens Healthcare refurbishment is no waste management activity

Siemens Healthcare refurbishment deals with medical devices for professional use in all Healthcare

segments i.e. Magnetic Resonance, Computed Tomography and x-ray applications (systems weight from

100kg up to 12 tons)

Siemens Healthcare refurbishment is a benefit for many – society, economy and environment

Siemens Healthcare refurbishment produces safe and effective medical devices by confirming an existing,

valid declaration of conformity (CE).

Antony Fell

Secretary General

European Forum for Manufacturing

I would like to thank all the speakers this evening for their

excellent contribution to this Debate on the important subject of

the Commission’s Circular Economy and Remanufacturing. The

evidence which has been shared on company experience will be

placed on the website to be read more widely, in accordance with

our transparency policy.

Our next European Forum for Manufacturing will take place on

Tuesday 16 June. The subject will be the Digital Single Market

Strategy, which has just been adopted by the European

Commission. This includes a set of targeted actions to be

delivered by the end of next year.

It is built on three pillars:

- Better access for consumers and businesses to digital goods and services across Europe

Creating the right conditions and a level playing field for digital networks and innovative

services to flourish.

- Maximising the growth potential of the digital economy.

The Forum Programme will focus on the fact that infrastructure is key to completing the Digital

Single Market. It will cover:

.

- What Digitisation means for Industry

- Engineering Industry’s expectations which will include:

· Data access

· Security of networks and data protection

· Standardisation