SEE THE SHOW NOTES AND LISTEN AT: Moving to a Circular Economy with Walter Stahel (Part 2)

Katie Whalen [00:00:06] I'm Katie Whalen and join me each week as I talk with experts around the globe about Circular Economy. You'll find out what's being done to make it a reality, and if it can really solve the problems it promises. It's time for Getting in the Loop.

[00:00:26] Hi, I'm Katie, and welcome back to the Getting in the Loop Podcast. Today, we're getting back in the loop with part two of our special two-part interview with the founding father of the performance economy, Dr. Walter Stahel. Walter is the founder and director of the Product Life Institute based in Switzerland, which is the oldest established consultancy in Europe devoted to developing sustainable strategies and policies. He is also a visiting professor in the Department of Engineering and Physical Sciences at the University of Surrey and is a full member of the Club of Rome. Last week, in part one, we heard about Walter's background and how his work on the foreman's economy began. This week, we're getting in the loop with Walter to learn more about the work he's currently doing to accelerate the transition to a more circular economy. In this episode, you will hear about his new book, The Circular Economy A User's Guide, including why he was motivated to write the book in the first place and why he thinks the most important part of Circular economy is you don't forget that resources and links to items discussed in this episode can be found at GettingintheLooppodcast.com. Now to pick up where we left off.

[00:01:41] Okay, so if  you if you would like to, shall we dove into your interview to your new book.

 

Walter Stahel [00:01:50] Okay.

 

Katie Whalen [00:01:50] Yeah.

 

Walter Stahel [00:01:52] Go ahead.

 

Katie Whalen [00:01:52] Excellent. Okay. So I was- my first question is a bit of a general one. But, you know, you've written a lot on this topic before, so what was the motivation for you to write this new book?

 

Walter Stahel [00:02:08] Okay. It's actually the first World Circular Economy Forum 2017 in Helsinski. where, again, I couldn't believe my ears. They had several people from the ministries of economics and from OCD that were. Talking about this labor aspect of the Circular economy, they came to the conclusion that the jobs created were really badly paid menial jobs. And then they gave examples and all the examples were about recycling, electronic waste of recycling, plastic waste and, you know, for God's sake. Recycling is the final phase of the linear industrial economy. Recycling has nothing to do with the Circular economy. The prevalent Circular economy would be to recover the molecules covered the atoms which we do for very few metals like gold and silver and copper, but mostly we with the metal alloys and the plastics, the mixed all the mixed waste that China has now has stopped importing because they say it's shit and they're absolutely right. A mixed race has no value. We need clean, sorted waste. But that is labor intensive. And so when when I heard D. Presentations in his kin 17. I decided to write the book. To put things right. Because I've had finally seen another problem with the Circular economy in in politics is that people simply did not realize it to Circular economy is about optimizing the use of products.

[00:04:29] And recycling is- The thing from political view maybe or is necessary to to get rid of waste. But the circular economy is about maintaining wealth. And with regard to materials, it means recovering the atoms, recovering the molecules for reuse. And that then brought me to the- When I wrote the book, unfortunately, it came as always and a bit too late to get it into the book, but it occurred to me that the real change that happened is the Anthropocene and now the scientists have agreed this was they started with a new car bomb in nineteen forty five because in the beginning of the Anthropocene was the moment when we no longer used natural product, natural materials to make products.

[00:05:48] But now we have developed our own energy that's much more powerful than natural energies. We produce our own materials such as agro chemicals, pharmaceuticals, plastics, metal alloys. That they're much more efficient and powerful than what nature often says but really neglected and especially politicians and scientists neglected the fact that these synthetic materials can no longer be disposed of. By nature, by nature circularity. But now it's manmade materials and therefore, we have a. Man made lady ability to take charge of these matters at the end of their life. And the latest development, which has slowly brought this to the attention of politicians is plastic in the oceans. Because, of course, fish cannot or the Asians can not get rid of this plastic, especially not the quantities that we throw at them.

[00:07:10] But the first of all, plastic should never have been in the environment. And all these other materials, should whoever created it or the object, whoever created it, should take them back because he has the knowledge. How would they were manufactured? Yes, the knowledge. Possibly. How they could be taken apart. And in any case, he made the profit from manufacturing and selling these things. And he should have priced in to take back and recovering of the materials into the original price. And if he hasn't done this, then something like an extended producer liability that will force him to take the things back will either put him in a very fast learning curve of how can I reuse the components or the objects that the products or the materials or otherwise I'm past, I'm bankrupt.

[00:08:23] So the economists call this internally the internalization of external costs, but they always talk about it in this in the green context, but they never go beyond. What does it mean in practice, in practice? It means the producer has to internalize these costs and the policy makers have to impose these, take back and dispose of recover atoms, molecules option on the on the producer. And this is really the big change of the Anthropocene. Anthropocene. I mean, I'm I'm born in 1946. I wasn't aware that I was living the beginning of a new era because it's only recently that we discovered that we have to live in a new area. But. Now, the important thing is to okay. Now we have we know what we have, what we know. But now we have to draw the conclusions. If we live in a manmade world of manmade materials, then mankind has to accept responsibility, the liability for this.

Katie Whalen [00:09:56] Right. Yes, and that was going to be sort of my next question. So that's kind of a nice segue because in the book you highlight that this sort of new maybe not new way of thinking, but like that point of sale is sort of this this pivot for ownership and liability and this this idea of extended producer liability, which you just talked about a couple minutes ago. This is sort of a you spend a good portion of the book talking about about this. And maybe could you explain a little bit to listeners of what you've explained a little bit already of what it is, but maybe you could explain like how it's different because from extended producer responsibility, because I know some of my listeners are probably familiar with with that and they're thinking this interest does extend to producer liability is interesting. But the how is it different from EPR?

Walter Stahel [00:10:56] Okay. Based on the fact that you have a triangle of values, ownership and liability in the economy.  And I define waste or used objects that become waste. You can also call it wasted resources as objects or materials with no positive value and no liable owner. So of the three things value ownership, liability, you have basically nothing left.

[00:11:41] Now, how can you overcome a situation like this? Either you give. Use objects of value. Such as don't use aluminum for beer cans, but use gold foil. And then if somebody throws away a box we can made of gold foil, somebody will pick it up and bring it to a gold merchant and get the box so nobody would throw it away. But then, of course, nobody did that to get a beer can cost fifty dollars, so nobody really buy it. So the beer manufacturers are not very, very enthusiastic by this idea. But the deposit laws, which I read this discussed again is exactly that gave wise the positive value then doesn't become wise. But somebody will pick it up. Now, the other thing is the liable owner theme by introducing an extended producer liability. You basically say that whoever produced it has to pay for the disposal. The difference with extended producer responsibility. Is that. Extended producer responsibility, the EPR, the manufacturer, pays a third party to solve the problem.

[00:13:24] But he doesn't actually do did the thing himself and he doesn't think about how he could make money out of taking back these goods because he never sees them again. He has how tourist a problem to somebody else. And did the costs for this outsourcing is fixed and appears in the economic books, in the annual expenses. And so you don't even see if you have EPL an extended producer liability. Then this appears in in the loss and profit account and as a liability and it is a liability that remains in the books until the product comes back to you.

[00:14:25] But you do know when it comes back and you do know how much it will cost you as a producer. And this is the absolute terror of any financial investor liability open in amounts and time. So people when they see this. Investors will say, no, I'll invest in something else, which means the manufacturers will have to change their business model. In order to get in to get money. It says this is the big thing.

[00:15:01] This is really how politicians can use the mechanic mechanic mechanisms of capitalism to force manufacturers producers to adapt their business model to this new economy of the Anthropocene. That if you produce something that is not digestible by nature, then you have to take full responsibility until the loop is closed. And this will show up in your books. The only way to avoid this liability is that either you rent your product, you keep the ownership and the liability yourself, but then when you do this, you will immediately design the product differently. You will use modular constructions. I mean, Xerox is a very good case, Europe's machines, because Xerox was in that position in 1990.

[00:16:07] So you will produce you will use modular construction with standardized components and you will keep track will keep control on your your message on your product because you want to optimize your profit. And your profit now increases if you have less expenses, and there is a very important lesson on that from my friends at Caterpillar. In Syracuse are in no current that the first factory was in Corinth. In the beginning, they sold the remanufactured engines 40 percent cheaper than the new ones. But a lot of pop TV manufacturers who are doing the same and they had no competitive advantage. And of course, a lot of these broken engines really came back in a horrible state because it's it's waste. No, nobody cares for waste.

[00:17:23] So then somebody had the brilliant idea to say no. The three main engines have the same qualities, same performance, same guarantees as new engines. So we no longer distinguish between three manufactured engines and new engines, but we buy back the broken engines. Paying the owner of the broken engine that buys new one. A base battery manufactured run up to 40 percent of the original value, depending on what date the thing comes back. So now instead of getting trucks full of broken engines on the heat back from the trade from the dealers, they now receive broken engines on a pallet with all the aggregates with everything, because then that the seller gets the highest price back.

[00:18:26] And that was one of the tricks to increase the profitability of free manufacturing, to realize that you need all the goods, all the that the whole system back to remanufacturing, because that's the highest profit you can make.

[00:18:46] So the pay is it's not so easy if you go switch from selling a product to. Using a product and reusing it product in a closed manufacturing loop, you have to. You have to learn the new tricks off of the performance economy because basically now you guarantee a performance and you have to educate your customers to become users that applies to worship that the play caring even to a broken engine and that think is the biggest change that will have to happen, educating people, that thing that is broken is not waste. It's simply an object that is broken and can be repaired.

Katie Whalen [00:19:47] And there's kind of this makes me a little bit. This makes me think about a little bit, this metaphor that you use throughout the book, and I'm probably going to butcher the name, but it's from a French author, Antoine D.S. Exude. And thank you.

Walter Stahel [00:20:08] I'm sure you know you know something you bury because he wrote probably the most famous children's book of the little prince on this planet.

Katie Whalen [00:20:21] Yes. Yes, of course, The Llittle Prince.

Walter Stahel [00:20:24] And he wrote the book, like I quote, is called Citadel which is unfinished. His last unfinished book, which is an incredible source of reflections of thinking on Wall Street today, we would call a sustainable society.

Katie Whalen [00:20:47] If you don't mind, may I read the translation of the quote that you put in?

Walter Stahel [00:20:51] Of course. Of course.

Katie Whalen [00:20:53] Okay. So you say it says when you want to build a ship, do not begin by gathering wood, cutting boards and organizing work gangs, but rather create the longing for the sea, awaken within that men and the desire for the vast and endless sea.

[00:21:10] So thinking about this and it's kind of what you talk a little bit about, of course you talk about it in the book, but you talk up. You just mentioned that, you know, we need to educate people and make them aware about the value of of products and how can we best awaken people's desire and make advances toward, you know, maybe this is a little cheesy, but towards a vast and endless circular economy.

Walter Stahel [00:21:39] Yes, the- actually, I shouldn't have said educating people is motivating people.

Katie Whalen [00:21:45] Okay.

Walter Stahel [00:21:46] We we have to give people the envy to to live a different lifestyle, to live, too. I did what my one line definition of the circular economy is enjoyed the use of and take care of your belongings. So, you know, it's you. It's not the duty.

[00:22:17] You should enjoy the things you have, the belongings you have, and then you will develop normally a healthy relationship and take care of. So the problem is. I had this discussion once in Brussels with people from the commission. But the politicians are doing at the moment and and a lot of other actors like industry. We are putting up a lot of eco labels. And a lot of measures, how do we measure sustainability? If you look at the. To the global system, what is it called global-

Katie Whalen [00:23:10] Reporting initiative.

Walter Stahel [00:23:12] Yes, that is one, but also the GFC, global sustainability from the UN has- It has now, I think, two UN different indicators to measure sustainability. It's nonsense. I mean, no. Nobody's going to read or use it, but it's again, this siloed thinking. You know, you have to measure in that silo something that's silo inside. So it's not a holistic approach. It's measuring what you can measure. But what you should measure is the well-being, their quality of life. And that is very difficult to express in an indicator, economic indicators. So the what any government should do is at least and universities stop looking for how to measure sustainability.

[00:24:24] But how can you give people this this envy to live a more sustainable lifestyle? And I think in that sense they're great that tune Bergen and Friday for four clear but clear method followers are expressing exactly that. They do not tell you what governments should change, but they say we want a future.

[00:25:04] You are destroying our future and governments are at a complete loss because, well. They cannot argue, they cannot discuss the thing. And of course, they have no clue what they should do or if they can do it. Because that's not the way policymakers function. They want to break it down into different things that can then be optimized individually. So the creating this longing for the sea, trading longing for a circular economy, you can do that. For example, I have several cars that are 50 years old and it's an absolute joy to drive a car like this. Even if you don't drive it every day. But it's very day. Or if you look at old paintings, master paintings, you realize there is a quality.

[00:26:08] There is something that- but not everybody reacts the same way. Some people say, well, it's just an old painting. No, Mona Lisa is, for God's sake, it's not even a for sale. You need to know prorogue lasted to look at it. But everybody has to find this forth for him is this quality that must motivate his behavior. And now that's another interesting aspect. That's where the cultural and religious aspect come into it. So circular economy or sustainability, there is no the UN is completely wrong.

[00:26:57] There's no one solution that fits all every culture, every person, every company has to find something that they are motivated by. And some pay day. They can they can pass. They can pass on to their employees, pass on onto- And I think that is the this cultural thing is the one thing that policy makers always shy away or governments shy away because that.

[00:27:34] Then, yeah, you can be attacked big because this is something that you cannot justify in kilo tons or in degrees centigrade of global warming. It's something that that you feel that you must believe in, but it must come out of you until you can see already explaining it is a disaster. So they did this, how do you motivate people to live? Sustainable lifestyle. And so in that sense, that Circular economy is a more sustainable lifestyle because you take care of your belongings instead of replacing them with new ones. And then another very important point. You are fighting circular economy is invisible and silent. You never will see publicity for the local car workshop or the local shoemaker. But you hear on television, on football stadiums, on the voice radio, in the newspapers, everywhere. Everybody bombard to. Visually and orderly with bigger, better, safer, greener products. Buy,  buy. If you want to be green or sustainable or you have to buy this the next year, you have to buy this. Now you have to buy a new electric car. But we all know that these electric battery cars are the next huge disaster in battery waste. So, of course, you have hydrogen and fuel cell cars in Japan, in South Korea, in Norway and in Switzerland. Even trucks. But that is something weird because hydrogen- Well, we  want to sell oil. We don't want to sell hydrogen because we don't have it.

[00:30:02] We want to sell you oil or. Okay. If you don't want to buy a combustion engine, then at least buy an electric car with the battery. But to buy something that will last for years. Why should they send you something like this even if they could manufactured. The I will never see you again in my lifetime. So the we have to get out of this rat race that first of all, growth. We need economic growth, but quantitative growth, to create jobs. And then secondly, the fast said that this industrial really spinning, the better we are off. And they say, no, the the best, the circular economy. Tells you that the best thing is if nothing is moving. Just look after the. Take care of the things you have. And that concerns natural capital. Cultural capital. Human capital. I mean, people. Any manufactured goods, manufactured capital, any kind of capital. Because if you define or as I define wealth as the sum of all your capital or stocks or assets in quality different quantitative terms, you can actually get richer without producing anything just by increasing the quality of what you have. And of course, that is a completely, completely different from what what to teach people in school and from what politicians think we make our nation competitive.

Katie Whalen [00:32:00] Yeah, it's a it's a complete like mind shift change, and I'm kind of cognizant of the time because, you know, you've taken some time to to graciously talk to me. And I'm sure we could we could be here all all day. But I think this sort of this shift into this mind shift changes is a great sort of segue to the last question that I ask all of the guests, which is about this game that I created to help engage people in systems, thinking critical materials and circular economy to sort of think about that. Yeah, we do need to sort of change how we're currently taking materials, making products and then just wasting them. And in the game, there are different events that happen and these can be positive or negative and they change sort of the market conditions of the game. And so my question to the guests that come on the show and of course now to to you, Walter, is if you could create an event for the game, what kind of topic do you think it would address?

Walter Stahel [00:33:15] I guess I would break it down to a very personal level. Because in the book I say that you have the circular economy, you and me, we are all are to circular economy. So it's not a manufacture using eco design in China. It's you and me the way we treat our products. And then I would ask people, what are your teddy bears? What are the objects that you have a personal relationship with? And how did you develop this relationship or. How did it? It may be a case by somebody.

[00:34:05] Maybe memories, for example, my 50- year-old Toyota knows everything that ever that they ever did when I used a car. So in that sense, it is really Teddy, a teddy bear. It's the the the the thing that is closest to my memory in an abstract way. And then how can you look how can you care for these teddy bears? And what is missing? Why did the if you threw away recently a teddy bear, why did you throw it away? Because you found a better one, because you couldn't repair it. You couldn't have a tree pair because you got fed up with it because. So. So it's really this longing for the sea. You can also say is longing for teddy bears. Why do we no longer have teddy bears? I mean, a smart phone is if no teddy bear. What was too good should go Jjapanese had these artificial animals at some point?

Katie Whalen [00:35:21] Yeah, Tamagotchi.

Walter Stahel [00:35:23] Yes. And that that was mechanical teddy bear had a lot of people had children, had very close relationship with it. But I'm sure once they were 20 years old and they threw away. So the. But it can also be a community feeling that, you know, it can be attending church or attending the sports club. But something where that they would really miss if I didn't have it anymore. And if that if that thing is sustainable is part of Circular economy, then you are on the right track.

Katie Whalen [00:36:08] So how to how to create more teddy bears? That should be all personal missions going forward.

Walter Stahel [00:36:18] I think we should become aware that, yes, if we want to look after people or after goods. It's you have to develop in both cases a personal relationship. Otherwise, you are just consuming and we have to become users, stewards of these objects and no longer consumers. Now, I think you also asked me how can people contact me? Yes. Either way, I'm on LinkedIn. That's probably the easiest way to find me. And that's the only social media I'm on. And I have a website, which is www.product-life.org.

[00:37:12] So product with the dash in between life dot org. And does a lot of also case studies think it's in half a dozen languages, but not everything was translated, so you have to surf in different languages, the ones you understand and see if you find different things. But basically, I think you have to be curious. You have to question all the things that big mainstream information media is telling you question it and say, what do I want? And that is I think their creator tune already an absolute lighthouse for anybody. First of all, think what do you want and then you tell the world. That is what I want. And if that makes sense, like let's stop climate change, then let people. Find ways to do it, but you first have to tell them what you want. You don't necessarily have to build ships, but you have to say, I want to sail the sea and now it's up to you to build me a ship. You got that?

Katie Whalen [00:38:44] Yes, definitely. Yeah. Let's let's create this longing for the sea.

Walter Stahel [00:38:52] Yeah. Yeah.

Katie Whalen [00:38:53] Well, thank you so much, Walter, for for coming on and for talking about so many different topics today and of course your book and I will have a link to the Circular economy A User's Guide on the the website as well as a link to the website that you mentioned, Product-life.org on the podcast page as well  so listeners can go there and find all of these great links.

Walter Stahel [00:39:22] Yes. And I'll also give you the links to the studies segment.

[00:39:32] Thank you for listening. I hope you enjoyed this episode. For show notes and links, go to our website at gettinginthelooppodcast.com. And while you're there, subscribe to our mailing list to have new episodes delivered to your inbox every Monday. See you next week.