Navigant Research Blog

Setting a Circular Blueprint for Business through Science

— May 23, 2017

The circular economy is a simple idea, but not a small one. It’s key for achieving sustainable development goals (SDGs) and addressing climate change, as it has the potential to close the greenhouse gas (GHG) emissions gap by half.

More than 400 participants at the WBCSD Liaison Delegate Meeting in Montreux, Switzerland on March 27-30 focused on the topic, “Roadmaps for Impact in Today’s Reality.” The discussions around circular economy were lively, enthusiastic, and most importantly, ambitious. In partnership with the World Business Council for Sustainable Development (WBCSD), Ecofys is working on a detailed assessment and analysis that identifies the points in the economy where circular economy measures can reduce environmental impact substantially, taking the value chain into account. This report aims to set the direction for circular economy efforts by businesses, and the analysis is one of the key elements of the circular economy approach of the WBCSD.

Preeti Srivastav at WBCSD Liaison Delegates Meeting 2017

(Source: World Business Council for Sustainable Development)

For the circular economy, the dam has burst. Now is the time to start implementing.

Ecofys’ analysis highlights the scientific perspective on the circular economy and how businesses can navigate and position themselves on related efforts. The implementation of circular economy measures can help companies and even countries reduce their GHG emissions and improve economic growth.

GHG Emissions Reduction

Let’s look at the GHG emissions reduction potential. A study done by Ecofys and Circle Economy in 2016 highlights the GHG impact of the circular economy. The emissions reduction commitments made by 195 countries at the Climate Change Conference in Paris are a leap forward, but are not yet sufficient to stay on a 2°C trajectory, let alone a 1.5°C pathway. Current commitments address only half the gap between business as usual and the 1.5°C pathway. There is still a reduction of about 15 billion tonnes CO2e needed to reach the 1.5°C target. Analysis by Ecofys and Circle Economy estimates that circular economy strategies can reduce the gap between current commitments and business as usual by about half.

Economic Growth

Moving on to the economic growth potential, there are various credible analysis and studies by organizations like the Ellen MacArthur Foundation that highlight the economic potential of the circular economy in terms of GDP growth, job creation for countries and cost benefits, competitive advantage, and the security of supply, etc. for companies.


In terms of the implementation of circular economy strategies, most companies are starting with end-of-life management, recycling initiatives, etc. These are great initiatives, but unless the end of life is managed in combination with upstream material flows, the impact will be limited.

Why? Because materials-related emissions account for more than half of total GHG emissions. Unless we focus on the upstream material flows, companies will end up spinning their wheels without actual impact.

Ecofys is currently leading a study that looks at eight key materials that are the most intensive in water, land use, and GHG emissions. The goal is to understand which companies and sectors can do the most. Food and shelter (cement, steel, forestry, agriculture, etc.) are the biggest material users, which means circular solutions in these fields bring huge opportunities and huge risks. There is a lot of potential for the food and shelter consumption categories to tap into the potential of circular economy, but we cannot take shortcuts, as both are basic human needs and we need to tread carefully.

Circular economy solutions are central. Let’s work together to do more with less.


Car? Truck? SUV? Who Knows? Who Cares?

— October 28, 2016

It used to be easy to distinguish a car and a truck. Until the 1970s, there were far fewer vehicle types than there are today. Truck buyers usually made their purchases because they needed the capability, and pretty much everyone else bought cars. Early SUVs were truck-based, niche products. Thus, when the US government first imposed corporate average fuel economy (CAFE) standards on the auto industry, it made some sense to have two different standards for cars and trucks. Not anymore.

Today, SUVs vary in form from subcompacts like the Nissan Juke to long-wheelbase Chevrolet Suburbans to the super-luxury Bentley Bentayga. SUVs are the fastest growing vehicle type in the market. But what exactly is that type?

For purposes of calculating CAFE and greenhouse gas (GHG) emissions, the feds have two target levels for cars and light trucks. But is an SUV a car or a truck? It can be both or either. It depends in part on the regulations and in part on what the manufacturer submits on the certification paperwork. Car segments are based on combined passenger and cargo volume while trucks are defined by gross vehicle weight rating (GVWR). However, SUVs vary so much that the US Environmental Protection Agency (EPA) doesn’t define them.

“You’ll notice no definition for crossover utility vehicles (CUV), which is what many vehicles seem to be called these days,” said Rob French, environmental protection specialist at the EPA. “When we last revised these regulations we considered inserting a definition for CUV, but found it impossible to describe robustly.”

While the EPA watches for automakers trying to game the system to get a best-in-class rating, it mostly goes with the classification that the manufacturer chooses based on size or weight. Since there is no crossover class, the manufacturer gets to choose a segment like small, midsize, or large car, or small or standard SUV. The small SUVs are generally the car-based crossovers, but EPA splits them based on two (2WD) or four-wheel-drive (4WD). A 2WD small SUV is grouped with cars while the 4WD version of the same is grouped with trucks.

Crossover Confusion

The Nissan Pathfinder, Chevrolet Traverse, and Ford Explorer are large three-row crossovers. The Chevrolet and Ford are classified as standard SUVs and thus trucks for all variants. The Pathfinder’s 5,985-pound GVWR is conveniently just below 6,000-pound threshold for a small SUV, so the 2WD model is a car while the 4WD model is a truck. Meanwhile, Nissan’s Murano—which to almost any set of eyes is as much an SUV as the Pathfinder—is a midsize station wagon and thus a car no matter how many driven wheels it has. Likewise, Nissan’s even smaller Rogue is also a small SUV but is also classified by how many driven wheels it has. Similar peculiarities can be found from most manufacturers.

For customers, none of these arbitrary labels matter, as they shop for price, performance, design, and capability. For manufacturers, it’s all part of balancing out the fleet averages for cars and trucks in a rapidly shifting marketplace. If the car average is in good shape, adding a big 2WD crossover enables them to still meet the car target while removing some vehicles from the truck count; likewise, a smaller 4WD can improve the truck average.

But there are limits to this segment juggling. Automakers are seeing the edge of the product mix envelope as they try to balance market demand, regulator demand, and affordability. That’s why (as the EPA and National Highway Traffic Safety Administration work on the mid-term review of the CAFE and GHG standards for 2020 to 2025) manufacturers are pushing back, hoping for some rollback of the current targets.

Capability Should Determine Categorization

Perhaps it is time to abolish the arbitrary car-truck split and devise a new formula that factors in the footprint size with payload/towing capacity. The world needs trucks, vans, and utility vehicles that can haul people and their stuff, but on an absolute basis these vehicles are never going to be as efficient as a small car. However, if we set a target based on the useful work the vehicle can do, we might be able to get away from some of this arbitrary categorization.


Audi Motorsport Marks the End of an Era as It Shifts to Formula E

— October 26, 2016

Car driving fastOver more than 3 decades, few companies have demonstrated more consistently how to “Win on Sunday, Sell on Monday” than Audi. Since at least the 1980s, Audi has used its involvement in motorsports to demonstrate the efficacy of its latest technologies. In the process, the Volkswagen (VW)-owned premium brand has risen from a niche player to being considered on par with its chief competitors at Mercedes-Benz and BMW. However, as a direct result of the VW diesel emissions scandal, the Audi racing program is making its biggest pivot in nearly 20 years.

The modern era of Audi motorsports began in the early-1980s with the introduction of Audi’s Quattro all-wheel drive system. Drivers such as Michel Mouton, Walter Rohrl, and many others demonstrated that, from that time on, all-wheel drive would be essential in order to win in the World Rally Championship. But since most drivers don’t spend their days driving through forests at high speed, Quattro was then proven on tarmac in series like Trans Am.

Since 1999, Audi has been developing its latest powertrain technologies in endurance racing, including 13 overall victories in 18 years at the 24 Hours of Le Mans. The various evolutions of the R8 that competed from 1999 to 2005 demonstrated the efficiency of gasoline turbocharged direct injected (GTDI) engines that Audi brands in its production models as TSI. While most casual observers consider racing to be all about speed, efficiency can be just as important—especially in 24-hour endurance races like Le Mans. The more time a car spends in the pits getting refueled, the less time it is racking up miles on the circuit. Increasing the number of laps between stops from 10 to 11 and eventually to 14 or 15 laps makes a huge difference in the ability to win.

Performance and Efficiency

As a premium brand, Audi customers are often as interested in performance as they are in efficiency. In 2006, the company set out to prove that you don’t have to sacrifice one for the other. The new R10 and its successors, the R15 and R18, have been powered with a series of TDI turbodiesel engines that quickly came to dominate everywhere they ran—including the first ever victory by a diesel at Le Mans. Thanks to the particulate filters used on the R10, it was both smoke free and quieter than most gasoline racing engines.

In 2012, Audi launched the final series of its endurance racer with the R18 e-tron that paired a smaller TDI V6 with an electro-mechanical flywheel hybrid drive system. Like its predecessors that became the first Le Mans winners with GTDI and diesel engines, the R18 was the first hybrid to win Le Mans.

Following the September 2015 revelation that the VW Group (including the VW, Audi, and Porsche brands) had been cheating on diesel exhaust emissions on millions of vehicles around the world, the promotion of diesel was no longer viable. In the past year, the VW Group has made a major commitment to electrification, announcing that it will introduce 30 new plug-in models in the next 10 years. It is unlikely that any VW-owned brand will ever sell another diesel-powered light duty vehicle in the United States.

Following the final two races of the 2016 World Endurance Championship, the Audi effort will end entirely. It is now all about electrification, so from 2017 onward, Audi will focus instead on the battery-powered Formula E championship with a full, factory-backed effort launching in 2018. As the technology improves, electric racing will expand; by the 2020s, it’s likely that we will see full EVs at Le Mans and possibly the return of Audi.


Driving Green in India

— December 31, 2015

Beijing’s infamous smog attracts more media attention, but there’s another city that holds the title in terms of pollution. The World Health Organization (WHO) dubbed Delhi the world’s most polluted city based on data from 1,600 cities collected between 2008 and 2013. How bad is the city’s air pollution problem? The WHO found that levels of PM2.5 (particulate matter under 2.5 microns) in Delhi were 15 times the maximum advised level. Delhi is not alone; Indian cities scored 13 spots in the WHO’s assessment of the 20 most polluted cities in the world.

So why does Beijing attract more attention? It’s partly due to China’s economic power, and partly due to its emergence as a global power and its leaders’ evident interest in expanding the country’s influence in global affairs. China declared its first ever red alert warnings in Beijing in early December, right in the middle of the Paris climate change talks, where China played a central role in the agreement negotiations. The pressures on India are somewhat different, as India has not taken quite the same high profile approach to global economic, environmental, or diplomatic debates. China has also been ahead of India in monitoring its pollutants. However, Indian political leaders are increasingly feeling the need to address the problem, especially as outside agencies such as the WHO catalog the issue.

Sources of Pollution

Vehicle emissions are a major contributor to India’s pollution problem, but the country’s vehicle emissions regulations lag behind those in Europe and North America, and it has seen little adoption of cleaner fuel vehicles. We are now seeing Delhi embracing brute-force mechanisms to control vehicle emissions, including vehicle bans and driving limitations. From January 1 to 15, drivers in Delhi will only be allowed to drive on alternate days. Given the number of exceptions, the policy may have limited impact.

India is also ending its recent—and relatively short-lived—love affair with diesel. India’s favorable taxation rates for diesel meant it was cheaper than gasoline, and the country saw diesel vehicles reach 50% or higher of new passenger car sales in the past 5 years. Diesel fuel is now back closer to parity with gasoline, so gasoline vehicle sales are rising. India was also touched by the Volkswagen (VW) diesel emissions scandal. VW will have to recall over 300,000 diesel vehicles that were found to be emitting more than is allowed under Indian regulations—regulations that were already much less stringent than European and U.S. standards. This spells trouble for diesel in India, with the capital region already declaring bans or restrictions on various types of diesel vehicles.

India is going to have look increasingly to alternative fuels to help reduce vehicle emissions. In Delhi, taxis and ridehailing services like Uber must switch to natural gas. India is also looking to spark adoption of hybrid and electric vehicles.  The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) program provides subsidies for hybrid and plug-in cars, buses, scooters, and rickshaws through 2020. The government’s goal is to have around 6 million electric or hybrid vehicles on the road by 2020. While only the goal for passenger cars is just 8% of the 6 million, given the anemic sales of hybrid and electric cars to date, even that will be challenging. Navigant Research estimates that sales of hybrid and electric cars make up less than one-fifth of 1% of the current passenger car market in India. India will have to significantly ramp up domestic manufacturing of hybrid and electric vehicles and offer additional incentives to be able to reach this goal.


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