While the growth in electric cars is happening faster than we thought, truly meeting climate goals will take riding the momentum of another big transition — one to the circular economy. Leaning into these parallel shifts could spark a revolution in how cars are made and used.
A circular economy is an economic system that aims to eliminate waste throughout an entire value chain — including throughout manufacturing, production and use. Its value comes in preserving raw materials and eradicating waste altogether. By contrast, our current “linear economy” transforms raw materials into products that are made, used and disposed of, finding value in producing and selling as many goods as possible.
Embracing the circular economy has become even more critical since COVID-19 has hit economies hard, putting pressure on consumers and manufacturers and driving home the need to be watchful of resources. In fact, one recent survey of supply chain professionals found that 51 percent expect the focus on circular economy strategies to increase over the next two years. Those surveyed from large companies (with revenues of more than $25 billion or more) had more optimism for this growth in the circular economy than mid-size organizations, perhaps signaling the opportunity for organizations with both resources and appetite for risk.
Transitioning away from the “linear economy” means systems-wide changes, including decarbonizing production and designing products for recyclability at “end of life.” For the automobile industry, it means achieving transformation at the scale of Henry Ford’s legendary assembly line, or Toyota’s famous “Just In Time” production system, one that timed manufacturing to dealer orders to minimize parts inventory.
Through what might be called a ‘green industry’ agenda, the global economy can maintain standards of living and offer mobility means to serve the expected doubling of the global passenger demand by 2050.
Since its inception, the automotive industry has led both process revolutions and technological innovation. As the industry adopts the technologies of tomorrow, it is poised once again to create a template for the global economy to reference and follow.
The Circular Cars Initiative (CCI) embodies this ambition for the auto industry. It represents a coalition of more than 60 automakers, suppliers, research institutions, NGOs and international organizations committed to realizing this near-term ambition. A new series of circularity “roadmaps,” developed in collaboration with the World Economic Forum, the World Business Council for Sustainable Development (WBCSD), McKinsey & Co. and Accenture Strategy, explain the specifics of this transition.
The CCI, and its 60 partners, developed three framework reports to help industry and regulators better understand this new, more sustainable future.
The first report, by the World Economic Forum with inputs from WBCSD and Systemiq, is titled “The Road Ahead: A policy research agenda for automotive circularity.” This work questions how current regulatory frameworks can support high circularity. The report makes an appeal for faster vehicle electrification, low carbon technology adoption, end-of-life management subsidies and incentives to support the industry transformation.
The second report, “Raising Ambitions: A new roadmap for the circular automotive economy,” is led by Accenture Strategy and proposes a comprehensive and future-looking framework for increasing both materials and use-phase efficiency in the automobile sector. This report, which will be published later in January, will examine innovative approaches to emerging business models for enabling high-quality recycling and second-life battery use.
The final roadmap, “Forging Ahead: A materials roadmap for the ‘zero-carbon car,'” also will publish this month and was developed in partnership with McKinsey & Co. The report is a detailed outlook on the costs and technology investments required to decarbonize automotive materials. This appeal to the industry to develop new technologies will help produce low carbon materials and forge the partnerships necessary to launch them at scale.
Collectively, these roadmaps lay the groundwork for what might be called a “green industry” agenda. At scale, this new model for industrialization can meet the climate imperative, the challenge to deliver goods and services and also dramatically reduce resources consumed and waste/emissions produced in the process.
Through this model, according to research by Accenture, the global economy can maintain standards of living and offer mobility means to serve the expected doubling of the global passenger demand by 2050. It also can reduce related natural resource consumption by up to 80 percent and carbon emissions per passenger by 75 percent.
CCI offers a platform to exchange and collectively investigate the technology and business models innovations that will help to make circularity the norm, faster. The platform draws the next frontier for the automotive industry and gathers its progressive leaders to find how carbon neutrality will make economic sense. New innovative business models around Mobility-as-a-Service (MaaS) and data availability along the use phase will increase a lifecycle view and bring circularity into the mainstream.
Industry leaders are already investing in such a future. One example comes from CCI member company Renault. This fall, Renault announced the creation of the RE-Factory as it will convert its oldest assembly plant in Flins, near Paris, into a new industrial unit focused entirely on the circular economy, aiming to provide 3,000 jobs and a negative carbon footprint by 2030.
A circular future is not guaranteed for the auto industry. It depends on the rise of 3 simultaneous trends.
In the future, a significant share of private cars could be turned into autonomous taxis, where owners could rent their vehicles out during the day when they aren’t in use. Such a model would create a fleet of autonomous vehicles that potentially could provide the same number of passenger miles with 90 percent fewer cars. Each car would see an increase in use which could clear a path for closed-loop recycling programs (where vehicle components and materials are remanufactured, reused and recycled at the end of life). Automakers who invest in circular innovation can trim costs and complexity from the manufacturing process and increasingly see financial returns.
To be sure, a circular future is not guaranteed for the auto industry. It depends on the rise of three simultaneous trends: high vehicle use models (such as ride hailing, car sharing and MaaS); the conversion of the distribution and maintenance network into collection, re-manufacturing and recycling centers; and the adoption of modular designs and low carbon circular materials during vehicle design.
Still, companies that embrace this future will create more value more quickly. The cost associated with the sourcing of materials and parts will reduce drastically and are expected to largely cover the necessary investments in technology and business models that allow to close the loop. At the same time, the brands that will adopt this approach may be able to provide cheaper and more accessible means of transport to many and offer financially accessible jobs in the gig economy. Finally, the companies adopting this model will have better visibility to carbon neutrality, supporting compliance and reducing their impact on biodiversity.
With investments in the technologies that support MaaS models and low carbon approaches, collaboration and support to convert the existing network and a gradual move to modular designs and production methods, the automotive industry could align its purpose to a 1.5 degrees Celsius scenario in the coming decade.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
