22 Feb 24

Sizing the impact of circular cars on fleets

The legislative pressure of a zero-emission value chain moulds the automotive setor into a test case for swapping a linear for a circular model. But while automakers are moving to the forefont of building highly recyclable cars that last longer and produce less waste, fleet managers find themselves in a case-specific role.

Several reasons are forging automakers, one of the most resource-intensive sectors in the indsutry, to redefine and reimagine the manufacturing framework that served them for so long. There’s the considered cost of the Emissions Trading System (ETS) if CO2 targets aren’t met, next to the taxonomy whip, deciding on their investment-worthiness based on reported eco-credentials. Finally, regional directives, like in the EU, set and increase targets for high quality recycling.   

Though their efforts in GHG-reporting (ISO 14064) can’t be considered common practice, automotive OEMs are making significant strides on the path to fully circular manufacturing, where the old car basically becomes the primary source for the new one.

The efforts of plant-based interior materials and in-house pilot projects on closed-loop production don’t always come without a whiff of marketing, but next to that, Renault (ReFactory) and Stellantis (Circular Economy Hub), for example, start operating their first recyling factories this year, breathing second life into vehicles, parts and batteries by reconditioning or recycling them to whole new levels.

What about Fleet?

In practice, fleet managers focus less harder on the CO2 footprint of vehicles from a total life-cycle assessment (LCA) perspective. They don’t seem to fit the profile of automakers claiming that cradle-to-cradle efforts are driven to a large extent by customer demand.

Product lifecycle emissions’ relevance depends on the owner of the vehicle. In case of a company purchase they belong to Scope 3, category 2, ‘Capital Goods’. But if leased, these fall under Scope 3, category 8, ‘Upstream Leased Assets’. Fleet managers mainly focus on Scope 1 (direct vehicle emissions i.a.) and Scope 2 (indirect purchased energy emission  i.a.), as Scope 3 (value chain of vehicles i.a.) is optional and not mandatory.

“Since the impact of GHG emission reporting from product lifecycle depends on the companies’ activities, it will carry more bearing in some cases than others. From minor, for a banking or insurance company for example, to major in the logistics sector”, explains Kota Tsuda, Fleet Sustainability Specialist at Scopesdata.

Tsuda points also at the hurdle of gaining access to the intrinsic data involved. “It is only starting to materialize”. Again, ownership decides whether these data must be provided by the automaker or the leasing company. Though circularity will take centre stage in future automotive manufacturing, the impact on case-variability is unlikely to change drastically for fleets.


Image Source: Stellantis

Authored by: Piet Andries