Is remanufacturing effective and eco-efficient?

Remanufacturing has long been perceived as an environmentally-friendly initiative, and it is therefore sup- ported by a number of governments, in particular in Europe. Yet, the assumption that remanufacturing is desirable to society has never been systematically investigated. In this paper, we focus our attention on the electronics industry. In particular, we take a close look at remanufacturing within the personal computer and mobile phone industries. We investigate whether reman- ufacturing substantially reduces the environmental impact (as measured by energy intensity) created in the life cycles of these two products, or whether it only marginally contributes to such reduction. Furthermore, we investigate whether remanufacturing is more eco-efficient than manufacturing for these two products, i.e. whether re-manufacturing can create more welfare per energy consumed than manufacturing. Using both process-based and economic input-output data, we show that remanufacturing significantly reduces the amount of energy used in the life cycle of these products, and that this result is robust with respect to the different levels of remanufacturing these products are subject to, as well as the different energy efficiencies of such products. However, we also find that the effectiveness of remanufacturing is very sensitive to the life span of the second life of the product. Furthermore, we find that remanufacturing is not always more eco-efficient than manufacturing. We show that the period of the life cycle in which the product is returned to recovery, the quality of the prod- uct (high-end vs. low-end), the easiness to remanufacture and the consequent recovery costs mediate such relationship. Furthermore, we test the hypothesis that the market of remanufactured products is composed by products that have been downgraded and are therefore sold for prices below the average price of the new products. We conclude that such assertation is true. More importantly, we find that despite the fact that remanufactured products may suffer downgrading (and that consumers, therefore, command a high discount for them), value added per energy unit used is still higher for remanufactured products. We also discuss the impact of our findings on the European WEEE and WEEE-alike legislations.

• View at SSRN