Circular Economy Formula (CEF) – a new, inherently closed-loop, attributional substitution approach for LCA, 2023

A new way of modelling of secondary products (materials, energy, parts, …) as input to and output from product systems has been developed by us: the Circular Economy Formula (CEF).
The basic idea of this approach is that everything that is kept in the loop, i.e. handed back to the economy during End of Life or waste treatment is credited to the analysed product system, while everything that is lost (e.g. to landfill or via downcycling) is the remaining burden/impact of the analysed product system, jointly with the burden/impact from the End of Life and waste treatment processes themselves. This also motivates the name: “Circular Economy Formula”, as it incidentally drives product systems towards a perfect Circular Economy, i.e. with minimised material and energy losses and as little as possible burdens from operating EoL and waste treatment processes. This basic idea is originating from the reasoning and descriptions in [Koffler & Finkbeiner; 2017]. This present report uses it as input to further develop our previous work on end of life modelling in form of the Integrated formula and the Umbrella formula 2013 to 2026, plus solving further hitherto open aspects, including a second key element that we include for all cases where downcycling occurs: that of an additional point of reference (to complement the point of substitution), to ensure that downcycling factor is acting exclusively on the relevant parts of the life cycle. Jointly these two fundamentally new elements prevent the implausible artefacts of net negative impacts from conventional and frequently too high crediting (as also occurring with the European Commission’s Circular Footprint Formula (CFF)) and at the same time the distortion of too little crediting in cases of downcycling. Importantly, the new formula is not more complex than current substitution/crediting approaches, but in fact has less demanding input data.