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Environmental benefits of engine remanufacture in China's circular economy development.

Shitong Peng,Yi Yang,Tao Li,Timothy M. Smith,George Z. Tan,Hongchao Zhang

Published 2019 in Environmental Science and Technology

ABSTRACT

China has implemented broad strategies aimed at achieving a circular economy, among which are providing subsidies for the remanufacture industry and setting a target of 15% increase in energy efficiency in industrial production across sectors. Here, we examine the environmental implications of these policies in the context of engine remanufacture, using an environmental computable general equilibrium (CGE) model. Results indicate that the subsidy policy and energy efficiency improvement can contribute to both economic growth and emission reductions, but the subsidy policy is estimated to have far greater impacts. Implementing both can reinforce each other, generating higher economic and environmental benefits than the sum of each occurring alone. Another major finding from our model is that an additional remanufactured engine can only displace 0.42 (90% confidence interval from 0.32 to 0.47) of a new engine (comprised of new parts), mainly because lowered prices for remanufacture engines lead to greater consumption. This ratio is much lower than the 1:1 perfect displacement commonly assumed in life cycle assessment (LCA) studies. Overall, our study suggests that subsidizing engine remanufacture in China can help promote the industry, improve overall economic welfare, and contribute to environmental targets. Our study also contributes to estimating more realistic product displacement ratios in LCA.

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