© LEVIS Project Consortium

How the Circular Economy Boosts Innovation and Sustainability

Introducing circular flow concepts to the economy

Sustainability, digitalization, and resilience play a pivotal role in driving transformation – not only in the economy, but in society overall. If anything, the current pandemic has accelerated this process. The issue of sustainability now transcends all areas of technology and is receiving growing attention within the context of the goals laid down under the European Green Deal, as are the opportunities offered by the circular economy. The Steinbeis Europa Zentrum is tackling these challenges and is currently involved in a number of projects aimed at creating new value chains.

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A circular economy focuses on the value of products, materials, and resources with the aim of preserving them for as long as possible. The fewer products we throw away and the more we return to the cycle of usable products, the less material has to be reclaimed. This is also good for our environment and supply chains, offering major potential and opportunities to innovate and develop new business models. The Steinbeis Europa Zentrum currently demonstrates the circular economy potential with three projects.

Recycling rare earth elements

Many hi-tech products – but also everyday systems such as washing machines and heating pumps – use permanent magnets based on rare earth metals. Although these can be mined in Germany, the majority of these elements have to be imported. Extracting materials has an enormous impact on the environment and entails a number of complex processes. Processing ores extracted from surface mines results in the production of large quantities of problematic waste such as alkalis, acids, and radioactive by-products. China virtually holds a market monopoly in this area and with almost no environmental regulations in place, Chinese companies have been allowed to extract materials without competition, a source of concern for European industry. To bolster the European market, in the fall of 2020 the EU established the European Raw Materials Alliance (ERMA). Its priority is to secure raw materials for permanent magnets. The ERMA plans to improve the reliability of magnetic material supplies through strategic collaboration with more dependable partners such as Canada and Australia. It is also focusing on recycling the 20,000 metric tons of permanent magnets currently in circulation in the European market.

Pforzheim University is making an important contribution to this initiative as part of an EU project called SUSMAGPRO. Professor Dr. Carlo Burkhardt of the Institute of Strategic Technology and Precious Metals is working with the Steinbeis Europa Zentrum and 16 other European partners from science and industry to develop a recycling supply chain for rare earth magnets. This project involves a shorter recycling system that uses a patented HPMS process to embrittle and pulverize magnetic materials (HPMS stands for hydrogen processing of magnetic scrap). Powders can be directly reprocessed into magnets, resulting in energy savings of over 90% compared to primary production and 98% lower levels of toxicity. By 2024, the aim is to be in a position to recycle 110 tons of magnetic waste per year at four pilot plants in Sweden, the UK, Slovenia, and Germany. Among others, this will benefit offshore wind farms, electric cars, and water pumps. By systematically recycling components with a high magnetic content, it should be possible to achieve recycling rates of 15-25% in the medium term. The initiative is receiving around €13 million of funding from the EU. Of this, €3.4 million will go to the state of Baden-Wuerttemberg, where it will be invested at Pforzheim University, the ZF Group, the Steinbeis Europa Zentrum, and MIMPlus Technologies.

The Steinbeis Europa Zentrum is helping with scientific coordination of the project, also taking care of the European network of research and innovation stakeholders and extensive PR work. In addition to developing and assessing commercialization models, it will also provide support on sharing and disseminating research results.

The circular economy in industrial manufacturing

Companies involved in industrial manufacturing also need circular economy strategies. Manufacturing plays a key role in innovation and growth in Europe, since outdated machinery and unplanned downtime can cause significant losses. To help in this area, as part of an EU-funded project called RECLAIM, the Steinbeis Europa Zentrum is working with a consortium of researchers and industrial enterprises from nine countries. One of those companies is Harms & Wende, based in Hamburg and Karlsruhe. The aim is to reduce the obsolescence of industrial plants and strengthen the economy and the environment. By digitally retrofitting machinery, malfunctions and production downtime can be prevented, also improving net energy and material consumption. The EU is providing around €13 million of funding for the project, which involves 22 partner companies. The focus of the project lies in the use of digital analytics, the internet of things (IoT), and circular economy strategies in order to improve maintenance procedures and modernize aging machinery.

At the heart of the technology lies a novel decision-support concept that can be used to manage optimum modernization and the reconditioning of large machines and robotic systems. The concept is based on IoT sensors and innovative forecasting and process optimization techniques, the aim of which is to extend machine life and thus raise productivity. The solution combines fog computing and augmented reality techniques with condition monitoring and fault diagnosis methods to improve material use, energy efficiency, and maintenance options. As one of five pilot sites, Harms & Wende will test the application in welding technology. Other sectors of industry involved in the project include timber processing (Switzerland), textiles (Turkey), robots (Slovenia), white goods (Czech Republic), and shoe production (Spain). At all sites, great attention is being given to close collaboration with industry to develop technologies based on a bottom-up approach.

The responsibility of the Steinbeis Europa Zentrum as a partner in the project is to make optimum use of the results and nurture synergies with national and European projects and initiatives, such as the European Factories of the Future Association for Research (EFFRA).

Lightweight components for electric vehicles

Because electric cars are powered by heavy batteries, automotive manufacturers and their suppliers have to compensate for the extra weight by finding new lightweight vehicle components. Such components can contribute directly to vehicle efficiency – not only in terms of energy consumption per kilometre and vehicle range, but they can also help alleviate environmental impacts. For this reason, the LEVIS project, which is receiving EU funding worth €4.9 million, is working on the development of cost-efficient lightweight components for electric vehicles.

The Steinbeis Europa Zentrum is also involved in this  project, supporting 12 industrial and research partners from six countries in the development of lightweight components for electric vehicles using eco-design and circular approaches. Three demonstrators will be used to validate the technical and economic feasibility, and prove the reduction of environmental impacts. These demonstrators are a suspension control arm, a battery holding set, and a cross-car beam. To do this,  multi-material solutions based on thermoplastic composites made from carbon fibers will be used. The idea is to identify the best way to integrate this multi-material solutions into metals and to manufacture them using cost-effective and scalable production techniques.

Circular design plays an important role in the project as recyclable resins and biologically produced carbon fibres will be used to manufacture the target components. In addition, the component life will be maximized and all structural parts will be designed to allow easy and effective disassembly and reuse. The aim is to launch these innovative electric vehicle components by the end of the project. The Steinbeis Europa Zentrum is responsible for the commercialization aspects and sharing project results.

EU Horizon 2020 programme

SUSMAGPRO has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 821114.
RECLAIM has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 869884.
LEVIS has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 101006888.


“It’s key to raise awareness of this issue among members of the public, politics, and industry”

An interview with Maëva Pratlong, project manager for resource efficiency and closed loop recycling

Hello Ms. Pratlong. The circular economy concept is not exactly anything new, so why is it suddenly receiving so much attention?

There is growing awareness at the moment that raw materials are not inexhaustible, and sometimes they’re difficult to get hold of – for example when extraction and processing are difficult for environmental or social reasons, or when a country virtually has a monopoly and uses it to exert political pressure. We see further obstacles coming if prices become exorbitant, if war breaks out in a country producing materials, or if a pandemic interrupts supply chains. The circular economy points to a number of ways to deal with these problems. First, by extending the service life of products as much as possible – for example by making them easier to repair, or improving their repairability, or by augmenting reutilization levels, but also by promoting recycling, for example by making it more attractive to collect waste. Another way to do this is to record raw material volumes and capture how they’re used at each stage of the value chain, regardless of the number of stakeholders and their locations, for example by using digital technology. It’s also important to maximize the reuse of by-products, waste, and material residues created by processing raw materials at each stage of the value chain.

What can companies – but also society as a whole – do to derive benefit from the circular economy?

The circular economy makes an important contribution to more dependable supplies and the robustness of our value chains. At the same time, it dovetails with the principles of sustainability and inclusion. It helps rethink our structures – by which I mean buildings, cities, industrial zones, commercial areas, or supply chains – in order to bring about a strong symbiosis when it comes to using resources. It creates new jobs and professions. And it helps enhance our capacity to provide training and retraining. It also allows new business models to develop in such a way that they enable companies to introduce their own sustainable processes and products, and thus remain competitive. In some cases, the circular economy even makes it possible to succeed in new markets or sectors, or it creates access to new private, public, or participatory sources of funding based on strong, long-term criteria.

Among other things, you’re working on the circular economy of rare earth metals. What are the biggest challenges in this area?

Rare earth metals are recognized in all parts of the world as critical materials, not because they’re genuinely rare, but because they’re difficult to get hold of. We already use them in a variety of strategic areas, such as renewable energy, defense, telecommunications, and aerospace, but also in everyday products. I’m currently involved in the SUSMAGPRO project, which focuses on the recovery and reuse of rare earth metals used to manufacture permanent magnets, such as neodymium and dysprosium. Presently, European production of rare earth-based permanent magnets covers less than 10% of European demand. The production and processing of these rare earth materials takes place almost exclusively in China, and most magnet production has followed this trend.

Recycling rates in this area in Europe are extremely low – less than 1% – and there are a variety of reasons for this. I’d say the biggest challenges we face right now are that it’s difficult to trace materials; that it’s difficult to pool spent rare earth metals in quantities that make it attractive to recover them from an economic standpoint; and that there aren’t enough eco-design options, i.e. not enough things are designed to be recycled. We’re tackling these challenges as part of the SUSMAGPRO project, and we’re already working on further ways to establish more sustainable and robust value chains for permanent magnets in Europe. One thing that’s key is to raise awareness of this issue among members of the public, politics, and industry.


Maëva Pratlong (author)
Project manager for resource efficiency and closed loop recycling
Steinbeis Europa Zentrum
Steinbeis EU for You (Karlsruhe)

Dr. Jennifer Bilbao (author)
Project Manager Open Innovation und Key Enabling Technologies
Steinbeis Europa Zentrum
Steinbeis EU for You (Stuttgart)