Edition 96
A Circular Economy for Digital Storage Components
by Tom Coughlin, President, Coughlin Associates, Inc.

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A multi-stakeholder project on Value Recovery from Used Electronics was created by iNEMI (the International Electronics Manufacturing Initiative. The focus of this project is forming a network of companies focused on moving towards a circular economy for hard disk drives (HDDs), with the ultimate goal of “making hard drives from hard drives”. This article is based upon materials from the iNEMI Value Recovery project team. The basic idea is that key industry decision makers are able to maximize the use of available resources by choosing to reuse,repurpose components, and recover materials with the right technologies and partnerships in place. The desired outcome is to reduce the consumption and waste of ever more valuable (resources that many people and companies rely on for their livlihoods (the definition of common pool resources),while providing value to manufacturers and consumers.

The goal of Value Recovery from Used Electronics Project is to create a voluntary, community-based solution involving adaptive governance systems to self-manage common pool resources. The basic concept behind this effort was developed by Elinor Ostrom, who won the 2009 Nobel Prize in Economics. Legislation is generally not practical or advantageous for these sorts of efforts and it is felt that the best path forward is through a multi-stakeholder collaboration that articulates a vision and develops economically viable scenarios for enhancing value recovery of electronics and metal resources.

The value of a circular economy, put in the Ostrom context, is based upon four principles. The first principle is the “tragedy of the commons” is not inevitable. There are myriad examples worldwide of stakeholders coming together voluntarily to preserve and enhance natural capital by controlling finite stocks,balancing renewable resource flows and by sharing a “commons” in a sustainable way. The second principle is that resource yields for the system can be optimized if stakeholders work together in specific ways to circulate products, components and materials in use at the highest utility in economic, technical and biological cycles. This was demonstrated by Ostom through game theory and decision making theory – that the rules of the game and the types of players involved determine the outcome. The third principle is that commitment, information sharing, and trust among the system “players” determines how effective the system can be. The fourth principle is that all the relevant stakeholders needed to make the system sustainable must be at the table, with their needs and concerns understood and included.

The figure below from the Ellen MacArthur Foundation shows how a circular economy works, including cycles for renewable resources as well as fixed stock resources. An important difference in the iNEMI project is the explicit application of the Ostrom Framework to focus on who the decision makers are in each circular pathways, what criteria must be met and what partnerships must be created for them to decide to move to a circular economy, and what new technologies and pathways must be created to meet those criteria.

Source: Ellen MacArthur Foundation https://www.ellenmacarthurfoundation.org/circular-economy/infographic

There is increasing pressure worldwide for societal transformation from a linear economy – based on the traditional take-make-waste model – to a circular economy (where resources are recycled and reused). The expanding worldwide demand for electronics – and specifically, for data storage capacity, often provided by HDDs – is creating opportunities for many parts of the electronics industry (from component manufacturers to HDD manufacturers, to storage system building and to data centers and consumers who use these HDDs.

With a linear economy this demand creates increasing resource consumption and thus resrouce depletion in a world that wastes finite resources. As seem from the work of the Ellen MacArthur Foundation, some of the world’s most successful companies have changed their business practices models to be consistent with circular economy principals. To date, some individual companies in the electronics industry have taken this direction within their own supply chains, but as a whole, the industry has not undertaken the business-model-level initiatives that are key for a serious transition to a circular economy. The iNEMI project on Value Recovery from Used Electronics represents a new paradigm, with its first demonstration being hard dism drives.

There are three major reasons why HDDs are a good candidate for a circular economy: (1) the demand for data storage is increasing rapidly; (2) data storage demand is increasing significantly faster than increases in HDD storage density, and (3) industry output of HDDs (manufacturing capacity) is not expected to increase significantly, according to industry projections. This leads to a potential gap between estimated data storage needs and the estimated ability of HDD and SSD manufacturers to keep up with digital storage demand. There are a number of ways to fill this gap: continued investment in fabs and technologies to increase HDD and SDD storage, increasing HDD reliability, and increasing the reuse of used HDDs, their components, and their materials so that they are available to meet some of our global data storage needs.

The figure below shows how a circular HDD economy would work.

Source: iNEMI (adapted from generic schematic from the Ellen MacArthur Foundation

Phase 1 of this project identified stakeholder groups and new technologies necessary to circularize the HDD economy. Phase 2 of this project brings together these stakeholders to create the circular pathways shown above using demonstration projects, business case studies, and system modeling, to assess economic and environmental impact of various reuse and recycling options. The team, consisting of industry leaders in the HDD economy,is committed to establishing a blueprint for HDD collection, processing, reuse, and recovery (with a special focus on rare earth magnets, one of the more expensive HDD components).

The figure on the next page shows the two limiting cases for value recovery in the Phase 2 studies. The first, highest value option is to increase the length of time and number of HDDs in use through low-cost and secure data wiping (so drives can be securely reused). The second is recovery of currently un-recovered material in components through dismantling, remanufacturing and recycling of high value metals (like the rare earth magnet assemblies) and thus to increase the value of HDD recycling.


Source: iNEMI (Used with permission)

Limited reuse and widespread shredding. The secondary market for HDDs has responded to these increasing data storage demands and, indeed, IT asset management firms process and sell millions of HDDs per year. However, the scale of HDD reuse is limited today by the number of HDDs that are allowed back into that market due to concerns of owners about release of sensitive information. Although secure data wiping processes can be performed for total data destruction, many HDD owners choose wholesale HDD shredding, which precludes reuse and reduces material recovery options. Shredding before any disassembly precludes reuse not only of the HDD but also of its components, and limits recovery of trace, but highly valuable, materials (e.g. Au, Pd, and rare earth metals that are concentrated in magnets).

The value recovery system is also limited by HDD collection efficiencies. Collection of consumer HDDs is very low, corresponding to the generally low collection rates for consumer electronics in the U.S. (26%), with most being shredded Commercial HDD collection (e.g. from data centers, including hyperscale data centers) has been reported to be very efficient in Denmark1 (up to 90%) and if that is true in the US, it is estimated from systems dynamics modeling that there are 19- to 24 million HDDs available per year for value recovery form North American data centers alone2.

More value can be realized and environmental and health impacts can be reduced if the HDD community and its stakeholders work together to implement an integrated, circular value recovery system that includes optimized product design, life extension, reuse, refurbishment and material recovery, and the processes required to enable it. Value recovery depends on knowledge of the markets, ability to refresh units via reuse, remanufacturing, and cascading the units through a longer cycle of usability. Identification and documentation of best design practices and process flows will maximize the value of recovered HDDs, parts and materials.

By optimizing the decision points for collaborating stakeholders in the HDD economy the iNEMI project has estimated that the value of used HDDs will be increased by more than a factor of 10x in a circular economic model compared to limited reuse and materials recovery from shredding, separation of the magnetic portion and smelting.

The iNEMI collaborative project has brought together key players in the HDD economy. This includes a major HDD OEM (Seagate), OEMs of electronics containing HDDs (Cisco), large data center users (Google, Microsoft), IT asset management companies (Teleplan, Geodis, Cascade Asset Management, Echo Environmental), magnet manufacturers and materials recovery comanies (Urban Mining CompanyMomentum Technologies), major research institutions (Oak Ridge National Lab, Ames National Lab, Idaho National Lab, the DOE Critical Materials Institute, Purdue University), and an electronics sustainability and ecolabeling organization (Green Electronics Council).

To achieve the goal of a HDD circular economy, new business models must be established, thus collaboration along the value recovery supply chain is vital. Ostrom described a set of necessary conditions for people and organizations to self-manage common pool resources, in this case, HDDs. Some of the factors that are critical for successful, self-governed systems are the size and importance of the resource to all participants, who share common goals, values, and norms, exhibit leadership/entrepreneurshi, and are trustworthy, all of which were present in the iNEMI project.

Reuse of a hard drive in its original form or in a slightly modified form is the best economic, societal, and environmental outcome. All environmental impact factors, from carbon footprint to toxicity, are lower for reusing rather than replacing HDDs, even when material recovery of used HDDs is factored in. The economic return of reuse can be over 10x-100X that of materials recovery. It remains a question as to whether HDDs, with their common footprint and widespread use are a special case where such self-managing, multi-stakeholder systems can be developed or they can serve as a broader model for other used electronic products. Time will tell.
RLM
Tom Coughlin, President, Coughlin Associates is a widely respected digital storage analyst as well as business and technology consultant. He has over 37 years in the data storage industry with multiple engineering and management positions at high profile companies.

Dr. Coughlin has many publications and six patents to his credit. Tom is also the author of Digital Storage in Consumer Electronics: The Essential Guide, which is in its second edition with Springer. Coughlin Associates provides market and technology analysis as well as Data Storage Technical and Business Consulting services. Tom publishes the Digital Storage Technology Newsletter, the Media and Entertainment Storage Report, the Emerging Non-Volatile Memory Report and other industry reports. Tom is also a regular contributor on digital storage for Forbes.com and other blogs.

Tom is active with SMPTE, SNIA, the IEEE (he is President-elect of IEEE_USA and active in the Consumer Electronics Society where he is chairman of the Future Directions Committee) and other professional organizations. Tom is the founder and organizer of the Annual Storage Visions Conference (www.storagevisions.com as well as the Creative Storage Conference (www.creativestorage.org). He was the general chairman of the annual Flash Memory Summit, the world’s largest independent storage event for 10 years. He is a Fellow of the IEEE and a member of the Consultants Network of Silicon Valley (CNSV). For more information on Tom Coughlin and his publications go to www.tomcoughlin.com.

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