Auctions and the Circular Economy

By Dan Main – CA Global Partners

Most of us within the IAA are familiar with the link between auctions and the circular economy. Auctions are a principal component of the circular economy – we help find another home for unwanted equipment, ensuring it stays in use.

But what does this mean in practice? Is there a way of specifically measuring and reporting the impact of an item sold at auction beyond just saying ‘it contributed to the circular economy’? Can we quantify the positive impact in a specific way? In 2021, we set out to do just that – and this article will tell you exactly how we did it (and more importantly, how you could do it too).

Back in late 2019 I met Stephen Haskew from Circular Computing, a company that take used laptops and refurbish them to a very high standard (now an ISO standard that they were instrumental in creating).

As part of this activity, they provide a Sustainable IT Calculator on their website. This is an interactive tool where the user types in how many laptops they have bought (or supplied), and the report gives back the following statistics, based on them buying used over new:

  • Kgs of sequestered carbon emissions
  • Liters of water saved
  • Kgs of carbon (CO2e) avoided by not buying new
  • Kgs of raw material resources saved by not buying new
  • Trees planted – through their 5 trees for every laptop partnership.

While I thought it unlikely that we could replicate this entire report for every asset we sold, I at least wanted to know what would be required to calculate the main figure of carbon avoided.

In 2021, we reached out to Toby Green at MyCarbon to find out what we would need to do to measure the carbon associated with the items we were selling at auction. MyCarbon worked with us to come with a methodology across a set of categories that we most commonly sold assets for, and the idea grew from there.

The benefits of auctions in relation to the circular economy have always been clear, but for these purposes our key argument was as follows:

Buying Used Avoids the Carbon Emissions Required to Make a New Item.

So if we can calculate the emissions associated with manufacturing a piece of equipment that we’ve just sold at auction, we can argue that enabling someone to buy that item removes the need for them to purchase a new one.


What is CO2e?

Before we look at the methods and calculations – what are we actually talking about? CO2e stands for carbon dioxide equivalent. It’s a metric used to compare the emissions from various greenhouse gases (GHG) based on their global-warming potential (GWP), the warming effect of a greenhouse gas over a set period, commonly 100 years. For any quantity and type of greenhouse gas, CO2e indicates the amount of CO2 that would have the equivalent global warming impact.

Methane, nitrous oxide, and fluorinated gases are among the other greenhouse gases that have higher warming potentials than CO2. Thus, the term “CO2e” consolidates the warming impacts of these different gases to provide a single comprehensive measure.

The table above shows the level of comparable impact of these gases, as well as the most common sources:

My favorite fact from the above table? Until 2006, Nike Air Max shoes were filled with Sulphur Hexafluoride (SF6). The use of SF6 was due to its large molecule size, which meant the shoes would take much longer to naturally deflate. Now, nitrogen is used to fill the air cushions for the shoes.

How does this relate to Manufactured Items?

Perhaps the best examples to demonstrate this are from the book ‘How Bad are Bananas’ by Mike Berners-Lee . In this book, Berners-Lee presents an analysis of the carbon footprint associated with various activities and products – specifically to produce a measure of the tones of CO2e produced by each item or activity.

For the example of a car, the CO2e for manufacture encompasses the energy and resources consumed during the entire manufacturing process, including the extraction of raw materials for the body, rubber production for tires, the assembly process, and transportation to dealerships.

The diagram below shows the CO2e for the manufacture of different cars, as well as the breakdown of which processes make up these emissions. A key point we will come back to later stated in the book is that ‘a car might have a footprint of 360kg of CO2e for every £1,000 ($1,270) you spend on it.

Measuring CO2e for Manufactured Items

There are many ways of approaching measuring CO2e, so how can we come up with an appropriate measure of CO2e for the items that we sell at auction?
Two commonly used methods are the Spend-Based Emissions approach and the Lifecycle Assessment. Let’s review each.
Spend-Based Emissions (source: MyCarbon)

A spend-based emissions factor allows us to quantify the emissions associated with an item based on the financial value. For example, the greenhouse gas emissions associated with purchasing a $100,000 machine tool. You will also see this referred to as an ‘Environmental Input-Output Analysis.

A spend-based emissions factor allows us to quantify the emissions associated with an item based on the financial value. For example, the greenhouse gas emissions associated with purchasing a $100,000 machine tool. You will also see this referred to as an ‘Environmental Input-Output Analysis.

The following is a summary of the steps taken when using spend-based emissions factors:

  1. Total the cost of all the items that have been sold, adjusted for inflation.
  2. Source the Emissions Factor per unit of currency for the product category (e.g., kg CO2e per $ spent).
  3. Cost x Emissions Factor = total carbon emissions avoided.

Thankfully, there are many existing sources of emissions factors already prepared – all you need to do is to find the appropriate factor for the item you are considering, and multiply it by the new price.

This diagram above shows a simplified example of the calculation for a specific industry. In essence, if a total industry emits 50 million kg of CO2e per year, and they sell $100 million of goods, their emissions factor is 0.5. Multiply that by the cost of an item – and you have the estimated CO2e associated with that single item.

This method provides a straightforward approach to measuring the carbon benefits of reselling returned goods and is one of the quickest solutions to achieve this. However, it may not capture the full environmental impact, as it relies on average industry wide emissions factors and does not account for variations in manufacturing or materials (including the difference between domestically produced items and imported items, which can be huge).

Additionally, it also assumes that there is a correlation between cost of goods and the associated emissions with manufacturing an item.
For example, using this methodology, a car costing $25,000 would have less associated emissions than a car costing $100,000, yet the reason for the price difference may be based on the brand rather than the manufacturing processes that go into creating the two products.

In Summary, the Spend-Based Emissions approach is fast, simple, and complete, but it is very generic, and does not account for differences between domestically produced products and imported ones.

Lifecycle Assessment (LCA) (source: MyCarbon)

Lifecycle assessment (LCA) is a more comprehensive method for quantifying the carbon benefits of reselling returned goods. LCA evaluates the environmental impact of a product throughout its entire lifecycle, from raw material extraction to disposal. This approach considers the carbon emissions avoided from both the elimination of landfill disposal and the reduced need for manufacturing new products.

Conducting an LCA includes steps such as:

  1. Identify the relevant lifecycle stages for the product category, such as raw material extraction, manufacturing, transportation, use, and disposal.
  2. Collect data on the environmental impacts associated with each lifecycle stage, focusing on carbon emissions.
  3. Calculate the total carbon emissions for the product’s lifecycle, taking into account any differences in emissions based on manufacturing processes or materials.
  4. Compare the emissions associated with reselling the returned goods to the emissions of producing new products or disposing of them in landfill.

By quantifying the carbon benefits of reselling returned goods through LCA, retailers and consumers can gain a deeper understanding of the environmental impact of their reverse logistics processes. This information can help inform decision-making and drive improvements in sustainability performance, ultimately contributing to reduced emissions.

Ultimately LCA is a more accurate method of quantifying the emissions associated with a product (and therefore the potential savings from reselling this), however due to the complexity of the process, it can be time consuming and may be difficult to apply to assets in the industrial auction context.

Which Method works best for Auctions?

The spend-based approach has the benefit of being faster, simpler and generally complete, as well as having existing data readily available for use. Mike Berners-Lee also stated in his book that environmental input-output analysis is ‘at least as robust as anything else in the murky world of carbon footprinting – which may sound like faint praise, but is more of a reflection of the early state of carbon footprinting.

For our purposes (which is to use across multiple items sold at auction), it is also acceptable that it is more generic, as combined across multiple items it becomes a better metric.

However, there are a couple of issues we still needed to overcome:

  • New Cost Data: While we may have new cost information available for some projects, for most auctions this is not something that is readily available.
  • Used vs New: This model treats a used item as having the same remaining life as a new one. However, that is rarely the case and in extreme examples can result in overstating the carbon. A second-hand item will have a shorter life and therefore should not receive the equivalent carbon measure of a brand-new item.

Thankfully we have a way of resolving both these issues! Using the second-hand price (i.e., the price the items sell for at auction), is a way of both easily sourcing the data (as we have it for every sale we do) and also reflects the reduced remaining life of an item.

The benefits of this approach are:

  • The second hand price is easy to obtain for auctioneers
  • It is a proxy for reduced utility
  • It results in the CO2e estimate being more accurate, rather than overstated

Sourcing and Using Emissions Factors
There are various different sources of spend emissions factors, we’ve provided some examples below. We worked with a specialist consultant, however, and we’d recommend you do the same – this way they can find the most appropriate source. This is especially important if your analysis could be questioned by your client for methodology:

  • WIOD (GHG Protocol). EU + 14 major economies
  • EXIOBASE3. 44 Countries + ROW Region

The following tables show examples of emissions factors for 4 categories and how these are used to calculate the carbon emissions (using new costs in this case).

Case Study: Calculating the Carbon Saving from a UK Auction

In 2022, CAGP and MyCarbon assessed the greenhouse gas emissions for 15 categories of audio-visual equipment sold at the Arena Television UK auction. The goal was to understand the carbon emissions avoided by buying second-hand items instead of new equipment.

The emissions factors used were spend-based, assigning GHG emissions to a product based on its cost. Emissions factors were researched by identifying relevant product categories and corresponding factors from the UK’s BEIS in 2019. MyCarbon adjusted the factors for inflation using the UK Consumer Price Index to ensure data from 2019 was relevant to 2022. As outlined above, we also applied a reducer to the carbon associated with the items because they were second hand; this was done by using the auction sale price (including buyer’s premium) instead of the new cost.

The following table shows the calculations across each individual category of assets sold at the auction:

Using the methodology above, we were able to report the amount of carbon saved because of a single auction.


Measuring carbon emissions from auction lots isn’t a new idea. There are examples of auction companies doing this from over 10 years ago. But it is gaining traction as ESG becomes a priority for more businesses and investors – and there are more methods and data to make the calculations within reach for most companies.

As auction companies, we’re used to talking about cash we’ll generate for assets, and maybe savings on storage, maintenance, and insurance. Our targets within a company may be operations managers, site managers and occasionally those with a role dedicated to investment recovery.

But talking about carbon reduction changes all that. You’re now talking about something that is a priority for most boards in the USA and Europe. The conversation is now with C-Level executives, Chief Sustainability Officers and ESG departments. This opens up a whole new avenue for auction companies when we are providing a sustainability solution in addition to cash generation and cost savings.