The World Circular Economy Forum meets today in Helsinki—construction is one of the biggest challenges.
In the same way some of us need budgets for buying lattes on our way to work, certain industries need budgets for emitting carbon dioxide. ‘Carbon budgets’ continue to be a popular approach to combating global heating. By measuring how much CO2 industries, countries and even households emit, their ‘spending’ can be constrained to keep within the 2C temperature rise above pre-industrial levels presented as a ceiling in the Paris Agreement.
For construction, according to the latest report from the Circular Buildings Coalition (CBC), the carbon budget for the European Union plus the United Kingdom is rapidly running out. Penny-pinching is urgent to avoid overshooting decarbonisation targets.
The industry produces around 277 million tonnes of CO2 equivalent per year. If its emissions continue at this rate, it will exceed its allocated budget for limiting global heating to 1.5C (the preferred limit in the Paris Agreement) in 2026 and the budget for 1.7C and 2C will be exhausted in 2029 and 2031, respectively.
Construction is a notoriously hard-to-abate industry and to date incremental change has been the modus operandi. But now radical change is needed to guarantee humanity can safely remain within planetary boundaries—boundaries that, when crossed, threaten the survival of life on Earth. Introducing circular-economy principles—eliminating waste, circulating products and materials and regenerating nature in the built environment—will be critical to markedly reducing the sector’s impacts. But this is not without challenges.
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Ambitious measures
The circular transition is already under way in the EU built environment, for example with the ‘Renovation Wave’. If the union is to achieve its 2030 climate target and climate neutrality by 2050, it should aim to renovate 3 per cent of building stock every year until then.
In implementing these ambitious measures, however, it is essential to take into account the carbon embodied in the materials used for the renovations. These will generate a cumulative 1.5 billion tonnes of CO2 equivalent by 2050. In a business-as-usual scenario, with no change in materials use, this alone would consume almost 90 per cent of the carbon budget allotted to construction to prevent a 1.7C increase! In the construction sector at large, 124 million tonnes of waste is produced annually as a result of demolition—equivalent to the mass of material needed to construct a tiny house for every inhabitant of Austria and Hungary.
The mountain of waste generated by construction and demolition in the built environment does have potential, though. When reused within the sector, construction and demolition waste could theoretically supply up to 12 per cent of the estimated (current) demand for virgin materials in construction—although that is highly theoretical and practically not achievable.
This also makes it abundantly clear, however, that reusing materials in construction is not enough significantly to reduce the environmental impacts of the industry. We need to reduce demand for construction materials in the first place, by using buildings for longer and constructing new buildings with as little environmental impact as possible.
Systemic challenges
The transition to a circular economy in the built environment in Europe faces other systemic challenges. One is creating fully functional markets for secondary materials which can compete with primary materials. Virgin materials are often far cheaper but ensuring all their impacts—such as on natural habitats and the climate—are incorporated in their final prices can encourage the use of secondary materials. Here public authorities have a critical role to play—and hold the power to create demand through their own procurement processes.
Another major challenge is developing business models that align with circular principles and scaling them up with innovative financing. Financial institutions need to rethink how they evaluate risk for buildings aligned with circular principles, for which the returns often have a longer time horizon. Various forms of blended finance can mitigate risk and leverage financing opportunities within a fund or financial vehicle, combining concessional financing (financial and tax instruments made available by lawmakers) and commercial funding from traditional business sources.
The policy landscape is changing rapidly in favour of circular principles. Coming changes to EU legislation, such as the Construction Product Regulation and Extended Producer Responsibility, could address some of the issues regarding transparency, safety and quality. In addition, the European Green Deal and its ambitious decarbonisation targets are pushing the sector to reduce its carbon footprint. Stakeholders in construction who anticipate these changes by adopting circular principles will be well-positioned to lead the transition while shaping resilient organisations.
The CBC has opened a call for initiatives working to overcome barriers to accelerate the transition to a circular economy in the built environment across Europe. Organisations which submit blueprint projects will help enlarge the market for their solutions, or similar, benefiting the public good while enhancing visibility of, and recognition for, their circular work.
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With just three years left in the allotted 1.5C carbon budget, the time is now to decarbonise the European built environment—and circularity holds the key.
Ivan Thung leads the Circular Buildings Coalition, a large-scale collaborative project, driven by Metabolic and Circle Economy, which aims to develop analysis and a shared understanding of the challenges facing construction in Europe during its transition to more sustainable models.
Megan Murdie is a writer and editor at Circle Economy. Her work on circularity has been published by the World Economic Forum, Green Forum and others.