News

Jan 11, 2024

Five Ways to Improve Circularity in Construction

Brief Buildings account for significant global emissions, but a more thoughtful

Brief

Buildings account for significant global emissions, but a more thoughtful approach to their construction can reduce their total footprint.

By Adrien Bron, Jenny Davis-Peccoud, Harry Morrison, Karim Shariff, and Marc De Wit

Brief

Building construction is a significant contributor to the world's emissions and materials footprints, accounting for about 40% of each. Most emissions associated with buildings result from their operations—primarily heating and cooling. But the embedded emissions in building materials still account for 28% of construction-related emissions.

Improving circularity in construction will be necessary to reduce the sector's emissions and materials footprint. It's a global challenge, and particularly critical in regions experiencing rapid population growth and urban migration, which generates significant demand for new construction. In this brief, we look closely at the European buildings sector, where regulation has helped push the industry to become more circular, focusing on end-of-life materials recycling and recovery.

While emissions reduction efforts will understandably focus on low-carbon technologies such as green steel and CO2-injected concrete, to deliver against net-zero goals the industry will also need to reduce the need for virgin, raw materials.

One way to reduce the demand for virgin materials is to ensure the best use of end-of-life materials—that is, material that can be reused or recycled when buildings are renovated or deconstructed. Because these materials are scarce (particularly in Europe, where buildings have long lives), the sector is also developing innovative new materials and working to secure access to recycled materials from other sectors. In this brief, we describe five tactical strategies that companies are making to improve their circularity, and we share three principles that they are using to navigate the shift to a more circular construction industry.

In Europe, policy and regulation have played an important role in encouraging the construction sector to become more circular, especially the European Union's Waste Framework Directive, the 2008 version of which aimed to have 70% of construction and demolition waste recycled by 2020.

Today, Europe's construction sector, including light industrial, commercial, and residential (not infrastructure), is about 30% circular, with the potential to reach 50% by 2040 (see Figure 1). (We calculate circularity as the weighted average of the percentage of material inflows and material outflows, per the Circular Transition Indicator Methodology of the World Business Council for Sustainable Development.) Heavy materials, such as concrete and plaster, make up most of the material used in the sector. The current amount of recycled inputs is still very low. Concrete, for example, accounting for the highest volume, has only 12% recycled input.

The shift to greater circularity will have a disruptive effect on the industry, especially on the makers of construction materials. Most of these companies are setting goals and putting pilot programs in place to explore ways to make the sector more circular. Owens Corning, for example, aims to deliver zero waste to the landfill by 2030, and Swiss building materials maker Holcim aims to double the ratio of recycled products in its product portfolio over the same period.

The pressure on these incumbents comes not only from regulators and customers. New entrants are also finding footholds in alternative materials and new services and business models. Incumbent leaders should be eyeing these disrupters carefully.

Biomason, for example, is a US company developing new types of cement using biotechnology. The company says their biocement takes inspiration from the formation of coral and other life forms that build with carbon building blocks. Their first commercially available product consists of about 85% granite from recycled sources and 15% biocement, creating a precast that matches the strength and durability properties of standard materials with a much lower carbon footprint.

Another good example is ZenRobotics, a Finnish recycling company recently acquired by Terex Materials Processing of Northern Ireland, which uses artificial intelligence and robotic pickers to improve sorting for different types of waste streams, including construction and demolition.

The shift to circularity is transforming the ways that building materials are developed and used in the construction industry. Each strategy on its own has a limited impact on circularity and emissions reduction, but together they can deliver huge improvements. Bain's analysis finds that if the industry's circularity rises from 30% to 50% by 2040, this would cut the production-related greenhouse gas (GHG) emissions in half, in addition to significant gains achieved by shifting to green energy during production.

A 50% circular industry by 2040 could meet rising demand for commercial and residential buildings with far fewer materials: The total material use could drop from its current 642 million metric tons to 590 million metric tons annually—a reduction of 8%.

Collectively, the building materials sector embracing these levers and strategies could increase circularity to 50% by 2040 (see Figure 2).

Players in the global construction industry, and specifically building materials companies, should take a proactive approach to make the most of the shift to a low-carbon economy. Our experience working with companies in this sector suggests that the companies out in front are guided by three principles that help them navigate the transition.

Historically, the construction industry has been slow to adopt new technologies and processes that deliver productivity gains. But that's changing quickly: Construction and building technology are among the hottest draws for venture capital, and the industry is rapidly adopting digitization.

The same is true for sustainability and circularity. If you visited a construction site tomorrow, you might not see many signs of circularity. But much of the work is in development or already operational in pilot programs. Some construction leaders, particularly in Europe where they have been spurred to action by regulations, are already showing how to use less, emit less, and recycle and reuse more. However, since the industry comprises many small firms, broader change will take more time, requiring greater awareness, more training, and the right economic incentives.

Beyond that, the industry is also pushing forward new technologies and product innovations to boost sustainability in a broader context, thereby reducing the environmental footprint of buildings in general. For example, Velux, a manufacturing company that specializes in roof windows and skylights, produces rooftop windows with expanded functionality to capture rainwater and to adjust the amount of light entering a room. Not only does this support more sustainable ongoing operations, but it also reduces the load of air conditioners that need to be installed at the onset.

After many years, the construction industry is finally showing that it can become more tech savvy and greener.

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