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This article was originally published by Social Europe
In the same way that some of us need budgets for buying lattes on our way to work, certain industries need budgets for emitting carbon dioxide (CO2). ‘Carbon budgets’ continue to be a popular approach to combat global warming. By measuring how much CO2 industries, countries and even households emit, we can limit our ‘spending’ to prevent the 2-degree temperature rise outlined in the Paris Agreement. For Europe’s construction sector, however, these budgets are very close to being spent. We have to start penny-pinching if we are to reach our decarbonisation targets.
In our latest report, Towards a Circular Economy in the Built Environment: Overcoming market, finance and ownership challenges, the Circular Buildings Coalition (CBC) found that the combined carbon budget of the EU and UK’s construction sector is rapidly running out. The industry currently produces around 277 million tonnes of CO2-equivalent per year. If the sector’s emissions continue at this rate, it will exceed its allocated carbon budget for limiting global warming to 1.5-degrees in 2026. What’s more, the budget for 1.7-degrees and 2-degrees will run out in 2029 and 2031, respectively, if the sector doesn’t start seriously reining in its spending.
The construction industry is a notoriously hard-to-abate sector. Traditionally, incremental change has been the modus operandi for decarbonising the built environment. But now, radical change is necessary to guarantee that humanity can safely remain within the 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 address these impacts—but this is not without challenges.
The circular transition is already underway in the European built environment, for example, with the ‘EU Renovation Wave’. If the EU is to achieve both its 2030 climate target and climate neutrality, it should aim to renovate 3% of existing building stock every year until 2050. We found that in implementing these ambitious measures, however, it is essential to consider the carbon embodied in the materials used for those renovations. These materials will generate a cumulative 1,500 million tonnes of CO2-equivalent between 2022 and 2050. In a business-as-usual scenario with no change in material use, this alone would consume almost 90% of the carbon budget allotted to the construction sector to prevent a 1.7-degree temperature increase! In addition to the carbon impacts, we also found that the materials used in renovation create 124 million tonnes of waste annually—equivalent to the weight of materials 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 some potential, though. For example, we found that when reused within the sector, construction and demolition waste can theoretically meet up to 12% of the current estimated demand for virgin materials in construction. This also makes it abundantly clear, however, that reusing materials in the construction sector is not enough to significantly reduce the environmental impacts of the industry. We need to reduce the overall demand for construction materials in the first place by using our buildings for longer and ensuring they’re run more efficiently.
In addition to material use and handling, transitioning to a circular economy in the built environment in Europe faces several systemic challenges. One such challenge is creating fully functional markets for secondary materials that are able to compete with primary materials. Virgin materials are often far cheaper than their secondary counterparts. Ensuring that all costs associated with virgin materials—such as damage to natural habitats and climate impacts—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 systemic challenge facing the construction industry is developing business models that align with circular principles and scaling them with innovative financing. For example, financial institutions need to rethink how they evaluate risks for buildings aligned with circular principles, for which the returns often have a longer time horizon. Ways to reduce risks include various forms of blended finance which mitigate risk and leverage financing opportunities within one fund or financial vehicle. This can be done by combining concessional financing (financial and tax instruments made available by lawmakers) and commercial funding provided by traditional business financiers.
The policy landscape is changing rapidly in favour of circular principles. Upcoming changes to EU legislation, such as the Construction Product Regulation (CPR) and Extended Producer Responsibility (EPR), 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 the construction sector who anticipate these changes by adopting circular principles will be well-positioned to lead the transition while shaping resilient organisations.
In addition to our latest report, we have opened a call to find initiatives working to overcome existing barriers to accelerate the transition to a circular economy in the built environment across Europe. Organisations that submit blueprint projects will contribute to enlarging the market for their solutions or solutions like them to benefit everyone while increasing visibility and recognition for their circular work. With three years left in the allotted 1.5-degree carbon budget, the time is now to decarbonise the European built environment—and circularity holds the key.
The Circular Buildings Coalition is an initiative powered by Metabolic and Circle Economy and funded by Laudes Foundation to accelerate circularity in the built environment in Europe.
This year we are sharing the findings from our new report and announcing a call for funding applications for European blueprint projects in the construction industry at the World Circular Economy Forum 2023 in Helsinki on Thursday, the 1st of June at 10:00–13:00 EEST (UTC+3).
