What is a circular economy?
The circular economy (sometimes called ‘CE’, ‘circularity’ and ‘circular thinking’) refers to an economic state where resources are kept in a continuous circle of use so that:
- Virgin resources are no longer extracted (e.g. from mining);
- Existing products, once used, are reused or recycled to make new products without loss of value;
- No resources are disposed of and no value is lost (e.g. in the landfill of incineration).
This contrasts with the existing ‘take–make–waste’ linear economies seen around the world. Linear economies consume large quantities of virgin resources to make products, only to permanently dispose of them at the end of their use. This represents a colossal loss of value in terms of the resources that the products contain and the extraction, energy and processes invested in them.
But is this loss really a problem? Arguably, linear economies give rise to huge benefits for humankind. Since industrialisation began, millions have been lifted out of poverty, and we’ve seen substantial increases in the supply of goods and services that people link to quality of life. However, there are two reasons why the linear economy is ultimately doomed to destroy itself:
- Pollution of the environment reducing the supply and quality of the natural resources it relies upon;
- Continuous extraction of resources faster than they can renew.
Both lead to scarcity in the supply of
resources, critical resources running out, environmental degradation and
ever-increasing costs. This additional cost is ultimately passed on to consumers
who, as a result, will increasingly struggle to maintain and improve living standards.
They will eventually experience a downward spiral in the benefits the linear
economy has delivered in the first place, which will accelerate as the world’s
population grows. As such, an economic problem becomes a serious geopolitical
Governments are beginning to realize this predicament and in response are promoting a transition towards a more circular economy. Research projects into CE principles are beginning to gain support, such as the BAMB project funded by the European Union’s Horizon 2020 research and innovation programme.
In addition, forward-thinking organizations identify the linear economy as a risk to their bottom line and as such are changing their business models to reduce exposure by adopting CE principles. However, it is a challenge to remain competitive when faced with prevailing economic structures, regulation and standards serving short-term linear business models that continue to result in:
- Unintegrated and unmappable supply
- Low-cost instead of quality
- Planned obsolescence
- Consumer perception of quality
- Negative impacts on the natural
world and communities being externalised and not reflected in the cost of
Nonetheless, success stories are emerging, particularly among entrepreneurial start-ups that adopt CE principles from the start. They can do this without the challenges long established organisations face, such as developing and launching new CE products and services without cannibalising income from existing linear products and services.
How do circular economy principles relate to established
CE in business and economic theory centres motivation
around avoiding supply risks, tacking value leakage and achieving value capture
thus leading to greater profit. As described above, reducing pollution and
consumption of resources is an important part of achieving these advantages. Where
wider sustainability benefits occur, they are incidental to the profit motive
and are likely to be presented as self-evident without being formally measured or
compared to specific targets.
What the CE means now varies from one
sector to another. For example, consumer goods, apparel and food industry organisations
would certainly recognise the original meaning and motivation explained above.
Many of these organisations have been examining and adapting their business
models accordingly for well over a decade. That is not to say they do not
recognise and promote the wider sustainability benefits too, which can be an
important aspect of brand perception.
For the construction industry, however, CE has emerged more recently and is primarily associated with sustainability rather than value. Terms like ‘circularity’, ‘circular thinking’ and ‘being circular’ are increasingly used instead of ‘sustainability’ and its derivatives – perhaps because of the more business friendly and practical connotations. The promise of new simpler sounding solutions to old unresolved problems. However, this overlapping of concepts and terms presents a challenge. If there is no clear distinction between ‘the CE’ and ‘sustainability’, then there is a plausible risk that the industry will become confused and frustrated which could lead to inaction. First, organisations are told they need to be more sustainable and are on a pathway in understanding and acting on that (e.g. by developing standards, guidance, measuring approaches, reporting methods and changing practices). Now they are told they must be more ‘circular’.
A solution may be to see the CE as an approach towards sustainability that is specifically focused on physical resources. A practical solutions-based focus of the CE will complement other established quantitative methods like life cycle assessment (LCA) and greenhouse gas emissions reporting which, rather than providing solutions, concentrate on the measurement and reporting against environmental issues like climate change, water scarcity, toxicity and resource depletion. For example, knowing that an organisation has started a CE inspired take-back scheme that has recovered and recycled 1000 tonnes of plastic sounds great, but what does it tell us in terms of progress in tackling the aforementioned environmental issues? Likewise, an LCA result of 500 Kg CO2e per m2 for a building design is useful to see its contribution to climate change, but how do you reduce it? Used together, practical CE principles will help to inspire and guide potential changes, while established measurement and reporting will demonstrate actual effectiveness.
Circular economy principles for construction – practical
The following practical CE principles relating
to physical resources are specific to the construction industry and may be
considered and applied to all projects: –
Reusing what already exists
Reusing an existing asset, with a necessary degree of renovation, enhances its value and maintains the value of the resources it contains. Compared to new build, reusing an asset clearly avoids the consumption of virgin resources and value-leakage from the asset through the disposal of demolished resources. If reusing the asset is not possible, reusing demolished construction products from it will still significantly reduce virgin resource consumption and value-leakage.
Construction products that must be procured
off-site should, where possible, be reused from other demolished assets or, if
that is not possible, manufactured from recycled resources. However, care
should be taken to ensure that reused and recycled products do not cause
unintended negative environmental and social consequences. For example,
transporting reused products for far greater distances than local virgin
products. LCA can greatly assist in identifying which options are beneficial
Designing for simple disassembly, reuse and recycling
Designing for simple disassembly, reuse and recycling allows products to be simply and cheaply disassembled into constituent products at the end of use, ready for the next use. This includes the ability to disassemble an asset into construction products (so they can be reused as-is), as well as disassembling the products themselves (if they cannot be reused as-is, but can be recycled). This often depends on the products:
- Having good design and composition records (see ‘material passports’ below);
- Having clear mechanical and reversible fixings (instead of being bonded or welded);
- Not being composites of inseparable substances (unless they can be readily reused as a whole);
- Being of a modular size;
- Having standardised performance;
- Not containing hazardous substances.
For example, a beam that fulfils these
points will be far easier to remove and reuse, and will retain value, compared
with a non-standard beam of unknown composite materials and coatings and
unknown performance – which is likely to end up a cost liability for the asset
Take-back / buy-back
Take-back / buy-back refers to end-of-use construction products being taken or bought back by a manufacturer (who may be the original manufacturer or another from the same product sector). For example, during a fit-out of a building, instead of carpet tiles being stripped out and sent to landfill, they are segregated into a dedicated container, collected and recycling into new tiles. Or better still, the tiles are carefully removed, deep cleaned and reused as-is. For the manufacturer, both approaches offer greater resource supply security and potential value capture. The asset owner benefits from gaining an income stream or reducing disposal liabilities.
Materials banking refers to the materials within
an asset not only having traditional value in terms of providing income-generating
space, but additional value as a resource to be realised once the building
reaches the end of its use. For the asset owner, realising maximum value
depends on choosing the right materials and construction techniques that are low-cost
to disassemble, re-use and recycle (see above).
This approach can similarly be applied to
existing assets. If the asset is surveyed in advance with a view to
value-capture at the end of use, the owner will be aware of the materials that
have potential value and how they need to be disassembled to maintain it. In
addition, they will be conscious not to reduce value during repair and
Materials/product passports refers to the use of technology to record product details for future reference. This provides a greater understanding of value as well as a wealth of practical information. How the data is stored and accessed varies and several systems are available or in development. For example, the data may be stored on a web-accessible and updateable database accessed via a QR code on the product. Or it may be a static record stored on a chip on the product. A material/product passport may include an unlimited range of data, for example: –
- Manufacturer details
- Installation date
- Product classification
- Cleaning and maintenance
- Certification and standards
- Constituent materials
- Safety consideration and
presence of any hazards
- Potential future uses and
Resource consumption efficiency
Resource consumption efficiency refers to
the asset design using a minimum quantity of resources to perform the required
function. For example, a floor slab may not need to be the same thickness
across its entire span, as is often constructed. A reduction in thickness will
result in a reduction in resource consumption. A building design that is
passively cooled will avoid cooling HVAC systems – a significant reduction in
highly engineered components that require regular replacement. Consideration
should also be given to the waste produced during installation and in-use so
that optimum resource efficiency is achieved over the whole life of the
In terms of value, although material costs
will reduce, it is possible that labour costs may increase due to the extra
design time need. Likewise, construction costs may increase due to a more
complex or novel form. A solution to this may be for design practices and
constructors to invest in developing more resource efficient innovative
approaches suitable for rolling out onto future projects. Alternatively, early
discussions with clients to raise awareness and present options for including
resource efficiency in design services could result in early buy-in and a
willingness to invest to reduce excess resource consumption.
An adaptable asset design can better accommodate several different use functions without significant compromises being made to each one. This includes the flexibility for the asset to accommodate different types of use in the same spaces, for example, a floor that was initially used for offices being simple to convert to residential or retail. In addition, adaptability includes the flexibility to easily accommodate changes to the internal layout for the same use function. For example, the straightforward relocation of partitions because of space planning changes.
A durable asset design is one that can provide its intended function over a longer period with low maintenance and repair requirements. An asset that delivers income for longer and with much reduced in-use costs is clearly of superior value to the owner. Durable design involves the careful selection of construction products that can better withstand exposure to physical impact (e.g. collision, abrasion) and are less likely to degrade. In addition, the durable design minimizes exposure to physical impact and causes of degradation. For example, careful planning of a goods yard to reduce the chance of vehicles colliding with the asset, and eaves that protect external walls and windows from rain.
Servitisation refers to changing from the traditional arrangement of a supplier selling products to customers (who then owns them), to the supplier retaining ownership of the product and selling a service using the product instead. For example, instead of selling luminaires to a building owner and then having little more to do with them, a lighting manufacturer sells a specified level of light over a defined period. In so doing, the supplier can replace equipment when more cost-effective versions are available, which allows value to be captured and profits increased. In addition, the manufacturer can reuse or recycle resources from the replaced products into new products, which provides greater resource supply security. The building owner benefits through greater cost certainty, someone else being responsible for maintaining light levels and not being lumbered with end-of-life disposal cost risks.
For the reasons stated at the beginning of
this article, adopting CE principles is essential to achieving sustainable
resource use and tackling other sustainability issues that it affects. BREEAM
is a powerful enabler for a CE in the construction and real estate sectors.
CE principles relating to sustainable physical resource use are rewarded through a range of credits across the family of schemes offered by BREEAM including:
- life cycle assessment;
- life cycle cost and service life planning;
- responsible resource procurement;
- designing for durability and resilience;
- material efficiency performance;
- construction and operational waste performance;
- designing for disassembly and adaptability;
- and maintaining a resource inventory.
As schemes are updated, BREEAM will continue to review and include emerging CE principles and will clearly signpost where they are covered.
This article was written by Daniel Doran, Principal Consultant at BREEAM