Insight

Circular economy: the world keeps turning

1 September 2014

The idea of a circular economy, where everything is built with re-use in mind and endlessly recycled, is gaining traction. As Katie Puckett reports, it presents a massive challenge for the industry - but also the opportunity to change the way we live. Illustration by Nick Lowndes.

Imagine a world where a manufacturer is happy to replace a product after 10 years, and not because there’s anything wrong with it, but simply because a better version has come on to the market.

It may sound far-fetched but this is a serious idea proposed by some of construction’s soberest minds. It’s part of a concept that has become known as the “circular economy”, in which the link between economic prosperity and resource consumption is severed. In a circular economy, the traditional linear process of “take-make-dispose” is transformed into a closed loop where no resource is wasted and everything is reused or recycled.

On one level, “waste not want not” is far from a new idea. Swiss architect Walter Stahel first propounded the economic benefits of a closed loop economy in the mid-1970s, and terms such as resource efficiency, life cycle assessment, cradle to cradle (C2C) and the blue economy have since become familiar, to sustainability specialists at least. The construction sector has steadily been reducing the waste it sends to landfill for over a decade, and many manufacturers already operate take-back schemes for products at the end of their lives.

But the circular economy goes further than reducing waste to eliminating it altogether, extending the life of products, enabling them to be reused over and over again, and “upcycling” them to increase their value each time.

Something about the circular economy seems to have captured the popular imagination, and there are signs that it is making the leap from deep-green niche to mainstream concern. As one of the world’s heaviest users of resources and producers of waste, construction is in the front line. But is a genuinely closed loop for building materials possible? Can construction products really be reused as easily as cans of coke or cars?

Unlike many ideas about sustainability, the circular economy appeals because it responds to a pressing concern for all industries: the increasing competition for resources. According to a report by management consultant McKinsey & Company — Towards a circular economy – rising commodity prices since 2000 have wiped out the real decline in prices that took place over the whole 20th century. With the global population continuing to grow and urbanise, and 3 billion new middle class consumers expected to enter the market by 2030, high prices and volatility will be here to stay unless action is taken, says the report. On the other hand, the European Union could save up to US$630bn each year by implementing circular economy principles, it says.

Finite resources

The report was commissioned by the Ellen MacArthur Foundation, established in 2010 to promote the circular economy, inspired by the round-the-world yachtswoman’s keen awareness of her finite resources at sea. Its founding partners were B&Q, BT, Cisco, National Grid and Renault and it has now signed up nearly 50 global companies to its business programme, the Circular Economy 100, including contractor BAM.

Brummen Town Hall in the Netherlands has a 20-year service life and is described by BAM as a “semi-circular” building. The client pays for elements such as lighting in a performance contract

Its campaign seems to be reaching critical mass. In July, the European Commission issued a proposal for a future EU directive, Towards a circular economy: A zero waste programme for Europe. This proposed a new target of recycling 70% of municipal waste and 80% of packaging waste by 2030, banning the sending of recyclable waste to landfill by 2025, and was accompanied by a specific proposal on developing a framework for resource efficiency in the construction sector. In the same month, a group of MPs in the UK published Growing a circular economy – ending the throwaway society, which recommended lowering VAT on recycled products, extending consumer warranties and banning food waste to landfill.

Applied to construction, the circular economy would demand nothing less than a radical shift in how buildings are designed, maintained and even owned. Buildings would be designed to be more adaptable and durable, and eventually to be disassembled into components which could be reused or recycled. Rather than selling products, manufacturers might undertake to provide a guaranteed level of service, upgrading components as more efficient ones become available and taking back the old materials.

Going full circle

The UK Contractors Group (UKCG) has established a task group to explore how the construction supply chain could become more circular, and promote the idea to its 30-strong membership. Mace sustainability director Andrew Kinsey is one of the group’s leaders. “In essence, it’s fundamentally different to what we currently do [already],” he says. “There is no waste in a circular economy because every output becomes another input. The whole industry is a long, long way from that ideal at the moment.”

"An awful lot of this is to do with ownership. If somebody’s designing something with a brick, who owns it?"

Jane Thornback, Construction Products Association

There are isolated examples of circular business models. In the aerospace industry, Rolls-Royce has offered an engine and accessory replacement service on a fixed-cost per flying hour basis since 1962, while Michelin started leasing tyres on a per kilometre basis in the 1920s. More recently, Dutch electronics giant Philips worked with RAU Architects on a “pay per lux” model for its lighting products, where it doesn’t sell the light fitting and luminaire as products, but as part of package with a guaranteed light level. While the Dutch are the undisputed leaders of the circular economy, London does have some excellent examples of best practice in the form of the temporary venues for the Olympics, where 99% of materials were reused or recycled.

The potential benefits of a circular approach to construction are many. Owners and occupants get a better building, and can spread the costs over the lifetime of the building. Manufacturers are incentivised to provide more efficient, better quality products because they will be more durable and require less maintenance, and in return enjoy a more fruitful long-term relationship with clients and a reliable supply of raw materials.

Positive message

From a contractor’s point of view, the circular economy is a more outward-facing, positive message than merely reducing waste, says Nitesh Magdani, director of sustainability at BAM Construct. “We wanted to create something that we could take forward to promote our company and what we can do for clients, rather than just being less bad. It’s one way to demonstrate that we’re not just going to give them the keys and move on, we want to make sure the building works. Contractors are really well placed to lead this because we make the agreements with the supply chain.”

BAM was involved in a “circular” project in the Netherlands, at Brummen Town Hall, completed in March 2013 and designed by RAU Architects as a “raw materials depot”. The municipality asked for a temporary facility with a service life of 20 years, so the building is constructed of high-quality, reusable and renewable materials, largely prefabricated timber components which will be dismantled and returned to their manufacturers at the end of the building’s life. This did mean small but significant changes to the design: “For example, the timber frame structural beams were designed to be an inch thicker than they needed to be,” says Magdani. “That way, when it’s deconstructed, they can be resold again as a standard product.”

The transition to a circular construction industry is far from an overnight process, however, and construction is far more complicated than many industries. “Construction products are not like retail products, it’s a quite different business model,” says Jane Thornback, sustainability policy adviser at the Construction Products Association. “They’re around for many generations and are going to way outlive the companies or people who made them. An awful lot of this is to do with ownership. If somebody’s designing something with a brick, who owns it? The people who made the brick, the people who made the brick into something else, or the people who demolish the bricks 300 years later?”

Diverse sector

Construction is also a very diverse sector, and circular economy principles are likely to be more easily applied on an out-of-town retail shed than a Cambridge college, for instance. Equally, the service contract model will work better for non-structural elements, such as internal partitions or M&E systems in which individual components can be replaced.

There are many legal and commercial issues to be addressed, such as intellectual property rights, and standards and warranties for reused components. Ensuring suppliers are financially stable enough to complete a building project is always a concern for a main contractor – what kind of safeguards would be needed to make sure they’re around to honour a 20-year service contract? And if they do go bust, would occupants find the receivers knocking on the door to reclaim parts of the building?

"Contractors are really well placed to lead this because we make the agreements with the supply chain."

Nitesh Magdani, BAM Construct

But first there are a whole host of practical and technical challenges to be overcome, to create buildings that can be dismantled and reused, without compromising on their lifetime performance or stability. “Designers need to start thinking about the lifecycle of a product, focusing on dismantling and reuse,” says Philippa Stone, group head of sustainability at ISG. “For example, products that are glued are notoriously hard to recycle so we need to think about how we put things together. At the moment, the focus tends to be on cost, waste and carbon efficiency during the life cycle and not really at the end of life.”

This is already being tackled. In 2013, the BSI issued part 1 of a new British Standard, BS 8895, Designing for material efficiency in building projects, with part 2 due in early 2015, and parts 3 and 4 to follow in 2016-17.

Construction competition

This was also the thinking behind a recent competition, “New designs for a circular economy”, funded by the government’s Technology Strategy Board, which challenged designers to rethink products, components and systems to make use of resources. One of these was piloted in B&Q stores over the August bank holiday last year. For a one-off DIY job, people tend to buy the cheapest tools available, which then sit in the shed or garage gathering dust. With ProjectBox, they take home all the materials for a given job and guidance on how to complete it, as well as a set of high-quality tools. When they’ve finished, they return the tools and the unused materials.

The TSB is now planning a construction-specific circular economy competition. “We’ve increasingly seen construction sector businesses applying to circular economy competitions,” explains Mike Pitts, lead specialist, sustainability. “I think the construction sector will be one of the pioneers in achieving the circular economy – the potential advantages are huge and the opportunities are strong.”

Pitts believes that BIM will play a key supporting role by providing a detailed record of exactly what a building is made of, but also by demonstrating the choices available at design stage and their impact on whole-life costs.

The TSB works on a 10-20-year timescale – the typical period that it takes to highlight an issue and work through the business challenges. Pitts expects that within 10 years, there will be many more examples of the circular economy in action. “The key challenge is demonstrating that something can work,” says Pitts. “Once that’s been done, it doesn’t take long before it becomes much more commonplace.

“The businesses we’ve been talking to have very much said that this is how they see it going in future. This is a new way of business evolving, there’s no two ways about that.”

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