Circular Economy in Construction: Opportunities for Sweden and the Netherlands

Building site

Why do the Swedish & Dutch construction sector need to become circular?

Our current economy with its "take, make, dispose" model, is not sustainable in the long run, as humans’ demand for raw materials exceeds what our earth is able to supply. It is necessary to shift towards a Circular Economy (CE) in which we rethink, reuse and renew our world's resources. This is especially true for the construction sector, as construction and demolition waste (CDW) is one of the heaviest and largest waste streams. It accumulates for about 25% - 30% of all waste generated in the EU.

This makes it a crucial sector to focus on in order to speed up the circular transition. The sector needs to minimize its use of virgin-grade raw materials while maximizing its use of secondary raw materials. The environmental necessity is only increasing, presenting a growing opportunity for businesses within this sector. After all, necessity is the mother of invention. See the graph below for the reasons why the construction sector can make a profit by becoming circular.

Circular construction graph

How circular are our countries’ construction sectors?

The Dutch government has launched a programme to become fully circular by 2050, and is increasingly active to use their policy toolkit to stimulate CE. In Sweden, the goal is to be fossil free by 2050. The government realizes CE is crucial to achieve this goal. Both countries are not just waiting until 2050, and already started to shift their economies as soon as possible. But, how are our countries’ construction sectors currently doing?

The EU Waste Framework Directive requires all EU countries to have a minimum recycling rate of 70% for construction and demolition waste (CDW) generated, by 2020. The recycling rate of CDW in Sweden is currently about 50-60%. The Netherlands is doing better, with a recycling rate of about 90-95%.

However, the EU’s required recycling rate of construction and demolition waste is almost meaningless. These rates do not distinguish between different types of recycling. Merely using mineral waste as an aggregate for a new road, or burning wood waste to recover some energy counts the same as completely deconstructing a modular building to re-use these materials. The required EU rate does not favor the most sustainable recovery operations at all and increases the risk for down-cycling materials with a high resource value. Thus, as judging by a country’s CDW recycling rate is pointless, the question becomes: how are our countries really doing?

“The EU’s required recycling rate of construction and demolition waste is almost meaningless.”

How is the Swedish construction sector trying to become more circular?
In the past decade, businesses in this sector have become much more aware of the benefits of CE. The sector is dominated by three big players, who are all trying to include CE in their corporate strategy:

  • Skanska: aims to be climate neutral by 2050, and wants to use CE in order to do so. Also, it developed an own tool to measure its sustainability (Skanska Color Palette™).
  • NCC: wants to stimulate CE. It launched a very successful open eco-system app called Loop Rocks, which directly connects supply and demand for construction sites.
  • Peab: is focusing on recycling and re-using CDW, with its 20 recycling facilities. Also, it is developing a more precise way to calculate the amount of materials needed, to prevent waste.

Most companies in the Swedish construction sector are still exploring how to completely shift their way of doing business by becoming circular, but it is clear that they are willing to change. The Swedish sector has a long history and good reputation of using sustainable and bio-based materials. So even though the concept of CE might not yet be fully integrated in their business models, there is a great foundation to build on in order to succeed.

A great example of a company in this sector that is really a driving force for CE is Ragn-Sells. This waste management company is increasingly focused on using “waste” as a secondary resource, and is involving the entire ecosystem, even outside of Sweden. For example, they recently organized a great seminar with the Dutch founder of the waste hierarchy, Dr. Ad Lansink, to discuss how we could collaborate to stimulate CE (see image below). They will use input from this seminar for their visit to the UN High-Level Political Forum, during the SDG business forum on the 17th of July in New York (2018).

Waste hierarchy seminar

Other driving forces for this willingness to change the sector are parties such as the Swedish Recycling Industries' Association, the Swedish Waste Management Association, and the Swedish Construction Federation.

The central government, however, has not developed a clear agenda for the construction sector to become circular. Nevertheless, there is a strong commitment to do so from Naturvårdsverket (the Swedish Environmental Protection Agency). They carried out a Waste Management Plan (PDF), that specifically emphasized how to improve the management of CDW. Moreover, universities and research institutes have become significantly more active in this specific field.

We could conclude that the Swedish construction sector is in its infancy to become circular, but that there is definitely willingness and initiative to do so. This could be an opportunity for the Netherlands, depending on how they are currently transitioning towards a circular sector.

How is the Dutch construction sector trying to become more circular?
The Dutch construction sector is transitioning towards CE with a more integrative approach in which all stakeholders active in the construction ecosystem are represented. In September 2016, The Netherlands launched a government-wide programme on how to become fully circular by 2050, in which the construction sector was identified as one of the priority value chains to focus on. The transition agenda (Dutch version here, English interview with chair here) on how the construction sector is going to be circular by 2050 was developed by a collaboration between the government, the industry, and several other organizations.

Even though the sector has a clear strategy to become circular, there are still many obstacles. Entirely turning around the construction sector requires a different view on the usage of materials and the way of doing businesses. These three principles prove to be successful ways to overcome these barriers in the Netherlands:

  1. Material rights and passports to retain value: The circular influencer, architect and entrepreneur Thomas Rau wrote a Universal Declaration of Material Rights in which he argues: “If we want to protect nature, then material should be protected from the abuse of ownership.” The Declaration will be presented to the United Nations later this year. Even though this might be symbolic, it does contain a strong message that we need to retain a material’s value, also after a product’s lifecycle. To do so, Thomas Rau created Madaster (cadastre for materials). This material passport provides materials with an identity. For example, when you build an office, you include all the materials you use (quality, lifespan, location, value etc.). This makes it much easier to retain a material’s value and makes circular construction much more efficient. 
  2. Public procurement to stimulate demand CE: Especially in the first stage of transitioning towards CE, it is crucial that there is enough demand. Public procurement focused on CE is a very effective method to stimulate market demand. The Dutch government agreed to include circular criteria for all public procurement by 2023. For example, last month, 50 public and private organizations signed a “Green Deal” representing a total amount of 100 million euros in public procurement focused on CE. Green Deals are used as a government tool to remove barriers for organizations, in order to help accelerate sustainable initiatives where possible. Moreover, public procurement focused on CE allows the Dutch government to practice what they preach. 
  3. Innovative Business Models to make money: Traditional Business Models (BMs) used in construction do not allow the entire value chain to benefit from CE. The Dutch companies Arup and BAM published a study on circular BMs for the built environment, supported by the Ellen MacArthur Foundation. Circular BMs depend on collaboration throughout the construction’s sector value chain, with a focus on long-term design thinking, technology, and innovation. Two Dutch pioneering companies within this field, are BLOC and de Architekten Cie. One of BLOC’s projects, The Dutch Mountains, is about building a data-driven circular environment capable of change over time, which will also be the highest wooden building in the world. Architecten Cie, designed the Dutch bank ABN Amro’s famous circular building, called Circl.
Signing Green Deal

What are the opportunities for more interaction between our countries in this sector?

Three opportunities for Dutch parties to go to Sweden

  1. Increasing need for material passports: In a report for the European Commission (PDF), it is stated that “a key factor in analyzing the present state in Sweden is the low quality of statistics on material flows and other relevant facts.” Also, the Nordic Council argues that the documentation and traceability of the content and quality of building materials are key to make the Swedish construction sector more circular (report in PDF). This creates a huge opportunity for Dutch companies, as they are experimenting with material passports on a much larger scale than Sweden.
  2. Increasing need for circular BMs: Dutch organizations are quite innovative when it comes to creating circular BMs, as was mentioned before. They are especially good at including the entire value chain. As Swedish parties are actively looking for ways to profit from CE, this could be a big opportunity for Dutch project mediators and stakeholder managers. An interesting party in this area is the Dutch social enterprise Circle Economy, which has created the Value Hill framework. It gives a clear insight into how to create economic value by becoming circular.
  3. Increasing need for circular design: Dutch businesses appear to take circularity more into account at every stage of construction planning than the Swedish businesses within this sector. In the near future, it is likely that Swedish companies are not able to supply the desired circular designs. This would be a big opportunity for Dutch companies to generate new business abroad.

Three opportunities for Swedish parties to go to the Netherlands

  1. Increasing opportunities in public procurement CE: As mentioned before, all public tenders issued in the Netherlands (total amount of 73 billion euros annually) will have circular criteria by 2023. This increasing demand offers Swedish companies to win contracts of these tenders. More information can be found through the Dutch public procurement expertise center, PIANOo.
  2. Opportunities to join/launch Green Deals: The Dutch Green Deal Approach explained above, is a government tool to remove barriers for organizations’ sustainable initiatives, with a focus on collaboration throughout entire value chains. France has successfully adopted this approach as well, and Sweden could do the same. Moreover, international Green Deals are also possible. The first one, called the North Sea Resources Roundabout, is an agreement with signatories from France, Belgium, UK and the Netherlands. Joining this agreement, or trying to set up new ones, could be highly beneficial for Sweden.
  3. Increasing demand for secondary resources: As the Netherlands is becoming increasingly circular, the lack of high-quality secondary resources becomes more and more of a problem. In Sweden, more than 99 percent of all household waste is recycled in one way or another. The secondary resource (or “waste”) separation and collection is a very efficient process. The expertise of organizations active within this area can easily be extrapolated towards the construction sector, and would be highly in demand in the Netherlands. 

In conclusion, it seems clear that the Dutch and Swedish construction sectors could both benefit from each other on their way towards a circular sector. Also, the countries’ governments could accelerate the transition within this sector by: focusing all public procurement on CE, using taxes or subsidies to stimulate the usage of secondary resources, and by working together to push regulations on CE in the EU. After all, the construction sector is quite traditional. Thus, in order to become circular, the sector needs to be given a push with one hand, while reaching out with the other.

This article is written by Rutger Oorsprong and was originally published 12 July 2018 on LinkedIn.