The circular economy & Canada’s built environment

By Paul Shorthouse, Managing Director, Circular Economy Leadership Canada

We currently live in what has been termed a “linear” economy – where natural resources are extracted, turned into something of use, and then often discarded at the end of life. This linear model is the root cause of our triple environmental crises: global warming and climate change; biodiversity loss and ecosystem damage; and pollution. The linear model is also resulting in enormous lost economic opportunities from failing to recapture the value of the materials and resources at end of use.

The construction sector, in particular, is the largest consumer of raw materials and energy globally, and also the largest contributor to the global waste stream by weight. Approximately half of all extracted raw resources globally are used to make construction materials. The sector is also extremely wasteful at the moment, with up to 40 per cent of urban solid waste coming from construction and demolition. The greatest impact associated with the construction sector is the ongoing need for virgin resource extraction.

In Canada, construction is a very important economic sector, generating $141 billion in GDP in 2020. Similar to the global picture, however, the sector is also one of the most wasteful. In Canada, nearly 4 million tonnes of construction materials are sent to landfill annually, representing an estimated 1.8 million tonnes of embodied carbon.

A circular economy approach provides the solution

Addressing the environmental issues and corresponding economic opportunities within Canada’s built environment sector can only be achieved by adopting circular economy approaches in construction and real estate management. The circular economy provides a framework and business strategies for moving away from the linear take-make-waste economy, allowing the full value of our materials and resources to be captured during their usage and at end of life. The circular economy model aims to:

1. RETHINK the way we are doing things by designing out waste and pollution through upstream interventions;
2. OPTIMIZE our materials and resources by keeping our products and assets in use at the highest value possible throughout their lifetimes; and
3. REGENERATE our natural systems.

The circular economy also allows us to reach our net zero climate targets by achieving deeper greenhouse gas (GHG) emission reductions, considering manufacturing processes and supply chain emissions (such as embodied carbon), as well as non-energy GHG emissions such as those from land use changes. For example, a recent report by the National Zero Waste Council found that 1.3 million tonnes of embodied carbon could be avoided per year if all buildings renovated or demolished in Canada were disassembled and reused.

Capturing the full value from assets & resources

Fundamentally, the circular economy is about designing out the concept of waste from products and services altogether – and, in this case, our built environment. From a circular economy perspective, we can think of waste in four different forms:

• Wasted resources – where we are using materials and energy that cannot be continually regenerated;
• Wasted assets – where assets are under-utilized; for example, buildings that sit empty;
• Wasted life-cycles – where we have the premature end-of-use of buildings or infrastructure assets given the lack of repair, maintenance, or adaptability; and
• Wasted embedded value – where materials, components, and energy from buildings, infrastructure, are not recovered at end of their use through deconstruction and material recovery.

There are five well-established circular business strategies that look to capture the full value of resources. These are:

• Circular Inputs – A business model which uses renewable energy, bio-based products (such as mass timber), or potentially completely recyclable materials (recycled plastics or concrete) as a key input.
• Sharing Platforms – A business model which involves increasing the usage rates of assets through collaborative models for sharing and community access.
• Product-as-a-Service – A business model where a product or assets ownership is retained by the producer over the long-term to increase is productivity (e.g., leasing models of tools and equipment).
• Product / Asset Use Extension – A business model focused on extending the lifetime of products or assets through repair, maintenance, upgrading, and resale.
• Resource Recovery – A business model focused on the recovery of usable resources at the end of a product or asset’s life.

It is important to think of circular economy in the built environment as much broader than waste diversion and recycling – the opportunities span the entirety of both the value chain and the building life cycle. A circular building or infrastructure assets lifecycle starts with circular design, then product and material innovation and manufacturing (including offsite and modular construction), construction site best practices, asset use and operations (including long-term maintenance, repair, and adaptive reuse), and, finally, deconstruction and resource recovery.

Overcoming the inertia to change

The market potential for circular economy solutions in Canada is large and interest is growing. Many industry leaders are focusing on the design challenge of embedding circular building strategies into their practices and operations (find out more in our recent Circular Economy & the Built Environment Sector in Canada Report).

That being said, very little has been focused on more upstream circular strategies, such as circular inputs and product-as-a-service business strategies. Furthermore, there are significant system barriers and existing inertia that must be overcome. Some of the key barriers include:

• Market and cost challenges of transitioning to a more circular built environment versus the linear status quo. Our construction and real estate sector in Canada have often been compared to the fast-fashion industry… fast, cheap, and as a result, not very durable.
• A broad lack of awareness and understanding of the circular economy as it relates to the built environment, as well as the data and information needed to make good investment and policy decisions.
• A fragmented industry that often operates in silos across the value chain, which creates barriers for the collaboration and systems approach required to advance circularity.
• A complex supply chain and infrastructure gaps create structural barriers to the changes required for circularity. The market for recycled materials is often regional, creating challenges for cross-border material flow and jurisdictional control.
• Inconsistent policy and regulatory frameworks between jurisdictions create challenges for businesses and investment risk. For example, if one region looks to raise landfill rates, waste haulers will just go to the next jurisdiction over.

Accelerating the circular built environment in Canada

To support a stronger business case and accelerate circularity in the built environment, we need to address the challenges and issues outlined above. The demand for circular solutions must increase across the entire value chain and, in particular, where important decisions are being made, including by real estate developers, building and asset owners, and architects, engineers, and designers. As such, it’s essential that the business case and value proposition for circularity is clearly articulated for these stakeholders for them to commit to incorporating circularity strategies and principles into their projects and building portfolios.

A focus on the key enablers can help to tackle the barriers, including:

• Valuing circularity and embracing circular design, which means shifting to valuing durability, repairability, and adaptability and integrating circular design principles from the outset. A total cost of ownership model can help here.
• Increased education and awareness of the business strategies and opportunities, as well as better access to quality information and data that can inform business and policy decisions.
• More cross-sector collaboration that can support the systems thinking and transformation required, which can include greater integration of circular principles within partnership models and existing practices, such as integrated design processes (IDP) and integrated project delivery (IPD).
• Technology and business model innovation, including a focus on circular materials and leveraging digital technologies such as building information modelling (BIM) and material passports.
• Supportive and harmonized policies and regulation, as well as procurement, to help drive the demand for circular products and services.

Working together to advance the opportunities

At Circular Economy Leadership Canada (CELC), we’ve been investing in the circular economy opportunities for Canada’s built environment sector as part of our Circular Economy Solutions Series.

The CE Solutions Series uses a social innovation lab model to bring together stakeholders from across the value chain to tackle issues and advance the opportunities within the sector. Our multi-phased work stream on Built Environment goes beyond a focus on construction waste to encompass the entire building, infrastructure, and real estate ecosystem in Canada.

To find out more and get involved, please get in touch by emailing me at pshorthouse@circulareconomyleaders.ca. I also invite you to sign up for our monthly newsletter to stay informed on our latest research, upcoming events, and partnership opportunities (sign up here).