Circular economy in the Nordic construction sector: identification and assessment of potential policy instruments that can accelerate a transition toward a circular economy
Nordic Council of Ministers
The purpose of this project is to identify and discuss potential policy instruments that can accelerate a transition toward a circular economy in the Nordic construction sector. Sixteen interviews were carried out with actors representing stakeholders from Denmark, Finland, Norway and Sweden. The objective of a transition toward a circular economy in the construction sector is to maintain, reuse, refurbish and/or recycle resources and materials used in all parts of the value chain. Most of the new policy instruments that the interviewees have suggested have focus on rules and regulation. Only a few of the interviewees focus on economic incentives, agreements or providing supplementary information. The suggested rules and regulations focus on product design and in particular design and demolition of buildings. The policy instruments that the interviewees mainly suggest can be summarised in three main policy instruments: Supplementary requirements for documentation of the content and quality of the building materials. New requirements for documentation of the use of reused building products and building products containing recycled resources in buildings. New requirements for waste and building demolition plans. These policy instruments will require improved documentation of the technical performance (quality, durability, strength, content of hazardous substances etc.) of building materials, improved traceability of the building materials as well as minimum standards for recyclability and reuse of building materials. The interviewees expect that the policy instruments will have the most direct impact for the building material producers and especially the building owners who will need to reflect such requirements in the sourcing of building materials and in the design, refurbishment and demolition of buildings. The interviewees mostly suggest anchoring the requirements in the building regulation in Denmark, Finland, Norway and Sweden and secondly in: Environmental Product Declarations (EPD). Construction Products Regulation (CPR). Building Information Modelling System (BIM). Material and/or building passports. Across the suggested policy instruments, the interviewees find that the suggested policy instruments will have great positive environmental impacts, neutral budgetary impacts for public authorities and positive financial impacts for private companies. These impact expectations mainly apply to the three summarised policy instruments. Most of the interviewees expect an implementation phase where companies have to adapt to the new rules and regulations. This may imply a short run implementation costs, but in the long run, the interviewees expect that impacts – and especially the environmental impacts – to be significantly positive. Implementation of the 32 policy instruments that the 16 interviewees suggest is expected to speed up the transition toward a circular economy. But the implementation of the policy instruments can be complicated and the implementation process needs to address a number of barriers that may hinder a reduction in the use of resources, greenhouse gas emissions and a full growth in gross profit. According to COWI the main barriers are currently: lack of (early stage) value chain corporation and partnerships in the construction sector lack of economy of scale lack of quality assurance marking schemes of reused building materials content of hazardous substances in existing building products currently embedded in buildings. From the perspective of policy makers, COWI expect that new rules and regulations cannot stand alone – neither for overcoming the above-mentioned barriers nor as the only policy instruments for accelerating a transition toward a circular economy in the Nordic construction sector. COWI expects that companies may need stronger economic incentives to change their existing and often linear business approach. New taxation structures, fees and financial support through public programmes such as innovation and demonstration schemes can create such incentives. New taxation structures and fees will lower the price on recycled and reused building materials and increase the market demand (a market push for recycled materials). A different taxation structure and fees on specific building materials may though be complicated and costly to develop and enforce. Furthermore, a lower tax on recycled and reused building materials will lead to a lower tax revenue that are expected to grow as the demand for recycled and reused materials increases. The costs of new taxation structures and fees therefore may need to be time limited and phased out as the market for recycled and reused building materials grows and becomes efficient and competitive to non-recycled and non-reused building materials. If so, a combination of new rules, regulation and stronger economic incentives can give public authorities a key role in accelerating a transition toward a circular economy in the construction sector. Furthermore, the actions can also create a large-scale demand of building designs based on circular business approaches and facilitate the needed dialogues, partnerships and processes.