The circularity gap, i.e. the percentage of non-renewable resources that remain outside the closed loop, amounts to 92.8% globally. Meanwhile, we’re consuming 1.6 times more resources than Earth’s regenerative capabilities allow. A vast majority of buildings in the European Union fail to meet the criteria for sustainable development, and they are responsible for nearly 40% of all energy use. Poland’s “gap” amounts to 89.8%, which means that, as a country, we are in 10.2% circular. We only have one Earth, let us leave something for those who come after us, especially if we have ideas on how to do so – call the authors of the “Circular. Closed-Loop Economy In Cities and Real Estate” report. Skanska commercial development unit in Central and Eastern Europe, a company with ESG in the center of its business strategy, became a partner in this publication.
Currently, production and consumption of goods go in a linear fashion: we extract raw materials, manufacture products which are then sold and used, until most of them end up in the landfill. The aim of a closed-loop economy, also known as a circular economy, is to maintain the value of products, components, and materials for as long as possible, and to limit waste and pollution.
Changes in the real estate sector are necessary
Globally, the construction sector is responsible for 35% of energy use, 38% of energy-related CO2 emissions, and 50% of resource consumption. In the EU alone, construction and demolition waste accounts for ca. 30% of all waste. Real estate is therefore one of the most important areas of circular economy and hence giving new life to products of this sector is so important. The world leader in construction material circularity is Switzerland. Studies from 2021 have shown that only 5% of this country’s virgin materials end up in landfill. In Poland, there are buildings in which materials from the closed loop were used, but for the moment they remain outliers. These include Skanska's office buildings: Centrum Południe in Wrocław, Nowy Rynek in Poznań, P180 and Generation Park X in Warsaw, High5ive in Kraków and Wave in Gdańsk.
In Poland, buildings made from materials designed with sustainable development in mind and characterized by a high potential for reuse are continue to be an exception. Still, we hope that change is coming. Circular buildings are designed, used, and reused without putting an undue strain on our resources or the environment, or degrading ecosystems. Their components are easy to disassemble and reuse elsewhere. This is the key to circularity, which ensures a harmonious relationship between the environment and people’s health and well-being, comments Patryk Bolimowski from SYSTEM 3E (partner of the report).
Sustainable development can be profitable
It is estimated that introducing a circular economy in Europe by 2030 could grow the continent’s GDP by 7%. However, the economy’s circularity cannot be increased without introducing radical changes to the real estate market. Acting in line with the spirit of circular economy principles can lead to nearly 60% reduction of greenhouse gas emissions over the entire lifecycle of buildings. Merely designing steel structures that can be disassembled and reused, could lead to energy savings amounting to 70% and 80% lower greenhouse gas emissions over a building’s lifecycle.
The economy is immensely complex and highly sensitive to external conditions. It is constantly evolving, and it is filled with uncertainty. Shifting it towards circularity is a very long and complicated process. For this reason, circular economy strategies should be ambitious, comprehensive, and flexible, so that we can fully leverage the potential of the city or community in question. Studies show that 86% of Poles are ready to reduce their consumption of material goods to preserve natural resources and reduce waste. Society’s determination did not go unnoticed by Polish businesses, which we are supporting in developing their ESG strategies and taxonomy analyses. Polish business sees that it has to change and move to a different model. Together, we are making this transformation happen, says Przemysław Chimczak-Bratkowski from ThinkCo, co-author of the report.
The rate is to be doubled by the end of the decade
Individual governments have long been setting goals and implementing actions geared towards sustainability. Circularity can help achieve these goals. As part of the new EU Circular Economy Action Plan, the rate of material reuse is to be doubled by the end of the third decade of the 21st century. The Renovation Wave (a set of programs aimed at removing obstacles that impede the renovation of buildings) mandates that the rate of energy-related building renovation is increased from 1% to at least 2% annually. It is essential so that existing buildings are more energy efficient and their life can be extended for as long as possible. The program is meant to combat energy poverty, create numerous jobs – according to the European Commision’s estimates, as many as approx. 700,000 by 2030 – and intensify technological progress. It is also meant to help the biggest organizations increase their profit and competitiveness by lowering the risk related to fluctuations in commodity prices.
These days, we have broad access to information, advanced technology, and the necessary expertise, which gives us nearly unlimited potential should we step up to the plate. There are existing platforms for trading construction materials, the potential and recovery value of which we can find in material passports. Existing technologies make renovations easier, from strategically planning demolitions to continuous monitoring of a building’s condition. This is not just a huge opportunity for growth and development, but also a way to manage our shrinking resources. These initiatives require comprehensive, long-term actions, but they remain within our reach. Let us choose to do the right thing, even if it is not the easy way, comments Elżbieta Rotblum from Skanska commercial development unit in CEE, partner of the report.
New direction: professionalization of building renovation
The report also points to a new development in the sphere of building renovations and adaptations. There are three main strategies that are going to dominate the market in the coming years – ThinkCo forecasts in the report. The adaptive strategy consists of changing a building’s function to a different one, which involves transforming its structure and equipment. This could, for example, mean converting aging office buildings into apartments, or turning post-industrial buildings into shopping or cultural centers, or office spaces. The expansive strategy involves making a broader use of a building by thoughtfully adding new spaces next to, above, or below the original structure. With the proactive strategy, the building continues to be in use, and we take preventive measures such as modernization, introducing new technologies, and targeted repairs of problematic areas, so that it does not lose its functionality. A spectacular example of this approach is New York’s Empire State Building, which has served as an office building for nearly 100 years.
Renovations should be performed with the aesthetics and the cultural heritage of the location in mind. Otherwise, we rob future generations of the opportunity to experience and immerse themselves in their historical significance. Even though proper modernization might be impeded by various challenges and the original structure’s construction flaws, this should motivate us to strive for more responsible and conscious construction in the future. These projects require, among other things, transparent information about the materials used and their quality, as well as technologies for monitoring the building’s condition, comments Alexandre Huyghe from Revive Poland, partner of the report.
There are several important motivators for us to modernize buildings. Insufficient space in attractive locations, the competitiveness of newly built properties, growing energy prices and the need to optimize them, and regulations that obligate investors and developers to work towards climate neutrality. In the face of the changing needs of conscious users, trends, and market conditions, renovations seem like the most reasonable solution, adds Jerzy Wójcik from JW+A, partner of the report.
However, it should be kept in mind that adapting a given building to today's requirements may also prove to be not so much impossible as unjustified. Investment in an 'upgrade', for example, will not make it possible to make optimum use of the space in which it is located or will not result in meeting the modern energy efficiency requirements. In this case, by designing a new building in place of the previous one, it is possible to select materials and solutions of the highest standard and thus contribute to the creation of a futureproof product, prepared for the changing needs of its users and aligned with the principles of sustainable construction.
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The publication is the result of ThinkCo's collaboration with report partners: Skanska, JW+A, Revive, System 3E, Siren Real Estate, and Torus.
The data quoted above is presented in detail in the ThinkCo report “Circular. Closed-Loop Economy in Cities and Real Estate”, along with the relevant sources.
In order to download the report, please visit the link: https://thinkco.pl/raport-cyrkularne