This study addresses the potential of the Circular Economy (CE). It provides an overview of the latest trends and concrete examples of construction projects based on the principles of CE, as well as a clarification of existing circular business models in Germany and the DACH region.
Commissioned by the German Energy Agency (Deutsche Energie-Agentur, dena)
Circular Berlin, Circular Structural Design and Concular GmbH.
July 2023 – November 2023
Implementing circular economy practices and business models has the potential to achieve the goals of decarbonising the construction industry by 2050. Circular business models can be used as a lever to harness the resources and capabilities of the private sector for the transition to a circular construction industry and to minimise the use of construction materials. However, this can only be realised by establishing sustainable circular business models that are attractive to all stakeholders. In order to achieve this, clarifying the considerable uncertainty as to how these can be implemented in the existing value chains of the construction industry and what value streams emerge as a result is essential.
The study was divided into four phases:
- Definition of the circular economy, the key principles for implementing it in the context of the construction industry, and the latest developments in the EU and Germany through the review and analysis of the scientific literature.
- Explanation of the life cycle phases relevant to the construction industry: the phase of planning, production, and construction, the utilisation phase, and the disposal and the end of life of buildings phase.
- Identification of up to nine relevant business models through a methodology that combines lifecycle phases in construction with value creation. These models are then structured around value proposition, target group, circularity aspects, and relevance for new buildings and/or renovations. A list of cases is provided.
- Addressing specific characteristics of each business model, analysing the barriers and levers for the effective implementation and dissemination of circular practices in Germany according to economic, organisational, technological and regulatory aspects.
Nine business models have been identified and analysed: Green Building Design; Advanced Design Software and Data Management; Circular Supply Business Models; Resource Efficient Construction; Product Service Systems (PSS) Models; Service Life Extension; Repurposing and Upscaling; Materials Marketplaces; Materials Recovery and Recycling. Energy and Water Efficient Services was also identified as a business model but not analysed in the study, as it does not focus on the use of materials.
The business models presented stand out from traditional business models in the construction sector due to their direct connection to the circular economy and their advanced degree of innovation.
The study also shows that all levels of the value hill are already being played out and that companies are endeavouring to establish new business models that incorporate the concept of sustainability and thus strive for economic success.