Circularity in the Built Environment 2024

Potential market for recirculated materials in 2050 FIGURE 4 Recirculated material $600 billion Additional material¹ $1.7 trillionMaterial for retrofit in 2050 $2.3 trillion Assets retrofitted Houses, apartments, commercial and industrial buildings Retrofit scope Insulation, windows, cladding, ceiling, roof, doors, HVACs,³ appliances and lighting~50% recirculated from extracted material ~50% sent to landfill from extracted material² Input material Extracted material Recirculated material Notes: Illustrative example 1. Includes both the replacement for materials removed and sent to landfill and any additional materials needed, such as double-glazed to replace single-pane windows 2. Material sent to landfill is assumed to be part of non-material retrofit market (labour and other) 3. Heating, ventilation and cooling systems Source: McKinsey analysis In addition, recirculating materials could prevent the release of up to 200 million metric tonnes of CO2e in 2030 and up to 500 million metric tonnes of CO2e in 2050, compared to the production and transportation of new materials. In terms of weight, these materials will predominantly include glass, steel and mineral wool. The insulation sector will be among those most affected by retrofitting as demand will increase for conventional materials such as fibreglass, mineral wool and alternative, bio-based materials. Recirculation rates of specific materials will likely vary based on the ease of deconstruction, reuse and recycling. Aluminium, for example, is projected to have a recirculation rate of approximately 95% by 2050, supported by initiatives such as the European Union’s Circular Aluminium Action Plan.²³ In contrast, materials such as plastics, concrete and gypsum board are likely to have lower recirculation rates because of sorting challenges, additives and the process of downcycling, which results in recycled products that are not as structurally strong as the original product. Differences in materials handling and recycling infrastructure will also contribute to variable recirculation rates. The volume of material and associated costs for a circular retrofit in the residential housing sector helps illustrate materials demand and recirculation (Figure 5). The recirculation rate for single-family buildings is higher than the average for all building types combined, mostly because of the higher potential to reuse materials with high recycling rates. Steel, glass and aluminium account for the highest volumes being circulated, with aluminium having the highest material value. Circularity in the Built Environment: Unlocking Opportunities in Retrofits 12