Circularity in the Built Environment 2024

Executive summary This white paper underscores the vital role of retrofits, as well as the added benefits of circularity in retrofits, in conserving natural resources and achieving rapid decarbonization. It quantifies the volumes of materials needed to retrofit existing buildings by 2030 and 2050 in line with International Energy Agency (IEA) net-zero targets. The paper also examines the potential to recirculate materials extracted during retrofits and outlines key themes stakeholders can consider to transition to a circular value chain. The findings reveal the retrofit market needs to grow from $500 billion today to approximately $2.9 trillion in 2030 and $3.9 trillion in 2050 to meet IEA net-zero targets. From 2023 to 2030, nearly 8 billion tonnes of materials could be required for retrofits alone. From 2023 to 2050, this number increases to nearly 40 billion tonnes. Glass, steel, concrete, aluminium, brick and plastic are expected to be in greatest demand for use in retrofit components including windows, cladding and roofing. Other essential retrofit materials, commonly used in insulation replacements and upgrades, include fibreglass, mineral wool, foam board and spray foam. Circularity helps ensure that as more building stock is retrofitted to meet net-zero targets, consumption of raw virgin materials does not increase proportionally. In fact, the model for this report shows that, on average, 50% of materials removed from buildings during retrofits from 2023 to 2050 could be recirculated in the value chain. In 2030 and 2050, respectively, this would correspond to an annual reduction of around 200 million and 500 million metric tonnes of CO2 equivalent (CO2e) and divert from landfill materials with a value of $500 billion and $600 billion.5Implementing circularity in retrofits will vary geographically, with Europe making earlier progress than other regions primarily because of its mature adoption of circular design principles and advanced take-back programmes. However, it is crucial to establish a foundation for circularity in retrofits and new buildings now to ensure long-term sustainability targets are met. This report highlights the opportunities circularity presents for stakeholders including real-estate owners, designers, manufacturers, upgraders, renovators, and logistics and waste handlers. Within these segments, materials and parts manufacturers, upgraders and renovators are best positioned to capture the largest share of new value across the circular value chain. They could add revenue streams from service-based business models, and from horizontal and vertical integration in the value chain, with specialists in circular retrofits emerging as market leaders. Achieving scale in circularity in retrofits requires a compelling business case and a clear return on investment. To achieve economically viable circular retrofits, it will be essential to minimize costs – including those involved in reducing, reusing and recycling materials – while keeping the costs of landfilling high. Simultaneously, incentives such as tax exemptions and decarbonization subsidies will be crucial. Embracing circularity in retrofits not only contributes to environmental goals but also creates economic opportunities, positioning market leaders to capitalize on emerging demand and propelling innovation in the built environment.The expanding retrofit market is expected to face challenges sourcing materials sustainably, making circularity essential. Circularity in the Built Environment: Unlocking Opportunities in Retrofits 4