Myth-busting construction circularity: separating hype from reality

The construction industry generates approximately 35% of global waste—over 3.3 billion tonnes annually—yet recovers less than 30% of demolition materials for high-value reuse. While circular economy rhetoric has permeated every industry conference and sustainability report, the gap between aspiration and implementation in construction remains stubbornly wide. This analysis separates evidence-based opportunities from overstated promises, providing investors and practitioners with a grounded assessment of where construction circularity actually delivers returns versus where it remains aspirational.

Why It Matters

Construction and demolition waste (CDW) represents one of the largest material flows in the global economy. According to the European Commission's 2024 Circular Economy Action Plan progress report, CDW accounts for roughly 35-40% of total waste generation across OECD economies. The embodied carbon locked in existing buildings and infrastructure represents between 8-11% of global greenhouse gas emissions—a figure that cannot be addressed through operational efficiency alone.

The financial stakes are substantial. The Ellen MacArthur Foundation estimates that circular approaches in the built environment could generate $4.5 trillion in economic value by 2030 through reduced material costs, extended asset lifecycles, and new service-based business models. Yet 2024-2025 data reveals a more sobering reality: material reuse rates in construction hover between 3-5% globally, with the vast majority of "recycled" construction materials being downcycled into low-value applications such as road aggregate rather than genuinely reincorporated into building systems.

Demolition waste projections compound the urgency. Buildings constructed during the postwar boom (1950-1980) are now reaching end-of-life, creating an estimated wave of 2.5 billion tonnes of demolition materials expected between 2025-2035 across Europe and North America alone. This represents both an environmental challenge and a potential resource opportunity—if the infrastructure for capture, processing, and reintegration can scale appropriately.

Embodied carbon regulations are accelerating market pressure. France's RE2020 regulation, the Netherlands' MPG (Environmental Performance of Buildings) requirements, and emerging whole-life carbon mandates in the UK and Nordic countries are creating compliance-driven demand for circular solutions. Investors who understand which circular strategies deliver measurable embodied carbon reductions—and which represent greenwashing risk—will be better positioned to allocate capital effectively.

Key Concepts

Selective Demolition

Selective demolition (also termed "deconstruction") involves methodically disassembling buildings to recover materials for reuse rather than conventional demolition's crush-and-haul approach. While selective demolition can recover 70-85% of materials by mass, it typically requires 4-8 times more labor hours than conventional demolition. The economics favor selective demolition primarily when high-value materials (structural steel, dimensional lumber, architectural elements) can be extracted and when landfill disposal costs are elevated.

Material Passports

Material passports are digital documentation systems that record the composition, origin, and characteristics of building materials throughout their lifecycle. The concept originated with the Madaster platform in the Netherlands and has been codified in standards such as the ISO 22057 framework. Material passports enable informed end-of-life decisions but face adoption barriers including data entry costs, lack of standardization across jurisdictions, and the challenge of retrofitting documentation onto existing building stock.

Urban Mining

Urban mining refers to treating the existing built environment as a materials reservoir. The concept reframes demolition waste streams as secondary raw material sources. The European Commission estimates that European cities contain over 100 billion tonnes of materials in buildings and infrastructure—a "mine" potentially more accessible than many primary resource deposits. Effective urban mining requires comprehensive material inventories, processing infrastructure, and market mechanisms to connect supply with demand.

Prefabricated and Modular Systems

Design-for-disassembly prefabrication enables buildings to be constructed from standardized components that can be separated and reused at end-of-life. Modular construction companies such as Katerra (which notably declared bankruptcy in 2021), Skender, and European operators like Algeco have demonstrated both the potential and the challenges of this approach. Successful modular systems require tolerance management, connection standardization, and logistics capabilities that many construction markets lack.

Building Banks and Material Marketplaces

Building banks aggregate reclaimed materials from multiple demolition sources and supply them to new construction projects. They function as intermediaries that address the timing mismatch between demolition (when materials become available) and construction (when materials are needed). Examples include Rotor DC in Belgium, Mobius in the UK, and the Insert platform in Scandinavia.

Construction Circularity KPI Benchmarks

Metric	Current Baseline (2024)	Leading Practice	2030 Target
CDW Recovery Rate (by mass)	50-60%	85-90%	70%
High-Value Reuse Rate	3-5%	15-25%	20%
Material Passport Adoption	<5% of new builds	30-40% (Netherlands, Denmark)	25% EU-wide
Selective Demolition Uptake	8-12% of projects	40-60% (mature markets)	30%
Reclaimed Steel in New Construction	2-4%	15-20%	12%
Embodied Carbon Reduction via Circularity	5-10%	25-40%	20%
Design-for-Disassembly Certification	<2% of commercial builds	10-15%	8%

What's Working

Netherlands Material Marketplaces

The Netherlands has emerged as the global leader in construction circularity implementation. The national Madaster registry has documented over 1,500 buildings with full material passports, enabling real-time tracking of materials-in-use. Government procurement policies now require circularity assessments for public buildings, and organizations like New Horizon Urban Mining have demonstrated commercially viable selective demolition operations that achieve 92% material recovery rates with positive unit economics on projects exceeding 5,000 square meters.

Steel Reclamation Networks

Structural steel represents the most commercially mature segment of construction circularity. Steel's consistent quality, established testing protocols, and high scrap value create favorable economics for reclamation. Organizations such as SteelZero (convened by the Climate Group) have documented closed-loop steel supply chains where demolition steel is refabricated into new structural sections without downcycling. Leading projects have achieved 30-40% reclaimed steel content while meeting structural performance requirements. Cleveland-Cliffs and ArcelorMittal have both announced expanded electric arc furnace capacity specifically to process construction-grade scrap.

Modular Construction Economics

While modular construction has faced notable failures, projects designed from inception for future disassembly are demonstrating viability. Skanska's modular healthcare facilities in Scandinavia have achieved 15-20% construction cost reductions through factory fabrication while maintaining future reconfiguration optionality. The key success factor is treating modularity as a design constraint from project inception rather than a retrofit solution.

What's Not Working

Quality Certification Gaps

The absence of standardized quality certification for reclaimed materials represents the single largest barrier to scaling construction circularity. Structural engineers require liability coverage that standard professional indemnity policies do not extend to materials without manufacturer warranties. The European Committee for Standardization (CEN) has been developing harmonized standards for reclaimed materials since 2019, but fragmented national approaches continue to impede cross-border material flows. Without clear certification pathways, reclaimed materials remain confined to non-structural applications regardless of their actual performance characteristics.

Labor Cost Realities

Selective demolition requires 4-8 times more labor hours than conventional demolition. In markets with high labor costs and low landfill fees (much of North America), the economics rarely close without regulatory mandates or substantial tipping fee increases. Even in Europe, where landfill costs exceed €100/tonne in several jurisdictions, selective demolition remains economically marginal for projects below 3,000-5,000 square meters. Automation technologies for selective demolition remain in early development, with limited near-term potential to shift this equation.

Regulatory Fragmentation

Construction regulation remains fundamentally local, with building codes, demolition permits, and waste management requirements varying between national, regional, and municipal jurisdictions. A reclaimed beam certified for structural use in the Netherlands may require complete re-testing for use in Germany, Belgium, or France. The EU Construction Products Regulation (CPR) revision process has included discussions of circular economy provisions, but harmonized standards for reclaimed materials remain years from implementation.

Key Players

Established Leaders

BAM Group (Netherlands): One of Europe's largest contractors with dedicated circular economy division. Has completed over 200 projects incorporating substantial reclaimed material content and operates multiple material processing facilities.

Skanska (Sweden): Global contractor with documented circular construction case studies including modular healthcare facilities and steel reclamation partnerships. Published transparent circularity metrics in annual reporting since 2020.

ARUP (UK): Engineering consultancy that has pioneered whole-life carbon assessment methodologies and design-for-disassembly frameworks. Developed the Circular Buildings Toolkit used by over 500 organizations globally.

Emerging Innovators

Madaster (Netherlands): The leading material passport platform with over 10 million square meters of documented building stock. Expanding across Europe with partnerships in Germany, Switzerland, and the UK.

Rotor DC (Belgium): Pioneering deconstruction and resale organization that operates building material retail outlets alongside consulting services. Has processed materials from over 300 demolition projects.

Concular (Germany): Digital platform connecting demolition contractors with construction projects seeking reclaimed materials. Raised €12 million Series A in 2024 to expand across German-speaking markets.

Key Investors and Funders

European Investment Bank: Has deployed over €500 million in circular economy infrastructure financing including construction material processing facilities.

Breakthrough Energy Ventures: Invested in multiple embodied carbon reduction technologies including Brimstone (carbon-negative cement) and CarbonCure (concrete carbon mineralization).

Closed Loop Partners: US-based investor with dedicated Built Environment circular economy fund targeting $300 million in commitments.

Myths vs Reality

Myth 1: Recycling Rates Indicate Circularity Success

Reality: The widely cited 70-90% CDW "recycling" rates in developed markets primarily reflect downcycling into road aggregate, not circular reuse. Genuine high-value reuse—where materials maintain their original function—occurs in only 3-5% of cases. Investors should scrutinize what "recycling" actually means in reported metrics.

Myth 2: Design-for-Disassembly Is Cost-Neutral

Reality: Design-for-disassembly typically adds 5-15% to initial construction costs through connection detailing, material selection, and documentation requirements. These costs can be recovered through end-of-life material value, but only over 30-50 year timeframes that exceed typical investment horizons. The business case requires long-term asset holders or regulatory mandates.

Myth 3: Material Passports Will Transform the Industry

Reality: Material passports address information asymmetry but do not solve economic or technical barriers. Buildings documented in Madaster still face certification challenges, labor cost constraints, and timing mismatches between demolition and construction. Passports are necessary but not sufficient infrastructure for circularity.

Myth 4: Circular Construction Is Always Lower Carbon

Reality: Lifecycle assessments reveal that circular approaches reduce embodied carbon by 20-40% in favorable conditions but can increase emissions when materials require extensive transportation, processing, or remediation. A reclaimed beam transported 500km may have higher lifecycle carbon than a locally manufactured alternative. Geographic and logistical context determines carbon outcomes.

Myth 5: Emerging Markets Will Leapfrog to Circularity

Reality: Construction circularity requires substantial processing infrastructure, skilled labor, and regulatory frameworks that emerging markets largely lack. While material scarcity creates stronger economic incentives for reuse in some contexts, the technical and institutional capabilities required for systematic circularity take decades to develop. Leapfrogging assumptions underestimate implementation complexity.

Action Checklist

• Conduct baseline assessment of current CDW generation and disposal pathways across your portfolio or project pipeline
• Evaluate selective demolition feasibility for projects exceeding 3,000 square meters, including labor cost sensitivity analysis
• Implement material passport documentation for all new construction above €10 million project value
• Establish relationships with at least two reclaimed material suppliers for high-volume categories (structural steel, dimensional lumber, masonry)
• Develop internal specification language that permits reclaimed material substitution where certification pathways exist
• Monitor regulatory developments in target markets, particularly EU CPR revision and national embodied carbon mandates
• Align project timelines to enable material recovery coordination between demolition and construction phases

FAQ

Q: What is the typical ROI timeline for selective demolition investments? A: Selective demolition achieves positive ROI within 12-18 months on large projects (over 10,000 square meters) in markets with high landfill costs (greater than €80/tonne) and strong secondary material demand. For smaller projects or markets with lower disposal costs, ROI may extend to 3-5 years or require regulatory mandates to achieve commercial viability.

Q: How do material passports integrate with existing building information modeling (BIM) systems? A: Leading platforms including Madaster and Concular offer API integrations with major BIM software (Autodesk, Bentley, Graphisoft). Integration maturity varies—new construction BIM-to-passport workflows are relatively seamless, while retrofitting passports onto existing buildings requires manual data entry that can cost €2-5 per square meter.

Q: What insurance and liability frameworks exist for structural reuse of reclaimed materials? A: Currently, no standardized insurance products cover reclaimed structural materials. Projects proceeding with structural reuse typically require project-specific engineering sign-off, material testing to current standards, and custom insurance arrangements negotiated on a case-by-case basis. Industry groups including the UK Green Building Council are working on standardized frameworks, but solutions remain 2-3 years from widespread availability.

Q: Which construction material categories offer the best near-term circularity opportunities? A: Structural steel offers the most mature circularity ecosystem due to consistent quality, established testing protocols, and favorable economics. Dimensional lumber, architectural elements (doors, windows, fixtures), and modular MEP components represent secondary opportunities. Concrete and masonry currently lack viable high-value reuse pathways at scale.

Q: How should investors evaluate circular economy claims in construction company sustainability reports? A: Scrutinize whether reported metrics distinguish between downcycling (aggregate production) and genuine high-value reuse. Request data on material passport adoption, selective demolition percentage by project count and value, and reclaimed material content in new construction. Third-party verification through schemes like Cradle to Cradle or BREEAM Circular Economy assessments provides additional assurance.

Sources

• European Commission. (2024). Circular Economy Action Plan Implementation Report. Brussels: Publications Office of the European Union.

• Ellen MacArthur Foundation. (2024). The Circular Economy in the Built Environment: Market Sizing and Investment Opportunities. Cowes: Ellen MacArthur Foundation Publishing.

• Madaster. (2025). Annual Materials Registry Report 2024: Building Stock Documentation Trends Across Europe. Amsterdam: Madaster Foundation.

• ARUP. (2024). Circular Buildings Toolkit: Version 3.0 Technical Documentation. London: Arup Group Limited.

• Climate Group. (2024). SteelZero Progress Report: Steel Decarbonization and Circularity in Construction. London: The Climate Group.

• European Committee for Standardization (CEN). (2024). Draft Framework for Reclaimed Construction Materials Certification (prEN 17XXX). Brussels: CEN-CENELEC.

• Netherlands Enterprise Agency. (2024). Circular Construction in Practice: National Progress Report 2023-2024. The Hague: Ministry of the Interior and Kingdom Relations.