Faster Ecological Restructuring of the Economy: Federal Chancellor Olaf Scholz Calls a Top Level Discussion on the Circular Economy

Federal Chancellor Olaf Scholz wants to accelerate the climate-friendly restructuring of the economy. In yesterday's top level meeting of the Alliance for Transformation in the Federal Chancellery, the discussion focused on how industrial value creation and the construction industry can adapt to the circular economy. From left to right: Kai Niebert (President of the German League for Nature, Animal and Environment Protection – DNR), Tanja Gönner (Director General of the Federation of German Industries – BDI), Olaf Scholz (Federal Chancellor of the Federal Republic of Germany), Yasmin Fahimi (Chairperson of the German Trade Union Confederation – DGB), Thomas Weber (President of the National Academy of Science and Engineering - acatechl) © German government/Sandra Steins
The Alliance for Transformation focused on the question of how the construction sector and manufacturing industry can achieve the transformation to a circular system. © German government/Sandra Steins

In the interest of saving resources wherever possible, the German government is currently developing a national recycling strategy which is due to be passed this year. The goal is to make the German economy gradually less dependent on imported raw materials. At the same time, the strategy aims to promote climate protection and the conservation of resources. Yesterday’s top level meeting of the Alliance for Transformation also focused on the question of how the construction sector and manufacturing industry can achieve the transformation to a circular system. This high level forum of the German government brings together experts from politics, the business sector, trade unions, science and the civil society in the quest to make Germany climate-neutral and more digital and resilient. Participants of yesterday’s discussion were Federal Olaf Scholz (Federal Chancellor of the Federal Republic of Germany) and Robert Habeck (Vice-Chancellor and Federal Minister for Economic Affairs and Climate Action), Steffi Lemke (Federal Minister for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection), Sarah Ryglewski (Minister of State to the Federal Chancellor) and Wolfgang Schmidt (Head of the Federal Chancellery and Federal Minister for Special Tasks).

Impetus came also from Cradle to Cradle expert Dr. Peter Mösle, Managing Director at EPEA (Environmental Protection Encouragement Agency) and a Partner at Drees & Sommer SE. The consulting firm specializes in construction and real estate.

Federal Chancellor Olaf Scholz underlined the enormous potential of the circular economy: “The circular economy offers the opportunity to become less dependent on the import of important raw materials by recycling more materials. According to studies, the circular economy could create about 12 billion euros additional annual gross added value by 2030, and also lead to the creation of new jobs. Our aim is to become the global pioneer for circular technology and products in areas such as batteries and construction,’ said Olaf Scholz. The building industry in particular plays a decisive role in the protection of resources and the climate. About 40 percent of global greenhouse gases come from the construction sector, and it is also responsible for more than half of the global volume of resources and waste materials. According to Steffen Szeidl, who is a member of the Management Board of Drees & Sommer, the building industry is currently stuck in an ecological snowball system: “At present, we are using the resources of the future to pay for the present. In view of the climate crisis and our dependence on foreign imports of raw materials, we can no longer afford this reckless treatment of finite raw materials. We must focus on revitalization instead of demolition, recycling instead of waste disposal, and we must design for a circular economy if we do not want to sabotage our own future.”

Steffen Szeidl advocates a systematic circular economy based on the Cradle to Cradle principle. This means that all materials and structures should be designed so that they are either completely biodegradable or – more frequently in the construction sector – can be reused in the same quality in a technical recycling process. To achieve this, the components must be free from contaminants and capable of separation into homogeneous material types – and the design of the buildings should also facilitate this.

Developing recyclable construction and building products for the real estate sector and for industry is the main focus of the environmental consulting institute EPEA, which has been part of the Drees & Sommer group for five years. The inter-disciplinary teams, consisting of environmental scientists, chemists, architects, construction engineers and material specialists, advise business companies and public authorities in the transformation from a linear economy to the circular economy. EPEA’s clients include not only industrial companies such as Würth and Schüco but also cities such as Heidelberg, which aims to be Europe’s first municipality with a fully circular economy, or the municipal housing company GWG Wohnungsgesellschaft München, which intends to carry out a material flow analysis to find out which materials from its existing buildings could be used in new construction projects.


Existing Buildings as a Treasure Store

Such an analysis of existing buildings offers great potential: “The raw materials in existing buildings in German alone amount to about 16 billion metric tons, which is over 190 metric tons per person. This is therefore a real treasure store of resources. Nevertheless, the materials from conversion or demolition work usually end up in waste incineration plants or on landfill, although they are urgently needed for new construction projects,” says Dr. Peter Mösle.

In existing buildings, the Urban Mining Screener, developed by EPEA, can therefore be used in conjunction with the digital materials register Madaster. It is a software solution which can use building data such as the place and year of construction, the volume of the building or the type of property, at the push of a button, to estimate the material composition and the potential savings in CO2 emissions. The data for the relevant existing buildings are then transmitted to a digital register on Madaster, which thus forms a catalog of building components. This helps to plan systems for manufacturers to take back components and to establish decentralized material repositories, and in the last resort it also helps in the design of new construction projects. “Transparency is necessary to ensure the success of seamless recycling and reuse. First, we must document what is actually contained in our buildings and what can be safely and intelligently reused to save carbon emissions and primary material,’ says Peter Mösle. He, therefore, demands digital circularity passports for buildings, a measure which was already defined in the 2021 coalition agreement.

EPEA has already drawn up 100 such circularity passports for buildings over the last eight years. They document exactly what material types and quantities are included in the buildings, how extensive their ecological footprint is and how much material originates from renewable resources such as wood or recycled material – and they do this for all products used in the building. A high number of points is awarded, for example, for healthy materials which can be dismantled, and there are deductions for products which are inseparably intermingled. Peter Mösle cites conventional thermal insulation systems as an example: “Here, there are often up to 20 different substances which are inseparably connected, and which can only be disposed of as hazardous waste after any refurbishment or demolition. But there are also certified recyclable systems which we can reuse in new buildings at the end of their life cycle.”

In the expert’s opinion, digital circularity passports for buildings will revolutionize the industry in a similar way to the energy certificates which came in 20 years ago. “Based on our experience, existing buildings and modern new buildings consist of less than 10 percent of renewable or recycled materials. If we plan with the aid of resource passports, we can easily achieve a ratio of more than 30 percent,” Peter Mösle suggests. This improvement could be achieved, for example, by using Cradle to Cradle products, cement with a low CO2 content or hybrid timber structures.

Calculations show that this can even provide economic benefits for building owners: “Seen over the total life cycle, value increases of up to ten percent are possible. This is because the capital bound up in the building materials is no longer lost, it can be used like a medium to long term investment which is released again when the building is altered or demolished. This means that our built environment is changing from a tomb for waste to a repository of raw materials,” Peter Mösle adds.

Circular Building Needs Measurable Goals

Environmental, Social and Governance (ESG) criteria, the new German Buildings Energy Act (Gebäudeenergiegesetz – GEG) and the Green Deal – The regulatory requirements and the growing environmental awareness in society are increasingly putting the industry under pressure. Steffen Szeidl therefore advises investors and building owners to start considering the optimization potential of their buildings as early as possible. “If we do not take the initiative and provide a good example for others, we will be moved by other forces – such as new regulations or social and economic pressure. Ecological and recyclable building is not a luxury, it is our bread and butter.” To stimulate the turnaround in the use of resources, Steffen Szeidl and Peter Mösle demand the introduction of a digital circularity passport for buildings with appropriate minimum ratios. By 2030, they propose that at least 40 percent of all materials used in construction projects should consist of regenerative raw materials or secondary materials – both in new buildings and in refurbishment projects. In existing buildings, this ratio can normally be achieved simply by preserving the foundations and load-bearing structures. For all new materials introduced to the buildings, they demand a circular material ratio of 100 percent. In combination with the savings in carbon emissions and the economical use of resources, this would constitute an innovative leap for the entire construction and real estate sector. In particular, the building materials and construction industry would need to be brought on board throughout the value creation chain: “We are already cooperating with manufacturers such as Tarkett and Heidelberg Materials, which are adapting their business models to the circular economy and carrying out industrial reuse. This will enable us to bring regional value creation back to Germany and Europe and at the same time reduce our dependence on imported raw materials,” explains Peter Mösle.



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