Circular Economy in the Danish Construction Industry: Incentives and Barriers

Abstract

The construction industry makes up the largest user of extracted virgin resources. With an annual use of 38.8 billion tonnes, it constitutes 40% of the total resource usage globally (Wit et al., 2020: 18f). Keeping in mind that the world is currently facing a future of exhausted resource reservoirs, if the global society doesn’t change the speed of which resources are extracted. The circular economy seeks to provide a solution to this problem. It exists as a counterpart to the current linear economy, that is characterized by a take-make-waste system of production and consumption. The circular economy evolves around core principles such as designing out waste, keeping products and materials in use and the generation of restorative natural systems (The Ellen MacArthur Foundation, 2020). Through the adaptation of such principles, the construction industry holds a large potential for inflicting positive effects on a struggling natural system, while still creating economic growth. In the Danish construction industry pioneering stakeholders are working towards a widespread implementation of circular practices such as reusing and recycling of secondary materials, design for disassembly and product life extension. But the transition has not yet reached beyond these trail-blazing stakeholders into the more mainstream actors in the industry.
This thesis sets out to explore the current state of the transition to circular economy in the Danish construction industry in order to trace this limited progress. This objective is prepared through a two-pronged research path. First, it examines the potential for value creation, that is implied in the current field of research. Thesis followed by an analysis of the possible barriers to the implementation of circular business models in the industry. The empirical foundation of the thesis is three interviews with central stakeholders in the Danish construction industry, supplemented by reports and published scholarly studies. The exploration is carried out by the means of R. Edward Freemans stakeholder theory, and leads into a systematic analysis of identified stakeholder groups, facilitated by a model developed on the basis of the Danish Technological Institutes “trekantsmodel” (a triangular evaluation of market conditions) and Julian Kirchherrs framework of barriers to circular economy, with inclusion of institutional theory. The thesis identifies how stakeholders in the Danish construction industry can achieve cost-savings, reduction in waste generation and strong collaborative relationships if they move onto more circular business models. However, these incentives are challenged by a wide and complex, network of barriers, within the realms of both market conditions, technological progress, regulation and cultural structures.