The United Nations has predicted that if the global population reaches 9.8 billion by 2050, the equivalent of almost three planets will be required to sustain current lifestyles. Australia ranks third among OECD countries in terms of per capita material footprint. Such a model of unlimited production and consumption is known as the “linear economy”, based on a “take, make, use and discard” principle.

To reduce the considerable pressure on natural resources, the European Commission has emphasised the need for a new economic model, known as the circular economy. This model is inherently restorative and regenerative, with resource input, waste, emission and energy leakages minimised by narrowing, slowing and closing material and energy loops.

Australia released its National Circular Economy Framework (NCEF) at the end of 2024. This framework highlights that Australia’s circularity rate is approximately 4.6 per cent, well below the global average of 7.2 per cent. Among the 30 OECD countries, the highest circularity rate was reported by the Netherlands, which is approximately 27 per cent. Hence, NCEF aims to double the circularity rate in Australia by 2035, prioritising four sectors including the built environment.

According to an interim report by the Productivity Commission, the built environment is the primary destination for materials in Australia. In 2024, the sector consumed 42 per cent of non-metallic minerals and 25 per cent of metallic minerals. The sector must be prioritised in implementing the circular economy model in Australia. New regulatory frameworks should capitalise on increased attention on the circular economy in the built environment from Australian researchers and organisations by integrating their insights.

Current policy landscape

Distinct from other sectors, the implementation of circularity in the built environment is hindered by specific challenges reflecting its unique characteristics. The sector produces complex one-off products, involving multiple simultaneous supply chain processes. From project to project, many different stakeholders are involved, many of whom do not share a common language or mutual vision. Moreover, every construction project is interconnected with complex upstream and downstream activities. Therefore, legal enforcement is critical to overcoming the challenges and accelerating circular economy transitions in the sector.

Table 1 outlines the existing regulatory directives on the circular economy instituted by NSW, South Australia and the Commonwealth. NSW and South Australia were chosen among other states as they had released a higher number of relevant government documents.

At a high level, the existing policy landscape can be described as fragmented. Different policies cover different aspects of the circular economy. This scattered approach creates regulatory complexities and compliance challenges. Moreover, it suggests that a sector-specific policy for the built environment may be required.

Some noteworthy attempts to develop sector-specific guides are South Australia’s “Action Plan” and the Practical Guide to Circular Procurement by the Green Building Council of Australia’s (GBCA), developed in collaboration with the Commonwealth, NSW, Queensland and South Australian governments.

Our recommendations for a circular economy policy for the built environment are guided by these two Australian documents, as well as the National Circular Economy Program of the Netherlands. We also considered recent advances in the research to identify key requirements for a sector-specific policy.

Key requirements for a circular economy policy for the built environment

We have identified five key requirements for formulating a circular economy policy for the built environment (Figure 1).

Figure 1: Key Requirements for a circular economy policy for the built environment

1. Circular economy levels

Generally, four levels can be defined for circularity in the built environment: nano, micro, meso and macro. To effectively achieve the state and national targets, policy should be guided at each of these levels:

• Nano level: building design and material efficiency.
• Micro level: responsibilities of the businesses involved and their business models.
• Meso level: industrial symbiosis opportunities.
• Macro level: intervention of government and legal bodies.

The South Australian “Action Plan” has some discussion about each of these levels. This could be built upon to stipulate policy targets at each level.

2. Lifecycle stages and stakeholders

Circular economy policy must address the lifecycle stages of a construction development, along with the responsibilities of the stakeholders involved in each stage. Unlike products in some other sectors, buildings have a long lifespan. Without a collaborative and lifecycle-driven policy approach, implementation may remain fragmented, limiting its effectiveness.

For example, the South Australian “Action Plan” and, in particular, GBCA’s “Practical Guide” have considered the lifecycle stages and stakeholder collaboration. The practical guide has mainly focused on six lifecycle stages of a building as planning, design, tender, construction, use and end-of-use. Under each stage, it explains the involvement of relevant stakeholders. For the planning stage, it identifies investors, developers and authorities as key stakeholders. Meanwhile, for the design, tender and construction stages, the pivotal actors are developers, professional services and procurement specialists. Although the guide has provided some guidance for such stakeholders, it has not specified the responsibilities of each party.

3. Circular economy implementation

The existing policy documents cover a limited number of strategies for implementation. For instance, the NSW circular design guidelines mention 13 implementation strategies, while the GBCA’s “Practical Guide” has just eight strategies with practical guidance for procurement. The majority of identified strategies focus on the design and construction stages of a development.

These strategies could be extended to a range of practices throughout the lifecycle, such as lifecycle extension of a building with suitable repairing and upgrading, share economy opportunities in the operation stage, and effective management of demolition waste at the end-of-life, as outlined in recent research studies.

4. Product group targets

The policy should cover relevant product groups in the built environment for implementation. For instance, the Netherlands national program prioritised the built environment as one of the key value chain sectors by including product groups such as housing, offices, industrial buildings, bridges and roads, and including the individual targets and measures for each product group.

The built environment is referred to as a value chain sector as it encompasses multiple activities and parties to create value for the economy, environment and society. The product groups are referred to as the final output of the built environment sector, which are developed to meet functional demands. Each product group differs based on characteristics such as design, construction methods and material requirements. Hence, defining the targets and requirements for each product group is imperative.

5. Evaluation and reporting mechanism

Along with policy formulation, a suitable evaluation and reporting framework is crucial. Circular economy indicators provide necessary guidance. Most of the existing regulatory directives cover a limited number of indicators, such as material, waste, building design and upfront emissions. ISO 59020:2024 provides a standardised framework for such circular economy indicators.

In terms of a standardised reporting structure, the Commonwealth’s Environmentally Sustainable Procurement Policy Reporting Framework covers some aspects of circularity. However, circular economy evaluation and reporting for the building sector should be better standardised and expanded to other significant indicators identified in recent research studies covering social value, economic value and business model creation.

The way forward

Circular economy implementation in the built environment would benefit from a sector-specific policy. The interim report of the Commonwealth ministerial advisory group on the circular economy has recommended the Net Zero plan as the ideal place to set the national strategic direction on circularity for the built environment. However, our view is that a circular economy policy must be extended well beyond the existing Net Zero plan for the sector.

A key gap in current work is in formulating an evaluation and reporting framework that links various strategies to each lifecycle phase with specific targets and measures to fulfil the fifth requirement listed above. In support of this, the Productivity Commission’s interim report also seeks information on the government’s assessment of materials and waste for public infrastructure projects, to reduce unnecessary material usage and waste generation.

While further research is required to develop such a framework, a sector-specific policy that covers the five requirements can be created by the Department of Climate Change, Energy, the Environment and Water at the national level. The NSW Government would also benefit from having a state-level policy that complements a federal policy.

Dr Sepani Senaratne is an Associate Professor in Construction Management at the School of Engineering, Design and Built Environment, Western Sydney University. She is the Deputy Director, Research at the Centre for Smart Modern Construction. Her current research focuses on sustainable construction, with a special emphasis on enhancing circularity adoption within the construction industry.

Shashini Jayakodi is a PhD researcher at the Centre for Smart Modern Construction, Western Sydney University. Her PhD research explores improving the circular maturity of construction enterprises.

Professor Srinath Perera is the Chair of Built Environment and Construction Management at the School of Engineering, Design and Built Environment, Western Sydney University and Director of the Centre for Smart Modern Construction. His research experience spans several years, focusing on digitalisation and sustainability in the construction industry.

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