Identification of the best practices for the development of circular economy in the building industry

Edda Donati

ERES from European Real Estate Society (ERES)

Abstract: The research analyzes the business models adopted in several European countries to pursue the energy refurbishment of the building stock. The aim is to identify the best practices that allow the development and diffusion of the circular economy in the building industry. After the enactment of Directive 2010/31/EU, the energy efficiency of the building stock has become a central theme to the policies of the governments, which have promoted subsidies and tax incentives to encourage efficiency-enhancing works. Some countries immediately adopted efficiency policies aimed at pursuing this objective, obtaining satisfactory results, such as Belgium, France, Germany, Holland, Spain and Portugal. In the current phase of the research, after the literature review, data is collected for specific case studies concerning efficiency improvement works that took place in the analyzed countries. By matching the evidence from the literature review and the case studies, the most used business models are identified: the One-stop shop model, the Energy Performance Contracting (EPC) model and the ESA/RENESCO model. The first one is characterized by the presence of a single contractor (ESCo), which deals entirely with financing the efficiency improvement works and their implementation. The customer interfaces exclusively with the latter and is repaid for the work carried out once the work is completed. The second business model, EPC, which still features the presence of a contractor, offers advantages in terms of flexible sources of efficiency, contract integrity, risk sharing and the ability to penetrate the energy efficiency market. The contractor finances the intervention, assumes both the financial and performance risks and is repaid by future cost savings if these are higher than originally agreed. Finally, the third model is again characterized by the presence of a single contractor (ESCo) which provides the customer with retrofit interventions and the energy performance guarantee for specific services exceeding 15 years in exchange for the purchase by the latter. For each of the three models, the elements that constitute their archetype are identified: Value Proposition, Supply Chain, Customer Interface and Financial Model. The forthcoming research period at a construction company is meant to identify which of the best practices has the greatest expectation of success in the Italian context.

Keywords: building industry; Business Models; Circular economy (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-ene
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