Scandinavia: Construction in motion

The construction sector is always in a state of change, however, the rapid drive towards Net Zero is resulting in huge upheaval, particularly when it comes to the way new structures will be built.

While those offering deconstruction and recycling services will initially see increased opportunities for financial gain when it comes to recycling and reusing existing materials, in the near-term this will be fraught with difficulties. This is mostly due to the increased costs associated with increases in planning and sorting materials, but also because the lack of a marketplace in which those materials can be resold.

Until the marketplace is better established, and assurances for reused and recycled materials are in place, many recyclers and dismantling contractors – particularly SME’s, will likely find it difficult to navigate the transition to the circular economy.

CREDIT: VATTENFALL

ECONOMIC OUTLOOK

Economically, the overall outlook for Scandinavia is largely positive.

According to the European Commission’s (EC) 2024 Spring Forecast, the Swedish economy is set grow over the next 18-24 months.

Described as a “recovery”, the growth is projected to return the country's economy to a level similar to what it was prior to start of the war in Ukraine.

As for Sweden's labour market, which was described as “resilient”, the lag between economic activity and employment will see the current unemployment rate of around 8% continue to rise into the middle of 2025.

However, the EC forecast predicts that this will eventually fall, catching up to the projected economic growth, in the latter half of next year, with real wages expected to “rise over the forecast horizon on the back of falling inflation”.

In Denmark, the outlook for 2025 is overwhelmingly positive.

Industrial production - particularly in the pharmaceutical sector, and gas extraction activities in the North Sea will continue to expand its net exports, underpinning the country’s economic growth.

And while 2024 has so far seen business investments “remain subdued” due to high interest rates, activity is expected to increase in 2025, in line with stabilising inflation and declining interest rates – which are expected to stabilize at around 1.9%.

Meanwhile in Norway, the economy has been somewhat less resilient in recent years.

However, green shoots are appearing, as the country’s central bank, Norges Bank, highlights in its 2024 Q2 Monetary Policy Assessment.

It says: “In most industries, businesses have grown more optimistic than they were earlier this year and expect a further improvement in Q3.”

While the bank is still projecting a decline in construction activity in Q3 of this year, overall “pressures in the Norwegian economy have gradually receded since the beginning of 2023”.

And looking at the latest economic forecast from Statistics Norway - the country’s national statistical institute, “several factors suggest that economic activity will pick up soon”.

Thomas von Brasch, Head of Research at Statistics Norway, said: "Lower inflation among our trading partners will push down inflation in Norway. Reduced interest rates internationally will also eventually lead to key policy rate cuts in Norway.”

The current forecast from Statistics Norway indicates that economic activity will increase significantly in 2025, becoming “almost cyclically neutral from 2026”.

Of course, all the above projections are contingent on other global factors, primarily the Russia-Ukraine war and other conflicts.

REGULATIONS AND LEGISLATION

In terms of the future demolition and recycling contract prospectives, Net Zero and infrastructure will be the drivers of industry growth.

But with Net Zero also comes the tightening of existing regulations and the introduction of new legislation.

In Denmark, which has achieved one of the highest recycling rates for C&D waste in Europe - often exceeding 80% according to various reports, strict regulations require contractors to segregate waste on site and maximise the recovery of materials such as concrete, metal, wood, and glass. .

With the country’s geographical location putting it at a high risk of flooding and erosion caused by rising sea levels, the Danish Government – with strong support from construction sector companies – has continually ramped up its circular economy efforts.

In 2023, Denmark became the first Nordic country to set a requirement in building codes to document the environmental impact of new buildings over their entire lifecycle.

The Danish requirements mean that construction companies must create life cycle assessments (LCA) showing the environmental impact of a new building over a period of 50 years.

LCA’s report on all phases of a building’s construction, from the emissions embodied in raw materials to transport, through to the construction and operation. It involves a series of complex calculations that place greater demands on suppliers and construction companies.

Additionally, on July 1 of this year, the country introduced a new law on reusing the building materials from demolished structures.

It requires contractors to produce detailed recycling plans for all buildings with a floor area exceeding 250 sq m.

E4 Stockholm Bypass

Currently under construction and due to be completed by 2035, the Stockholm Bypass is one of Sweden’s largest infrastructure projects.

Running between the Kungens Jurva interchange in the south of the city and the Häggvik interchange in the north, it comprises the construction of 21 km of roadway, most of which – around 18 km – is being built entirely underground to minimise its environmental and cultural impact. Large scale demolition and remediation works have taken and continue to take place to enable the implementation of the scheme, which is estimated cost around €2.7 billion and will accommodate up to 140,000 vehicles a day.

Like other countries in Europe, around 40% of Denmark’s waste comes from the construction sector, with the sector also being responsible for 30% of the country’s CO2 emissions.

Other new policies in Denmark include a ban on unauthorized asbestos removal.

With significant fines (of around US$4,500 for a first offence) for contractors that do not abide by the rule, the law means that only specifically licensed companies can carry out asbestos removal work, no matter how small or large, or the type of structure involved.

THE IMPACT OF LCAS

Likewise, the Swedish National Board of Housing, Building and Planning, Boverket, also proposed to introduce LCAs.

Currently, these are due to be introduced in 2025 and will produce an estimated carbon reduction of 63% by 2030. Sweden is aiming to be a carbon neutral society by 2045, which equates to an 85% reduction in greenhouse gas emissions compared to 1990 levels.

Like most other countries in Northern Europe, a major challenge to the reuse of materials as part of circular economy is two-fold.

While legal obstacles form one part of the challenge, like elsewhere in Northern Europe, there is the further challenge of how waste is classified, which makes it difficult for contractors, specifiers and recyclers to recycle and reuse materials.

In a recent report Boverket – the Swedish National Board of Housing, Building and Planning – commented on the impact that even further tightening of LCA’s would have on the construction sector.

It said: “The design stage will be more important than before: this is deemed to be a consequence of the limit value.

"There will be more opportunities at the design stage to make choices that will optimise the climate impact of a building. Project planning costs may increase as a consequence.

“However, this does not necessarily mean that construction costs will increase, provided that the building and the use of materials are optimised.”

It added that a possible consequence of limit values would be that developers/ project clients would “receive fewer tenders and subcontractor availability will be reduced”.

REMOVING BARRIERS

Meanwhile the central government of Norway is focused on policy, with an emphasis on removing the barriers that impede the progress of climate action at a municipal level.

In recent years significant policy changes relating to demolition and recycling have included a greater emphasis on material reuse.

The 2023 report by the Norwegian Government’s Climate Change Committee, titled The Transition to low emissions: Climate policy choices towards 2050, states: “So far, changes have been made to the energy, climate and environmental requirements in the Technical Regulations (TEK) as well as associated changes in the Building Application Regulations.

“These changes entail a requirement for new buildings to be constructed in a way that enables subsequent dismantling, and that the materials must be surveyed for reuse during major work on existing buildings.”

Additionally, “the requirement for sorting waste at construction sites has been increased from 60 to 70 per cent. A requirement has also been introduced for GHG accounting for apartment buildings and commercial buildings.

“New documentation rules have been introduced for construction materials that will make it easier to sell used construction products.”

However, despite these changes, industry contractors are still finding it difficult to adapt to a circular economy.

“It is often more profitable to erect new buildings than to renovate or incorporate used materials,” says the report.

“The market for used materials does not function as intended, and the TEK contain few binding requirements on the reuse of materials.

"Nor do the current regulations require recycled raw materials to be incorporated into products or stipulate limits for emissions generated by the use of materials.”

Circular economy: Concept Vs Reality

With the age of the circular economy dawning, the potential business and development opportunities for recyclers, contractors and the wider sector are significant.

However, growing the reuse rate of materials continues to be painfully slow – and even stifled – because of outdated legislation and regulation, which is further hindering the development of the circular materials marketplace.

Although Europe has the highest circularity rate of any region, calculated at 11.5% in 2022, this figure has increased by less than 1% since 2010, according to the European Environment Agency (EEA).

In its 2024 report; Accelerating the circular economy in Europe, the EEA said: “Despite legislative steps forward over the past five years, efforts to transform Europe’s largely linear, ‘throw-away’ economy into a circular one will require further bold action and strong implementation of existing measures.

“Decisive action is essential to drastically reduce waste, prioritise reduction of resource use, improve recycling rates and improve the introduction of products that are designed for circularity from the outset.”

The report further outlined key actions that the EU and its member governments need to take to further establish the circular economy, which it said is still more of a concept than a reality.

It said that circular policies needed to become more binding and target-oriented, with “higher quality recycling” to promote “resource independence”.

CREDIT: THE NORWEGIAN PUBLIC ROADS ADMINISTRATION

Sotra Connection Project

The Sotra Connection is a massive infrastructure project currently underway on the west coast of Norway. This public-private partnership, which has a contract value of over €1 billion, aims to connect the Sotra Island to Bergen on mainland Norway.

The project includes the construction of a 1-kilometer suspension bridge, 22 smaller bridges and viaducts, a four-lane motorway, and four double-bore tunnels. Combined, the updated transport system comprises over 9 km of new roads and motorways, over 12.5 km of tunnels, and 14 km of pedestrian and cycle paths.

The works are being carried by a consortium comprising main contractors WeBuild, FCC Construction, SK Ecoplant, and have seen a significant number of older structures being demolished to make way for the new infrastructure system.

With the Sotra Connection Project is expected to be finished by 2025, it forms part of the larger, €40 billion E39 Coastal Highway infrastructure programme.

Scheduled to be completed by 2050, E39 Coastal Highway initiative aims to overhaul Norway’s major west coast infrastructure systems by replacing the outdated ferry connections with tunnels and bridges that currently run through six counties.

For things to improve, the report recommends that legislative changes must be made, and that the Ministry of Local Government and Regional Development must update the country’s Planning and Building Act and TEK requirements.

OVERALL OUTLOOK

The regulatory changes being implemented and LCAs set to become mandate across Scandinavia in the near future, those contractors that fail to do due diligence when it comes to sustainable practices will suffer financially - whether by government-imposed fines or a failure to win tenders.

Conversley, companies that are proactive in adopting LCAs will be better positioned to meet the rising expectations of environmentally-conscious clients. This can lead to increased demand for LCAsavvy contractors in both private and public sector projects. Implementing LCAs and other environmental measurement systems will require contractors to invest in new technology, training, and possibly software to accurately assess the life cycle impacts of materials and demolition processes

These upfront costs could pose a challenge, particularly for smaller demolition firms. However, over time, these investments are likely to pay off by enabling contractors to streamline their operations, reduce waste, and potentially lower costs by reusing materials. ■