Incentivising the Recovery and Utilisation of Construction and Demolition Waste

Abstract

This thesis analyses the question of how to improve incentives for resource recovery in construction and demolition waste practice. It is a thesis by publication, containing five individual portfolio papers published in peer reviewed academic journals during 2023 and early 2024, deploying a hybrid qualitative and quantitative (longitudinal) approaches. The thesis contains five main findings. Firstly, that economic incentive mechanisms used to motivate firms to manage externalities in construction and demolition waste can be classified in three main groups: revenue support, cost-of-capital support and negative externality levy mechanisms. Secondly, that incentives linked to greenhouse gas abatement can drive positive resource recovery outcomes as a co-benefit. Thirdly, that unilaterally designed mechanisms like border carbon adjustments, which offer potential as an incentive mechanism, can generate controversy among affected jurisdictions, jeopardising the long-term sustainability and credibility of the investment signals. Support for this finding was evident during the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC)1, with parties expressing concern over the EU’s carbon border adjustment mechanism, affirming understanding that incentive mechanisms designed to induce investment into long-lived infrastructure assets need to be perceived by firms as sustainable. Fourthly, that there is an important role for voluntary action by private firms in the pursuit of resource recovery and the reduction of negative externalities associated with waste management. The effectiveness of voluntary action, though, is linked to what customers want and are prepared to pay. In cases where customer preferences favour environmental protection, firms may engage in innovation to capture market share by increasing competitiveness. In addition, the research found that simultaneous access to two or more support mechanisms did not necessarily invalidate an activity’s need for those incentives nor did it always amount to greenwashing. Within the fifth portfolio paper, this research provides a framework for quantifying the equivalence of incentive mechanisms as a financial value per unit of positive externality. The research found that developing incentives is challenging because climate change, waste management, resource recovery and recycling are globally connected problems. Negative impacts and supply chain relationships overlap political boundaries. Therefore, solutions implemented in one jurisdiction may well resolve problems simply by shifting them to another location and creating harm elsewhere. Equally, firms operating across jurisdictions can identify and even exploit the regulatory arbitrages that policy variation opens up. This underscores the role for regional and multilateral cooperation, challenging as it may be to implement. Further research is recommended. The first area is exploration of contemporary issues in the design of multilateral sectoral mechanisms that create incentives, as alternatives to border carbon mechanisms. The second area is methods to integrate assessment of project and activity-level additionality into methodologies for labelling of sustainable finance. The third area is preparation of qualifications to Coase’s Theory and the Porter Hypothesis theories, or the development new theories. A limitation of this thesis was its focus on steel, therefore future research is recommended into other construction materials.