MAGAZINE Tech start-up champions endless material reuse

Thomas Rau, an architect but above all a pioneer when it comes to the circular economy, is anything but a dreamer. ‘If we want change, we need to make it financially attractive. Otherwise it won’t happen.’ Madaster, his proptech start-up launched in 2017, is the practical manifestation of Rau’s answer to the ecological crisis: putting an end to the waste of natural resources. In his view, waste needs to be made a thing of the past by identifying resources and recording exactly where they are at any given point in time.
Madaster is essentially a public register of materials used in the built environment and is modelled on the Dutch land registry, known as the Kadaster. It operates as an independent public platform that connects the identity of materials to their location and records them in a materials passport.
Rau argues that we need to conserve our natural resources because they are not renewable. Energy is less of a problem as we have unlimited reserves of energy sources such as wind and solar power. But essential metals such as copper and zinc are becoming increasingly difficult to extract and methods such as using sand are increasingly affecting the environment. To use Rau’s words, they are ‘limited editions’.
Rau’s solution is the unlimited reuse of materials. ‘That’s not the same as recycling, which is just a stay of execution, because it still ultimately ends up as waste. Materials become so polluted when they’re recycled that we can no longer use them. But if we pay attention to the purity of the materials when designing items, the material can always be reused. Modular construction turns a building into a materials depot so that at the end of its life cycle the materials can be used for a new building. Not only do new buildings no longer use new materials, but it’s a cheaper process.’

Materials depots
RAU architects have been experimenting for nine years with the idea of using buildings as materials depots. Rau’s architectural practice designed the first building of this kind in 2010/2011 for the council offices in the town of Brummen, where 90% of the materials are reusable. Another example is the transformation of the former headquarters of energy firm Alliander in Duiven. In 2012 a materials passport was created for the existing building to ensure the materials were available for the next reconstruction. Everything was then designed as a materials depot, a database containing all the materials used in the building. At the same time the first materials bank is being compiled in which the value of the materials can be continually monitored. This building will be the headquarters of Triodos Bank Nederland.
But Rau saw that constructing one-off buildings with a materials passport was not enough to turn the tide. The idea needed to be scaled up to make it financially attractive. To set the ball rolling, he and Pablo van den Bosch held a number of meetings with four men from the IT and financial sectors. The idea of Madaster was born and the concept went live in 2017. The start-up was recently named as a winner at the Digital Top 50 awards in the category ‘Tech for Social Impact’ by Google, McKinsey & Company and Rocket Internet.

Public register
Madaster has been designed in such a way that other passports, certification and systems can connect with it. And connecting it with the likes of commodity exchanges will provide an insight into the value of materials. It will also facilitate trade in materials: although Madaster has no ambitions to be a marketplace, it wants to stimulate marketplaces. The mere idea that a building has a residual value could have considerable influence on current economic reality. Never again will the residual value of a building have to be written off as zero. ‘Or less than zero,’ says Rau, ‘because often there is a bill for demolition.’

Financial consequences
That is one of the reasons that banks in particular are interested in Madaster: the residual value can reduce the cost of financing. The insights offered by Madaster also have other financial consequences that are bearing fruit: the Erasmus Medical Center in Rotterdam is using information from Madaster in its tender for the demolition of an 80,000 m2 building. Now that the hospital knows what the residual value is it can submit a much more accurate tender. Documenting everything creates a value for something that was previously worthless.
Safety risks can also be brought into the equation. Rau: ‘Consider the Grenfell Tower in London. The producer of those cladding panels knows it has made around a million panels that have been incorporated into buildings. But nobody knows which ones they are. And how much easier would it be if we knew all the places where asbestos has been used?’
A million square metres of buildings have already been included in Madaster. These are mostly the 33 pioneers, early adopters such as VolkerWessels, OVG, Triodos Bank, Schiphol Group and ABN Amro which are testing the system. The 33 companies have given financial support to the first phase of the company that is operating Madaster. Rau is not surprised by the interest in Madaster: ‘Everybody knows it needs to be done differently, but nobody knows how. And nobody wants to miss the boat.’
The search for new approaches is also being driven by anticipated extra regulation: the climate agreement reached in Paris two years ago has generated all kinds of ambitious plans in EU member states, such as ‘A circular Dutch economy for 2050’. To this end the construction sector is advising the Dutch government on whether a materials passport should be compulsory by 2020. Other goals include halving Dutch CO2 emissions and waste by 2030. Rau: ‘Given that construction accounts for 40% of both, there are huge gains to be made.’

How Madaster works
The easiest way to work with Madaster is by uploading a template that has been made in the Building Information Modelling System (BIM) to the platform. Data for existing buildings can also be inputted manually.
A Circularity Indicator (CI) is given based on the materials and structures. The value of the material is determined by consulting 80 different databases such as the London Metal Exchange. The residual value can be determined after a preset running time to correct for inflation and the labour involved in retrieving the material.
The building’s dossier can be used to determine and update the maintenance plan including ownership of materials and products, as well as recording things like permits, insurance and tenants.
The data in the platform remains the property of the building’s owner, who can decide whether to make it available to others. Data can also be used anonymously for generic purposes. A subscription costs €19.95 for personal clients. For professional clients the price is based on the total floor area and number of users to be covered. For more than 1 million m2 and 20 users this amounts to around €25,000 per year.

Buying into the platform for as little as €20
To finance the development of the next stage of the Madaster platform, the aim is to raise a minimum of €500,000 and a maximum of €2.5 mln by means of a convertible bond loan. This funding model has been developed by funding platform AndersFinancieren using the Symbid crowdfunding platform. In order to make the bonds attractive to private as well as professional investors, bonds are available for as little as €20. This funding will support Madaster’s management company, which will use the money primarily to develop software. The Madaster Foundation, with Thomas Rau and Pablo van der Bosch on its advisory board, will supervise the servicing company and guarantee its independence.
The new funding model offers private and professional investors a return of 6% over five years. Interest will be added to the lump sum annually rather than being paid out periodically to bond holders during the life of the loan. At the end of the loan period bondholders will be able to convert the amount of the loan plus the accumulated interest into certified shares.
Initial funding for Madaster  included a €25,000 gift from 33 parties. A European subsidy worth €2.4 mln was also obtained. Madaster’s revenue model is based on securing subscriptions to the platform. Turnover for 2018 is on course to reach €150,000. But if Madaster were able to connect 1% of real estate stock in nine European countries to the platform by 2025, it would take its turnover to around €50 mln.

Spreading the word in Europe
With or without regulations, Madaster is well placed to conquer Europe, where the Paris Agreement to combat climate change will require action from member states. Circularity becomes more attractive when trade in materials increases. The platform has thus been set up in such a way that it can easily be adapted to local markets and circumstances. The network currently extends to eight countries. Contacts have been established through the business community in Switzerland and Belgium, in the education sector in Germany and via an initiative group in Norway, while in Portugal and Luxembourg the governments themselves have made contact. Spain and France are also on the radar and Asia has also expressed an interest. Rau: ‘It doesn’t matter how we establish contact in other countries: we grab the opportunities that are there and try to find local ambassadors as quickly as possible.
The structure of Madaster, with a supervisory foundation and operating subsidiary, is designed to ensure a balance from the outset between the public and private spheres. We want to emphasise the public element by using crowdfunding to make the financial base of Madaster as broad as possible. Incidentally, that means that the original participants are allowed to invest too.’
Neither is Rau’s vision of a circular economy limited to the practically focused Madaster. He sees the big picture in terms of freeing up property, of developers and investors managing buildings and reaping the rewards, and constructors who in future not only build but drive through logistical processes. In September he will give a speech during the Carnegie Peacebuilding Conversations at the Peace Palace in The Hague on his initiative for the Universal Declaration for the Rights of Materials. He recently outlined his vision of circularity at the Vatican, the science building where Galileo was among those who have defended their concepts. ‘That was really something for me,’ says Rau. The Vatican has asked him to elucidate four theses, including Madaster. Rau expects to receive the response soon.

PERSONAL PROFILE
Thomas Rau studied architecture in Aachen, Germany, before founding the RAU architectural practice in the Netherlands in 1990. For many years he has been an advocate of the circular economy and his efforts have been recognised in various ranking lists. He was nominated for the Circular Award at the World Economic Forum and this year won the ABN Amro Sustainable 50. Together with his wife, Sabine Oberhuber, he set up Turntoo in 2010, a consultancy bureau that develops circular business models. The company’s innovations include Light as a Service, which allows consumers to buy lighting on subscription, with Philips supplying and maintaining the light fittings and managing the energy bills. Dutch TV broadcaster VPRO asked him to outline his views in an episode of its Tegenlicht documentary programme, entitled ‘The End of Property’. Together with Sabine Oberhuber he wrote the book Material Matters, which sketches the route to a new economic model in which the consumer is no longer the owner, but the user.