AbstractBuildings are responsible for approximately 36% of carbon emissions in the European Union. Besides, gradual aging and a lack of adaptability and flexibility of buildings often lead to destructive interventions, resulting not only in higher costs but also in a large amount of construction and demolition waste (CDW). Recently, an innovative system (Ref. VEEP project) has been developed to recycle CDW for the manufacturing of energy‐efficient prefabricated concrete elements (PCE) for new building construction. By applying life cycle costing (LCC) and life cycle assessment (LCA), this study aimed to determine whether the use of VEEP PCE leads to lower carbon emission and lower associated costs over the life cycle of an exemplary four‐story residential building in the Netherlands than a business‐as‐usual (BAU) PCE scenario. This paper provides a case study on the alignment and/or integration of LCA and LCC in an independent and a combined manner (via monetization). This study examines how the internalization of carbon emission and discount rate will affect the final life cycle costs over a 40‐year life span. The simulation results show that the key to economic viability and environmental soundness of VEEP PCE is to reduce production cost and to optimize the thermal performance of the novel isolation material Aerogel; internalization of external cost monetarizes the environmental advantage thus slightly expands the cost advantage of low carbon options, but leads to larger uncertainty about the LCC result.