Buildings have become a major concern because of their high energy use and carbon emissions. Thus, a material-efficient prefabricated concrete element (PCE) system was developed to incorporate construction and demolition waste as feedstock for residential building energy renovation by over-cladding the walls of old buildings. By conducting life cycle assessment and life cycle costing using the payback approach, this study aims to explore the life cycle performance of energy conservation, carbon mitigation, and cost reduction of the PCE system in three European member states: Spain, the Netherlands, and Sweden. The results show that the energy payback periods for Spain, the Netherlands, and Sweden were 20.45 years, 17.60 years, 19.95 years, respectively, and the carbon payback periods were 23.33 years, 16.78 years, and 8.58 years, respectively. However, the financial payback periods were less likely to be achieved within the building lifetime, revealing that only the Swedish case achieved a payback period within 100 years (83.59 years). Thus, circularity solutions were considered to shorten the PCE payback periods. Using secondary materials in PCE fabrication only slightly reduced the payback period. However, reusing the PCE considerably reduced the energy and carbon payback periods to less than 6 years and 11 years, respectively in all three cases. Regarding cost, reusing the PCE shortened the Swedish payback period to 29.30 years, while the Dutch and Spanish cases achieved investment payback at 42.97 years and 85.68 years, respectively. The results can be extrapolated to support the design of sustainable building elements for energy renovation in Europe.