The construction industry has been resilient through the pandemic even as it confronts shortages of workers and raw materials, and rising inflation. But these challenges will pale in comparison to the ones that contractors will face as nations race to meet aggressive goals in reducing carbon emissions.
The construction and property development industries account for as much as 50% of global carbon emissions annually, according to one manufacturer.
At the United Nations Climate Change Conference, or COP26, in Glasgow over the past two weeks, these goals in reducing carbon emissions have taken center stage. For a range of industries, including aviation, shipping, health and autos, nations at the conference have pledged to aggressively reduce carbon emissions.
Construction firms and real estate developers will not be immune in the push toward net-zero emissions. After all, they account for as much as 50% of global carbon emissions on an annual basis, according to Saint-Gobain, a leading multinational manufacturer of construction materials.
RSM has identified three broad considerations for construction firms and property developers as they work to meet this challenge:
First, improve the design, construction and operation of buildings. This will require stricter energy efficiency codes on new buildings and renovations of existing buildings. Construction planning should consider carbon intensity in both creation and building usage, eco-friendly products and the use of smart grids to help achieve greater sustainability.
Second, work with suppliers to identify ways to reduce their carbon footprint. This means using materials that are lower-carbon intensity; if possible, use materials that are reusable.
A study by Oxford Economics found that the 10 most used construction materials in Europe would produce an annual 518 million tons of greenhouse gas emissions by 2030 if no action is taken. That is the equivalent of approximately 35% of the total carbon waste produced by the continent.
A construction supply chain is often filled with numerous complexities and hierarchies. These supply chains are often highly fragmented, with waste endemic in that fragmentation. Working to implement technology solutions and even alternative construction solutions, such as off-site manufacturing and 3D printing, can help to eliminate waste, resulting in cleaner construction methods.
Third, be aware of changing global policies that will shift consumer preferences. The United States and European Union, for instance, are considering carbon tariffs, which would cut carbon emissions through trade of materials. Policymakers are looking at targeting steel, chemicals and cement for these tariffs, which would create competitive advantages for producers in countries with low emissions. If these proposals materialize, the construction industry will feel the impact of the tariffs driving up price of materials.
Governments are also using infrastructure spending—often a source of high carbon emissions—as a means of transitioning their economies to be more climate friendly. Congress recently passed a sweeping infrastructure package, which includes $21 billion for environmental remediation and $15 billion to improve the electrification of the vehicle fleet with initiatives like charging stations, and electric buses and ferries.
The larger push for sustainability, though, is in the $1.75 trillion social spending bill that would call for $550 billion in investment toward clean energy and climate change initiatives.
Even with these projects, though, annual total global climate finance spending would need to grow by 588%, to $4.35 trillion, to achieve many of the carbon-reduction goals laid out by 2030. Already, those investments nearly doubled from 2011-12 through 2019-20, according to the Climate Policy Initiative.
The takeaway
With the world embracing net-zero carbon emissions and environmental sustainability, innovation in the construction industry is sorely needed to keep its impact on the environment in check. The opportunity is great for construction companies willing to position themselves to harness these drivers of change and lead the industry toward a brighter, cleaner future.
