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Decarbonizing Construction: Building a low-carbon future

An industry perspective

Decarbonization has become a global imperative and a priority for governments, companies, and society at large. This report from Deloitte and Shell analyzes the challenges the construction sector faces in reducing its emissions, while also proposing a roadmap to accelerate the transition to net-zero emission construction.

The drive to decarbonize

The construction sector is essential for modern society, delivering the buildings we live and work in, the roads and bridges that connect us, and the industrial facilities that produce and distribute our energy and goods. In 2020, construction output accounted for around 13% of the global gross domestic product (GDP). The sector can also be an enabler of decarbonization across other sectors through green buildings, renewable energy projects, and production facilities for greener products, such as electric vehicles.

Despite being a crucial sector for the world economy, construction is a hard-to-abate one. With emissions coming from sourcing and producing materials, logistics, and construction activities – called embodied carbon – accounting for more than 16% of global CO2 emissions, it must decarbonize.

Decarbonization solutions and initiatives are emerging across the construction value chain, but more needs to be done and quicker to achieve net zero.

Decarbonizing Construction: Building a low-carbon future

The “Decarbonizing Construction: Building a low-carbon future” report presents the voice of the industry, reflecting the view of nearly 100 executives from 84 companies across the construction value-chain from Europe, North America and Asia on the challenges and opportunities to decarbonize the construction sector.

The sector is at a point where it needs to make decisions around decarbonization. This report recommends 14 solutions for accelerating the decarbonization of construction and presents a practical way forward. Here are a few key highlights from the report:

  • The construction sector accounts for 37% of global carbon emissions, of which 16% represents embodied carbon mainly from material manufacturing.Significant carbon reduction needs decisive action now.
  • Applying a segment view, the infrastructure end market will likely decarbonize first; across the value chain, construction equipment will likely be the first to decarbonize.
  • Several barriers to decarbonization exist: ineffective procurement practices; a lack of regulation; production challenges for low-carbon concrete and steel; and no established standards for data, methodologies and tools.
  • Most of the existing carbon reduction efforts have been focused on operational carbon. Creating better visibility for embodied carbon and developing solutions to reduce it will be critical.
  • Asset owners have a leading role to play to generate demand, kickstart collaboration, and increase investors’ confidence to take the leap of faith necessary to invest in emerging technology.
  • Synchronized regulations and standards for embodied carbon will create the conditions required for action, including consistency on how embodied carbon can be measured.
  • Low-carbon cement and concrete are within the sector’s direct influence; the focus should be on investment in alternative raw material inputs as carbon capture matures.
  • Demand from other sectors, especially automotive, will increase the availability of low-carbon steel and lower the production costs of low-carbon fuels and carbon capture.
  • Improving workforce capabilities around sustainable and digital solutions is needed to drive efficiencies.
  • A system-level approach is needed to optimize trade-off decisions between costs and carbon emissions.
  • Decarbonization will be a catalyst for embedding efficiency and minimizing unnecessary emissions throughout the sector.
  • Sharing learnings will help each region accelerate progress towards net zero.

Decarbonizing the construction sector can have a profound impact on global emissions and can accelerate action in a number of other sectors across the value chain.  Synchronizing regulation, and investment roadmaps between customer demand and material supply is necessary.  Engaging with nearly 100 executives and experts, we define 14 solutions for change, and explore best practices from around the world to inspire action

Tarek Helmi, Partner, Deloitte Netherlands

Connected for a new energy future

Energy is the pulse of our day-to-day life and how we create and use it is evolving rapidly. At Deloitte, we understand the opportunities the Future of Energy brings and the importance of connecting ecosystem players, innovators, regulators and thought leaders to create a new energy world that is sustainable and abundant. In collaboration with Shell and working closely with many leaders of the construction industry, Deloitte explores the promise of decarbonizing the industry. We truly believe that as ecosystem players connect and adopt the right mind-set, the positive impact we make can be accelerated.

This report was produced in collaboration with Shell.

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