In this third edition of our blog series on the implication of climate change for various sectors, we will be exploring the issues as they relate to the building and construction industry. As with our previous installments on the financial sector and power utilities, we will dive into the key impacts and translate them into decision-useful considerations. We hope this discussion will help provide clarity and propel internal discussions and management of climate-related risks and opportunities.
The recent Intergovernmental Panel on Climate Change (IPCC) report has made it clear that the world must decarbonize by 2050 – and be well on the way by 2030. Successfully navigating this unprecedented transition will require a clear vision to identify and minimize risks while seizing new opportunities. One of the most important sectors that will make or break this effort is the building and construction industry which is responsible for roughly 40% of global energy-related GHG emissions.[1]
Governments around the world are updating their building codes and construction standards to create the low-carbon and resilient cities of tomorrow. This action can be broken into three broad categories: (1) eliminating emissions, (2) increasing resilience, and (3) enhanced disclosure by building owners and operators to support 1 and 2.
Eliminating Emissions
Governments are setting ambitious carbon reduction targets and piloting new initiatives at each phase of construction. A small sample of example activities include:
- California rolling out legislation to no longer purchase construction materials with high-emission production processes.
- The EU’s Energy Performance of Buildings Directive requiring all new public buildings to be nearly zero-energy as of the start of this year and all new buildings (including private buildings) to be nearly zero-energy by the end of 2020.
- The World Green Building Council working with dozens of national governments to develop net-zero carbon building standards.
- Toronto’s introduction of a Zero Emissions Buildings Framework showing a gradual path towards zero emission buildings by 2040.
- The surging circular economy movement which is closing the material loop to ensure raw materials can be reprocessed and repurposed with minimal carbon.
Although the details and ambitions of these programs vary by region, the message is clear: the construction, operation, and renovation/decommissioning of tomorrow’s buildings must involve dramatically fewer carbon emissions.
Increasing Resilience
The construction sector must adapt to create structures and systems that will withstand the climate of tomorrow, and indeed the next sixty to hundred years! This means buildings that are more resilient to both chronic long-term changes like warmer temperatures and increased precipitation, and also to acute shocks due to extreme weather events like flash flooding, hurricanes, and fires.
Some buildings owners are installing enhanced back-up energy generation and storage systems that go beyond code requirements of maintaining power for evacuation, to maintaining power for prolonged use of the facility without the help of the electricity grid. Designers are working to prioritize critical building loads and linking them to back-up systems so that key systems can be maintained in an ‘island mode’ powered only by on-site energy systems like solar, battery, or enhanced backup generators.
Enhanced Disclosure
Climate solutions are already being implemented by organizations with strong vision and leadership; however, the whole-market transformation required means a more standardized approach is required to ensure the entire building industry evolves. Better data and enhanced disclosure will be required to verify compliance with industry standards and evolving regulatory requirements.
In the not-so-distant future building owners will have to quantitatively demonstrate their buildings are not just designed to be low-carbon (as is currently required by most building codes) but are also operated to be low-carbon. Ontario’s new Energy and Water Reporting and Benchmarking (EWRB) initiative now requires annual disclosure of energy consumption by large commercial buildings throughout the province. Expect this to be gradually expanded to other jurisdictions and to other types of buildings potentially including single-family homes.
It’s not just the operating carbon of buildings that will need to be disclosed, but also what they’re made of. As low-carbon construction materials are increasingly prioritized, manufacturers will need to “prove it” using carbon footprint methods and tools to demonstrate they meet the ever-stricter procurement requirements set by building owners and designers. Embodied carbon analysis, life cycle assessment (LCA) and environmental product declarations (EPDs): these methodologies and tools are already being used in the market but will evolve from their current green building niche into the primetime. Many industry leaders see parallels to energy models, which evolved rapidly from a green building niche just ten years ago into a building permit requirement today.
Enhanced disclosure will also be used to demonstrate and value building resilience. Industries that are hyper-sensitive to downtime (think finance) will place increasing value on buildings with resilient energy systems and islanding capabilities as well as those located in areas with reduced risk of flood and fire, for example. These considerations will see whole new metrics being communicated and valued in buildings.
How can your organization be prepared for the coming climate impacts on the building and construction sector?
1) Assess your climate risk and opportunity
Consider the risks and opportunities that might materialize as society places increasing value on eliminating carbon and increasing resiliency. These climate risks and opportunities can be applicable to a building or asset, a company, or even a process.
2) Make systemic change
The industry needs to go beyond incremental improvements and embrace systemic change. Examples include considering changes to the structural material of some buildings from typical materials that result in carbon emissions during their production (eg. steel and concrete) to materials that absorb and store carbon (eg. responsibly sourced timber). Sidewalk Labs — Google’s sister company — is planning a low-carbon neighbourhood of the future on Toronto’s waterfront, consisting of 17-buildings using mass timber as their structural material.
Another example is to design new buildings without combustion for heating; use heat pumps and geothermal energy for heating instead. Such systems can be powered solely by carbon-free electricity.
3) Measure and report your progress
Data is needed to prioritize action and demonstrate impact. Providing case studies and lessons learned from your journey will identify your business as a future-oriented leader positioned for growth. Sharing these learnings sends a strong message to employees and investors that you are facing the future proactively and are ahead of the curve. Many will view this a proxy for good governance that extends well beyond ‘green’ issues.
This article only scratches the surface of how the building industry will be impacted by climate change considerations. Companies will have to respond uniquely given their jurisdiction and local realities; however, one thing is certain: the construction and buildings industry ignores climate change at its peril.
Contact Mantle to understand how we can help you and your organization manage climate-related business impacts. We can guide you in considering what to manage, how to incorporate climate into standard and best-practice development and can help communicate internally and externally. Our services encompass the spectrum of climate change management processes from education to scenario analysis.
Click on “Climate Series” from the categories menu to read more blog entries from this series.
[1] United Nations. Towards a zero-emission, efficient, and resilient buildings and construction sector. Global Status Report 2017.