The building industry is facing the enormous task of reducing carbon emissions by about 45% by 2030. This goal will take a combination of innovative techniques, incentives and regulations to achieve, and green building materials play a critical role.
Carbon in real estate includes both embodied carbon and operational carbon. Embodied carbon encompasses all the carbon emitted during the building process including the materials used to construct it, as it’s renovated over time, and ultimately when it’s demolished.
Operational carbon, on the other hand, refers to the carbon emitted from operating the building: electricity, heating and cooling, and so forth. This currently accounts for a bigger portion of emissions, but as power grids across the county get greener by shifting to sustainable energy sources, the burden weighs more heavily on finding ways to reduce carbon on the embodied side of the equation.
The two are highly intertwined and need to be thought about holistically (along with expected usage, which may impact the right choices for a specific project). But there are some “big-ticket” materials making up the biggest chunk of the carbon pie which need to be addressed.
According to the Urban Land Institute, fully 80% of a building’s embodied carbon comes from structural materials. Steel and concrete have the highest embodied carbon, though interior finishes like drywall and carpet also contribute to a building’s carbon footprint.
Fully 80% of a building’s embodied carbon comes from structural materials like concrete, steel, and mass timber.
“Owners can address carbon from building operations on a periodic basis by upgrading lighting, mechanical systems and other equipment, but once a concrete floor is poured or ceiling tiles are installed, the carbon emitted during the manufacture and transport of those materials can never be recovered,” wrote the New Buildings Institute.
To make significant impact in lowering a building’s carbon footprint, we must address embodied carbon from day one and consider green materials such as low-carbon concrete (companies like CarbonCure and CarbonBuilt are making great strides on this front), recycled steel (from companies including Nucor and Schnitzer), or mass timber.
It’s a common myth that green materials make construction projects too expensive.
The reality is that green building materials are only 1-3% more expensive than traditional materials but can reduce embodied carbon as much as 46% per RMI. Moreover, these projects may be slightly more costly upfront, but over their entire lifecycle green buildings incur lower operational costs, making them a better long-term investment. In some cases, pricing may even be at parity with traditional equivalents.
"By simply asking our suppliers for their lower-carbon options, we have been able to procure materials that meet our reduction targets and performance specifications with zero cost premium." - Katie Ross, Microsoft
Take Microsoft’s experience. The tech giant is pioneering the use of green materials and building practices with the specific aim of reducing its embodied carbon. When the company approached redeveloping part of its headquarters in Redmond, Washington, Microsoft sought to use lower-carbon materials.
“What we have found so far is that by simply asking our suppliers for their lower-carbon options, we have been able to procure materials that meet our reduction targets and performance specifications with zero cost premium,” wrote Katie Ross, Real Estate and Facilities Global Sustainability Lead, at Microsoft.
The need to replace some high-carbon materials with greener options is a no-brainer. Take concrete, for example. Experts estimate that concrete and cement are the world’s biggest emitters of carbon, accounting for 6-8% of the world’s total emissions. If concrete were a country, it would be the 3rd highest carbon emitter in the world. Concrete is a low-cost, durable material, which is appealing from a building perspective and a necessary evil in many cases, that can’t easily be replaced by an alternative.
However, last year saw the innovation of the world’s first carbon-negative Portland cement. It’s a material chemically and physically identical to conventionally-manufactured cement, but created without releasing CO2—and in fact pulls carbon from the atmosphere and sequesters it. Last August, the maker of this material, Brimstone, closed its Series A funding with $55 million to start manufacturing their version of this essential material at an industrial scale. Brimstone aims to offer this material to the construction industry at a lower cost than traditional “dirty” cement.
Brimstone is developing the world's first carbon-negative Portland cement, which sequesters CO2 from the atmosphere.
Cement isn’t the only material getting a green upgrade. The Inflation Reduction Act includes provisions that will make lower-carbon steel cheaper and more widely available for the building industry. The Act offers tax credits for the use of greener energy at steel plants, carbon capture, and other innovations. The Feds are steering their own infrastructure procurement towards sustainable materials as well, which should help spur even more growth based on increased demand.
Today, the imperative to source green materials is purely market-driven. Buildings that use green building materials are able to command a green premium. New regulations will soon make it mandatory for the building industry to address embodied carbon. France, The Netherlands, and California are all considering national and local policies to drive reductions in embodied carbon in real estate—Vancouver recently launched theirs.
However, there are challenges with availability of many of these materials at commercial scale and in every geography. We’ve heard from many experts at construction and development companies that it’s easy to access low-carbon materials for small residential use, but that options for large-scale projects are limited. There is currently a disconnect between supply and demand which will only become more acute with the shift towards greener buildings as the norm. Today it is nearly impossible to build a true net-zero building without relying on carbon offsets to close the gap.
Carbon insets (as opposed to offsets) fund projects within the supply chain to help green materials get developed and produced at scale more quickly, which can then be used to build, creating a virtuous cycle of carbon reduction.
There is a better way: we need to develop a system of carbon insets, which are an investment into the supply chain of the commercial real estate industry. As opposed to carbon offsets (which fund projects outside of a company’s primary mission, like reforestation), insets fund projects within the supply chain to help green materials get developed and produced at scale more quickly, which can then be used to build, creating a virtuous cycle of carbon reduction. In addition to being an investment in the availability of these materials in the future, insets also serve as an alternate type of carbon credit that can be applied immediately to help a company achieve its climate goals, so the benefits are two-fold.
By pooling demand and funding for these materials in advance—while still meeting the need to close the gap to carbon-neutrality in the near term—we can start the flywheel necessary to ensure that companies like CarbonCure or Brimstone will be able to ramp up and help the entire industry get to zero carbon faster.
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