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Decarbonising the built environment needs more than an attitude change: here’s why

June 2, 2021

According to the recent IPCC Special Report, we have 10 years to halve global greenhouse gas emissions and avoid global warming above 1.5°C, which would cause unknown havoc and destruction. It’s the most fundamental challenge of innovation we humans have ever faced.

Green technology and climate tech encompass a broad set of sectors that tackle the challenge of achieving this reinvention of the global economy and is collectively motivated by reaching net-zero emissions before 2050. But the reality is that every industry needs to radically decarbonise in just over two business cycles.


The built environment is lagging worryingly behind other more agile industries. It drastically needs to change - with buildings and construction responsible for 39% of global greenhouse gas emissions. According to a report by the Association for Consultancy and Engineering (ACE) and the Environmental Industries Commission (EIC), most parts of construction are unprepared for net-zero.

Why is the built environment lagging? 

The report, ‘Are we ready? Delivering net zero in the built environment,’ polled more than 130 net-zero and sustainability experts who work across different areas of the built environment.


The findings show few businesses rate highly with the common challenges of meeting net-zero targets. The problem is built-in; client business models are incompatible with net-zero pathways and the challenges of clashing and changing layers of regulation.


The report argues that the industry needs a new, holistic approach that marries policy changes to new ways of delivering projects.

However, we will not succeed in creating these solutions if we don’t adjust our finance and investment logic and re-evaluate how we manage risk in the built environment.

Not that long ago capital had a long term mission. When banks were still family businesses, wealth was created with a long-term vision for future generations. This changed when banks started to be listed on the stock exchange. Since then most investment decisions are guided by the short-term logic of the stock markets.


In the real estate world, this has led to a 5-6 year investment logic in which everything is focused on the competition of construction - once the building is built we slap a certification on and realise our profit (sell, rent, flip the asset). Currently, building carbon neutral is expensive and sustainability is a luxury - the only way to change this is to redefine our current CapEx/OpEx logic in real-estate development. 


Innovation is on the horizon 


Both buildings, the materials they are made from and our investment models need to change to adjust their carbon footprint. Small scale efficiencies like improvements in heating, lighting or appliances will play a role. However, given the breadth of the built environment’s impact, bigger solutions will also be needed: building-level electricity and thermal storage, new construction methods and circular approaches to investment and risk-management. 


Despite the challenges, a report from PwC, ‘The State of Climate Tech 2020,’ outlined key trends supporting innovation and investment in green technologies. 


New and cheaper technologies: technology advances and infrastructure investment have shifted the cost curve down, and powerful new technologies – like AI, cloud, blockchain, and advanced sensors – are not only enabling solutions to be optimised and scaled but are offering entirely new business models.


Greater consumer demand: sustainability is the new disruptor for the consumer goods segment, with consumers demanding more from brands and sustainable products starting to demonstrate higher growth rates than their non-sustainable rivals. A new class of ‘climate tech unicorns’ such as Tesla, Nest, Oatly and Impossible Foods have also emerged showcasing the viability of disruptive approaches in the consumer market that also deliver on sustainability. In the built environment, there is a similar demand and a 'green' angle has become a sought after edge. However, this demand has also lead to designs becoming green-washed to win projects or to attract press coverage.


More supportive policies and regulations: with over one hundred countries committing to net zero emissions economies before 2050, we can expect to see continued and rapid strengthening of policymaking over coming years, including carbon pricing, subsidies, standards, bans and phase-outs, public finance mechanisms and green infrastructure investment.



Cities embrace green technology


For lasting change, it will take many of these factors working together. We need more than good attitudes to help shift the built environment towards a carbon-neutral future. However, the stage appears set for an uptick of green tech into a mainstream investment, the corporate landscape and the built environment in the decade ahead.


We are already seeing cities invest in bold solutions to solve climate issues that are central to the built environment. The Helsinki Energy Challenge, for example, was launched to encourage innovative, sustainable alternatives for urban heating systems, using the city of Helsinki as a testbed. 


Four winning designs were chosen, among which was Carlo Ratti Associati’s Hot Heart project. Comprised of 10 floating reservoirs, the system would use seawater heat pumps to convert mainly carbon-free electrical energy from sources such as wind and solar power into heat.


The Finnish capital intends to use the winning solutions to reduce the city's dependence on coal and biomass to meet its target of carbon neutrality by 2035. Hopefully, showing the way for other coastal cities to do the same.