Sustainability challenge and related SDGs
According to the International Energy Agency, buildings and construction account for roughly 37% of all CO2 emissions globally. 9% of the global emissions are embodied in building materials such as concrete, steel and aluminium, while the remainder is due to the buildings’ operations, i.e., heating and warm water. Moreover, urbanisation is increasing, and construction is booming.
This puts not only SDG 11 “Sustainable Cities and Communities” in jeopardy but requires “Climate Action” according to SDG 13 as well as a focus on SDG 7 “Clean and Affordable Energy”. Following through on the commitments of the Paris Agreement and the #Agenda2030 means reducing 95% of total CO2 emissions in the building sector by 2050 compared to today’s level, the IEA estimates in its “Net Zero by 2050”-scenario.
The IEA states that the built environment uses up a third of global energy demand. It also expects that energy efficiency of heating and air conditioners can be improved by up to 50%.
Possible solutions and their contribution to achieving the SDGs
As one of the major CO2 emitters, the construction sector, will need to completely change the way it uses materials. The good news is that the technologies for the #GreenBuildingSolutions already exist. Insulation materials have become more sustainable, using bio-based materials such as wool and woodchips. Innovative building materials, coatings and paints are required.
Energy-efficient construction processes and machines will need to support the decarbonisation of the sector.
Renewable energy production and storage can be integrated directly in buildings. Heat pumps and district heating are also reducing the carbon footprint of buildings to foster a low-carbon transition.
Primarily related SDG Targets: 7.1, 7.2, 7.3, 11.1, 11.3, 11.6, 11.c, 13.2
Investment Rationale and Growth Potential
The construction sector represents a major part in the transition to a more sustainable and carbon-efficient economy.
As governments rally to pull important levers to create incentives and penalties in favour of a green overhaul of the sector, companies that provide insulation, innovative construction materials and renewable energy solutions are likely to thrive. Moreover, the increasing scarcity of non-renewable, highly emitting materials like concrete will precipitate the switch to low-carbon solutions such as low-clinker and recycled cement or clay and bio-based solutions such as timber.
As homeowners and tenants increasingly value the life quality of sustainable buildings, demand is likely to rise.