What is holding back UK green construction?

With vast carbon impacts, construction and housing are an obvious candidate for greening. Yet, barriers remain.

Anyone with even a remote interest in sustainability is probably familiar with these kind of figures; the manufacture of cement alone is responsible for around eight per cent of global CO2 emissions, or that when adding emissions from the building construction industry on top of operational emissions, the sector accounted for 38% of total global energy-related CO2 emissions.

It doesn’t make for the most inspiring reading. And further; The International Energy Agency (IEA) has estimated that direct building CO2 emissions need to fall by 50 per cent by 2030. This equates to around six per cent per year; a huge task by any estimation.

Yet the pace of change is nowhere near what’s required. That’s odd, because changing things up would add profit and longevity to the sector. Perhaps an overview of what we ought to be doing is in order…

Lighting a fire under construction emissions

UK FIRES is a major research programme, comprising a consortium of subscribing industrial partners from resource-intensive sectors working with academics from Cambridge, Imperial College, Oxford, Bath, Nottingham and Strathclyde.

Their demands are simple: all new builds should be to zero-energy standards of use. ‘The impacts of construction are primarily about the use of materials: primarily steel and cement. By 2050, we will have only very limited cementitious material and will use only recycled steel, but there are myriad opportunities for radical reductions in the amount of material used in each construction.’

The UK Green Building Council (UKGBC) argues that our 2050 net zero carbon target, corporate ESG drivers and increased occupier interest in net zero are just three reasons why developers and investors are becoming acutely aware of the need to deliver net zero carbon buildings.

Its Advancing Net Zero programme is helping drive the transition to net zero carbon buildings, including through its publication of the Net Zero Carbon Buildings Framework.  In one of the UKGBC’s latest guides on reaching net zero, they note that capital expenditure often trumps a focus on whole life value when it comes to green buildings.

Net zero, it appears, is increasingly well understood and desired. Yet we face an irony; within a country with an exponentially more expensive housing and buildings market and many UK homeowners mortgaged to within an inch of their means, capEx still trounces net zero. Controlling and understanding the true vagaries of price on buildings still eludes us. And that damages sustainability.

More encouragingly, UKGBC notes that more than 30 companies in the UK have now signed up to the Net Zero Carbon Buildings Commitment, and through 2019 there was a doubling in the number of companies with a central London presence who signed up to science-based targets.

For these companies, moving to a low carbon or net zero building is one of the easiest ways to decarbonise their footprint.

Money, money, money

Some astonishing metrics are out there on what we might be achieving. Green buildings are a global investment opportunity that could be worth $24.7 trillion by 2030, according to the International Finance Corporation.

And, institutional investors don’t need convincing. Research from Warburg-HIH Invest found 51 per cent of 100 respondents were expecting a higher return on real-estate projects that take ESG into account and 70 per cent said ESG is now relevant to their investment criteria.

Here’s the kicker: ‘It doesn’t come cheap though. And it’s because of the upfront costs of designing efficiencies into buildings that there’s a reluctance to update or plan new developments with sustainability in mind. Looking beyond the upfront cost is critical to encourage more capital investment.’

Better lending criteria are needed, and a wider understanding and long termism within many in the sector; corporate tenants, builders and lenders alike.

This article notes: ‘Commercial real estate is poised to benefit from an expansion of ESG lending options available for projects that not only reduce their carbon emissions but meet certain key performance indicators over time. These could include how resilient a building is and whether it offers a healthy, working environment.’

How fast such ESG-oriented lending can reach the market seems absolutely key to progress.

The same old story

These barriers to building green are not new. We know upfront finance is hard to achieve. We know that often the long term impacts of a greener building are diminished when the huge initial costs are being weighted up, within an environment of high level risk and investment.

Similarly, we know what the major players have to say; UKGBC and their kin have been reporting for years on how to green up the sector.

And we know that government is demanding change, powering ahead with net zero policy and regulation, even while simultaneously ditching efficiency grants.

It makes for a puzzling mix. The writing is so evidently on the wall; the time for greener construction is here. What will it take to truly disrupt a sector that somehow, in spite of all the evidence, continues to drag its heels?