Report: Circular economy could cut 75% of embodied emissions for built environment

The report from McKinsey and the Forum, published ahead of the highly anticipated annual summit in Davos next week, concludes that embedding circular economy principles could cut up to three-quarters of the sector’s anticipated emissions in 2050.

The term ‘embodied emissions’ is used to refer to emissions generated before the building or infrastructure project begins operating, including those attributable to construction processes and to the supply chains for materials and components.

At present, one-third of the world’s material consumption is attributable to the built environment.

According to the report, four gigatons of these emissions can be prevented through to 2050 on a cumulative basis. At the same time, an annual profit net gain of up to $360bn could be created by mid-century due to the establishment of closed-loop value chains.

This is possible even as urbanization and population growth contribute to increased building rates, particularly in emerging market economies.

The figures are based on creating a circular economy for six key materials: cement and concrete, steel, aluminium, plastics, glass and gypsum.

Circular economy principles include minimising material use in the first instance; using innovative materials with recycled content; designing for durability and longevity; and designing for disassembly, reuse and/or recyclability.

The McKinsey and WEF report’s headline findings are also based on scaling up carbon capture, usage and storage (CCUS) in the value chains of emissions-intensive materials. This is particularly important, the report argues, in cement and concrete manufacture.

Scaling solutions

Report co-author Jukka Maksimainen, of McKinsey’s Helsinki office, said: “Our analysis of the construction sector shows an extraordinary potential for circularity – not only through carbon dioxide savings but also on a financial level.

“Nevertheless, we see hardly any solutions in the market that address this issue at scale yet – this makes it even more essential that we identify scalable solutions and make them visible.”

The report highlights how collaboration between governments, standard-setting bodies and businesses across the built environment value chain will be needed to commercialise and scale circular solutions.

These include the use of innovative feedstocks to create concrete; modular building design innovations that enable the reuse of steel, glass and aluminium, and industrial manufacturing equipment that is electric or can run on low-carbon fuels.

Some technologies are available commercially already. These include systems to capture and reuse heat at material manufacturing plants. The report compels larger businesses in particular to continue pioneering these solutions, highlighting cost savings as well as decarbonisation benefits.