Report: Current technologies can halve built environment emissions

Many of these technologies are either already cost-effective relative to conventional practices or are expected to be by 2030 if industrialised.

Industry players can unlock economic benefits by scaling up technology and material production, establishing service companies, optimising supply chains and developing operational skills throughout the value chain, according to the report.

The built environment sector is accountable for roughly a quarter of global greenhouse gas (GHG) emissions, amounting to 14.4 metric gigatons of CO2 equivalent (GtCO2e) annually.

Construction and building operations contribute to approximately 26% of all GHG emissions and 37% of combustion-related emissions.

Considering the typical 30-to-130-year lifetime of a building, the report suggests that 80% of the building stock expected to exist in 2050 has already been constructed, necessitating action to avoid future energy-intensive upgrades and to employ low-emissions materials to prevent irreversible embodied emissions and enhance the energy efficiency of existing buildings.

The McKinsey report identifies 22 levers that, if implemented at scale in the next five to ten years, have the potential to reduce emissions from the built environment by up to 75%.

These levers were assessed across various asset types and geographic locations to account for specific factors such as climate and regulations.

Levers in the built environment can cut operational emissions by up to 90% and embodied emissions by up to 60%.

Housing sector emissions

In the built environment sector, residential buildings account for approximately three-quarters of operational emissions.

According to the report, there are 11 levers that can reduce up to 90% of these operational emissions from homes. These include using 100% renewable electricity from both off-site and on-site sources; heating and cooling using heat pumps, fitting high-efficiency insulation, and installing district heating facilities.

The report proposes three currently cost-effective solutions that can collectively abate 20% of embodied emissions including increasing the use of Design for Manufacture and Assembly (DFMA) techniques and promoting on-site construction practices, replacing cement with fly ash, and scaling up the utilisation of low-carbon insulation.

Major infrastructure development 

More than half of embodied emissions in an average large infrastructure project can be abated with nine levers, according to the report.

Replacing aggregate in asphalt with recycled concrete aggregate, along with substituting bitumen in asphalt with lignin, can collectively abate 40% of asphalt emissions.

Electrifying heavy equipment presents an opportunity to mitigate 7% of emissions stemming from such machinery, and by employing value engineering techniques to decrease the demand for concrete and steel, it is possible to abate 2% of emissions linked to these materials.

The industrialisation challenge 

While many levers, including heat pumps and smart thermostats, are already economically and technically feasible, there are certain levers that require industrialisation to become cost-effective.

As per the McKinsey report, to meet the EU’s Fit for 55 targets, renovations may need to increase 15 times the current rate, creating a potential market of $175bn and 1.5 million workers in the insulation sector.

Additionally, transitioning steel plants to low-emissions production could require $164bn in annual capital spending, benefiting engineering and construction firms.

Centralised digital procurement and best practices could reduce net-zero consumables’ costs by up to 30%, and retrofitting opportunities could reach a $1tr global market annually by 2035, according to the report.