No Match Found
In today’s rapidly urbanising world, where environmental consciousness is at an all-time high, the owners and developers of infrastructure and buildings face a monumental challenge: how to build the future sustainably while ensuring value for money. One answer lies in adopting a comprehensive framework for the sustainable procurement of green building materials.
Construction materials have long been deemed “hard to abate” when it comes to reducing carbon emissions associated with their creation and use. Modern-day cement and steel, the cornerstones of the built environment since the 19th century, are carbon intensive in terms of the raw materials and fuel required to produce them. Cement and steel production generate 2.3 billion and 2.6 billion tonnes of carbon dioxide each year, respectively, according to the International Energy Agency. These figures are set to rise dramatically. By 2050, the United Nations estimates that more than 80% of the world’s population will live in cities, a trend that will effectively double the current demand for building materials.
Green building materials prioritise sustainability throughout their life cycle, generating fewer emissions from their production, construction, operation and end of life than traditional materials. Energy efficiency is part of the solution for minimising any direct or indirect emissions associated with the manufacturing of green materials. For example, new low-carbon processes, such as hydrogen-powered blast furnaces and carbon capture and storage technologies, can be utilised at production facilities. However, the emissions produced throughout supply chains—including during the extraction, processing and transporting of raw ingredients such as limestone and iron ore—are often the most complex and costly to monitor and abate.
of building emissions are “embodied” in the production of steel and cement, which are used for construction.
Progress in creating low-emissions or emissions-free materials has been relatively slow due to formidable challenges. High temperatures—upwards of 1450 degrees Celsius—are required for the calcination processes that produce clinker for cement, and the carbon dioxide that is released as a result makes it difficult to eliminate carbon emissions entirely. Researchers and industry players have been exploring more innovative methods of making cement, such as replacing high-temperature furnaces with room-temperature electrolysis, or performing ongoing experiments in zero-emissions concrete. But it’s an intricate puzzle that demands time and, ultimately, resources.
According to PwC’s State of Climate Tech 2023 report, climate tech investors allocated US$8.1 billion, or 14% of total investments, to startups targeting emissions from industry, manufacturing and resource management. Collectively, these sectors account for 34% of total global emissions. Conventional steel production is heavily reliant on fossil fuels such as coal and coke. The transition from traditional blast furnaces to electric arc furnaces, which have lower CO2 intensity, offers relatively quick wins. Electric arc furnaces may account for 35 to 40% of global steel production by 2050. However, scaling cleaner technologies—such as hydrogen-based steelmaking and molten oxide electrolysis—is more capital intensive. It requires substantial infrastructure changes, including renewable energy pipelines; innovation in manufacturing facilities; guaranteed supply of alternative ingredients like special-grade iron ore briquettes; and material recycling and circular economy hubs.
The imperative to move more quickly is evident from a new set of trade-offs for project owners and developers. For the past hundred years, the classic triangle in construction involved the interplay between cost, quality and time. It is still vital to focus on those issues in order to plan and execute development. But given the rising demand for materials and expectations surrounding sustainability, the calculus for construction over the next hundred years will evolve to include both environmental and social impact (see diagram below).
Source: PwC analysis
When evaluating a project, project owners and developers must fit a new set of deliverables into their budget: reducing carbon emissions and delivering positive outcomes for society—which includes stimulating the supply of green materials. This effort involves seeking out, certifying and collaborating with suppliers (often within business ecosystems) that are committed to sustainable practices and product innovation. Efforts and policy instruments geared towards encouraging supply—such as carbon markets and pricing, science-based targets, and incentives—have not mitigated supply-side uncertainties driven by the economic costs of decarbonisation. Large infrastructure projects in particular are crucial to stimulate demand for green materials by guaranteeing “offtake,” a pre-construction agreement to buy a portion of such materials in order to secure market revenue.
Given the complex changes required to tackle the green materials challenge, we’ve developed a strategic framework that can help developers and project owners on their journey towards sustainability, across their businesses and supply chains.
This journey to sustainability starts with a solid decarbonisation strategy that incorporates green materials and design imperatives to reduce waste and material usage overall. By setting specific objectives and timelines for the transition to sustainable material procurement, you can achieve ambitious targets in reducing emissions from cement and steel. The decarbonisation strategy of a recent large-scale high-speed rail project in the UK included plans to cut embodied emissions—the total greenhouse gasses associated with material production, transportation and disposal—in half by 2030. Project leaders intend to do this by using a blend of green building materials, increasing use of recycled materials and implementing more energy-efficient construction practices that can adapt to meet the evolving needs of a project—particularly in the early stages when its carbon debt is high.
Research conducted by Imperial College London in partnership with PwC suggests that designing projects with strategic flexibility increases their longevity, functionality, and environmental sustainability, while protecting and creating value. ‘Large-scale infrastructure projects face significant uncertainty and risk, and planners must balance the life cost of a project against its environmental footprint when designing them. We’ve seen that the integration of green building materials with strategic design flexibility is a key factor in unlocking substantial value in this process,’ says Dr Michel-Alexandre Cardin, associate professor at Imperial’s Dyson School of Design Engineering.
Setting the right strategy involves a studied approach to supply chains and manufacturing processes. Having a sophisticated understanding of both the market and the availability of materials provides project planners with the knowledge they need to kick-start decision-making and set policies that balance economic, environmental and social factors. The goal is the best greenhouse gas abatement at the lowest cost; and it is vital for planners to understand the trade-offs involved so they can gain management buy-in.
When rolling out a decarbonisation strategy that includes the procurement of green materials, leaders should do the following:
The assessment of green materials is a critical part of the process. This phase is when you determine feasibility by certifying environmentally friendly materials and evaluating their practicality for integration into a project. As part of their decarbonisation strategy, project owners must assess green materials against such criteria as quality, availability and amount of embodied emissions.
A key aspect of this feasibility assessment is the thorough comparison of the cost implications associated with incorporating green materials. With broad trade-offs already addressed as part of the decarbonisation strategy, evaluating costs against benefits requires a specific capability to weigh factors like the initial investment, maintenance and long-term sustainability of a specific project against government-backed targets. Tools like Pathways to Paris, a collaborative project between WWF Germany and PwC Germany, funded by the German Federal Ministry for Economic Affairs and Climate Action, create a range of comparative, territory-specific scenarios of cost versus emissions for steel and cement, aligned with the Paris Agreement’s goal to limit global warming to below 2 degrees Celsius.
This comparative approach delves into the full material life cycle, accounting for emissions from material extraction, production, transportation, construction and disposal. It is a viewpoint that seeks to uncover complex environmental costs, while providing project owners a more nuanced understanding of the project’s total cost of ownership (TCO).
Where sustainability is both an aspiration and a business imperative, transparency can be a bridge to trust. Buyers of materials currently have an option to buy offsets such as green certificates, which lessen their net carbon position. But this is not the same as abatements at the site of production, and bans on certain offsetting claims have begun to be implemented. Under the principles of science-based targets, companies first need to decarbonise, which we have seen typically accounts for roughly 80 to 95% of reductions, and offset only the unavoidable emissions, which account for the remaining 5 to 20%. Openly communicating results of impact assessments therefore becomes a vital cog in the machinery of sustainable progress.
For leaders navigating the intricate landscape of feasibility testing, it’s important to consider these actions:
A sustainable procurement strategy goes beyond the mere acquisition of materials. Selecting suppliers that embody a steadfast commitment to sustainability is critical to bolstering innovation and demand for green materials across the industry. This includes taking into account new design and circular economy principles, such as requiring concrete to contain a certain benchmarked percentage of recycled aggregates, and establishing key performance indicators for tailored supplier contracts that reinforce and guarantee emissions performance.
Partnerships are driving sector convergence within ecosystems, exemplified by dynamic collaborations and innovations in materials technology—such as flexible concrete and bioplastics—and in more ambitious targets. A major European car manufacturer is aspiring to produce the world’s first commercially available car built with fossil-free steel. The manufacturer’s collaboration with a steelmaker, as part of a wider ecosystem that includes an iron ore producer and an energy company, aims to remove fossil fuels from the steelmaking process by 2026. The growth of green materials through such premium products—or similar commitments to procure green materials over a more long-term basis—can pave the way for technology learnings and a broader uptake of green materials through cost reductions.
On the supply side, there are obstacles to navigate. Suppliers may not be as readily available to meet increased demand, especially in regions where sustainability standards may not be rigorous or where access to production innovations is limited. Shifting the mindset of suppliers and adjusting their operations towards sustainability can be a difficult challenge.
Project owners and developers have a clear imperative to consolidate demand in the pursuit of sustainable materials as a preferred choice. When the weight of multiple projects is united, it forms not just a financial advantage but also a compelling statement of intent.
On the issue of procurement, leaders should consider these actions:
The delivery phase is where the seeds of quality control, real-time monitoring and adaptive management are sown.
Supply chain assessments and quality assurance of suppliers and products will be crucial in ensuring the correct usage of green materials and in maintaining quality control. Monitoring the materials robustly means conducting regular inspections, collecting data on longevity and performance, and tracking the green materials’ impact on energy efficiency and overall environmental footprint.
Adaptability is the defining characteristic of this phase. The ability to respond to emerging data and evolve strategies as insights unfold is vital for success. A recent partnership between a wind farm operator and a steel manufacturer demonstrates how a commitment to sustainable procurement can be made on an evolving basis. Initial plans to procure green steel for tower construction have been designed to scale to include replacement blades made of recycled materials, once they are commercially available. Collaborations like this one hinge on the establishment of feedback loops.
Leaders embarking on this phase should consider these actions:
Even after the project’s final bricks have been laid and the last beam has been secured, the relentless pursuit of sustainability persists. Documenting experiences and lessons drawn from both successes and failures is not merely a post-mortem exercise; it is a method for unlocking continual improvement.
This phase also doubles as an important way to influence market innovation and the green building movement. Your accomplishments can reverberate beyond the boundaries of your projects and operations. Through close collaboration and communication with industry peers, one organisation’s insights can be the catalysts for industry-wide transformation. For example, an industrial gas supplier and a material manufacturer are collaborating on a four-kilometre pipeline infrastructure project, which aims to provide efficient and environmentally responsible hydrogen in order to power green material production facilities in Germany.
To support these aims, it is important to establish a culture of learning and adaptation through these key actions:
By embracing this framework, project owners and developers can chart a course that begins to reshape the construction and built environment industries, moving them towards sustainability while bolstering their own competitive edge. Lessons gleaned across projects globally are important markers of progress as sustainability continues to be woven into core strategies. As the adoption of green materials grows, and markets and supply chains take shape, those who take the lead will be paving the way for a more sustainable, profitable and environmentally conscious world.
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Global Capital Projects and Infrastructure Leader, Partner, PwC United Kingdom
Tel: +44 7764 235 239