Climate | ~ 4 min read
Concrete action required
With global construction buoyed by increased infrastructure spend, there is a need for critical action and new technologies to reduce CO2 emissions from the most widely used construction material.
Building construction is one of the largest emitters of greenhouse gases globally, accounting for a quarter of total emissions. Concrete – made by mixing cement, water and aggregates such as sand and gravel – is the most widely used material in construction. But the production of cement alone accounts for 8% of global CO2 emissions , driven by two major factors:
- Process emissions – Just over one-third of CO2 emissions are released by the chemical reaction required to transform limestone into clinker – a main ingredient of cement.
- Energy emissions – The remaining emissions come largely from the energy used to heat the kilns to temperatures of approximately 1,450°C to effect the chemical reaction above.
Energy emissions can be reduced through greater use of electricity or alternative fuels to power kilns. Reducing process emissions is more challenging. Since the CO2 is released by a chemical reaction, it can be reduced only by limiting the amount of clinker or using alternative materials or recycled elements. In all cases, carbon capture and storage (CCS) is required for residual carbon, and while CCS is being explored in the industry, costs remain high.
How we approach engagement on this topic
There is no one-size-fits-all solution for these challenges, and some elements of the problem are outside the direct control of the cement producers, such as the reuse of cement (eg, as bricks) after the end of its original lifespan.
While disclosures within the global building materials sector have improved in recent years, there’s still the challenge of standardisation and divergence across regions. We have undertaken many engagements in the sector in recent years to better understand different decarbonisation strategies, the specific challenges faced, and the role of industry initiatives in addressing hard-to-abate emissions.
In our Construction Materials and Building Products sector framework, we assess the importance of the different environmental factors that are relevant to the sector, and have focused on Scope 3 emissions and avoided emissions. We have created specific questions for our investment professionals to use when engaging with the different segments of the sector. This work has been complemented by our publication of two thematic papers on Scope 3 emissions and Avoided emissions.
