The built environment accounts for nearly 25 percent of global greenhouse-gas CO2 emissions, including operational and embodied carbon.1 No single entity can capture any of the large opportunities alone. Members within the ecosystem should recognize the significant positive actions that have taken place in the industry over the past 48 months, including collaborations that take a broader system transformation into account, strong commitments by players along the value chain, and successful delivery of low-carbon projects. They should now build on this momentum and rapidly scale these efforts.
On October 21, 2022, McKinsey’s Global Infrastructure Initiative (GII) hosted a roundtable discussion with global senior leaders representing engineering and construction (E&C), project owners, real estate professionals, investors, and technological innovators. Roundtable participants discussed several major questions:
- Which technologies and trends will accelerate decarbonization?
- How will value pools and prices shift due to the near-term shortage of low-carbon materials?
- How should leaders quantify the embodied and operational emissions of capital projects?
- What new actions and collaboration models are required for long-term success?
Five themes emerged during the discussion:
- Collaborate with purpose. A unified purpose should be the heart of collaboration, and each party involved should clearly see the tangible benefits of the project. Most new builds are occurring in developing economies. Therefore, new approaches—such as technology and innovation through open sourcing—are required to be successful, and convening industry leaders across these disciplines and industries is imperative. Bring together big global players to identify opportunities, coordinate standards, and find new ways of collaborating.
- Combine levers to maximize full life cycle and ecosystem impact. For each project, use a full ecosystem lens to make processes more efficient and less carbon intensive. These actions will take many shapes. For example, maximize tech deployment by using local energy generation and storage. Use alternative materials with a lower carbon footprint. Improve processes by minimizing waste or using modular construction. Identify opportunities to vertically integrate—physically or virtually—to take out waste and scale innovation faster. Make “not building” as profitable as building. Retrofit projects at scale. And use technology to assess and employ underused assets, such as variable speed limits, shared ownership, or flexible leases.
- Create transparency. Transparency is key in uncovering decarbonization opportunities and accelerating value creation. There is ample opportunity to increase transparency related to carbon emissions produced from materials, the supply chain, and the full life cycle. By sharing data about these areas, stakeholders can more easily collaborate on a common set of carbon-based goals. Moreover, as data transparency increases, adopting new data and emerging insights will help owners successfully pilot projects.
- Tell the story using a vision and mission. The industry should align on overcoming a larger decarbonization challenge. In turn, that mission will help attract new talent. Members within the ecosystem can partner continuously with start-ups and education institutions to circulate this unified vision, make a case for low-carbon initiatives, and show customers they are working toward decarbonization.
- Follow the money. Governments can price carbon emissions, set decarbonization targets, and make direct investments in green projects.