COP26 and the Future of the Construction Industry

COP26 and the Future of Construction

At COP26, all eyes were on the Built Environment and Construction sector, which contributes about 39% of global greenhouse emissions and is responsible for 50% of all extracted materials. In response, climate leaders are calling on the Built Environment as a major solution provider to the current climate crisis and urging for widespread industry change and more ambitious regulation.

In this article we cover what you should know about COP26, why it matters and what it means for those of us in the construction industry.

What is COP26?

COP26 is the short name for the most recent annual UN Climate Change Conference, which took place in Glasgow, UK, in November 2021. It happened a year later than planned due to delays caused by COVID-19 pandemic.

COP stands for Conference of the Parties (“Parties” refers to the 197 nations that agreed to the United Nation’s Framework Convention on Climate Change, a treaty ratified in 1994). They have been meeting annually since 1995 in an international summit to promote climate action.

COP26 is an opportunity for world leaders, influencers and decision makers to join the collective effort to mitigate the impact of climate change, reduce carbon emissions and provide the necessary funding for both. The dominant theme at COP26 was how to stay within the 1.5°C global warming threshold established in the Paris Agreement.

The Paris Agreement & The 1.5°C Target

In order to appreciate the significance of COP26, let’s revisit some of the events leading up to it.

In 2015, at COP21 held in Paris, the Paris Agreement was signed. For the first time in history, nearly 200 nations committed to strengthening the global response to climate change by keeping a temperature increase this century to “well below 2°C and preferably 1.5°C, compared to pre-industrial levels.” They also pledged to provide $100 billion annually to developing countries considered the most susceptible to the effects of climate change and establish “Nationally Determined Contributions” (NDCs), which are national climate action plans and policies to ensure each country achieves its targets.

It was a major turning point for the world, in which both developed and developing nations agreed to act to tackle climate change. They also agreed to a 5-year review cycle to assess their collective progress towards meeting these climate targets—making 2020 (COP26) a crucial delivery year for the Paris Agreement.

COP26 was an opportunity for the world to come together to evaluate progress thus far and agree on measures to achieve the targets set in the Paris Agreement.

Is the 1.5°C Target Achievable?

Despite the efforts put forth in the Paris Agreement, the International Panel on Climate Change (IPCC) warned in their August 2021 report that “under all scenarios examined, we are likely to reach the crucial 1.5°C warming limit in the early 2030s.” The IPCC cautioned that warming beyond 1.5 degrees may put us at greater risk for major shifts in ecosystems and precipitation patterns causing droughts, heatwaves, rising sea levels, in addition to impacting human health and food security.

Moreover, Climate Action Tracker announced that, even if all targets proposed in the NDCs are delivered, there is still a massive credibility, action and commitment gap. It projects that the world is heading towards at least 2.4°C of warming, if not more, by 2100. This is well beyond the 1.5°C target.

It is a bleak outlook. Unless global emissions are not drastically brought under control, warming targets will be exceeded this century.

All Eyes are On the Built Environment

At COP26, attention was put on the Built Environment, specifically the impact the construction sector has on climate change. The Built Environment is where we live and spend most of our time. It encompasses all the man-made or modified structures that touch our lives—including our homes, workplaces, factories, hospitals, public buildings, recreational spaces, distribution systems, transportation systems, and so on. Creating and operating these buildings and systems involves vast amounts of materials and energy.

Currently, the Built Environment and Construction sector collectively accounts for about 39% of global carbon emissions, more than any other industry. Moreover, buildings are responsible for 50% of all extracted materials. Reducing these emissions is vital to addressing climate change and meeting Paris Agreement targets.

Going forward, the building and construction sector has a key role to play in eliminating carbon and achieving climate targets.

Embodied Carbon vs. Operational Carbon

Climate activists and influencers in the construction sector have begun putting the spotlight specifically on “embodied” carbon emissions in the Built Environment. Unlike “operational” carbon emissions, which come from building energy consumption and can be reduced through conservations measures, building energy renovations and the use of renewable energy, embodied carbon emissions come from the construction of a building itself.

Embodied carbon is the carbon footprint associated with the manufacturing, transporting and installing of construction materials. According to the Carbon Leadership Forum, it is estimated that embodied carbon will be responsible for nearly 50% of new construction emissions between now and 2050.

#BuildingToCOP26

Until recently, de-carbonizing in the construction sector has been slow. According to the World Green Building Council (WorldGBC), only about $3 of every $100 spent on new construction goes to energy efficient buildings. And of the 186 countries that submitted NDCs in response to the Paris Agreement, only 53 countries mention “building energy efficiency” and only 38 specifically call out building energy codes. The majority of countries do not include de-carbonization targets for the Built Environment in their NDCs.

In response, a coalition of green building organizations led by C40, the Global Alliance for Building and Construction (GlobalABC), The Resilience Shift, World Business Council for Sustainable Development (WBCSD) and World Green Building Council (WorldGBC) announced the BuildingToCop26 Coalition in September 2021, just prior to COP26.

To limit warming to no more than 1.5°C as set forth in the Paris Agreement, the BuildingToCOP26 Coalition is working together to establish the Built Environment as a major solution provider to the climate crisis. It calls for emissions from buildings to be halved by 2030 and to reach net zero life-cycle emissions for all buildings by 2050.

To do so, the Coalition is promoting widespread collaboration across the Built Environment in order to achieve the following three outcomes:

1. In their NDCs, all countries must include de-carbonization targets for the entire Built Environment.
2. 1,000 cities and a minimum of 20% of the largest Built Environment businesses by revenue must commit to joining the UN’s Race to Zero campaign.
3. These shared goals:
   1. By 2030, 100% of new buildings must be net-zero carbon in operation and embodied carbon must be reduced by at least 40%.
   2. By 2050, all new and existing assets must be net zero across the whole life cycle (net zero embodied and operational carbon).

The Growing Importance of ESG & Sustainability Reporting

Another key outcome at COP26 was the creation of the International Sustainability Standards Board (ISSB), tasked with encouraging the development of uniform global Environmental, Social and Governance (ESG) reporting standards. This was a major step forward in the goal of establishing globally-aligned ESG reporting in order to provide investors, owners, developers and stakeholders with consistent information about sustainability-related opportunities and risks.

This undertaking came in response to the emerging discrepancy between acknowledged emissions and calculated emissions. In fact, one recent study identified a 5.5-billion-ton gap in emissions reported by the world’s nations and the emissions calculated using independent models. Accounting inconsistencies like this could considerably compromise the already challenging task of achieving climate targets.

What Does This Mean for Construction?

Sweeping change is coming. The shift towards more sustainable construction is more imperative now than ever.

The building and construction industry is already preparing for bolder, more ambitious regulation. Governments, including the UK, France, Sweden and Italy, have already started establishing carbon requirements for new buildings, and planning for the inclusion of carbon limits in the near future.

Moreover, according to the WorldGBC, efficient buildings are projected to be “one of the biggest investment opportunities worth an estimated $24.7 trillion by 2030.” Indeed, many investors and developers are now including carbon requirements in their projects, which will help play a key role in transforming the sector. Demand for ESG integration and sustainability reporting is also steadily growing.

The United States, in an effort to re-establish its position as a major climate solution provider, announced new NDCs that pledge to reduce U.S. emissions by 50-52% below 2005 levels by 2030, reach a 100% carbon pollution-free power sector by 2035 and achieve a net-zero economy by 2050.

Yet, while progress is being made, there is still a long way to go, especially when it comes to reducing embodied carbon emissions in construction. The construction sector must pave the way in building a more sustainable future by adapting the latest principles in sustainable design and construction.

Although the specific details of sustainable design and construction are always evolving, the main objectives include:

• Preventing environmental degradation caused by buildings and infrastructure throughout their life cycle.
• Avoiding the depletion of critical resources such as energy, raw materials, water and land.
• Establishing built environments that are healthy, comfortable, livable, productive and safe.