Decarbonizing Construction for a Greener Planet
Despite the commitment from various governments to reduce carbon emissions and ambitious goals from industry leaders to achieve net zero by 2050, the construction industry faces significant challenges in its decarbonization efforts. Environmental advocates point out that, particularly in the case of cement – a major contributor to global emissions – the industry still has a long way to go.
Cement alone is responsible for approximately eight percent of all CO2 emissions worldwide, which underscores the critical need for more effective CO2 reduction strategies within the building materials sector. Despite the environmental impact of cement, demand is growing rapidly, and it remains an essential material for fast growing urban centres. The global cement market size is projected to grow from $405.99 billion in 2023 to $544.55 billion by 2030.
It’s clear cement is big business, and it’s essential for development. But there are greener alternatives that can meet the increasing demand for cement while also reducing the material’s carbon footprint.
Attracting investment
Unfortunately, in 2023, venture capital investments in construction technology (Contech) declined significantly as a result of turbulent macroeconomic forces. High interest rates, geopolitical turmoil, and fears of a recession kept investors away across the entire global VC industry. What’s encouraging, however, is that the rate of decline in Contech investments was actually lower than the average VC investment drop, demonstrating that investors found value in the industry even during uncertain economic times.
Moreover, the data also shows that sustainable solutions remained increasingly attractive for investors and following solutions that enhance construction’s productivity, “green construction” emerged as the second most popular investment focus area. It’s evident investors are now seeing sustainability as a lucrative future of the industry.
Investment in Contech mirrors the general trend of socially responsible investment (SRI) and classifying investments according to environmental, social, and governmental (ESG) principles. According to a 2023 survey, 50 percent of professional investors plan to increase their allocation of socially responsible investments over the next year. That represents a huge opportunity to attract investments in the sustainable Contech space.
Green alternatives
Through open innovation, construction companies have the opportunity to mature and adopt sustainable alternatives and a wider array of technologies. For example, one of the most polluting processes of construction is the production of cement – a fundamental component of concrete, the world’s second most widely used material. Exploring alternative energy sources, produced from solar heat and waste, can help reduce the industry’s dependency on fossil fuels and reduce CO2 emissions.
Moreover, researchers are actively seeking out materials that can serve as alternatives to traditional, high-emitting cement binders in order to maintain the structural integrity of concrete without the environmental toll. Innovations include green cement, which incorporates alternative binders like fly ash from power plants, slag from steel production, and even agricultural waste such as rice husks. Fly ash, for instance, interacts with calcium hydroxide to create compounds that boost the strength and durability of concrete.
At the same time, there are significant strides being made in Carbon Capture, Utilization, and Storage (CCUS) technologies to lower cement’s carbon footprint. The process of transforming limestone into clinker, a fundamental ingredient of cement, is notably energy-intensive and a major source of CO2 emissions. CCUS technologies target these emissions directly, capturing the CO2 before it can escape into the atmosphere.
The future
Europe stands at the forefront of green construction investments, driven by European Union and country specific regulations that reward sustainable innovation. This sets a benchmark for government leaders across the globe to steer the construction industry towards greener practices. A broader embrace of such incentives, coupled with the support from venture capitalists, can spur growth in construction technology startups focused on sustainability.
For the global construction sector to effectively pivot to sustainable practices, it’s crucial to engage venture capitalists and industry leaders who grasp the significance of investing in green construction. Their support is essential for funding research, development, and deployment of alternative materials and cutting-edge carbon capture technologies.
As the momentum towards sustainable construction gains pace, the urgency to act becomes more apparent. Collaboration between governments, start-ups, investors, and industry leaders is the key to catalysing a transformative shift in the construction industry.
Article by Alfredo Carrato. Alfredo is a trained architect, BIM enthusiast and college professor who scouts for breakthrough technologies and solutions in the decarbonization space for the construction industry. As a Venture Capital Advisor, he oversees investment activities and strategic partnerships at Cemex Ventures, putting a special focus on start-ups that effectively tackle the carbon footprint challenge of the built sector.
