Building Better - sustainability in the construction industry

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Hi, and welcome to the Sustainable Business Podcast. I'm Will Richardson. As all areas of industry and the economy look to transition towards a more sustainable future, there are a number of obstacles in their path, but also opportunities. Perhaps more than other industries, construction is often under the microscope. With a significant impact on pollution and energy consumption, the construction industry also has a crucial role to play in improving sustainable practices and in cutting down global carbon emissions. Joining me today is Ian Riley, CEO of the World Cement Association. He brings a wealth of experience of working on improving sustainable practices and the challenges they pose. Thank you for coming on the podcast, Ian.

Well, thank you for inviting me, Will, and it's a pleasure to be here.

Could you explain a little bit about the World Cement Association and what it is that you do?

The World Cement Association was set up in 2016 to be a voice for the independent players in the industry. So in addition to being the voice of the industry, we have 2 other objectives. One is to try to help our members to improve the efficiency of their production operations, so to reduce their energy consumption and of course their CO2 footprint. And the other is to help accelerate decarbonization of the cement industry. So perhaps just putting that into context, the cement industry is responsible for 7 to 8% of the world's CO2 emissions. And this comes as a result of the raw material decomposing in the kiln to calcium oxide and CO2. So it's a part of the process. Even if you have very good energy efficiency or you switch to other fuels, you still have a residual emission. About 2/3 of emissions come from the limestone. So the industry has known for a long time that this has been something that it has to find a way of reducing. The carbon footprint is something we have to find a way of reducing. And although we've been working on that for a long time and made some progress in that, it still remains the key challenge for the industry.

Interesting. So I've heard of the term carbon negative. concrete. Could you let us know a little bit about how concrete production can reduce its impact on the environment, please?

Yeah, so concrete is composed of cement, sand, aggregates, water, and some additives. The majority of the carbon footprint of concrete comes from the cement. The sand, aggregates, water are all very, very minor. And so traditionally, the way that we've tried to reduce the carbon footprint of concrete has focused on reducing that cement footprint. And so the cement industry, for example, has moved from using, let's say, a pure clinker-based cement, an OPC, to a blended cement where the OPC, the clinker, is blended with particularly with slag and fly ash, but other cementitious materials so that the high CO2 portion is reduced. So using this approach, you can reduce the CO2 of concrete. But recently, companies have started, especially startups, have started looking at technology which looks at making concrete in a different way. So there are a number of technologies that look at using CO2 to cure the concrete so that during that curing process, the concrete is absorbing CO2. This is a technology that can be applied primarily to precast because you have to have curing chambers. And another technology that is very interesting is producing aggregates by sequestering CO2 into a calcium carbonate. So most aggregates used around the world are limestone. So that's basically calcium carbonate with a few impurities in there. And you can make these synthetically by sequestering CO2 from an emission source and reacting it with calcium oxide to form calcium carbonate in much the same way that it's formed in nature, in the shells of—

Right.

Of marine animals. So applying that kind of technology, you can effectively get an aggregate that's been made with CO2. So in a sense has that negative CO2. And when you combine that with lower CO2 cementitious products, you can reduce the CO2 of the concrete. And if you just use synthetic aggregates, then in principle you can sequester a lot more CO2 than was generated in the cement production. So you, in that sense, have a carbon-negative concrete.

Interesting. It's a bit of a game changer for concrete, really, with such a dirty reputation.

Yeah. So of course, with all of these new technologies, the question is scaling them. So there is a tremendous amount of activity and development and brainpower being applied to this. And you see lots of startups in this concrete tech or climate tech space. But it is something that's relatively new. So at the moment, these various different ideas are all at the sort of pilot stage. And the challenge is to scale them. Some of them are more expensive, some of them are less expensive. But I think in the UK, we have an environment with the ETS, so you've got carbon pricing, and a lot of pressure to improve the sustainability of building materials. So I think in the, in the UK, at least, we have the conditions that will allow these new technologies to be developed.

Right. And looking at the construction industry more broadly, businesses are increasingly under pressure to ensure circularity and pay close attention to the full life cycles of their materials. What impact do you think this has had on the industry?

I think it has already had a substantial impact. If we go and talk to construction companies or developers, then they're very keen to explore ways in which they can improve the circularity of materials and reduce the carbon footprint.

Okay. Is there a need for better collaboration across the supply chain?

We see more and more companies reporting their carbon footprint and not just looking at Scope 1, but also Scope 2 and 3 as well. So when we look at Scope 3 emissions in the construction sector for contractors or house builders, then the vast majority of their emissions are going to be Scope 3.

Yeah.

So Scope 3 really falls into 2 parts. One is the embodied carbon of the materials, and one is the carbon that's in use. So when you and I buy a house, we're going to heat it and so forth. So there's the carbon in use for the lifetime of the building. And the in-use portion is about 2/3 and the materials are about 1/3. So as more and more companies start to report that and start to look at that, then they're suddenly realizing that the scope of their sustainability challenge is much, much larger than they had realized when they were just looking at Scope 1. And I do think that this will lead to a much more rapid change as companies start to look at the full, if you like, the full supply chain, the full lifecycle emissions.

Yeah, yeah, yeah, I can see that. And it will make house builders think about the running of the houses as well. And we've already got the Merton Rule, but that's only 10% energy, isn't it? So we need to see more legislative devices than just that.

Yeah, I think in the UK we've got a big challenge with the existing housing stock, you know, most of it is, is not particularly well insulated. And so the heating costs are higher than they perhaps could be. And if you look at the older housing stock, if you look at, you know, houses that are 100 years old or more, it's often very difficult to really improve their insulation to a point that that you have a much lower cost. But at the moment, what's happening is even new houses are being built that have much higher carbon footprint than they need to. So we're still installing gas boilers in new houses because of course they're a lot cheaper than installing heat pumps. But we can see in countries that install heat pumps as a standard, The costs of doing so are not much higher than they are for gas boilers. So I think there's quite a long way to go in terms of having effective supply chains for some of the new technologies, and not just in construction materials, but also in heating and the in-use CO2.

Yeah, that makes sense. I mean, are there any new technologies that could help in making the construction industry less wasteful? and more sustainable on top of the ones you've mentioned before?

Well, there are, of course, technologies that are being applied both in the design phase and in the construction phase to reduce waste. In usage, so when the construction materials are being used on the sites, the techniques that are being applied today start to be different from the techniques that we've used for you know, for centuries, I guess. And construction companies are applying, so for example, building information modeling on the design side, but also on the project management side. And this can be used to optimize designs and also reduce the waste in the whole supply chain to the construction site. I think that the trend that we're seeing is that the designers are starting to pay more attention to carbon footprint related matters. So I remember when I worked for Holcim, some, it must have been 10 or 15 years ago, we tried to engage contractors in a discussion on carbon footprint to try to look at how the concrete could be optimized, not just for cost, but also for CO2. And they really weren't interested at that time in having that conversation. Today, that's completely changed. And everybody involved in the supply chain, starting with the designers and the developers, right the way through to the material suppliers, is concerned about this and are thinking about how CO2 can be reduced. So take a simple example. In the past, you would probably, on a smaller or mid-sized site, you probably just have one grade of concrete that would have been specified for all of the usage. So clearly some of the uses of concrete, for example, in pillars is going to be, have a higher requirement than concrete that's just used for a car park. But it's, it's more difficult to schedule the trucks and manage the logistics if you have more than one grade. So in the past, there was a tendency just to keep life simple. And today there's much more of a willingness to say, okay, well, let's optimize this. Maybe on a cost standpoint, it doesn't make so much difference, but it can make quite a big difference to the embodied carbon.

I guess there are logistics software that could probably help in this area for site managers.

Well, I think this is part of it, of course, is that the The tools that the site managers have and use today are more sophisticated. And as you say, you know, the logistics are usually managed digitally on the largest sites.

Yeah, I can imagine it. Are there any challenges in adopting these new technologies?

So a number of the new technologies use a waste material as the raw material. So in the example that I gave earlier with the synthetic aggregates, The CO2 is sequestered and reacted with calcium oxide. So that calcium oxide is coming from waste concrete. So a large portion of the output of a plant that will be sequestering the CO2 is on the aggregate side. It's both the upcycled aggregates that have had the cement washed off of them and reacted with the CO2. And also the synthetic aggregates that are produced with the CO2, sequestering the CO2 into the aggregates. So although you start out with a carbon sequestration technology, to make it work, you really have to have a business that sources construction waste and is able to sell aggregates. So this is an example of how it's a bit more complicated to actually make that work in the, in the real world. A lot of it comes down to looking at the logistics. and making sure that you have materials that you need within a very short distance of the plant and you have a market for the products that are being produced. So it's not as simple as being able to just plug something in and sequester the CO2.

Do you think these issues can be solved by the private sector or is there more that governments can do?

I think governments have an essential role. in encouraging this transition. And you could perhaps split that into a couple of parts. So one part is to create the right economic incentives. And economic incentives really, I think, come in sort of 2 flavors. One is carbon pricing, which of course in Europe we have, although the way that it's applied is not universal yet. And then the other is creating public procurement markets that lead the way, that reward greener products, you know, so that they're deliberately procuring products that have better circularity or lower carbon. So I think that's part of what government can do is to provide those incentives. And then the other part of what government needs to do is to look at regulations and standards. That have been set up really to, if you like, for the old linear economy. So if you take standards for concrete or for aggregates, then these standards have been set up to use virgin materials and to be quite prescriptive in terms of what is used. So if we want to take full advantage of the opportunities that the new technology provides, Then government has a role there in changing some of these standards and encouraging the standards bodies to change more quickly. And possibly also in risk management. So one of the things that worries designers with new techniques and new materials is, you know, is the building going to fall down? So if you're building a bridge, you want to be really, really conservative. But if you're building, you know, if you're building a slab parking lot or a warehouse or something like this, well, you probably can afford to take more risks. And, and, but the question for, for the enterprises is often, well, does my insurance cover this? Uh, and so I think there's probably some role that government can play in order to put in place a system where enterprises that are willing to try new techniques are not forced to take sort of business-threatening risks.

It's a massive picture. I was going to say problem, but it's not really a problem. It's a picture, isn't it? It's so multidimensional with regards to the different areas that impact has from insurance through to environment, through to longevity, through to everything that you've you've said, it's complicated.

It is complicated. And I think because it's complicated that we should expect the private sector to deal with a lot of it. The private sector deals with complexity better than the government does because there are so many different actors looking at so many different angles. But the government still has a very important role in providing a framework and providing a business environment which encourages Yeah, the right sort of behavior.

We know that construction has a huge impact on the environment, but we also know it needs to meet the demands of the changing world. Do you think there are any opportunities for the industry during this transition?

So I think that the, the construction industry is obviously playing an essential role in allowing, especially in developing countries, in allowing those countries to develop and to urbanize. The amount of construction that's necessary to allow developing countries to come out of poverty and enjoy the sort of lifestyle that we have in the West is huge. And I don't think it's realistic to think that they're going to be willing to give that up. So the challenge for the industry is to find new ways of doing things. that are more sustainable. And I think we'll only see increasing pressure to do that. So it's not only in the developed countries, not only in Europe, for example, that we see changes. A former colleague of mine is in charge of modern construction methods for the NEOM project in Saudi Arabia. So NEOM is a big new city And the target is to build a zero-carbon city.

Right.

And so they're investing a huge amount of money on innovative construction methods, some of which they're piloting and they're trialing themselves. So he was telling me that they're looking at plastic composites for tunnel linings as an example. So this is a completely new method. Maybe it will work, maybe it won't, but the point is that as As part of this mega project, there's a lot of developments going on.

Okay. Are you optimistic about the future of the construction industry as it makes the move to more sustainable practices?

I think that there's a, there's a great opportunity for the UK here because the, what we see is, is in, in the UK that the pressure on circularity and carbon reduction is probably as high as it is anywhere and higher than most almost anywhere else. And that's leading to innovation. And, you know, the UK has a lot of companies that are engaged in construction and design in particular. So I think it's a good opportunity specifically for the UK to be pioneering these new construction techniques. So I think, yes, in general, the construction industry, there's clearly a huge demand. And the fact that societies are keen to see innovation and more sustainable approaches gives a lot of opportunity for the industry.

Brilliant. I like that. It's always good to be optimistic. It's always good to finish on that note as well, because I think if we start to dwell in non-optimistic thinking, then I think that We start, you almost, it's self-perpetuating, isn't it? Self-fulfilling prophecies. And I think it sounds like your industry is doing huge amounts of work in this area and is a massive part of the solution, which is great to hear, to be honest with you. It's really, really good to hear. Yeah.

So look, thanks for giving me the opportunity to talk to you today.

Thank you so much for joining us on the podcast, Ian.

Thank you.

And that's it for this edition of the Sustainable Business Podcast. If you would like to learn more about us, you can find a link to the Green Element website in the show notes. We would also love to hear from you. So if you want some feedback, or if you have any questions, feel free to DM us @GreenElement through LinkedIn, Twitter, or Facebook. Thank you so much for listening. I'm Will Richardson from Green Element. And please don't forget to rate and subscribe. Subscribe to the podcast so you don't miss an episode, and we'll be back next month. Until then, take care.