Circularity could abate 75 per cent of embodied emissions in built environment: report

A report that was published in partnership between McKinsey & Company and the World Economic Forum has revealed that circularity in the built environment could reduce carbon dioxide emissions in the construction sector by 75 per cent by 2050.

A report that was published in partnership between McKinsey & Company and the World Economic Forum has revealed that through the establishment of a circular economy, the construction sector’s carbon dioxide emissions, from building to real estate to infrastructure, can be reduced by up to 75 per cent by 2050.

Findings from the report revealed that circularity presents substantial economic advantages and has the potential to yield an annual net profit gain of up to $46 billion by 2030 and $360 billion by 2050.

The report noted that as the population grows and urbanization accelerates, 30 billion square meters of new buildings will be required to be built in the next 40 years. This is similar to building the equivalent of New York City every 40 days.

According to the report, most of this growth will take place in emerging markets such as Africa, the Middle East, and Asia.

“The construction sector is a crucial industry for reducing greenhouse gas emissions in the long term,” said Sebastian Reiter, partner in the Munich office of McKinsey and co-author of the study. “One-third of material consumption and 26 per cent of global carbon dioxide emissions come from this sector. At the same time, this sector employs 7 per cent of people globally and accounts for 13 per cent of economic output.”

The report considers the potential for carbon dioxide abatement as well as potential net value gain for six building materials including cement and concrete, steel, aluminium, plastics, glass and gypsum.  

The report found that circular loops could abate up to 4 gigatonnes of CO2 (Gt CO2) in 2050.

Additionally, it noted that in 2030, recirculation of materials and minerals and CCS/CCU are each expected to contribute roughly 40 per cent of total abatement.

Circularity in cement, according to the report, has the potential to create the highest value pool across materials, with an estimated net value gain of $10 billion in 2030 and $122 billion in 2050.

“Our analysis of the construction sector shows an extraordinary potential for circularity – not only through carbon dioxide savings but also on a financial level,” said Jukka Maksimainen, senior partner in the Helsinki office of McKinsey and co-author of the report.

“Nevertheless, we see hardly any solutions in the market that address this issue at scale yet – this makes it even more essential that we identify scalable solutions and make them visible.”

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