Cement, steel and the built environment: How will landlords and tenants be impacted?

No measures were implemented to reduce fossil fuel use at this year's COP. However, a significant step towards decarbonising the built environment was made as the cement and steel sectors joined the First Movers Coalition. Below we discuss the importance of this and explore how recent policy developments in the built environment will affect everyone.

The built environment consists of the buildings we live and work in, the infrastructure that provides our electricity and the roads we drive on. With an estimated two-thirds of humans living in urban areas by 2050, it is safe to assume it will continue to grow. A fragmented and diffuse assortment of actors at multiple scales makes the built environment a challenge to decarbonise. Regardless, it is unsustainable to continue a business-as-usual approach with the built environment currently responsible for over 40% of global emissions.  

Cement and Steel

First Movers was revealed at COP26 by US president Joe Biden, intending to combat emissions from heavy-industry and long-distance transport sectors, utilising their combined market value of $8tr. These “hard-to-abate” sectors are responsible for 30% of global emissions. Membership has grown from 25 to 65 in the past year, with cement and steel joining at COP in the form of General Motors (cement and concrete), Rio Tinto (aviation, shipping and trucking), PepsiCo (aluminium, trucking), and RMZ Corp (cement and concrete), among others.

These sectors are fundamental to society and their participation cannot be understated: following water, concrete is the second most consumed material on earth, accounting for 7% of global emissions in 2021. In the past 20 years, emissions from cement, the glue that binds concrete together, have doubled. Similarly, the 2 billion tonnes of steel produced each year contribute 9% of global emissions, with the majority originating from just 553 manufacturing plants.

R&D into decarbonising the manufacturing processes of these materials is ongoing. For example, replacing coking coal in the energy-intensive steel-making process has proven a challenge, electrifying this process is a suitable solution. Putting their market value to use, the First Movers Coalition have agreed to purchase at least 10% net-zero cement by 2030. Elsewhere, an alliance of 17 construction and property giants have pledged to transition to net-zero concrete by 2050.  

Climate Policy

Most investors, businesses, and organisations own assets in the built environment. Due to emerging policies, even those that don't - for example, businesses renting offices - have an incentive to help decarbonise the sector. For example, US president Joe Bidens Inflation Reduction Act is funnelling $1bn to help jurisdictions implement building codes. Among other measures, the changes in regulation could see tenants paying for the decarbonisation of their landlords’ properties. Placing the initiative on landlords and tenants is seen as key to retrofitting buildings. In practice, this includes retrofitting old, high-emission buildings with heat-pumps over gas boilers, installing triple glazing, insulating roofs, and so on.

Whilst retrofitting your landlord's property may seem like a hard pill to swallow, it does have dual benefits; energy prices will be lower as efficiency is increased and the impact on the environment will be lessened. The costs, however, are eye-watering. The Climate Change Committee, which advises the UK government, estimate that it would cost £250bn to decarbonise the UK’s 28.5 million homes, whilst public sector buildings will cost £25-30bn. When it comes to new builds, strict building codes and regulations will have to be followed with more policy changes and support expected in the coming years.

Although it didn't grab the headlines, cement and steel's admission to the First Movers Coalition is a promising development, reinforcing an initiative that appeases financial and sustainability motives. Channelling your efforts towards decarbonising the built environment is a worthy endeavour in a rapidly urbanising world.