What next for the energy transition after COP26?

Industrialisation of the industry – from embracing new technologies and harnessing the power of data, greater collaboration, new approaches to risk allocation, and new ways of working – is an ethical imperative, given its potential to enable decarbonisation and address the projected catastrophic rise in global temperatures. It is also a commercial imperative, with funding for projects and access to contracts at risk, and increased regulatory scrutiny and reputational harm likely, for traditional engineering and construction companies that do not adapt.

Though the challenge ahead for the sector is significant, there are actions infrastructure businesses can take now and reasons for optimism as consensus builds on the need for rapid change and for the Glasgow Climate Pact and other pledges made at COP26 to be delivered.

The link between industrialisation and decarbonisation

Opinions will differ on the level of success achieved by COP26 in light of the agreements and commitments made over the two-week COP period. What is beyond dispute is that businesses have never been as engaged as they are now with the climate agenda, and that there is an unparalleled level of public scrutiny over how that engagement translates into action.

At COP26, discussion in the Build Better Now virtual pavilion, led by senior industry figures, focussed on the vitally important influence and impact of the built environment on our global ability to achieve ‘net zero’ emissions targets. The significant contribution of the construction and infrastructure sector to carbon emissions and resource consumption is widely accepted and provided the context for what was said.

Andy Mitchell, chief executive of the UK’s Construction Leadership Council, said that progress made over the past 18 months – with a number of companies in the industry embedding net zero targets into their working practices – had shown the industry how much change is possible in a short period of time if the industry is willing to implement it. There was a collective consensus, however, that the hard work starts now and that an increase in effort is needed across the whole sector if the net zero targets are to be met.

The construction and industry sector has come a long way in terms of increasing digitalisation, reducing waste and sourcing electricity from renewable sources, but there is an enormous amount to be done in reducing greenhouse gas emissions from economic infrastructure, protecting nature and increasing the resilience of our infrastructure to the effects of climate change. Those objectives will also require additional investment in new and emerging technologies by the sector.

There was consensus that challenges of this magnitude require re-thinking approaches. Some of the main messages to emerge from COP26 were centred on how the sector could become more industrialised.

The scale of the challenge to decarbonise the sector is significant. There remain huge issues around how to reduce the significant amounts of carbon created in producing core industry materials like steel and cement. However, whilst solutions are developing to those challenges, there is lots more that can be tackled right now, such as limiting the practice of over-specifying materials required for construction, powering construction sites and vehicles from renewable sources, considering alternative lower-carbon materials and approaches, and designing with energy efficiency in mind.

The crucial role of collaboration and the importance of data and digitisation were echoed by multiple speakers.

There is excellent collaborative practice emerging around the world in the race to reduce carbon in the built environment, but we need to do more. The focus of the discussions at COP26 on the need for more intensive and focused collaboration, with increased digitalisation and data sharing and multi-disciplinary thinking across supply chains, was timely – collaboration should no longer be a choice.

The importance of procurement and supply chain engagement was highlighted by multiple speakers. Many within the sector are starting to embed low-carbon thinking into their approach to procurement and contracting already. This will increasingly become normal practice for projects of all sizes, and that is helping to drive the industry towards lower-carbon solutions.

All parts of the sector from clients, to consultants to contractors need to lean into new contractual approaches and risk sharing models to enable us to align and meet the wider net zero goals. We know that businesses working in the built environment want standard whole life carbon calculations and targets to be mandatory for construction projects and contracts. This will help owners and the public to identify what good looks like and drive competitive innovation.

Innovation in materials and reduction in waste was also highlighted as an important area for focus in Glasgow. There were calls for industry to cut down on the use of traditional concrete, and focus on low-carbon alternatives. Others emphasised that tight margins should not be used as an excuse for defaulting to traditional methods and encouraged companies to look harder for alternative materials, fuels and construction methods at the same price. This will require industry to pull together and find new approaches to drive the necessary change.

The discussions held at COP26 further emphasised the importance of substantial improvements in the built environment in tackling climate change. In its new circular economy action plan, the European Commission highlighted the significant impact the built environment has on many sectors of the economy. It said: “The construction sector is responsible for over 35% of the EU’s total waste generation. Greenhouse gas emissions from material extraction, manufacturing of construction products, construction and renovation of buildings are estimated at 5-12% of total national GHG emissions. Greater material efficiency could save 80% of those emissions.”

Even though the Commission has still to publish its long-awaited new comprehensive strategy for a sustainable built environment, stakeholders within the sector are expected to define new approaches and implement circularity principles to reduce climate impacts of the built environment.

Bridging the divide between national and local strategy and the importance of standardisation was also a theme which was returned to by several participants at COP26.

Many cities and regions are forging ahead with their own greenhouse gas reduction and net zero policies – this is a necessity as a 1.5 degree maximum temperature increase cannot be achieved without locally driven action. However, it produces a challenging situation for infrastructure promoters and contractors. They will face an increasingly diverse and stretching range of requirements across their portfolio, with a corresponding challenge in terms of everything they need for a lower carbon business, including the people, materials, products and data.

Those most likely to prosper will be the ones who can quickly standardise to meet the core trends across different local regulatory environments and adapt to put themselves at the front of the queue for the next project.

Co-written by Anne-Marie Friel, Christian Lütkehaus, Nick McDonald and Stacey Collins.