IFC Report: Potential Construction, Building Decarbonization Strategies

Illustration of sustainable buildings and infrastructure

(Credit: IFC)

by | Oct 30, 2023

An International Finance Corporation (IFC) report has identified how energy-saving design, construction, and operations, combined with sustainable investment in the construction value chain, could curb sector-wide emissions by 12.8% by 2035, down from 2022 levels.

The report, Building Green: Sustainable Construction in Emerging Markets, mainly explores the two largest contributors to construction sector emissions: buildings’ energy usage and production of building materials, especially cement and steel. According to the IFC, construction value chains account for about 40% of global energy and industrial-related emissions, and without ample decarbonization measures, the industry’s emissions are expected to rise an additional 13% globally by 2035.

In implementing green construction practices, however, companies may both contribute to decarbonization while also reaping cost-savings and accessing wide-ranging new business opportunities.

Decarbonizing Building Operations with Renewable Energy, Energy Efficiency Measures

The report emphasizes how energy-efficient technologies may be implemented in buildings to reduce construction emissions without major cost obstacles. The electrification of buildings, shifting away from fossil fuels, and using systems that reduce energy consumption were recommended since around half of the construction industry’s emissions come from heating, cooling, and powering buildings.

Some suggested strategies for implementing energy-efficient design included external shading, orientation of buildings towards the sun, reflective paint, and smart heating and cooling systems. Installing smart HVAC systems in existing and new buildings may reduce emissions and save on costs, and heat pumps have also been identified as an effective, zero-emissions heating and cooling alternative.

Reducing Emissions from Building Materials

Cement production, according to the IFC, is the most carbon-intensive activity in the world, and using alternative fuel sources may greatly reduce this impact.

The report identifies an overarching need to shift away from coal-powered operations. Specifically, pairing the use of biomass, waste, and industrial residue-based fuels with wind and solar energy to replace coal may reduce cement production emissions by 20%. In terms of steel production, using pure oxygen in blast furnaces to reduce coal usage may lower emissions by 15% to 20%, and electric arc furnaces are mentioned as an additional zero-emissions tool.

Green hydrogen technology and carbon capture were noted as longer-term solutions to decarbonizing construction materials.

Financing Needed for Emerging Markets

Since sustainable finance markets are less developed in emerging markets than in advanced economies, there lies a considerable gap in investment, with the need to invest $1.5 trillion towards emerging markets within the next decade. According to research, if recommended energy efficiency measures are taken, greening construction value chains would represent about .03 percentage points of global GDP between 2022 and 2035, totaling $3.5 trillion in overall global investment.

The IFC recommends increased public and private funding for green buildings, through blended finance, sustainability-linked debt, green mortgages, and venture capital funds. Finally, governments may contribute to the decarbonization of the sector through stronger energy-efficiency codes, tax breaks, and incentives for lowering emissions.

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