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Circularity could reduce 75% of embodied emissions in built environment

The construction sector’s carbon dioxide emissions – from building to real estate to infrastructure – can be reduced by up to 75 per cent or 4 gigatons of carbon dioxide by 2050 through the establishment of a circular economy.

This is according to a new report ‘Circularity in the Built Environment: Maximizing CO2 Abatement and Business Opportunities‘ published in partnership between McKinsey & Company and the World Economic Forum, which has found that circularity also presents substantial economic advantages, with the potential to yield an annual net profit gain of up to $46 billion by 2030 and $360 billion by 2050.

As the population grows and urbanisation accelerates, 30 billion square metres of new buildings will need to be constructed in the next 40 years. Most of this growth will occur in emerging markets including Africa, the Middle East, and Asia. Creating a sustainable and resilient built environment is crucial for people’s wellbeing and to stay within safe planetary limits.

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

Key findings include:

  • Circular loops could abate up to 4 gigatonnes of CO2 (Gt CO2) in 2050.
  • In 2030, recirculation of materials and minerals and CCS/CCU are each expected to contribute around 40 per cent of total abatement.
  • Circularity in cement 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.

Sebastian Reiter, Partner in the Munich office of McKinsey and co-author of the study said: “The construction sector is a crucial industry for reducing greenhouse gas emissions in the long term. 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 seven per cent of people globally and accounts for 13 per cent of economic output.” 

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