Construction emissions could be cut by 75% with circular economy approach


Circularity in the built environment could reduce carbon dioxide emissions in the construction sector by 75% by 2050.

A new report published in partnership between McKinsey & Company and the World Economic Forum reveals that the construction sector’s carbon dioxide emissions – from building to real estate to infrastructure – can be reduced by up to 75% or four gigatons of carbon dioxide by 2050 through the establishment of a circular economy.

The report, Circularity in the Built Environment: Maximizing CO2 Abatement and Business Opportunities, has found that circularity also presents substantial economic advantages, with the potential to yield an annual net profit gain of up to $46bn by 2030 and $360bn by 2050.

As the population grows and urbanisation accelerates, 30 billion square meters of new buildings will need to be constructed in the next 40 years – similar to building the equivalent of New York City every 40 days. 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 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% of global carbon dioxide emissions come from this sector. At the same time, this sector employs 7% of people globally and accounts for 13% of economic output,” said Reiter.

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 in the report include: –

  • Circular loops could abate up to four gigatonnes of CO2 in 2050.
  • In 2030, recirculation of materials and minerals and CCS/CCU are each expected to contribute around 40% of total abatement.
  • Circularity in cement has the potential to create the highest value pool across materials, with an estimated net value gain of $10bn in 2030 and $122bn in 2050.

Jukka Maksimainen, senior partner in the Helsinki office of McKinsey and co-author of the report, noted: “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.”

Click here to download the report, Circularity in the Built Environment: Maximizing CO2 Abatement and Business Opportunities