Keynote address | The Hon. Rob Stokes MP Minister for Infrastructure, Cities and Active Transport, New South Wales

I want to acknowledge the traditional custodians of the land on which we meet and discuss today, the Gadigal clan, and thank elders past and present for their leadership, and their custodianship of Country. I also want to extend those respects to Aboriginal people in the room with us. It is so appropriate that we begin forums like this as a public representative to acknowledge Aboriginal people, because so often through our history they have been acknowledged last, if at all. That’s why it is so appropriate that someone like myself, in the office I hold, acknowledges their custodianship first.

Ladies and gentlemen, my speech this morning will focus on the national and state objective – a shared objective toward net zero. The New South Wales Government is enormously proud of, and focused on, delivering $112.7 billion of public infrastructure investment over the next four years. The scale of this investment is well known to everyone here. It is accountable for keeping more than 140,000 people in jobs in New South Wales and providing untold benefits to citizens wherever they live, across the length and breadth of this great state – and not just now, but citizens who don’t even exist yet. With that in mind – that temporal aspect of infrastructure provision and the idea that we’re providing not just for citizens now, but into the future – we are lead inevitably to a discussion of sustainability.

How do we reach our adopted goal of net zero emissions across the whole New South Wales economy by 2050 and, even more pressingly, a 50 per cent cut in emissions below 2005 levels by 2030? Infrastructure clearly has a key role to play in this transformation due to the embodied, operating and enabling emissions generated throughout a project’s infrastructure lifecycle. It’s an inherent challenge, but it provides all of us with an extraordinary opportunity, particularly in government, to encourage and support the private sector in the progressive decarbonisation of infrastructure supply chains.

Now I’m going to outline three specific initiatives I believe will help the infrastructure sector to achieve this shared objective of decarbonising our economy. I’m going to put forward a thesis, the three things we need to do collectively, and the things government needs to lead on. The first is to build more with less. The second is to procure and plan more thoughtfully. I think sometimes our procurement processes are almost done following the guidebook because that’s what we do, rather than question why we do things the way we have traditionally. The third is to construct more efficiently. So, to build more with less, procure more thoughtfully and construct more efficiently.

Efforts to reduce carbon emissions in infrastructure projects have traditionally focused on the operational energy of an asset. While significant progress has already been made to reduce the sector’s operational emissions, largely driven by the uptake of renewable energy, our ability to achieve further reductions will depend on success in areas that have proven harder to address.

Decarbonising the infrastructure sector requires a reduction in emissions right across asset stages, including emissions embedded during construction, generated by ongoing asset operations, and left behind through waste. It’s not just the spatial elements, but the temporal elements of infrastructure we need to address if we are going to decarbonise. In that sense, it’s fitting that the theme of today’s event is to refocus, because embodied carbon is the next frontier in our task to decarbonise the infrastructure sector. Embodied carbon in the production of building materials is estimated to be responsible for approximately five to 10 per cent of Australia’s total emissions, a frequently overlooked and under-measured part of the net zero discussion. With concrete, steel and aluminium considered some of the more difficult materials to decarbonise, our record levels of infrastructure investment have created additional challenges in reducing embodied carbon. We have a paradox of a massive infrastructure pipeline at the same time as we are trying to decarbonise – using carbon-intensive materials while at the same time having net zero ambitions. It poses a massive paradox and throws out a huge challenge for us to embrace.

To ensure embedded emissions are more than just a second-order issue in our decarbonising dialogue, it’s important that we look at some of the reasons why the issue has been so fraught. The traditional and understandable focus on cost efficiency has stymied progress on decarbonisation innovation in construction. This has been underpinned by a historical stigma surrounding recycled materials, often seen by traditionalists as having poorer engineering characteristics. Fortunately, this concern is diminishing as new products emerge that are both cheaper and more efficient than conventional materials. Furthermore, the increasing acceptance and adoption of re-use, recycle, and reduce principles are crucial in guiding governments and the private sector to foster a capacity for innovation across the construction value chain. This tension and interplay is having a positive compounding effect on our road to decarbonisation.

There are a number of pathways to address embodied carbon in infrastructure, as I began with, and it’s appropriate that we start at the beginning. The first pathway is obviously prevention – the building less option, to do more but using less. Now, how do we achieve this? Well, principally a greater focus on upfront options analysis can lead to more sustainable solutions at a lower cost to taxpayers. My mantra has been so often we’ve started with the project rather than the problem that the project is seeking to solve. With a greater focus on the problem, that will lead us to choosing more innovative and more sustainable alternatives.

Increasing the use of existing assets – for example, for renovation or adaptive re-use – is an important first step in reducing emissions that would otherwise be created through

a new build. It’s practical to say that the highest potential for reduction in embodied carbon is generally at the start of a project. The cost, sustainability and effectiveness of a project are largely determined in the design process. Reference designs can lock in an approach that is suboptimal, with little opportunity to reverse that process once formal procurement commences. I think a lived experience for probably everyone in the room is to say we could do it better, but when it’s too late for us to consider those alternatives.

This screams at us; we need to ask those questions at the beginning when we can actually make a difference. Although market soundings are now common in the approach to procurement, they’re not as consistently applied in design solutions. The quantity and types of material are dictated by our design standards, sometimes resulting in solutions that are perhaps over engineered and subsequently resulting in more embodied carbon, not less.

Of course, there’s an obvious reason to ensure structural standards are upheld, but when it comes to many design decisions, it’s possible and indeed crucial that we attempt to reduce embodied carbon in infrastructure projects. If we can embed the concept of dematerialisation as part of the brief at the start of a project, the subsequent development of an efficient design will require less material.

This leads logically to the next point, that we need to plan and procure more thoughtfully. Governments play a key role in setting the decarbonisation bar through our standards and certification requirements – the things that we impose. Let’s face it, our design assurance processes have resulted traditionally in incredibly conservative design standards. It’s ironic that our discount rates fully depreciate an asset within 20 years even though we are requiring a design life of well over 100 years. There’s a balance in ensuring our certification requirements don’t impose superfluous environmental costs.

Currently, there’s a lack of established standards and design guides to assess embodied carbon. We must update our code standards and specifications to preference lower-embodied-carbon intensities for products with high volumes of materials such as concrete, steel, aluminium, and glass. We know that some existing construction and material standards may not cover materials with recycled content. Updating our infrastructure and building sustainability standards, ratings, and benchmarks will help improve asset performance, and also investment attraction. It’s encouraging, certainly, that right across the globe infrastructure and building sustainability standards, ratings, and benchmarks have increased the uptake of sustainable and low-carbon building materials, and improved energy efficiency, reduced water use, and limited waste materials.

In Australia, the routine adoption of industry standard sustainability metrics enables the objective measurement and consistent reporting of sustainability performance in infrastructure assets, although I do believe there’s probably an opportunity to see if we can standardise some of these different rating tools. Different rating tools are used differently in different jurisdictions, and the tools that we use here may not equate with tools used overseas. I know that’s a vast piece of work, but in the same way we have common currencies in relation to monetary policy, it’s probably sensible that we look at similar currencies or consistent currencies across measuring and reporting sustainability outcomes, as well. These metrics are an important tool for private sector investors to make informed investment decision, the Global Real Estate Sustainability Benchmark is obviously one good example of that.

The next obvious step in improving procurement planning is to update the National Construction Code to include performance targets for embodied carbon. That’s obviously a matter the joint infrastructure ministers will have to consider. It was interesting at the recent infrastructure, transport and ministerial meeting that the public servants all wanted the ministers to talk about trucks, but we wanted to talk about infrastructure. Specifically, what we wanted to talk about was how we drive efficiency and sustainability in infrastructure projects. Almost all ministers said that this was what our communities were telling us they cared about. And this, I believe, is the discussion that will focus those meetings literally over a decade to come. So, in updating the National Construction Code, structured market engagement on things like low and zero-carbon design solutions, with a long list of potential business, can be established prior to setting on a reference case finalising budgets or issuing tenders.

Again, the sustainability requirements and standards early in the process allow us to have more thoughtful discussions about how to achieve more sustainable and decarbonised solutions. At the same time, we can require government agencies to develop a carbon base case in a project’s business case. This would be an estimate of the carbon that would be embedded in the infrastructure asset during its construction. This is a model that Infrastructure Partnerships Australia has put to government, and one we are certainly very interested in exploring. The way it would work is that once a project reaches procurement, tenderers would be asked to bid a lower carbon option than the carbon base case put forward in the business case.

This would then form part of the agency’s assessment of bids alongside traditional metrics like time, quality and cost. As I mentioned, I know this is something that Infrastructure Partnerships Australia has recently advocated for, and shown extraordinary vision and leadership on, and I’m pleased to say that Infrastructure NSW – and Simon Draper, who is here today – and New South Wales Treasury are already looking at how we can implement these ideas here in New South Wales. We are also keen to explore with the Minister for Planning whether we should consider mandating a maximum embodied carbon

rate, as a condition of approval, in relation to State Significant Infrastructure. Earlier in the design process is ultimately the best time to be embedding these sorts of expectations and standards. New South Wales Government infrastructure agencies are also engaging with their supply chains on ways to incorporate sustainability measures as standard practice through contracting arrangements.

The final opportunity I wanted to talk about is how we construct more efficiently through modern and efficient methods of construction. Prefabricated and modular construction approaches, for example, help to reduce material waste, reduce build times and energy usage, and improve building flexibility, utilisation, and ease of refurbishment. The modularity improves the way in which buildings can be re-used and adapted over time. Prefabricated and modular designs are well suited to facilities requiring identical repeated spaces and have already been used in cost-effective procurement of new public housing and public buildings, including schools, hospitals and social housing. The aesthetic of their design, for those who have seen some of the recent school builds, has improved remarkably. A great example is the NSW Department of Education’s new pavilion model, enabling high-quality school buildings to be designed and constructed off site, and assembled on campus in a matter of weeks, saving time and money, and minimising disruption in campuses that are often very busy.

Another opportunity is in the fabrication of actual construction materials, such as innovations in energy-efficient manufacturing, which creates less waste during manufacture, and utilising lower-emission materials, including engineered timber, green steel, and precast greener concrete panels. I hesitate to call concrete green; I don’t think there’s anything particularly green about it. In delivery, the major source of reduction is material substitution, where carbon-intensive materials such as cement and asphalt are replaced by low-embodied-carbon solutions, such as supplementary cement materials and concrete mix, geo-polymer concrete, and recycled asphalt pavement in asphalt mix. We know that increasing the use of lower-emission construction materials can grow new industries to meet the future demand for infrastructure in New South Wales, while decarbonising our built environment and using waste materials such as fly ash, used in coal burning, for example.

In New South Wales, we are seeing the benefits in action already of efforts to reduce the use of traditional Portland cement. We recognise this opportunity for the Sydney Metro City and Southwest – I want to acknowledge the great leadership of Peter Regan, who is also here today. In City Metro and Southwest tunnelling works, an average of 42 per cent of Portland cement has been replaced with a low-emission alternative, translating to a significant reduction in greenhouse gas emissions. We are proud we’ve decarbonised the way in which these assets are operationalised; the challenge now is decarbonising the way they are built. The Parramatta Light Rail project is another example of where we’re projecting a 36 per cent reduction in embodied carbon emissions during construction and operations, and they’ve been achieved by designing a catenary wire-free system using supplementary cementitious materials and macro synthetic fibres in concrete, using reclaimed asphalt pavement, and re-using existing rail sleepers and ballast across the alignment.

In Grafton, New South Wales, the Wells Crossing to Glenugie Pacific Highway Project has replaced 15 per cent of the sand in the concrete lean mix for pavements with recycled crushed glass, using more than two thousandths of locally procured crushed glass for that project, replacing the need for unnecessary or superfluous use of unsustainably sourced concrete.

We have made similar progress when it comes to green steel, with huge opportunity in New South Wales to decarbonise our infrastructure while creating an exciting new export industry. Green steel produced from direct reduction with hydrogen could decarbonise steel production, with a global market estimated at almost US$600 billion by 2050. Because of our comparative advantage in renewable resources, we can make this hydrogen, and therefore green steel, cheaper than countries such as Japan, Korea, and Indonesia. Doing this at a global scale will require big industrial workforces, and in our Six Cities Plan, recently released by the Premier, we identified areas like the Hunter Valley and Illawarra in New South Wales as obvious locations that can house these new industries. Particularly, noting the export focus of the Hunter, hydrogen for export could be a focus of hydrogen production in the Hunter, whereas at Port Kembla, a real focus could be hydrogen for domestic use, recognising that the steelworks is a huge part of the industrial workforce in that region.

So, they’re similar industries directed to different purposes to ensure that there’s tension and appropriate levels of competition directed towards serving different national aspirations. While green steel and green concrete are rightly the focus of the decarbonisation of infrastructure, also substituting steel and concrete with timber and engineered wood projects can reduce the emissions intensity of construction. There’s a mature market and supply chain for engineered wood products in product manufacturing and low-rise residential housing construction, but advancements in wood engineering technologies to improve durability and consistency now mean these products are suitable to replace concrete and steel in medium-rise commercial and residential buildings.

Increased use of timber and engineered wood products in construction offers multiple economic benefits that are probably well known to those in the room, including faster construction times, greater potential for prefabrication, and supporting a sustainable plantation forest, as well as our forestry wood processing and manufacturing industry here in New South Wales. Furthermore, modern approaches using engineered wood products can improve energy efficiency and increase lifecycle value through greater potential for re-use, recycling, and bioenergy as compared to an unsustainable product like concrete. Timber is a renewable and recyclable building material, which frankly also gives much more organic and less austere architecturally and aesthetically pleasing attributes than some of the more manufactured products of concrete, steel, and glass.

To wrap up, progress is being made in reducing embodied carbon in infrastructure, but there’s still a long way to go. A lot of strides have been made in relatively easy areas. Tackling embodied carbon in our infrastructure projects is the hard bit; but, as with everything, where there’s a great risk there’s also great reward. Ultimately, this action establishes new industries in local manufacturing, provides for innovation through our universities and creates exciting new export industries, as well. It’s not just addressing a shorter-term urgency in relation to climate change, but is also offering tantalising new opportunities for export markets.

Ecological economist Daniel Bromley once said that sustainability is all at once a fine idea and a hopeless concept. It’s a fine idea because it points us to the plight of future generations, but it’s a hopeless concept because it’s devoid of any operational content. We like to talk about it, but when it comes to doing it, that’s an altogether more difficult conversation to have. Hopefully today I’ve outlined a few practical ways in which we can and are working together to reach what is, for every one of us, a shared objective. Our desire to do things more thriftily and efficiently, to save time and money, and to save the planet for ourselves, for our children, and grandchildren is why it’s such an important objective. We started by talking about reconciling with one another, but this is also about reconciling with future generations and with the planet itself – it’s a pretty important piece of work. While we’re building things, at the same time, we are restoring things.

So, to conclude, my three messages have been about how we do this. We build more with less, we procure more thoughtfully and we construct more efficiently. Hopefully, I’ve put some clear flesh on the bones as to how to achieve this, and I wish you all the very best as you take up this challenge and help government to find new and innovative ways of reaching these shared objectives that are so important for the future of our environment, but also our society and economy. Thanks a lot.

The Hon. Rob Stokes is the New South Wales Minister for Infrastructure, Cities and Active Transport. Stokes has been a member of the New South Wales Parliament since 2007 and has served as Minister for Planning and Public Spaces, Minister for Transport and Roads, Minister for Education, Minister for Environment, Minister for Heritage and Minister for the Central Coast.

Stokes is an Honorary Fellow with Macquarie Law School, and holds a double degree in arts and law from Macquarie University, a Masters of Science from the University of Oxford, and a PhD in planning law.