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Building towards net zero What is it and how do we get there?

Professor Sean Smith Chair of Future Construction, School of Engineering, Director of the Centre for Future Infrastructure, Edinburgh Futures Institute, University of Edinburgh

Carla Parsons Associate, Mills & Reeve

June 2021

2050 is not that far away... Sustainability, net zero, ESG. All topics that are (or should be) at the top of every organisation’s agenda. But many are confused about what they should be doing, and indeed exactly how we define net zero. The general response from most environmentalists and climate change experts is that it is time for action, given that we are now in a climate emergency. The UK government has targeted 2050 for net zero emissions (along with the Welsh and NI Assembly, and Scotland earlier at 2045), with a target of a 78% reduction in carbon emissions by 2035 announced in April this year. Many local authorities and public bodies have set targets earlier than 2050. Many of our clients are asking themselves these very questions. And so, in order to support and advise them, we have produced a report, Building towards net zero, with the assistance of Professor Sean Smith, Chair of Future Construction, School of Engineering and Director of the Centre for Future Infrastructure, Edinburgh Futures Institute at the University of Edinburgh.

Declared or set policies and strategies to acheive net zero

200 90 1200 Cities

Major businesses


Public opinion swell “The public have noticed the gap between rhetoric and reality on climate policy, reflected in low levels of trust in the government to deliver action to meet its ambitious targets,” Tim Lord, former director for clean growth at the business department and now at the Tony Blair Institute for Global Change, quoted in The FT, 25 April 2021

Article by Peter Foster in The Financial Times

Net zero - what is it? The definition of net zero is defined as a balance of emissions produced which are then offset or sequestered and reduced so the overall is net zero.

Emissions come under three main areas

Scope 1 - Direct greenhouse gas emissions Purchased energy/electricity emissions Emissions from sources that are owned or controlled by an organisation, e.g. emissions from their combustion boilers, furnaces, company vehicles, etc.

Scope 2 - Electricity indirect greenhouse gas emissions Boilers, energy leakage Emissions from the generation of purchased electricity consumed by an organisation. Purchased electricity is electricity that is purchased or otherwise brought into an organisation, with the emissions physically occurring at the facility where electricity is generated.

Scope 3 - Other indirect greenhouse gas emissions Travel, materials purchased and sourced All other indirect emissions. Scope 3 emissions are a consequence of the activities of the organisation, but occur from sources not owned or controlled by them, e.g. supply chain emissions or business travel such as air travel or where staff use their own vehicles.

How do we get there?

Fossil fuel emission reduction has been the success story of our reduction in greenhouse gases. Other areas need to catch-up. By 2020 the UK had reduced emissions by 44% from 1990 baseline levels, primarily through the reduction in the use of fossil fuels and increased use of renewables, changes in industry, and the installation of energy efficiency measures in existing buildings. However, with the world’s population set to increase by around 3.5 billion by 2100, 2.1 billion new homes need to be built if we are to meet the forecast global housing demand. This is the equivalent of rebuilding the EU27 nations seven times. The increased global population and the resultant carbon emissions, as well as the emissions connected with building and operating the required infrastructure, mean that it is imperative that action is taken now to reduce emissions.

Property and construction must work together Around 40% of all carbon emissions relate to the built environment, so the property and construction sectors play key roles in achieving net zero. Three areas that the construction and property sectors should focus on to reach this are: Retrofitting and addressing the emissions from existing buildings Adapting and installing alternative energy generation systems and supply, e.g. for electric vehicles, the future switch from gas to electric and potential hydrogen adoption in industrial and existing large-scale developments Designing and building future buildings and infrastructure to slow-down or reduce emissions from new buildings and infrastructure

Measuring and reduction are key offsetting is a last resort Net zero needs to be a consideration for the lifecycle of a building, from design stage to end-of-life and be part of the contractual journey from pre-tender, tender, award of contract, ongoing analysis and evaluation until the end of the contract period. Where any stage is viewed in a silo, there is a risk that potential sources of emissions will be overlooked. Three key steps to be incorporated in the contractual journey to reach net zero are measure, reduce and off-set: Measure: measuring all of emissions within an organisation’s direct control. Reduce: developing plans, implementing actions to reduce emissions and benchmarking progress based on measurements. Offset: purchasing carbon credits to offset the carbon footprint. Measuring and developing appropriate plans and actions are key to reducing emissions in a sustainable and impactful way. Offsetting should be a last resort as it only delays required action to reduce emissions and the cost of carbon credits is likely to increase as more organisations target net zero.

Repurpose existing buildings The built environment accounts for almost 40% of carbon emissions so retrofitting and repurposing existing buildings is a vital part of targeting net zero. It reduces the emissions resulting from the demolition phase at the end of a building’s life, though there will still be emissions inherent in the construction phase, including from design and development, transportation and waste to landfill. Retrofitting reduces a building’s operational emissions by replacing existing energy generation systems with greener and more sustainable technologies. Reducing operational emissions, which include a building’s use, maintenance and repair, is one of the most important short term ways of reducing emissions, and can be achieved through the integration of smart or low carbon energy systems (such as air source heat pumps) or renewable technologies (such as solar thermal heating systems) into existing buildings. 25 million homes in the UK require retrofitting. Upgrading existing non-domestic buildings represents a more complex project: many are bespoke, involve a range of complex energy and business operations or have high energy demands, such as sports and leisure buildings. Retrofitting university estates will be uniquely challenging due to their size (some portfolios can contain over 500 buildings), mixed use (including offices, accommodation and laboratories) and, for many, age and historic significance.

Carbon assessment after contract delivery As a building will produce more of its emissions once it is in operation, it is worth considering how to ensure a building is truly net zero after the construction or retrofitting stage. Contracting authorities should adopt the use of whole-life carbon assessments to understand and minimise the greenhouse gas emissions footprint of projects and programmes throughout their lifecycle. Developers may wish to consider a carbon assessment 12 to 24 months after completion. With the requirement to report on carbon emissions becoming increasingly standard practice in contracts and the UK government’s 2050 net zero target, it is possible that a post-evaluation carbon assessment could become a requirement for all construction projects. The question of subsequent carbon evaluations also raises a number of interesting questions: how do you incentivise contractors to stay involved with a development after contract delivery until the carbon assessment? What mechanisms - such as retention or a carbon bond - might you be able to use?

How we can help Review ESG requirements for your construction and engineering projects Provide appropriate ESG drafting for inclusion in your construction contracts Advise on innovative concepts for encouraging the supply chain to comply with ESG requirements In-house bespoke ESG training ESG audit General ESG advice

Watch Building towards net zero

Stuart Pemble, Professor Sean Smith and Carla Parsons address the ‘foundations’ of the movement towards net zero and what we mean by net zero.

Meet our ESG experts Stuart Pemble, Partner T: +44 (0)7717538275

Joanne Davies, Partner T: +44 (0)7436810824

Jayne Hussey, Partner T: +44 (0)7810556385

Neil Pearson, Partner and Head of ESG and Social Value T: +44 (0)121 456 8460

Laura Ludlow, Principal Associate T: +44 (0)7436588474

Carla Parsons, Associate T: +44 (0)1223222312

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Net Zero report (short version)  

Net Zero report (short version)  

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