Circular Economy Could Cut Construction Emissions by 75%

A new joint report from McKinsey and the World Economic Forum shows how the construction sector could diminish its carbon dioxide emissions by as much as 75% (or four gigatonnes) by 2050 thanks to circularity. The establishment of a circular economy in the sector – which covers building, real estate and infrastructure – would also bring substantial financial gains, such as an annual net profit increase of up to US$46 billion by 2030, and US$360 billion by 2050. Over the next 40 years, 30 billion square metres of new buildings will need to be built to respond to growing demographics globally. Most of these constructions will likely occur in Africa, the Middle East and Asia, where building a sustainable and resilient environment will be crucial to preserve people’s health and well-being, as well as the planet’s future. “The construction sector is a crucial industry for reducing greenhouse gas emissions in the long term,” said Sebastian Reiter, Partner at McKinsey’s in Munich. “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.” The report highlights six key building materials with a high potential for emissions reduction and net value gain: cement and concrete, steel, aluminium, plastics, glass and gypsum. Although such opportunities exist across the sector, McKinsey Partner Jukka Maksimainen said there are hardly any solutions in the market addressing this issue at scale yet.

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