With a growing list of corporations making a commitment to net-zero and to decarbonising their footprint, property developers have increasingly been considering how to reduce the emissions associated with built form, such as those arising from the production of building materials and the performance of construction work and how they can be reduced. Known as 'embodied carbon', these emissions are estimated to account for 35-45% of a standard building's lifecycle carbon emissions.1
To take just one example, most buildings will incorporate steel and concrete; two materials which are traditionally energy-intensive and therefore are considered to have high embodied carbon.
There are a range of initiatives underway that are seeking to drive change towards lower embodied carbon outcomes, including the work (and resources) of the Materials and Embodied Carbon Leaders' Alliance (MECLA) and the Green Building Council of Australia (GBCA).
Even so, there is some uncertainty about when (and if) tangible embodied carbon benchmarks for construction will be prescribed and regulated for future property development. There is also no official or accepted industry wide method for measuring embodied carbon in construction projects.
So, for a developer who wants to take immediate steps towards reducing embodied carbon in their developments it is not as simple as prescribing compliance with a single standard, and passing that risk down through the contractual chain.
However, there are some steps that developers can take today towards addressing embodied carbon issues in their developments.
1. Appoint a carbon planning consultant
Developers can initially set a carbon budget for their development with the assistance of a carbon planning consultant. Consultants can help developers to set appropriate carbon budgets based on their experience with other similar projects and drawing from the growing body of resources published by MECLA and GBCA and others.
Once the carbon budget for a project has been determined it can then be used as a reference point throughout the development process. A carbon budget, like any budget, will be subject to adjustment during this process.
After a developer has measured carbon on one project it is able to use that data as a benchmark to measure carbon outcomes and set target for other projects. In that way, developers can demonstrate and develop processes for continuous improvement in reducing embodied carbon emissions in their projects.
2. Consider embodied carbon in site selection and early stage feasibility and design processes
By engaging with the issue of embodied carbon early in the site selection and feasibility process, developers will be able to identify embodied carbon 'hot spots' and take steps to change the embodied carbon footprint of the development via site selection, design refinement, materials selection and procurement processes. For example, using the foundations and structure of an existing building, is likely to significantly lower embodied carbon compared to the development of a new building.
Material selection is another key issue, particularly given the current significant pressures on material supply chains. Finding the right materials for a project requires consideration – not just of the embodied carbon associated with the manufacture of the materials selected, but also whether those materials will be available as and when required, and the distance and method of transporting the materials to the project site.
Of course, cost is another important consideration, as lower embodied carbon materials may be more expensive in the short term.
As with the carbon budget, this is an iterative process and may be subject to change. Careful contract drafting will be required to give a contractor sufficient flexibility to achieve the embodied carbon outcomes without sacrificing other key requirements such as time and quality.
4. Finding the right contractors and briefing the construction team
The developer's project team will need to be briefed on the embodied carbon objective and their role in achieving the embodied carbon targets.
When going to market for contractors, developers will need to articulate their carbon objective and how the terms for engagement of contractors will address and facilitate the achievement of that objective.
A building contract for a project with an embodied carbon objective must carefully consider a number of contract terms including:
- how the embodied carbon targets for the project will be
articulated, and how compliance with those targets will be
measured, monitored and reported on during the build phase;
- how embodied carbon will be considered in the context of any
variations to the project brief – for example, when and what
substitute materials can be used where low embodied carbon
materials are unavailable? How are cost adjustments managed?;
- the consequences of a builder failing to satisfy its obligations associated with the embodied carbon targets and objectives. Because a requirement to re-do work would generally be inconsistent with an objective of reduced embodied carbon, it is more likely that an abatement or liquidated damages regime will be imposed: for example, the builder may be required to contribute to the cost of buying carbon offsets as a consequence of a failure to meet the relevant target.
5. Consider how to market the project
Given the uncertainties outlined above, a developer may face challenges in marketing its project. If there is no widely accepted standard to be adhered to, and if the supply chain challenges might put at risk use of materials which might reduce embodied carbon emissions (in spite of everyone's best endeavours), how can such a project be positioned?
One option is to express the developers' objectives in terms of targets2 or objectives, which must be carefully formulated to ensure transparency and accountability, and to minimise the prospect of greenwashing allegations later being made.
6. Manage embodied carbon throughout the building life cycle
Embodied carbon issues remain relevant during the building life cycle and consideration should be given to the impact of embodied carbon on how the building is managed and maintained. For example, through minimising the need for repair, replacement or refurbishment, and where such works are required, through consideration of the embodied carbon matters discussed above at steps 2 and 3.
At a time when investors and other development stakeholders are prioritising how to address their carbon footprint, considering embodied carbon in construction and building projects presents both challenges and opportunities for developers.
By taking steps today towards better understanding and reducing embodied carbon in construction, developers will gain valuable lived experience with embodied carbon issues and position themselves as industry leaders in this space for the years to come.
1 Slattery Upfront Embodied Carbon Benchmarks, Measure to manage: Benchmarking embodied carbon in Australia, May 2022
2 As Dexus has done in relation to Atlassian's new HQ in Sydney.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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