06 Jan 2023

The critical role of carbon offsets in complementing the built environment’s embodied carbon goals

At COP27 in Sharm El-Sheikh, Egypt, we saw the UN High Level Climate Champions set an important goal for the global built environment. For all new projects to achieve a 40% reduction in embodied carbon by 20301. This is an ambitious target aligned with those previously set by organisations such as the World Green Building Council2 and Green Building Council of Australia3.

Embodied carbon represents the emissions associated with the materials and construction processes used throughout the entire life of a building or piece of infrastructure, accounting for 11% of total global carbon emissions4.

A 40% reduction in embodied carbon is significant, however it begs the question at a time when rapid decarbonisation is needed across all sectors to address the climate crisis, why isn’t this figure higher?

The goal of a 40% reduction reflects the hard-to-abate nature of embodied carbon. Particularly the ‘upfront emissions’ that are released during the manufacturing of building materials. These represent the most significant portion of embodied carbon and are locked into that building or piece of infrastructure’s carbon footprint from day one.

Many organisations throughout industry are leading efforts to reduce upfront emissions by innovating in product manufacturing, reusing building materials and refurbishing existing buildings. However, the unfortunate reality is that in the short-to-medium term, a significant portion of the greenhouse gas emissions associated with the production of new building materials are not going anywhere due to technological constraints. Of particular significance are steel and cement, with the production of these materials when considered across all use cases representing 8% and 6% of total global emissions respectively5.

We can’t just stop using steel and cement. So what can we do?

This is where carbon offsets will play a key role.

Until we reach a point where building material production has completely decarbonised, high-integrity offsets will be needed to address unavoidable emissions. The purchase of high-quality, high-integrity offsets allow organisations throughout the value chain to invest in projects that prevent greenhouse gases from being released or remove them from the atmosphere, neutralising the hard-to-abate embodied carbon that can’t yet be eliminated.

Utilising offsets to account for embodied emissions also creates a real cost of carbon for new projects, which helps to accelerate the business case for activities that avoid emissions in the first place. In this way, offsets complement the collective goal of 40% reductions by 2030 and beyond.

Why wait until 2030?

As is being demonstrated by a growing number of industry leaders, offsets enable organisations to demonstrate leadership by taking responsibility for the carbon locked into building materials being used in construction today. Additionally, waiting until the final hour can dramatically increase the risk of not being able to access appropriate offsets.

It is essential that extensive due diligence is conducted when procuring offsets to make certain they are high-integrity. This ensures genuine carbon abatement and helps to manage reputational risks. Offsets can also deliver other amazing co-benefits, such as supporting First Nations peoples and cultures, promoting the regeneration of ecosystems and biodiversity, and addressing the health impacts of inefficient cookstoves on international communities.

Through the utilisation of carbon offsets, organisations can address their carbon footprint whilst achieving other sustainability-linked goals. Did someone say three birds, one stone?

As the grid decarbonises, buildings and infrastructure will move towards a position of net-zero in operation, and embodied carbon will represent a growing portion of the overall carbon footprint. We can’t afford to ignore these emissions. We will need offsets

TEM proudly manages the carbon offsetting for organisations including Goodman Group, Lendlease and CBRE. Please contact Nick at nick.baker@tem.com.au to find out how we can support your organisation.
Reference list:
  1. 1. Upgrading our systems together
  2. 2. Bringing embodied carbon upfront
  3. 3. A climate positive roadmap
  4. 4. Steel and cement can drive decade of action on climate change

Important information

This information has been prepared by Tasman Environmental Markets Australia Pty Ltd (TEM), a corporate authorised representative (ABN 97 659 245 011, CAR 001297708) of TEM Financial Services Pty Limited (ABN 58 142 268 479, AFSL 430036). This material is for general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation, or needs. While we believe that the material is correct, no warranty of accuracy, reliability, or completeness is given, except for liability under statute which can’t be excluded. Before making an investment decision, you should first consider if the information is appropriate for your circumstances and seek professional financial advice. Please note past performance is not a guarantee of future performance.