What does California SB-253 mean for the construction sector?

1 December 2023

Mark Wartenberg is our sustainability director in the Americas and is a highly regarded leader in the field of sustainability in the built environment. In this blog, he looks at new legislation in California that requires companies to measure and manage their carbon emissions.

With the new California SB-253 now signed into law, it is clear our industry will need to make decarbonizing construction programs a bigger priority. Companies will have to measure carbon for their built assets in a way they have not needed to before. And they will have to measure it for the asset’s whole lifecycle from conception to end-of-life. So, what does all this really mean and how can companies navigate this added burden?

When Governor Gavin Newsom signed California’s SB-253 Climate Corporate Data Accountability Act into law in October, it set the stage for a sea change in the need to measure and manage carbon impacts in construction programs.

The Act calls for businesses in California with annual global revenues over $1 billion to make public the carbon produced by their operations and electricity use by 2026. The truly trailblazing part of the new legislation though, is that carbon emissions generated by these companies’ supply chains and customers (Scope 3 emissions) will also need to be disclosed beginning in 2027.

So, what does that mean for the construction sector? There are three wide-ranging impacts that those planning and delivering construction projects will need to understand:

1.The pressure to reduce overall carbon emissions for built portfolios will greatly increase.

Companies will need to measure the carbon produced by their operations, electricity use, and supply chains. As buildings and construction projects are a direct cause of these emissions, companies will need to measure the carbon produced by them. Logically, once these numbers are disclosed to the public, the public will demand action to reduce them.

This is a good thing for the planet. Reducing the amount of carbon produced by buildings and construction projects would make a real difference to our environment.

Each year, nearly 40% of greenhouse gases (GHGs) released into the Earth’s atmosphere come from buildings. The entire life cycle of buildings is involved, from raw material supply and manufacturing, through construction, operating, and an eventual demolition, disposal, or reuse of built materials. The result is 126 million tonnes of carbon dioxide produced annually.

By 2060, it is predicted that construction sector will add 2.4 trillion square feet of new buildings to accommodate what the United Nations Population Fund calls the largest wave of urban growth in human history. This is the equivalent of adding an entire city the size of New York to the planet every month for the next 40 years.

Clearly, companies have a real opportunity to address the current climate crisis through reducing the carbon impact of their built portfolios.

2. Attention will focus on reducing embodied carbon – the type of carbon most closely associated with construction programs.

Following the passage of SB-253, there are two types of carbon companies must measure and account for:

1. Operational carbon. This is the carbon produced by operating a building. It comes from the heating, cooling, and powering of buildings.
2. Embodied carbon. This is the type of carbon most closely associated with construction programs. It results from the creation, use, and disposal of construction materials.

Over the past three decades the focus of our industry has been almost entirely on reducing operational carbon (energy). Most people understand the need to create more efficiently operated buildings and use clean energy as it becomes available. Many of us are already doing this.

Following the announcement of the Act, we must now hold a magnifying glass up to embodied carbon. Again, this is a good thing for our environment.

Currently a third of carbon emissions produced by the built environment come from embodied carbon. With the energy grid rapidly pushing towards a goal of 100% renewable sources by 2050, embodied carbon will make up nearly 50% of the built environment’s carbon impact by 2050 or sooner. Further, while operational carbon can be reduced over the life of a building, once the embodied carbon is in place, that carbon can never be adjusted.

The case for reducing embodied carbon is clear. For many, though, this will be a new consideration.

3. Many more companies will eventually be impacted.

While SB-253 applies to a relatively small portion of companies in number, the legislation is widely expected to become the blueprint for future nationwide climate regulation. The move to broaden which companies will need to track and report carbon has already begun in California through CA SB-261. This Act will apply to companies with revenues of just $500 million. The Federal Securities and Exchange Commission (SEC) is proposing federal regulation that will require many more businesses across the US to disclose climate-related risks to their business and financial statements. This will cover multiple aspects of climate related risks including but not limited to the disclosure of scope 1,2 and 3 emissions. More requirements at the federal, state and regional/local level will likely follow. It is more a question of when companies will need to start tracking and disclosing their carbon emissions than if they will have to.

We all know how long the process of design and building can take. It makes sense for companies to start planning now how they will reduce carbon – specifically embodied carbon - for their built portfolios. As we get closer to reaching the global tipping pint on climate change, reducing embodied carbon will supersede operational carbon reductions in the short term.

At the same time though, the ubiquitous demands on construction professionals to deliver projects on time and within a tighter and tighter budget will not change. What is a business to do?

These five tips can help move us toward net zero carbon, while still maintaining scope, schedule, and budget:

1. Reuse what is already built.

We all know the greenest building is the one that never gets built. The next best thing is to reuse as much of the existing built environment as possible. This has the potential to reduce a project’s embodied carbon footprint by as much as 75%. It can minimize or eliminate some of the worst carbon culprits including concrete, steel, roofing, underground concrete encased piping and façade replacement. Adapting existing buildings will take an enormous chunk out of construction embodied emissions. While we know it cannot be the only thing we do, considering reuse first needs to become a part of every location and building strategy.

2. Rethink corporate standards

Corporate standards for design and construction set out an organization’s standard game plan for construction projects. By making decarbonization a key part of these standards, businesses would embed carbon efficient policies into every single project they undertake. For example, were we to add carbon into the mix of decision drivers for corporate design and construction standards, we could easily, and with very limited cost impact, reduce embodied carbon by 25-35% for a given build program simply by specifying currently available reduced carbon materials for interior and exterior finishes and demolishing less of what is already in place (which saves money too!). Making such specifications standard enables a clear and measurable roadmap to reducing embodied carbon. It also helps drive the demand and improve availability of low carbon materials carbon goals.

3. Recycle building components and materials by designing for demolition and disassembly

Many have been talking about this type of recycling and reuse for decades. However, to date, very little real action has taken place. Were we as an industry to commit to recycling of building components we would likely see the cost of undertaking such efforts decrease rapidly. Increasing the use of pre-manufactured components like interior walls, ceiling systems, millwork, interior electrical distribution, and exterior facades would be a great place to start. Offsite fabrication with onsite installation eliminates an enormous amount of waste in the construction process, but more importantly, it enables predictable disassembly and recycling of materials at the end of a built asset’s useful life. Adopting building information modeling (BIM) as an industry standard, as is happening in some countries around the world, would help us understand what is in a building that can be reused, repurposed, or upcycled at the end of life.

Carbon emissions are calculated across the entire life cycle of a built asset. Emissions at “stage C” known as the end-of-life stage, involve deconstruction, waste processing, and disposal. This stage typically accounts for approximately 6% of embodied carbon emissions without taking into account how much waste ends up in fewer and fewer landfills. Emissions happening at the recovery, reuse, and recycling stage, are referred to as occurring at stage D. If recycling efforts are documented as avoidance of waste to landfill, waste in manufacturing, and an ability to reuse materials, they could be proven to greatly reduce stage C embodied carbon impact moving a building’s emissions from neutral to negative.

4. Repair and refurbish existing systems, building exteriors, and furniture, fixtures, and equipment (FF&E) as much as is feasible

Look for and specify systems and equipment that are designed to be repaired rather than thrown away. Replacing entire mechanical and electrical systems for instance, can account for 15% - 20% of embodied carbon on large projects. Repairing and refurbishing elements like ductwork and piping can reduce the embodied carbon impact of a project.

5. Reimagine core industry metrics to bring embodied carbon into the front row.

It may be a cliché, but it’s as true now as ever. You cannot manage what you do not measure. Equally though, once you measure, you must find ways to implement the changes your data tells you to move forward.

The construction industry uses nearly 50% of all non-renewable natural resources consumed globally. Concrete alone is the second most consumed substance on the planet after water. The International Energy Agency (IEA) estimates that the industry must reduce embodied carbon by 90% if the world is going to even approach the goals of the Paris Accords. Yet according to AIA Architecture 2030, less than 1% of all buildings, old and new, have embodied carbon information available. Clearly it is time for a radical change and that must start with measurement. If we don’t measure and benchmark embodied carbon, we cannot know when or if we are on schedule to meet the goals.

Cost measurement and management should be used as a model for how we treat embodied carbon in the construction industry. Cost measurement is well understood at both an intuitive and technical level because cost literacy at all levels is considered an essential skill. We’ve been building a dynamic cost database for more than 100 years which has helped us manage to our budgets. Choices necessitated by cost and budget are made constantly based on schedule, supply chain availability, strategic shifts, design criteria, how construction gets done and changes during construction.

Achieving a similar level of embodied carbon literacy is a critical step in decarbonizing our built environment. The industry must start with measuring embodied carbon, researching it, and benchmarking it the same way we have with cost. Developing a carbon-per-square foot metric as widely adopted as cost-per-square foot is feasible today. The tools are there, much of the data for construction materials exists and is improving daily.

From there, having an “embodied carbon budget” in the same way as we would establish monetary budget parameters for construction projects would enable teams to identify and make choices based on the “sweet spot” where the intersection between cost and carbon cost matches business priorities. Integrating and eventually requiring LCA (life cycle assessment) early in the project design process enables a balancing and integration of embodied carbon into the scope, schedule, and budget.

Having access to tools and processes to perform carbon estimation for construction projects could reveal large potential carbon reductions. Using the data effectively is key though. Frequently optioneering exercises reveal easy wins with sizeable reductions in carbon impacts made possible without significant impacts to cost, schedule, or construction project scope. Sometimes an option that reduces carbon can even be cheaper or quicker than the original plan. On two recent projects, for example, we have found a strong correlation between low carbon and lower cost in both façade and workplace specifications. The latter achieved a 10% cost saving alongside a 31% reduction in embodied carbon.

There is so much potential for decarbonization in construction. And it doesn’t have to be at the expense of your bottom line. Please reach out to [email protected] to explore tailor-made solutions to reduce carbon for your construction projects.

About Mark Wartenberg

Mark is a highly regarded leader in the field of sustainability in the built environment. He has spent the past 15 years of his 30-plus-year career focused on sustainability in design, planning, project management, and construction management for projects across more than 30 countries. Mark has created, developed, and implemented science-driven sustainable corporate standards for design, specification, construction, and building operations for a range of high-level organizations.

About Currie & Brown

Currie & Brown is a world-leading provider of project management, cost management, and advisory services, covering the full range of public and private sectors. With our global outlook and local delivery approach, our purpose is to add value that makes building a better future possible. We help clients navigate volatility and unpredictability, providing the certainty that enables better, more sustainable built environments for all.