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The great rebuild


Think of the cities your grandchildren will inhabit and you might imagine something futuristic — driverless transit systems, sensor-packed buildings, augmented reality, and androids that cater to a city dweller’s every need. But these cities will not be defined by the innovations that move, entertain, and comfort; rather, they will be defined by the innovations within — the stuff that buildings are made of and the way those buildings are put together. Because we are at a critical moment in time where the future of our built environment is in question, we must rethink how our most ubiquitous construction materials — cement, steel, glass, and wood — are made, transported, and assembled if we are to meet the world’s vast need for housing while preserving the stability of the climate for subsequent generations.

Two of the primary challenges faced by the building industry are contradictory in nature. Buildings are some of the primary emitters of global greenhouse gases, and yet as the world’s population grows and more industrialized economies emerge, we will need more, not fewer, of them to be built. One thing we do know is that continuing with current building and construction practices will almost certainly guarantee that the world will exceed the 2˚C warming limit above pre-industrial levels established by the Paris Agreement, regardless of any cuts other sectors are able to make. If this is truly the climate decade — where industries and governments come together to get our planet on track — it must also be the decade that our buildings are reimagined.

Change will be difficult. To create the cities of the future, the building sector — one of the world’s largest and oldest — must undertake a transition rivaled only by the industrial revolution. We must not only change how we build but what we build with, and we must do so simultaneously.

Unlike some technology sectors that have a few players with massive worldwide market shares, the construction industry is highly fragmented and strictly driven by cost. There will also be regulatory and safety hurdles that differ by jurisdiction and long-established consumer bases requiring real cost incentives to shift processes or products.

But the opportunity is too immense to ignore. Global output of the construction industry is expected to grow to $15.5T by the end of this decade, and that pace will not taper. Buildings are and will continue to be central to human existence on this planet. They house us, provide places, employment, and for many are one of their most significant investments and sources of equity. Thankfully, technologies and frameworks to solve the industry’s toughest challenges are emerging today. Now is the time to invest in bringing them to market — let’s not miss it.

The Climate Challenge

Buildings are at the center of the climate crisis. We can say with confidence that the built environment accounts for 40%-50% of greenhouse gas (GHG) emissions annually, even though the exact share of emissions varies by source. At nearly half of global CO2 output, there is virtually no climate mitigation strategy that doesn’t account for the built environment and its share of the problem.

The Intergovernmental Panel on Climate Change (IPCC), the body of the UN responsible for convenings such as COP21 (also known as the 2015 United Nations Climate Change Conference) that put forth the Paris Agreement of 2015, has said that the best chance at staying under the maximum threshold of 2˚C of warming over pre-industrial levels (let alone any shot at staying under 1.5˚C) will require eliminating all building sector emissions by the year 2050. That is a herculean order when projections also say we will need to build an additional two trillion square feet between now and then to sustain the world’s needs. Such an effort is similar to adding more than 10 New York Cities (all five boroughs included) to the globe every year for the next 30 years.1

How exactly does the world tackle eliminating the emissions of every current and future building on the planet?

Most discussions centered on “green building” or “net zero” in the last few decades have focused on reducing the operational emissions of buildings — emissions produced by processes like heating, cooling, and lighting. This has translated to improvements like solar roof installations, smart heating and cooling systems, LED lighting, and highly insulated and tightly sealed buildings that trap more heat or cool air and thus require less energy for climate control. This is a crucial area for the sector to mitigate.

There is another, often overlooked area of built environment emissions, however, that Tough Tech breakthroughs are uniquely positioned to help solve. The embodied carbon of our built environment is everything that comes before a building goes into operation. Embodied carbon includes the energy and carbon emitted in the earliest stages of a building's life, from the extraction and manufacturing of materials to their transportation to site and, finally the construction of the structure itself.

Taken as a whole, the materials production, transport, and construction processes make up over 10% of global emissions (within the half that the building sector is responsible for). And for a building with an average lifespan of 80-100 years, embodied emissions will represent an average of 20% of total lifetime emissions.2 This means that a fifth of a typical building’s carbon footprint is already established before its doors even open. We must pay close attention to that 20% today. As operational emissions fall with successful industry initiatives, and with only 30 years to address the entire sector’s emissions, the upfront embodied carbon of a building over those years constitutes a larger proportion of the overall sector emissions to be remediated.

This all creates extraordinary pressure to radically rethink the materials with and processes by which buildings are constructed, and to do so quickly. There is no pathway to meeting the world’s goals on slowing climate change if we do not.

Steel and cement are arguably the two most significant emitters in the building sector and most widely used commodities worldwide, together accounting for roughly 15% of the planet’s annual GHG emissions. Many are working to alter the processes by which these products are made, as well as the material properties themselves, in order to produce green cements and steels that could be commercialized at competitive prices.

Cement is quite literally the foundation upon which our built environment is constructed. The material emits roughly one ton of carbon for every ton produced — a staggering ratio — and, given its ubiquity, decarbonizing it is one of the largest hurdles for the construction industry. Any decarbonization efforts will require intervention in two areas: reducing the high temperatures needed to generate the binding clinker out of limestone, and limiting or capturing the carbon dioxide released when the limestone is reduced down to lime.

Sublime Systems, which is in The Engine’s portfolio and led by electrochemist Leah Ellis and serial entrepreneur Yet-Ming Chiang, is working to tackle both of these decarbonization pathways. They are applying industrial electrochemical concepts to convert limestone into lime at room temperature, making the CO2 produced during the conversion process easier to capture and reducing overall energy consumption. Sublime’s process can be powered by renewable electricity, in which case its operation is carbon-neutral.

Given the sheer scale of cement use globally, there are an encouraging number of groups working to tackle its emissions problem. Carboncure, Solidia, Carbicrete, and LC3 are just some of the startups around the world attempting to reduce the carbon output of the material, with industry incumbents like LafargeHolcim and CEMEX also providing low-carbon alternatives. Approaches include using recycled CO2 within the concrete mixture to store carbon and strengthen the solution (Carboncure, Carbicrete, and Solidia), or introducing low-cost and abundantly available clay, which emits very little carbon and reduces the amount of limestone that must be broken down (LC3).

Steel produces a similar amount of global carbon emissions each year, with the world is reliant on the material for nearly every building, infrastructure, and manufacturing project. Boston Metal’s CEO Tadeu Carneiro, who is also in The Engine’s portfolio, recognizes that steel will not be easily replaced, but he is working toward a future with no pollution from metals production. The company’s unique Molten Oxide Electrolysis process merges innovations developed at MIT and best practices from the aluminum and steel industries. The technology uses an electrolytic cell that has three components: an anode, a cathode, and an electrolyte. The materials in these components allow ore to be separated into steel and oxygen with zero greenhouse gas emissions.

While steel and cement produce the greatest overall greenhouse gas emissions of all commonly used building materials, the production of aluminum, a metal used throughout the built environment, emits six times the amount of carbon than steel on a per-ton basis. Gypsum (which goes into drywall), standard insulations, glass, ceramics, carpet, and roofing all have emissions implications. The production of these materials, and the materials themselves, must also be reimagined to emit less CO2.

Alternative methods to cut the embodied carbon of a building include increasing the use of existing and improved regenerative materials like timber, bamboo, or straw, that actively store and remove carbon from the atmosphere. Though timber is of course a widely used material in construction, its structural use beyond several-story dwellings has been limited.

The primary challenges with regenerative materials are twofold; first, their structural integrity limits building the multi-story infrastructure needed for most urban settings; second, production is at the mercy of natural growth cycles. Traditional construction woods like fir, hemlock, and pine can take decades to grow and mill. Other materials such as bamboo can be cultivated in much shorter cycles than timber, typically in fewer than 10 years. Bamboo, however, has different structural properties than woods that make its widespread use as a building material less likely.

The rise of cross-laminated timber (CLT) shows us how a manufactured timber-based product can replace steel, perhaps altogether. The CLT production process binds the grains of wood in perpendicular layers, enhancing their structural capacity and allowing for larger dimensions, typically around 40 feet, though some cases have been even longer.3 CLT panels can reduce the carbon footprint of a building by replacing walls, floors, and structural components, creating a true carbon sink that offsets emissions for generations.

In some projects, engineered timber has fully replaced steel. Completed in 2019, the 18-story Mjøstårnet in Norway is the world’s tallest all-timber building.

Widescale adoption of such materials faces significant hurdles like building code adoption, which currently limits the number of stories a developer can build with the material, and cost, which remains high in comparison to incumbent materials such as steel and concrete.

There are also emerging innovations with wood at the molecular level. Inventwood, spun out of the University of Maryland, is pioneering methods to compress and chemically treat wood fibers to make it stronger than steel while still significantly lighter and carbon negative. The startup is also modifying lignin and hemicellulose to create translucent material that could someday replace windows or insulation in buildings.4 These innovations imagine a world where regenerative timber products could become a larger component in the construction of urban high rises and developments, cutting back on the use and emissions of non-regenerative materials and the need to manufacture and transport large-scale panels such as CLT.

It should also be noted that new methods of integrating more timber into our built environment at massive scale are not emissions free. Wood extraction and the milling and production of timber for construction, whether in new or traditional forms, can also emit carbon. We must work to produce a material that still stores more carbon than it emits in the process, and this is possible given the right forestry, production, and treatment processes.

What some are calling a “living architecture movement” is also gaining momentum. This field uses synthetic biology to grow structural materials for building construction. Researchers have tested the use of algae, fungi, and bacteria to grow bricks and cements organically and repair cracks or damage in existing structures and materials. The Living Materials Laboratory at the University of Colorado Boulder, for example, is experimenting with e.coli to produce styrofoams and limestone products as well as cyanobacteria (plant-based microorganisms) to create living cement bricks.

Startups like Ecovative Design are harnessing the self-growing properties of fungi or mycelium to create structural composites that could be integrated into a building.5 And other living cells could be used to conduct electricity through biofilms or as bio photovoltaics that introduce regenerative materials into solar capture, possibly for use as a material on entire building envelopes. The B.I.Q. house completed in 2013 in Hamburg, Germany as a result of a competition used an algae facade to capture solar energy to power the building.

Though in the early stages and like something out of science fiction, these are the types of developments that could transform the impact of our buildings, if we can find ways to commercialize them at scale. The potential of self-powering, self-growing, and self-repairing properties have already caught the attention of DARPA and NASA, for example, for the long-term possibilities of having genetically engineered buildings in remote settings.6

The weight and density of our buildings and cities also have profound implications for the sector’s role in climate change. The reasoning is quite simple: with denser and heavier materials, more finite resources must be used to create them, producing greater emissions in the process. Adding to this are the inherent emissions from transportation, which typically increase in response to the material weight.

Reducing material density while maintaining structural integrity, and developing methods for more decentralized or localized production of materials, could significantly improve that problem. Electrifying transportation will help cut emissions from the movement of materials, but that transition relies on abundant renewable sources of energy, will take decades that we don’t necessarily have, and will likely impact commercial freight (the modes moving heavy materials) after all other modes of transportation. We should be looking for lighter-weight solutions that can be integrated into building processes today.

Graphene is a carbon material that has 5% the density of steel but 200x its strength, along with superconducting properties. First produced in 2004, engineers are still discovering new potential applications. Graphene can be used to add structural properties to existing building materials and has the potential to someday be used as a 3D building material itself.7 Currently, due to its prohibitive cost, graphene applications in the construction industry mostly include supplementing existing materials such as paint or cement to make them more durable and water or rust resistant. Such applications require less structural mass in materials during build and maintenance cycles, but its properties don’t yet scale to replacing the core components of a building altogether.

Carbon nanotube composites, a cousin of graphene but containing other elements like oxygen and nitrogen, have existed for decades as components of airplanes, boats, wind turbines and other high-performance vehicles and structures. With the ability to custom tune strength and weight ratios, they are becoming an increasingly viable alternative to traditional materials as advancements continue to drive the cost of production down.8 Carbon composites can be used to produce moldable unitary, jointless parts, which could reduce time, materials, and overall costs in the construction process, and with a low density could also reduce transportation costs and emissions.

These composites are made by transforming gas into solid materials in which carbon is stored, versus burned into the atmosphere. The material could present an environmentally friendly solution to transitioning the oil and gas sector. New developments in methane pyrolysis are also working to split off hydrogen from solid carbon, creating a clean fuel and structural material in one process.

Recent discoveries out of Rice University have shown how carbon materials can be produced from carbon dioxide emitted from food and waste which could introduce graphene into the carbon capture category that helps to mitigate the implications of our existing trades.9 Other researchers within the U.S. Forest Service as well as Mississippi State University have been working on ways to produce graphene using lignin, a byproduct of the pulp and paper industry, eliminating the need for petroleum based products altogether.10

While perhaps ironic, it is possible that the oil and gas industry could supply an economically viable and sustainable solution to the world’s building needs.

The Housing Challenge

While it is clear that building more volume comes with significant risk to the planet, slowing down the pace of construction is not an option. Instead, the globe will need to accelerate its housing output in order to match the demands of its growing population, which is expected to grow by 2.5 billion in the next 30 years. Trends in better standards of living as emerging economies develop and a reduction in family sizes and birthrates mean that this population growth will come with proportionally more households, requiring even more material resources than the growth that came before.

Some developed nations have shown us what this could look like already; for example, the National Records for Scotland show a household demand vs. population growth discrepancy of 7%-8%. If you apply that same discrepancy to the entire planet, we would have to construct two billion homes by 2100 (800 million more than population growth alone is expected to require). Our current practices will not be able to meet that rising demand. In fact, analysts identified a $1.6T productivity gap in 2017 for the building sector, an industry that comes in second to last for sector-wide digitization (after agriculture). This productivity lag is exemplified across the world with most countries having large and growing housing gaps. Looking to the State of California as an example, it would need to construct 3.5M housing units by 2025 in order to eliminate its own shortage. But as a whole, construction productivity is not merely struggling to keep up, it is slowing down, with the productivity of construction declining by 10%-20% in the past 20 years.

Buildings also account for an unsustainable amount of resources, many of which are wasted on-site before even making it into the finished product or discarded at the end of a building’s life, as the vast majority of our buildings are not constructed with their own deconstruction in mind. Demolition of a building often renders any efforts to recycle materials nearly impossible, yet the construction industry accounts for 60% of the world’s resource consumption, most of which has a finite limit to their supply. For example, there is more copper in our built environment than in the earth’s crust. Half of worldwide mass waste comes from the sector, and typical sites will scrap between 10%-30% of materials before a project is done .

How we introduce more efficient practices that accelerate our construction processes in a cost- effective way while cutting down on the amount of materials needed or wasted in the process will determine the standard of living our built environment is able to provide for generations to come.

“Cement is quite literally the foundation upon which our built environment has been constructed. The material emits roughly a ton of carbon for every ton produced — a staggering ratio — and, given its ubiquity, decarbonizing it is one of the largest hurdles for the construction industry.”

Integrated Solutions

Developments in advanced robotics and offsite or modular construction show how the sector could begin to see a paradigm shift in productivity and the ability to satisfy the world’s demand for housing.

Modular construction introduces full or partial manufacturing and assembly off-site, typically in nearby facilities; installation then takes place in a fraction of the typical time. The use of precision robotics and off-site planning can also significantly reduce material waste, with fewer errors on the job and the ability to reuse materials for other projects being assembled within the factory. This practice has gained popularity in regions with significant labor shortages and climates that have short windows for building due to harsh seasons or limited daylight hours, such as the Nordic region of Europe.

A recent McKinsey report featuring modular and prefabricated building practices outlined a vision for cutting schedules by 20%-50%, overall costs by 20%, and waste to a significant degree. These cuts could move the needle for developers, allowing additional units to come online more quickly and accelerating the speed and productivity of the building sector as a whole.

WoHo Systems, a startup funded by The Engine and founded by architects Débora Mesa and Antón García-Abril, is working to improve on these projections of time and cost savings while delivering modular buildings that reduce the ecological footprint of buildings by 70%. They aim to do all this while enhancing project predictability and construction quality that will enable their modules to construct high rise buildings, which has remained a challenge for off-site industrialized construction to date.

The company has developed a system of discrete foundational components which can be scaled and configured to span both residential and commercial buildings like multifamily housing, hotels, labs, offices, and dormitories. This approach gives WoHo control over the design, material selection, and overall quality of each assembly at a finer level than traditional construction, allowing the team to continuously iterate and improve facets of their assemblies without stalling production.

But the construction industry is not a “winner-take-all” market, and there are multiple groups using new approaches to accelerating the build process. Prescient, for example, is streamlining digital design-build structural systems that can be robotically assembled on-site in a fraction of the time with extreme tolerances. Others like Juno and Factory OS are working to introduce affordable and sustainable options that deliver more housing more quickly, and IKEA and Skanska have partnered to bring BoKlok to the European market.

The recent shuttering of modular timber startup Katerra, which attracted over $2 billion in venture financing from Softbank and others, raised questions about the viability of this practice at scale. Without speculating on its ending, however, it does underscore the need to work closely with regulatory and industry partners as these new practices are introduced into the market.

As regulatory bodies and ecosystem players begin to adopt the practice, even more efficiencies will be unlocked. Ruiz described a future for the building industry similar to that of automotive assembly lines, noting that with quality control standards in place, eventually builders won’t have to rely on on-site inspections on a unit-by-unit basis, significantly speeding up the rate of production. Despite some hurdles and setbacks, the global market for modular construction is still expected to reach $115 billion by 2028.

Our Buildings Reimagined

This report is on the challenges that Tough Tech, in particular, will need to solve within the production and construction phases of our built environment, but many more issues loom. How will we deal with the refrigeration and cooling of our buildings — one of the biggest offenders to the environment — which will only grow in use as global temperatures rise? How will the sector ensure that the labor is not displaced as we look for more efficient ways to build faster and with less waste? What interim steps can we take now while some of the most advanced innovations get to market?

What interim steps can we take now while some of the most advanced innovations get to market? Achieving zero-carbon steel and cement could be a holy grail to the construction industry, but as Greg Smithies from Fifth Wall Ventures described, there are actions we can take now that can help mitigate significant emissions while those technologies mature. Replacing coal furnaces with hydrogen in material production facilities could offset carbon within those processes by 40%, for example.

And how will the public sector play a role in encouraging a necessary shift in the way we build? We can’t wait for or rely on policy to subsidize an entire transition, making new products and solutions competitive across the board, but there are critical steps that should be taken to help push the industry in the right direction. Our governments can fund R&D and scaling building technologies, introduce disincentivesfor excessive waste, and provide the industry with incentives for shifting toward greener and more efficient practices that cut emissions while housing more people affordably.

Transitioning our building sector to meet the world’s rising housing demands without perpetuating the climate crisis is one of the toughest challenges technology and society has ever faced. While emerging technical solutions hold promise, they will need the support of additional capital — both private and public. The same attention that is focused on electrifying our transportation sector should also be directed toward decarbonizing the buildings we inhabit every day — and ensuring we can scale such innovation to every corner of the world.

“How we introduce more efficient practices that accelerate our construction processes in a cost-effective way while cutting down on the amount of materials needed or wasted in the process will determine the standard of living our built environment is able to provide for generations to come.”