Low Carbon Building Market Trends

Market Driver - Increasing Awareness of Climate Change

As the impacts of climate change become more apparent through extreme weather events, people are becoming increasingly concerned about global warming. As awareness increases, more people are educating themselves on the relationship between buildings and climate change.

The materials, construction, and day-to-day functioning of a conventional building releases a lot of carbon into the atmosphere over its lifetime. Customers are realizing that the choices made regarding a building's design and operation can significantly help or hamper global efforts to curb climate change. This realization is driving demand for low carbon buildings which are energy efficient, use sustainable materials, and integrate renewable energy to reduce their environmental impact.

Developers and building owners have taken note of this shifting consumer sentiment. They know that being perceived as sustainability leaders can help their branding and give them a competitive edge in the low carbon building market. Manufacturers of green building products have ramped up research & development to meet the growing needs of an eco-conscious customer base. Overall awareness of how buildings link to global warming has become a major driver propelling the low carbon building market.

Market Driver - Stringent Government Regulations Promoting Green Construction

In response to public demand for stronger climate policy, many governments worldwide have introduced stricter building codes and regulations in recent years. These are aimed at curbing emissions from the building sector by mandating greater energy efficiency in new construction.

For example, the European Union has set sector-specific benchmarks through its Energy Performance of Buildings Directive which member states must implement at a domestic level. In the US, states like California and New York have led the nation with some of the toughest low carbon building standards domestically.

Financial incentives are also being put in place to encourage green building practices. Tax credits are offered for developments that pursue third party green certifications from LEED, Living Building Challenge, Passive House etc. Public funding supports research into innovative low carbon building materials and systems.

Governments are demonstrating that green building is a public policy priority, generating greater investor interest and private sector commitment towards low carbon solutions. Over time, regulations are anticipated to become even more rigorous, ensuring this remains a main growth driver for the low carbon building market.

Market Challenge - Limited Industry Expertise in Low-carbon Construction

One of the key challenges currently facing the low-carbon buildings market is the limited industry expertise in designing, building and operating truly low-carbon structures. While there is growing awareness of the importance of reducing embodied and operational carbon in buildings, traditional building practices were not developed with sustainability as a core priority.

As a result, most construction firms, architects, engineers and tradespeople have relatively little hands-on experience delivering projects that minimize carbon footprint. This creates execution risks around ensuring designs that prioritize low-carbon outcomes can still be built cost-effectively within typical construction timeframes and budgets. There is also a shortage of specialists with in-depth knowledge around evolving low-carbon building technologies, materials, and processes.

Overcoming these expertise gaps will require significant training and upskilling of the existing industry workforce. Players in the low carbon building market will also need to change procurement processes to properly incentivize low-carbon design and construction practices.

Market Opportunity - Integration of Renewable Energy Systems like Solar and Wind in Buildings

One major opportunity for the low-carbon buildings market lies in more comprehensive integration of renewable energy systems directly into building design. By generating clean power on-site through solar photovoltaic panels, small wind turbines, or other renewable microgeneration technologies, buildings can substantially reduce their reliance on dirtier grid electricity and lower operational carbon footprint.

With renewable energy technology costs declining, building-integrated applications have become increasingly economically viable compared to traditional construction. Forward-looking developers see significant value in developing expertise around optimizing building envelopes, roofs, facades and other elements to harvest clean energy.

As policies like renewable portfolio standards increase demand for such systems, skills around “building as a power plant” have potential for growth. Adoption of integrated renewables also helps building owners reduce long-term energy costs through revenue from excess power fed back to the grid.