Theme article: Energy and material solutions have a key role in the reduction of emissions from the built environment

The reduction of emissions from the built environment is a crucial part of climate change mitigation. Buildings generate emissions both at the construction stage and when they are used through energy consumption. The energy efficiency of buildings has already been improved, and investments related to energy efficiency have grown significantly. The next step is to highlight the role of low-carbon construction materials in the construction industry of tomorrow. In addition, digital solutions can be used to reduce emissions throughout a building’s life cycle.

Emissions from the built environment are off track to reach the target

During both the construction phase and occupancy, buildings contribute to approximately 37%1 of global emissions, so their role cannot be ignored when talking about solutions to mitigate climate change. The carbon neutrality target for buildings has jumped to a new ambitious level in the past few years, but at the same time, the energy demand by buildings has increased as the workforce has moved to hybrid working and developed countries have increased their use of fossil fuels in buildings. These occurences have caused the emissions from building use to reach a new record level. Other external economic factors, such as energy price variations, the rising cost of living and the impact of rate increases on investments in low-carbon construction projects, are also causing significant risks to the decarbonisation trajectory.

The Global Status Report for Buildings and Construction1 was published at the COP28 conference in Dubai. The gap between actions in the buildings and construction sector and climate targets is growing, and the sector will not meet the set CO2 reduction targets by 2050 if it stays on its current path. Emissions from the sector have not decreased from the 2015 level and as they are, they are 40% higher than the target level of the emissions reduction pathway. On the plus side, there has been significant growth in investments in improving the energy efficiency of buildings. Despite the positive development, the efforts to improve energy efficiency are not at the level required to be in line with the target pathway.

Attention must be paid to the carbon footprint of construction and building materials

To maintain the CO2 reductions achieved through energy efficiency, other immediate action needs to be taken to reduce the carbon footprint of buildings. In addition to the operational emissions from buildings, construction and, especially, construction materials play a key role in the emissions generated by the sector. The share from construction materials will grow even further as energy efficiency improves. The production of construction materials, such as concrete, steel and cement, is already a significant source of emissions at global level. According to the OECD’s estimates, the use of raw materials will double by 2050. This development is primarily driven by increased consumption of mineral resources, including construction materials and metals, particularly in developing countries2. Construction, renovation and demolition projects also generate significant amounts of waste, of which 35% is estimated to end up in landfills even though the waste materials could be reused. In other words, a comprehensive life cycle approach from the carbon footprints of construction materials to the treatment and recycling of waste will be needed for the emissions from the built environment to meet the reduction target.

The carbon footprint of construction can be reduced by improving material efficiency, supporting the introduction of low-carbon or bio-based solutions, and promoting the use of traditional production methods for construction materials. Moreover, efforts to improve the sustainability of the building stock and extend the life cycle of buildings can help avoid unnecessary construction of new buildings. Experts highlight the potential of implementing material efficiency strategies in the building stock. In G7 countries alone, implementing material efficiency strategies, including the use of recycled materials, could reduce greenhouse gas emissions generated through the life cycle of the materials used in residential buildings by over 80% by 20502. However, the demand for recycled materials is outpacing their supply, especially in terms of carbon-based metals such as steel. Therefore, we must focus to explore additional measures that support low-carbon construction.

Growing market potential is expected for low-carbon construction materials

According to a survey conducted by Ramboll, Finland is a pioneer in the property industry when it comes to working towards carbon-neutral buildings3. Finland is also a pioneer in the development of regulations for low-carbon construction, as Finland’s roadmap for low-carbon construction aims for a more ambitious trajectory than that currently required by the EU. Finnish construction companies recognise that the industry is taking steps towards low-carbon construction, and they believe the development will create market potential in the short term, especially in the production of low-carbon construction materials.

Concrete is the most used construction material in Finland, and there are situations in which it cannot be replaced with other materials. The emission load of concrete mainly consists of its carbon-intensive cement production, but researchers are developing binding agents that could replace cement partially or in full. Three-quarters of the cement used in Finland is produced in Finland, and this high share plays a significant role when it comes to reducing emissions from construction. Emissions from the cement industry can also be reduced by electrifying the production and using carbon capture, usage and storage (CCUS) technologies. However, these technologies are still in development, and it is expected to take years before they can be widely adopted.

Steel is also one of the most emission-intensive construction materials. In Finland, steel manufacturers are striving to reduce emissions by improving energy efficiency, increasing the share of recycled steel in production, and using hydrogen reduction. Steel is entirely recyclable, and its high value contributes to a substantial recycling rate, both in Finland and globally. However, the supply of recycled steel is not enough to meet the increasing demand for construction materials, which means that other alternative solutions are needed. Hydrogen-reduced steel is a step in the right direction, but it is not yet commercially available.

In recent years, wooden products have increased in popularity among low-emission building materials. According to the Ministry of the Environment, wood buildings will represent 45% of public newbuilds by 20254. Wood buildings function as carbon storage during their life cycle, and is a good long-term application of wood as long as sustainable harvesting practices and changes in carbon sinks are taken into account. Wood is also used in wood fibre insulation materials, which are attracting growing interest both in newbuilds and in renovations.

Digital solutions as an enabler of low-carbon construction

The improvement of information management and utilisation is being widely implemented in Finland as part of the accelerated pace of digitalization5. The goal is to utilise the possibilities provided by digitalisation effectively across society. According to the Digital built environment vision for 2030, Finland will have a living environment that is sustainable, based on the world’s best knowledge and creates well-being. Digitalisation gives us new information that can indirectly promote goals such as emissions reductions and other positive developments. In the construction industry, material and product knowledge produces valuable information throughout a building’s life cycle.

Energy-efficient and low-emission construction starts at the planning state of buildings by selecting materials such as low-carbon concrete or cement, using wood, choosing recycled or reusable steel, and optimising the number of structures. Digital solutions provide tools for estimating not only the emissions from materials but also the environmental impact of heavy machinery and other resources used in construction, such as fuel and water consumption, waste management and the use of natural resources. In other words, digital solutions facilitate the use of information as a decision-making tool.

The Finnish Climate Fund’s portfolio companies contribute to the promotion of low-carbon construction

Reducing emissions from construction requires several measures, such as improving energy efficiency, using low-carbon building materials and adopting the principles of circular economy and material efficiency. In the Finnish Climate Fund’s portfolio, emissions from the construction sector are addressed through material efficiency and digital solutions. The solutions accelerate emissions reductions in the industry and promote the principles of circular economy by, for instance, reducing the amount of waste generated.

Betolar utilises industry side streams in concrete production
  • Founded in 2016, Betolar is a growing Finnish material technology company. The company has developed Geoprime, a side stream -based low-carbon binding agent that utilises industry by-products instead of virgin raw materials. The solution’s digital platform makes it possible to identify potential by-products for producing the binding agent and to create recipes.
  • With the side stream -based innovative binding agent, the CO2 emissions from concrete raw materials can be reduced by up to 80% compared with traditional concrete products. This has the potential to achieve significant emissions savings, as the company’s target is to reduce emissions by up to 150 Mt of CO2-eq by 2030.
  • The Finnish Climate Fund has decided on a capital loan of EUR 7 million for the development of Betolar’s digital platform and the services based on the platform. The digital platform allows for more efficient utilisation of the by-products used as raw material for cement.
Infrakit reduces emissions from infrastructure construction with digital software
  • Founded in 2010, Infrakit offers cloud-based data management services for infrastructure construction sites. Infrakit’s solution has been used in over 3000 projects, and it offers tools for tracking the site’s carbon footprint, monitoring the emissions to be generated and optimising the emissions during the construction stage.
  • The software makes it possible for Infrakit’s customers to achieve indirect emissions reductions with the software’s tools for data management by allowing customers, for instance, to reduce the consumption of fuel used by the construction machinery. If the business plan is successful, the software could help reduce emissions by roughly 3 Mt of CO2-eq in 10 years.
  • The Finnish Climate Fund has decided on a capital loan of no more than EUR 6 million for the development of the company’s solutions that promote emission reductions and to accelerate the adoption of the software abroad.

To read more about The Finnish Climate Fund’s portfolio, please visit Portfolio – Climate Fund.

1The decarbonisation journey of buildings & construction – How far have we come? A global perspective (

2UN 2022 Global Status Report for Buildings and ConstructionThe status report for 2023 will be published on March 2024.

3Gaia Consulting (2022): Vähähiilinen rakennettu ympäristö – katsaus toimialan nykytilanteeseen

4 Wood in public construction – Ministry of the Environment (

5 Digital built environment – Ministry of the Environment (

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