Publication: Construction Industry Value Chain: How Companies are Using Carbon Pricing to Address Climate Risk and Find New Opportunities
Loading...
Date
2018
ISSN
Published
2018
Editor(s)
Abstract
The global construction industry is the world’s largest consumer of raw materials, and constructed objects account for between 25 and 40 percent of total carbon emissions in the world. The industry is projected to grow at 4.2 percent annually between 2018 and 2023 in terms of market value, with expansion opportunities in residential, nonresidential, and infrastructure projects. In parallel, the Paris Agreement and its well-below-2 degrees Celsius target for global temperature increase has signaled an imperative toward decarbonization in the public and private sectors, including creating the impetus for a sustainable construction industry. With increasing populations, urbanization, and the fact that almost 75 percent of the infrastructure that will exist in 2050 has yet to be built, the construction industry is expected only to expand, thus providing a significant opportunity to improve its efficiency and transition toward a low-carbon future. This paper provides a framework for considering the construction value chain and explores existing attitudes and initiatives toward carbon pricing along it, with the objective of enabling companies to identify possible synergies and align their approaches to sustainability. Twelve of the Carbon Pricing Leadership Coalition’s (CPLC) partner companies representing sectors across the construction value chain, including aluminum, cement, glass, infrastructure, equipment manufacturing, construction services, and steel were interviewed to understand their motivations and experiences as they attempt to implement carbon pricing and transition toward low-carbon construction. Finally, the CPLC provides a forum for private companies to engage with governments to ensure the development of well-designed carbon pricing policies to help create a level playing field.
Link to Data Set
Citation
“Carbon Pricing Leadership Coalition; International Finance Corporation. 2018. Construction Industry Value Chain: How Companies are Using Carbon Pricing to Address Climate Risk and Find New Opportunities. © World Bank. http://hdl.handle.net/10986/31055 License: CC BY-NC-ND 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Greening Construction(International Finance Corporation, Washington, DC, 2019)This report examines how to design effective carbon pricing mechanisms (CPMs) for the construction industry. As the world’s largest consumer of raw materials, it accounts for a significant proportion of final energy demand and is responsible for 25 percent to 40 percent of global carbon-related emissions. Demographic trends underline the need for the construction industry to do more to address its contribution to climate change. The world’s population is predicted to reach nearly 10 billion by 2050, with the majority expected to live in urban areas. This will increase demand for buildings and infrastructure; some estimates suggest that 75 percent of the infrastructure needed by 2050 must still be built.Publication Moving Up the Value Chain : A Study of Malaysia's Solar and Medical Device Industries(Washington, DC, 2011-07)This report responds to a request by the Government of Malaysia to examine how Malaysia can move up the value chain in the solar and medical device industries. Through the lens of long-term development, the overall growth performance of the Malaysian economy has been a resounding success story. The Commission on growth and development listed Malaysia as one of only 13 countries that registered sustained growth of 7 percent or more for a period of 25 years or longer. Much of this growth occurred on the back of a buoyant manufacturing sector, which was spurred by Malaysia's export-led industrialization model reliant on foreign direct investment (FDI). Multinational firms favored the country for its geographical location, political stability, reliable infrastructure, elastic supply of low-cost labor and attractive incentives. As a result of this success, Malaysia became the region's third-most open economy to trade, with the electrical and electronics (E&E) industry accounting at its peak for approximately half of all trade. Moving up the value chain concerns the process of shifting the productive activity of a nation, an industry or a firm into those goods and services that generate higher value added. Moving up the value chain is a highly complex undertaking it requires a fundamental reorientation towards innovation as the fundamental driver of growth, supported by a healthy level of investment in human and physical capital. This process should not be confused with simply producing the same mix of products more efficiently and neither should it be construed as implying a shift in focus towards anything high-tech. Moving up the value chain entails new, more complex, and more skill-intensive activities in the manufacturing of products; it requires conducting these at world-class standards of quality, productivity and competitiveness; and, as long as higher value is created, it does not matter whether these final products are low-tech, medium-tech or high-tech. This study is as much a process as a product. This report is the outcome of the study. The report sets out a conceptual framework, examines the global industry context, analyzes Malaysia's position in the global value chain, identifies industry opportunities and bottlenecks, and suggests policy adjustments. This study is however more than just a report. The study is also accompanied by a process of capacity building to train policymakers and industry participants in global value chain analysis, so that this work can be updated, extended, and replicated to other industries. The study also constitutes an attempt to promote a novel way of thinking about identifying and seizing value chain opportunities in ways that emphasize bottom-up, decentralized, collaborative and consultative approaches.Publication Development and Climate Change(World Bank, Washington, DC, 2008)This strategic framework serves to guide and support the operational response of the World Bank Group (WBG) to new development challenges posed by global climate change. Unabated, climate change threatens to reverse hard-earned development gains. The poorest countries and communities will suffer the earliest and the most. Yet they depend on actions by other nations, developed and developing. While climate change is an added cost and risk to development, a well-designed and implemented global climate policy can also bring new economic opportunities to developing countries. Climate change demands unprecedented global cooperation involving a concerted action by countries at different development stages supported by "measurable, reportable, and verifiable" transfer of finance and technology to developing countries. Trust of developing countries in equity and fairness of a global climate policy and neutrality of the supporting institutions is critical for such cooperation to succeed. Difficulties with mobilizing resources for achieving the millennium development goals and with agreeing on global agricultural trade underscore the political challenges. The framework will help the WBG maintain the effectiveness of its core mission of supporting growth and poverty reduction. While recognizing added costs and risks of climate change and an evolving global climate policy. The WBG top priority will be to build collaborative relations with developing country partners and provide them customized demand-driven support through its various instruments from financing to technical assistance to constructive advocacy. It will give considerable attention to strengthening resilience of economies and communities to increasing climate risks and adaptation. The operational focus will be on improving knowledge and capacity, including learning by doing. The framework will guide operational programs of WBG entities to support actions whose benefits to developing countries are robust under significant uncertainties about future climate policies and impacts-actions that have "no regrets."Publication Utility-Scale Solar Photovoltaic Power Plants(Washington, DC, 2015-06)With an installed capacity greater than 137 gigawatts (GWs) worldwide and annual additions of about 40 GWs in recent years, solar photovoltaic (PV) technology has become an increasingly important energy supply option. A substantial decline in the cost of solar PV power plants (80 percent reduction since 2008) has improved solar PV’s competitiveness, reducing the needs for subsidies and enabling solar to compete with other power generation options in some markets. The World Bank Group (including the International Bank for Reconstruction and Development, the International Development Association, International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency) helps client countries secure the affordable, reliable, and sustainable energy supply needed to end extreme poverty and promote shared prosperity. The approach mirrors the objectives of the sustainable energy for all initiative - achieving universal access, accelerating improvements in energy efficiency, and doubling the global share of renewable energy by 2030. The World Bank Group recognizes that each country determines its own path for achieving its energy aspirations, and that each country’s transition to a sustainable energy sector involves a unique mix of resource opportunities and challenges, prompting a different emphasis on access, efficiency, and renewable energy. The objective of this guidebook is to enhance the reader’s understanding of how to successfully develop, finance, construct, and operate utility-scale solar PV power plants. The guidebook focuses on aspects of project development that are specific to solar. From this perspective it covers all aspects of the overall project development process including site identification, plant design, energy yield, permits and licenses, contractual arrangements, and financing, giving sparser coverage to general project development basics that are not specific to solar. This guide covers the key building blocks to developing a successful utility-scale solar power project (the threshold for utility-scale depends on the market, but generally at least 5 megawatt (MW).Publication Distributional Impacts of Carbon Pricing on Households(World Bank, Washington, DC, 2020-05-01)Carbon pricing policies that are aligned with the Paris Agreement objectives will have positive and negative socio-economic impacts on society. Impacts of unabated climate change are expected to disrupt economic development and disproportionally affect the poorest parts of the population, especially in lower-income countries. In response, through the Paris Agreement, the international community pledged to limit global warming to well below 2 degrees Celsius above pre-industrial levels. Carbon pricing has been highlighted as a crucial prerequisite for effective climate change mitigation. Carbon pricing is essentially a payment required to emit one ton of CO2 into the atmosphere. This makes production or consumption of carbon-intensive goods and services more expensive. While carbon pricing policies aim to shift behavior towards low-carbon alternatives, they can also result in unintended distributional effects for households, especially when lower-cost alternatives are not available. The negative distributional impacts can be offset through specific policy design choices, but efforts to do so should not undermine the goal of incentivizing emissions reduction.
Users also downloaded
Showing related downloaded files
Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Global Economic Prospects, January 2024(Washington, DC: World Bank, 2024-01-09)Note: Chart 1.2.B has been updated on January 18, 2024. Chart 2.2.3 B has been updated on January 14, 2024. Global growth is expected to slow further this year, reflecting the lagged and ongoing effects of tight monetary policy to rein in inflation, restrictive credit conditions, and anemic global trade and investment. Downside risks include an escalation of the recent conflict in the Middle East, financial stress, persistent inflation, weaker-than-expected activity in China, trade fragmentation, and climate-related disasters. Against this backdrop, policy makers face enormous challenges. In emerging market and developing economies (EMDEs), commodity exporters face the enduring challenges posed by fiscal policy procyclicality and volatility, which highlight the need for robust fiscal frameworks. Across EMDEs, previous episodes of investment growth acceleration underscore the critical importance of macroeconomic and structural policies and an enabling institutional environment in bolstering investment and long-term growth. At the global level, cooperation needs to be strengthened to provide debt relief, facilitate trade integration, tackle climate change, and alleviate food insecurity.