Why new construction solutions are not getting into market

The slow adoption of innovative and climate-friendly solutions in the construction sector has been attributed to outdated regulations and protectionism by larger industry players.

A recent conference, which brought together climate investors, startups, policymakers, and academics, highlighted the struggles innovators face in introducing their ideas to the construction market.

Experts at the conference suggested implementing a carbon tax to ensure that novel, climate-friendly construction materials can find their place in the market and compete fairly.

Adital Ela, Founder and Chief Executive of Criaterra Innovations, a company focused on creating eco-friendly construction materials, explained that the biggest challenge for innovators is bringing their products to market.

“If an innovator has a major product, like blocks, they may find it difficult to penetrate the market due to lack of regulations or opposition from existing businesses whose value chain shares the same product,” Ela said.

To address this challenge, Criaterra Innovations started with wall tiles. “Ceramics is an impactful market on the environment, but people often consider tiles a less important product,” she noted.

Ela suggested that a more effective way to introduce new products is through experts like architects and engineers who can vouch for the innovator’s work as being as good or better than existing technologies while also being environmentally friendly.

“You have to be ready for an unforgiving market. Identify all stakeholders so that they buy into your vision on how they are going to make money,” she advised. Once accepted, scaling up to meet industry demand and obtaining necessary certifications is crucial.

Ela also mentioned that regulations vary significantly across different markets, making it essential to aim for seamless integration rather than being revolutionary. She pointed out that legacy businesses using outdated technologies often hinder new innovations from entering the market.

“Many masonry blocks require cement to be accepted as building materials. We need to change regulations,” she emphasized.

Kenya has been working on a new building code to replace an outdated version from 1968. In February, the Cabinet Secretary in charge of Lands, Public Works, and Housing gazetted the National Building Code 2024, which aims to introduce energy-efficient construction methods in response to climate change.

The lack of regulations in many jurisdictions extends to the circular economy in the construction industry. Dr. Ricardo Osiroff, Chief Executive of Construction Innovation Hub by Shapir Engineering, an Israeli firm, noted that governments should not only impose a carbon tax but also create an enabling environment through regulations for a circular economy.

“There are billions of tonnes of dumped materials that we cannot use because regulations do not allow it, and there is no infrastructure to recycle,” Osiroff said. He highlighted that construction materials contribute 10 per cent of global emissions, with each tonne of concrete creating one tonne of carbon dioxide.

“The next generation of construction materials should reduce the amount of pollution and emissions our industry creates,” he said during the PLANETech World conference held in Tel Aviv, Israel.

Jack Lev, Co-founder & Partner of MoreVC, a venture capital firm that invests in seed and early-stage technology startups, proposed a global declaration of a carbon tax on construction materials. “If we understand we have a problem, we need to price carbon into the product. That’s what the world needs. It will make every innovation or startup compete fairly,” he said.

A 2019 report by the International Finance Corporation (IFC) titled “Greening Construction: The Role of Carbon Pricing” advocates for carbon pricing, noting that the sector is energy-intensive and is the world’s largest consumer of raw materials, responsible for 25 per cent to 40 per cent of global carbon-related emissions.

“Demographic trends and the expected increase in future construction demand underline the need for the industry to do more to address its contribution to climate change,” the report states. The growing global population, estimated to reach 10 billion by 2050, will drive increased demand for buildings and infrastructure.

This increase in demand is against the Paris Climate Agreement target of limiting global temperature rise to two degrees above pre-industrial levels. “Putting a price on carbon can be an effective way for governments and organizations to plan for a low-carbon future,” the report concludes.