Be prepared for a new carbon-based economy – where the main commodity is strictly regulated. Elaine Knutt looks at the implications for construction

As the news from the financial sector has worsened over the past month, the glitzy towers of the City and Canary Wharf still put on their free light show for the rest of London every night. But even as the credit crunch dominated the headlines, we heard news of an even more momentous shift that will not only turn off the lights, but give a new focus to the sustainability debate – the impending carbon crunch.

Last month, new energy and climate change secretary Ed Miliband adopted the target of an 80% reduction in C02 emissions by 2050 recommended by the government’s independent Climate Change Panel. Forget (for a while, at least) the problems of an economy where capital and investment have stopped flowing. We’re now on the path to an economy where carbon – in the form of the energy we burn, the materials that go into buildings and the products we consume – is a rationed and restricted commodity.

‘We’re going to be living in a carbon-controlled world, where carbon has a financial price associated with it,’ says John Alker, head of public affairs at the UK Green Building Council. ‘I was at a presentation from Deutsche Bank the other week. You’d think they’d have other things on their mind, but actually they were talking about factoring carbon into every decision they make. Increasingly, I think that’s going to be the case for all of us.’

In itself, another sustainability target is not exactly news to the construction sector. To an industry that’s geared up to Part L, ISO 14001, the Code for Sustainable Homes, the BRE Green Guide, BREEAM, zero carbon housing et al, it’s like a wake-up call to someone who’s been up since dawn smelling coffee.

But its significance lies in the changes it will effect in the wider economy, such as the five-yearly ‘carbon budgets’ that will set targets for every industry as stepping stones to the overall 2050 goal. Encompassing retail, manufacturing and service industries as well as construction, the first budget is expected in December. Once the ‘price’ of carbon becomes an issue we are all familiar with, there will be a knock-on impact on how we think about sustainable construction, with carbon content of buildings likely to carry more weight in regulation, codes and specification.

The government is already laying the groundwork for our carbon-controlled economy. From 2010, under the new Carbon Reduction Commitment (CRC), the industry’s biggest clients, including local authorities, high street retailers, major property owners and others that pay around £500,000 a year for electricity, will be co-opted into a new emissions trading scheme and required to buy permits for each tonne of CO2 they emit. The scheme will put a direct price on carbon and create a financial incentive for reducing emissions.

The CRC could become a more effective lever of change than energy performance certificates, obligatory since 1 October for all buildings being sold, rented or marketed. EPCs simply ask building owners to record carbon emissions, but from 2010, they’re going to have to pay for them. ‘I think [the CRC] will have a major impact on refurbishment projects,’ says Alker. ‘The worse the buildings perform, the more owners will have to pay for their permits.’

We will also see more stress on the carbon footprint of buildings and their materials. To date, the issue has been a bit of a minefield. What sounds quite simple – measuring the carbon content of the raw materials, the manufacturing process, and packaging, transport and distribution – has opened a Pandora’s box of complications and quarrels.

The worse buildings perform the more owners will have to pay for their permits.

But a new government-backed standard methodology on how to calculate carbon footprints was published at the end of of October. Developed over 18 months, PAS 2050 (publicly available specification) was drawn up by the Carbon Trust, the British Standards Institute and Defra. The document also underpins a new carbon labelling system to be rolled out in 2009, with paving and landscape company Marshalls among the early adopters (see box below).

That news will be welcomed by many specifiers, who are already finding that clients such as the Olympic Delivery Authority are pushing suppliers to give a carbon rating for the products they use. Terry Keech of Calford Seaden has been frustrated by the opacity surrounding embodied carbon. ‘You try to get the embodied energy of products, and no manufacturer will tell you. We should be brave enough to put the embodied energy on materials, in one umbrella scheme.’

Manufacturers are also ready for carbon labelling. BRE offers environmental profiles of their products, which are assessed under 13 categories, including ethical sourcing and toxicity. But lately, more and more manufacturers have been asking for carbon ratings. ‘It’s only one factor out of 13, but it’s becoming a hot issue,’ says Paul Gibbon, director of materials at BRE. ‘I see it becoming more important as we move forward.’

Embodied carbon is being brought to the fore by another factor. Traditionally, it has been estimated as being responsible for one fifth of a building’s overall footprint over a lifespan of 60 years. But as we become more skilled at cutting energy emissions from buildings, services consultant Battle McCarthy has recalibrated the ratio of embodied carbon to operational energy from 20:80 to 40:60. Its offshoot consultancy dcarbon8 (see box below) has now put that statistic at the heart of an integrated carbon-cutting scheme.

Of course, embodied carbon is never going to be the sole specification criteria. ‘If you’re designing a building, you could use low-carbon rated products, but put them together in the wrong way,’ notes Jane Thornback, environmental policy adviser at the Construction Products Association. But the shift could promote some materials at the expense of others. Where there is a disconnect between energy performance and embodied energy – such as PVC windows with low U values and but high embodied carbon content – the carbon label will carry the day.

To date, the legislative drivers on green building – Part L of the Building Regulations, the Code for Sustainable Homes – are based on performance in use and air-tightness rather than carbon. But experts foresee a day when the regulations will become more carbon-centric.

‘With the focus in the media on energy prices and peak oil, people will start to focus more on the carbon effect, and the carbon profile of the elements,’ says Peter Caplehorn, technical director of architect Scott Brownrigg. ‘But embodied carbon will have more of a contribution to lifecycle carbon, so looking at the materials content is the next logical step in the evolution of construction codes.’

To an industry struggling under the credit crunch, the idea of a carbon crunch may seem just too onerous to contemplate. But there’s little doubt that it’s coming, and that every UK business will be affected. In the past, the construction sector has complained that it is shouldering responsibility for climate change while other industries carry on regardless. Now, as with the credit crunch, the carbon crunch will be an upheaval that affects everyone.