Brazil is famous for sustainability: a lack of it. But a new wave of green legislation and client requirements is creating demand for skills local contractors don’t have - and UK specialists are first in line for the work. Luke McLeod-Roberts reports in the second of our special features on Brazil
There is billions of pounds worth of construction work in Brazil. The problem is, the country’s got plenty of skilled companies to do it. Competing with local firms is a serious challenge for UK firms wanting to get a foot in the door. But there are some gaps in Brazilian expertise that can be used as entry points into the wider market - and one of the biggest is sustainability.
While Brazil is generally recognised as a world leader in engineering, hydroelectric, aerodynamics and mechanics, its lack of experience in sustainability is generating unparalleled opportunities for international firms, especially as Brazilian banks, private developers and international organisations like Fifa begin to demand higher green standards in projects country-wide.
So are UK firms likely to get picked for the work? It seems so. A survey recently conducted by Building showed that 60% of Brazilian firms asked ranked the UK as “good” or better in this area. The opportunities are there for the taking. The only questions are where exactly, and how?
Times are changing
Historically, Brazil’s behind-the-times approach to sustainability has been clear to see: every day its plethora of natural resources is plundered and its famous forests felled to provide land for energy projects and wood for housing and offices. Shanty towns sprawl unregulated, eroding soil and spewing waste into rivers, roads are choked with traffic and contractors have, in the past, tended to put short-term cost savings over environmental concerns.
But all this is all starting to change - albeit slowly - as Manuel Carlos Reis Martins, engineer and director of the environmental think tank Fundacao Vanzolini, explains: “Brazilians are becoming more and more concerned with environmental questions. It’s not yet at European levels, but it is beginning. And in Brazil when something is in fashion, everybody wants it.”
Examples of a shift towards greener building include the fact that Caixa Economica Federal, the public bank that is the largest funder to the Brazilian housing sector, now stipulates that all of the schemes it finances must prove that wood used is legally procured. As the government invests in income redistribution programmes and spends £107bn on low-income housing through its Minha Casa Minha Vida (MCMV) programme, the rate of growth of the informal housing sector is slowing down, which helps to keep unregulated land occupation in check. An additional £8.5bn is being invested in sanitation projects nationally to 2014, £7.3bn from public sources.
The private sector is also creating momentum towards sustainability. Developers are increasingly aware of the long-term cost savings of incorporating sustainability at an early stage. “Clients are demanding it, because they are often involved in the facilities management and have an understanding of long-term cost,” says Martins. “And the contractors are beginning to respond.” Some of the contractors building stadiums in the 2014 World Cup are using metal moulds to produce the concrete, saving on wood, and are planting trees near the installations.
So, the clients are getting on board with sustainable construction - and legislation is starting to back up the green agenda, meaning that developers and contractors could soon be forced to adopt more sustainable building approaches anyway.
“There’s a bill in the Sao Paulo state [assembly] for minimum environmental criteria that developments must follow in order to be approved [it covers waste, consumption of water and energy and impact on the local neighbourhood]. This is a start,” says Martins.
Brazil also recently passed a strict environmental code that imposes retroactive fines on companies found guilty of deforestation. Speculation has mounted in the local press that this move came as a result of pressure from Fifa for the next World Cup host to be seen to be taking a responsible attitude to sustainability.
The bottom line is that as sustainability regulation creeps into contracts and client requirements, it is now up to UK firms to use this opportunity to get a foothold. Stephen Lowry is project manager for the Americas at Halcrow, which now has a track record of environmental management in Brazil. He says that if Brazil didn’t require the sustainability services the group offers, then: “We wouldn’t be brought in at all.”
And it was the need for outside capability in the environmental sector that provided the impetus for Aecom’s entry into the Brazilian market 13 years ago. The firm got a job providing environmental advice for a consultancy operating in the oil and gas sector in 1998, and environmental work now accounts for about 90% of the firm’s Brazil business, split roughly 50:50 between the off-shore oil and gas sector and investigation and clean-up of polluted areas.
Paulo Coelho, Aecom’s local managing director in Brazil, says that environmental work is a “fragmented market [in which] no one actor dominates”, so there is plenty of room for increasing market share.
Where the work is
So, where to look? First up, residential.
“The real estate market has been breaking records,” says Paulo Safady Simao, chief executive of the construction lobby group CBIC. “Between 2003 and 2010 the value of investments in the sector increased from R$2bn (£0.8bn) to R$56bn (£22bn),” he says. This growth is pushing up land prices and, together with a new-found interest in sustainability, is leading to the revitalisation of inner-city neighbourhoods.
Sao Paulo municipality is developing the Nova Luz scheme across 50ha in the city centre. Aecom was appointed urban planner as part of a consortium including Concremat, City, and the Fundacao Getulio Vargas. The scheme involves redeveloping homes and improving the public realm, including tree planting and the creation of two new parks. The environmental impact, feasibility and urban planning studies are to be delivered later this year. At £4.8m, the project is relatively small, but it is a taste of what could come. “This is the first major urban regeneration in Brazil,” says Coelho.
The federal government has also put sustainability at the heart of MCMV. It stipulates that all of the scheme’s developments in the south, south-east and centre-west must include solar heating for water. The Ministry of Cities subsidises the contractor to include solar heating up to the value of £700 per house and £970 per apartment.
“As well as becoming concerned with the environment, people are becoming concerned about cost. For example, when I use solar energy my electricity bill is lower. When you’re talking about the low-income sector this has a lot of weight,” says Maria Cristina Chiquetti Carnier, sustainable business manager at the Caixa, which administers the housing scheme.
However, a scheme like MCMV is unlikely to generate many direct work opportunities for international firms. Developments are being designed along modular lines and built - on the whole - by Brazil’s major contractors. But Carnier does see a role for overseas firms in providing training on sustainability, particularly to the project designers.
“There’s an idea among project designers that sustainable building has to be more expensive. But that’s not always the case. It would be interesting if companies that work on this area outside [Brazil] could provide training,” she says.
The commercial sector is also offering opportunities for sustainability experts.
The skylines of Brazil’s cities feature more and more eco-friendly high rises. In 2007, the Eldorado Business Tower, developed and built in Sao Paulo by Brazil’s ninth-biggest contractor, Gafisa, broke new ground by becoming the first Latin American project to achieve the LEED platinum seal from the US Green Building Council. The company used water saving techniques to reduce the average water fees by about half and also procured supplies from within 800km of the city, to reduce supply chain pollution.
Suppliers of construction materials and products will also see opportunities in the energy sector. The national infrastructure investment plan, the Plano de Aceleracao de Crescimento (PAC), outlines a preference for “clean energy”, such as wind, biofuels and hydroelectric power. Overall this area needs about £400bn of investments, according to EPE - the national energy research body - in order to meet rising demand.
An example of the scale of some of these projects is seen in the £10.6bn Belo Monte hydro plant in the northern state of Para. The project has been criticised for the amount of land that will be flooded to make way for what will be the third largest such development in the world, but its supporters argue that it will produce zero-carbon energy for the country and that contractors have made commitments to offset any potential adverse impact by investing in sanitation, health and education within the local communities. Although this is being built by the Norte Energia consortium, which is composed of Brazilian contractors including Queiroz Galvao and Galvao Engenharia, there are opportunities at supply chain level and turbine contracts have already been signed with Alstom, Voith Siemens and Andritz.
Zero-carbon technology has also been prioritised on the transport side of the PAC. Brazil hopes to build a £21.5bn high-speed rail project linking Rio and Sao Paulo (see feature, “Seek your fortune”, published 1 July), on which Halcrow is providing technical advice to the government. It is expected that the expertise of UK firms in developing rail projects will give them a head start. Indeed, a survey of the Brazilian construction market by Building found that 73% of clients thought the record of UK firms in this area was either “excellent” or “good”.
Another area of potential for international firms is the 2014 Fifa World Cup. “There are very specific areas in which Brazil is lacking expertise for these events and sustainability is one of them,” says Ligia Micas, spokesperson for the architects and engineers association Sinaenco, which is involved in monitoring the progress of the projects.
To date, five of the 12 stadium projects are in the running for LEED certification. However, some sources argue that a rushed timetable as a result of delays to starting construction work and a lack of planning mean that only two of them - those in Brasilia and Belo Horizonte - may achieve this accreditation.
“Our culture of construction is about wanting to start building right away, perhaps investing less in the earlier phases of planning. [But] if you only come to think about sustainability at a later stage you discover that it ends up costing more,” comments Fundacao Vanzolini’s Martins.
He thinks funders may increasingly make sustainability a precondition for financing new developments.
The demand for sustainable building solutions is growing. Brazil will need experts in this area - particularly project managers, those who are able to provide training, and suppliers of ecological products to help deliver these projects and to protect its immense natural beauty for future generations. And this is where UK contractors can come in.
Concrete makes a comeback in Brazil
The Brazilian cement industry is a global reference point in terms of reduction of carbon emissions. Studies carried out by the World Business Council for Sustainable Development’s Cement Sustainability Initiative indicate that CO2 emissions per tonne of cement are lower in Brazil than in China, India and the CIS.
This is due to the Brazilian cement industry’s increased use of low carbon fuels, the fact that it has co-processed waste matter and improved energy efficiency. For many years it has also used residue from other sectors, such as blast furnace slag, fly ash and limestone filler as additives in the cement as well.
This is very important in terms of sustainability given the salient role of cement in the Brazilian construction sector. The first Brazilian highway to be built with this material was back in 1925. While the use of cement suffered a long-term decline between the 1970s and 2000s, this has changed recently. The recent widening and extension to the BR-101 highway between the north-eastern cities of Feira de Santana in Bahia and Natal in Rio Grande do Norte was built out of concrete, which, given the heavy use by freight vehicles and the tough climatic conditions, was chosen because of its durability and ability to sustain heavy loads.
It’s also been a popular building material in the informal housing sector. While studies suggest that its use will reduce with the growth of the formal housing sector ABCP - a cement trade association - claims that industrialisation of the supply chain and better training means that this hasn’t been the case in Brazil. Around 92% of all units built under the Minha Casa Minha Vida housing programme use cement, the organisation says.
CONCRETE SHOW: Sao Paulo 31 August to 2 September
This year’s Concrete Show South America presents the latest technologies in machineries, equipment, commercial construction products, services and constructive systems from leading industry suppliers.
For more information, visit www.concreteshow.com.br/en/
How to crack Brazil
Building’s White Paper on the Brazilian market is now available to download, providing need-to-know data on clients and projects, and exclusive information on attitudes to UK firms. For more information or to order a copy, go to www.building.co.uk/whitepapers