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AkzoNobel: Sustainability trends drive change in housing industry

<p>What&#39;s the next step for building smarter cities? The sustainability head of the chemicals and coatings company explains.</p>

Meeting the twin global challenges of more people and dwindling resources are the key issues facing home builders today. But with more than 9 billion people expected on our increasingly resource-scarce planet by 2050, these issues are expected to be even more critical in the future.

This situation is exacerbated by the dramatic rise of new middle classes in countries across the world, all demanding higher standards of living, including air-conditioned houses and cars, computers and other technologies, all of which require energy.

Rapid urbanization is also driving change. It is estimated that every week a new city of 1.5 million people will have to be built over the coming decades to meet this demand, and that by 2030, 70 percent of the world’s population will live in mega-cities.

We also need to help the approximately 2 billion people today who do not live in decent houses or have access to electricity or safe drinking water and sanitation.

If we are to meet the demands of the new middle classes and improve the lives of an increasingly urbanized population, what changes need to happen?

Many believe the answers lie in the creation of “smart cities” with modern infrastructures that create a new urban model. The development of these cities — which offer smart housing tied to a smart grid, more sustainable transport and more locally sourced food — is a great challenge, but also a big opportunity for business and society.

In the developed world, the process of retrofitting to upgrade and improve resource efficiency in the housing sector will be very important. Providing effective insulation, access to renewable energy and efficient recycling systems ultimately will need to become industry standards.

But perhaps the greatest challenge (and opportunity) lies in new housing — the majority of which will be constructed in emerging economies. For instance, in China, the government wants to facilitate the expansion of Beijing’s population from 20 million to 40 million, while still maintaining the same environmental footprint. The sustainability portion of this plan has been implemented, not because the government officials are environmental activists, but because they have no other option. Beijing simply will not be habitable in the future without such measures. This plan largely will be achieved through new legislation and tightened regulations. Successful home builders in Beijing will need to build houses that are much more energy-efficient, use more renewable materials and are provided access to renewable energy.

Across the globe, environmental legislation is increasing and this is affecting the housing sector. In the EU, the European Climate Change Programme has set 2020 targets of a 20 percent reduction in greenhouse gas emissions from 1990 levels, a commitment implemented through binding legislation. At the same time, the EU Emissions Trading Scheme caps carbon dioxide emissions, simultaneously creating a huge trading market for carbon allowances.

Standards such as the BRE Environmental Assessment Method (BREEAM) measurement rating system for green buildings in the UK, LEED in North America, Green Star in Australia and HQE in France are also helping to drive significant changes in the housing sector.

As homebuilders grapple with the demands placed on them to develop more sustainable housing, they increasingly will look to their suppliers to help them meet this challenge. Whether a cement maker, a renewable energy generator, a glazing company or a paint and coatings manufacturer, companies serving the housing industry will have many opportunities to help accelerate sustainability.

Historically, it has been difficult for building companies to work effectively with suppliers, as they often have to deal with more than 150 of them for any one project. Suppliers who offer more integrated solutions by bundling many services together will stand to benefit. Over time, home builders will come to rely on fewer suppliers who are able to make a significant overall contribution to the environmental performance of a building.

We think that different suppliers who can work together in partnership have the potential to provide a very powerful proposition, delivering a significant proportion of a house’s sustainability criteria. And suppliers who are proactive and bundle their products together will be more prepared to help those companies they supply reap the rewards.

As a supplier to this industry, we ask ourselves: How can we better meet its changing needs? If the housing sector is to become energy and carbon neutral with full recyclability of raw materials, then we need to produce insulation, wood protection, heat reflective materials and other solutions to do this. If we look more widely through the lens of innovation and work together with our customers, the transformation to an energy-efficient, low carbon economy is certainly possible.

Suppliers themselves also must ensure their “house is in order” by becoming much more energy and resource efficient in their own operations. This must happen across the whole value chain, from their own suppliers through to their operations and processes. They must become much less dependent on fossil-fuel based energy and the non-renewable raw materials used in products. For instance, 33 percent of our energy currently comes from renewable sources (hydropower, solar, wind and biomass). The aim is to increase this to 45 percent over the next decade.

Already, 10 percent of the raw materials we use come from renewable sources; we want to increase that share in order to be less dependent on fossil fuel markets and carbon pricing In particular, bio-renewable materials such as saccharides, oils and fats are providing a rich vein of sustainable raw materials which have the potential not only to serve as alternative building blocks to petrochemical-based feedstocks, but also for creating products with new properties and applications. For instance, AkzoNobel struck a deal this year with biotechnology company Solazyme to develop renewable oils sourced from algae. Under the terms of the deal, we will start product development this year with Solazyme, with a view to improving the environmental footprint of a number of our paints, coatings and other products. We expect products to hit the shelves in 2014, with "competitive" prices based on Solazyme's cost of manufacturing. These will bring us closer to the goal that we set in 2009 to reduce our cradle-to-gate carbon footprint by 10 percent per metric ton of product by 2015 and by 20 percent to 25 percent per ton of product by 2020.

Increasing our own operational efficiency is also a vital part of this process, and we have a dedicated operational eco-efficiency program designed to significantly improve our performance in this area.

Renewable energy is a major aspect of the improvements required to achieve our 2020 strategy carbon footprint reduction. To that effect, we've developed various projects including a new burner in Germany that allows us to use hydrogen as fuel for the production of steam instead of natural gas; a long-term power purchase agreement with the largest and most efficient biomass power plant in the Benelux region; and a custom-built, 2-kilometer long pipeline providing steam from a waste-to-energy plant to AkzoNobel’s salt site in Hengelo, the Netherlands.

Those initiatives form part of AkzoNobel’s commitment over the past 10 years to improve the energy and resource efficiency of every area of the business, from operating processes to compliance issues. Our Sustainability Council, chaired by our CEO, ensures that sustainability is integrated at every stage of our management process, and oversees our sustainability targets. However, we also recognize the need to accelerate our commitment to address the key mega trends our customers in the housing sector are experiencing.

To improve sustainability, chemical and coatings suppliers must aim to create more value from fewer resources. Of course, none of this can be achieved without working in partnership with suppliers, customers and other business partners. Ultimately, by collaborating effectively across the whole value chain, companies can accelerate the path toward becoming truly resource- and energy-efficient.

Top image by Andy P via Shutterstock

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