Sustainable construction
- Scandinavian markets
Overview
Despite these issues at hand, the demand in the construction market has so far been good in Scandinavia, reaching levels of pre-pandemic in many cases. There are expectations for a flat market development in Sweden after a strong growth recently. Both Denmark and Norway have experienced a temporary decline in recent years much due to the pandemic, but there are now prospects for new growth in the next couple of years from different industry forecasts and analysis in both countries.
The Scandinavian countries have some of the highest construction costs in Europe, while the capacity and competition is low. This has led to a housing crisis in many of the biggest Scandinavian cities and foreign construction companies have been, and will be, a vital part of the Scandinavian construction sector to keep up with the demand for the future.
While there is a positive outlook for the coming years, the governments of the Scandinavian countries have been stepping up their aims for a more sustainable construction sector. Each of the Scandinavian countries have set ambitious targets for a construction sector that will be climate neutral, have closed material circuits and net zero emissions of pollutants.
The Scandinavian construction sector has responded to these targets as companies are now vocally asking the governments to increase the incentives and legislation for sustainable practices in the construction sector and it is expected that sustainable practises will be required in an increased number of public tenders already in the next years to come. Many construction companies in the region have been foreseeing this change and are now using sustainability as a competitive advantage. The ambition and focus to become a leader in sustainability will have them keeping an eye out for new developments, which offers exciting opportunities for foreign suppliers of innovative building materials, equipment and technical solutions that can decrease the environmental impact on the construction sector in Scandinavia.
Market opportunities
2. Innovative building materials with low climate impact in a life cycle perspective such as hybrid elements and bio-based materials.
3. Technological solutions that help increase the efficiency of the industrial process of prefabricated elements.
4. Photovoltaic systems.
5. Waste management solutions to both decrease and collect waste on construction sites.
6. BIM’s and digital twin technologies.
7. Technological solutions and sensors to increase energy efficiency.
8. Green insulation and sustainable cladding materials.
9. Solutions that improve the indoor climate such as temperature, air quality and lighting.
10. Components, fittings and sealants used for window renovations for increased energy efficiency.
The Swedish construction sector
Sweden has some of the highest construction costs in Europe. The cost, together with low competition and capacity issues are said to be the main reasons for the current housing shortage. The Swedish association for public housing (Allmännyttan) has the main purpose of offering good rental housing for everyone and sees competition as key to drive down costs and increase construction capacity. Since 2017, they have had projects in Poland, the Baltics, Germany and Spain to remove trade barriers for foreign companies and increase competition in the market to build homes for the Swedish public good.
The construction sector today accounts for a fifth of Sweden's climate impact. The Swedish government has decided that Sweden will aim for net zero emissions of greenhouse gases by 2045 as per the Paris agreement.
The Swedish government recently decided to introduce a new climate declaration for buildings that will come into place by the 1st of January 2022. This new climate declaration will provide more guidance to the previous voluntary commitments that the construction sector has been undertaking. Going forward, contractors will have to submit a climate declaration containing information on the building and the climate impact during the whole construction phase.
The need for renovations
Around one million homes in Sweden that were built between 1965–1975 are now in need of different degrees of renovation. The cost for this big scale renovation is estimated at up to SEK 500 billion (€50 billion) and the Swedish construction giants NCC, Skanska and Peab have all developed complete concepts for a sustainable renovation to take place.
The number of photovoltaic systems continues to increase in Sweden as more and more look at ways to power their homes with renewable electricity supply. At the start of 2021, there were almost 66,000 grid-connected photovoltaic systems, which is to be compared with 44,000 for the previous year. It still only corresponds to about 0.8% of Sweden's total electricity production so there is much room for a continuous increase in both the public and private sector.
Building materials
The government has since then revealed plans to temporarily extend Cementa's environmental permit for a period of eight months. This decision will have major consequences for the construction sector as there are expectations of an acute cement shortage when the permit ends, while importing cement will depend on the availability of foreign suppliers in combination with how rapidly a change towards other alternatives can be realised.
Today, concrete is the most common wall element for apartment buildings in Sweden, but with the upcoming cement shortage and the push to reduce emissions, the construction sector is starting to turn its eyes to other alternatives, such as hybrid sandwich elements made of concrete and wood.
Industrial wood construction is growing rapidly in Sweden as more and more companies have started to build larger buildings in wood. The climate footprint is one reason for this trend. Other advantages stated are a faster construction process and the possibility for prefabricated large wood constructions which can be completed up to 85% in the factory. Thus moving parts of the production of wall elements to other places will free up labour on the construction site which will help reduce the high construction costs that exist in Sweden. With the prospect of a cement crisis, there will be a need for technological solutions for the industrialisation of prefabricated wood elements to become more efficient and produced on a bigger scale.
Industrial wood construction is growing rapidly in Sweden as more and more companies have started to build larger buildings in wood. The climate footprint is one reason for this trend. Other advantages stated are a faster construction process and the possibility for prefabricated large wood constructions which can be completed up to 85% in the factory. Thus moving parts of the production of wall elements to other places will free up labour on the construction site which will help reduce the high construction costs that exist in Sweden. With the prospect of a cement crisis, there will be a need for technological solutions for the industrialisation of prefabricated wood elements to become more efficient and produced on a bigger scale.
The Danish construction sector
Revenues in the construction industry amounted to a total of DKK 73.6 billion in the first quarter of 2021 (€9,9 billion) which is an increase of 5%. compared to the first quarter of 2020. This can partly be explained by loosened Covid restrictions in comparison to 2020, even though the Danish construction sector wasn’t as affected by restrictions as other business sectors.
The recent increase in new construction now seems to be leveling off, while remaining high due to the demand for new housing in the bigger cities. Copenhagen is expecting to have to accommodate 10,000 more inhabitants per year until 2030 according to the City of Copenhagen's population forecast and an analysis made in connection with Copenhagen's municipal plan shows that there will be a need for around 60,000 more homes when we reach 2031.
The demand for sustainable construction is increasing in Denmark with climate-friendly materials, minimization of waste on the construction site and circular renovations being high on the agenda.
In December 2019, the Danish government entered into an agreement on a new climate law which sets out a framework towards the goal of climate neutrality by 2050. Later a new ambitious climate target was agreed on with the aim for Denmark to become a pioneer in the climate field. In this agreement it was stated that by the year 2030 the greenhouse gas emissions must be reduced by 70% compared to the level in 1990.
In spring of 2021, the Danish government created a new national strategy for sustainable construction in which 21 initiatives were set for the restructuring of the Danish construction sector. The CO2 requirements for new buildings of more than 1000 m2 will be set in 2023, and from 2025 the requirements for all new buildings will be in place. The aim of this new framework is to set the directions and scale up the requirements towards a sustainable construction.
The five focus areas of the strategy
1. More climate-friendly buildings and construction
2. Durable, high-quality buildings
3. Resource-efficient buildings
4. Energy-efficient, healthy buildings
5. Digitally-supported construction
The need for renovations
For the future, it’s expected that the Rural Development Fund will prioritize green renovations to the point of 85-90% of the renovations needing to contain green elements so that the green conversion will continue.
The new green guarantee for investments and a pilot pool for sustainable projects will push for the public sector in Denmark to be one of the greenest in the world. It is anticipated to increase the projects of sustainable construction, wood construction, green cement, the continuous digitization of the construction sector and to reduce the energy consumption of the building stock.
Building materials
In May 2021 Danish-produced steel had increased by over 50% since the same month last year, while the price of Danish wood has risen by 12% during the same time according to figures from Statistics Denmark. This has led to cancelled projects and in some cases as plans for wooden buildings have had to change for concrete due to the spiraling wood price.
Danish construction has been characterized by concrete construction as they use 8 million tonnes annually. Only 8% of all buildings are made of wood so they are currently a bit behind their Scandinavian neighbours in this area. There is a need for new housing in the bigger cities and it can be expected that a proportion will be built vertically. In order not to have an escalation of Co2 emissions then an increase of the construction in wood in Denmark is needed.
The Norwegian construction sector
There isn’t a housing crisis in Norway in general as eight out of ten own their own home, which is unique even in comparison to their Scandinavian neighbours. There is however a shortage of residential homes, especially in the Oslo area for young people and more investments and projects are expected.
The national goal of Norway is to become climate neutral by 2050 with a 50-55% reduction by 2030. As a part of this goal, the Norwegian government has decided to aim for fossil-free construction sites by 2025.
The cities of Oslo, Trondheim, Stavanger, Kristiansand, Bergen and Tromsø have shown to be more ambitious as they have all signed a declaration on a fossil-free construction, with fuel from renewable raw materials to replace from 2021. They further accelerate climate measures by aiming for an emission-free municipal construction sector by 2025. This means that builders and contractors will have to prepare and show that they are capable of providing emission-free construction in order to win tenders from the municipalities. One can already see that this is something which is included and emphasized more and more in the buildup to 2025 as large municipalities are already demanding climate-friendly solutions in tenders.
There are calls from the Norwegian construction sector to receive similar guidance and regulations as Sweden and Denmark have implemented for sustainable construction. Some of the biggest players have vocally demanded rule changes and national definitions in order to be able to speed up their emission reductions. The ten largest public developers have at the same time demanded waste-free construction sites already from 2022 where the main topics of discourse is around circular construction and reuse of materials where material passports and waste management solutions can play a big part. Several players have expressed that the rules for product documentation that apply to the sale of used building materials are currently a barrier to increased reuse.
As a response, the Norwegian Directorate for Building Quality (DiBK) has in October 2021 sent for consultation proposals for new requirements for documentation in the sale of used building materials.
The need for renovations
As eight out of 10 Norwegian people own their homes in Norway, it has been said that there is still a lack of incentives from the government for the home owners to invest in renovating their homes for energy efficiency rather than the more pleasing interior or esthetics. Today, the renovation rate is low in Norway which shows that there is still a long way to go to reduce emissions from the existing building stock.
In 2021, there is no separate national target for reducing energy needs with an increased Norwegian rehabilitation rate. The Norwegian Interest Group for Energy Efficiency (IEE) has commissioned a report on how the Norwegian authorities can design and realize a goal and propose effective measures to increase the pace of rehabilitation in buildings with a focus on technical measures to increase the energy efficiency in buildings.
The areas of rehabilitation, renovation and remodeling are now expected to grow, in the overall focus on sustainability. Green buildings have been built on a large scale and it is now said that by reusing buildings compared to demolishing and building new ones will take Norway further in its quest for a reduction of the climate impact of the construction sector. Lately an increased demand has been seen from both the state and the municipalities to utilize existing buildings and homes to a greater extent, both based on the environmental aspect and the fact that there is a shortage of undeveloped land, especially in the cities.
Building materials
Successive Norwegian governments have pointed to the forest and timber industry as a driver for green conversion in the construction sector. Investments in the country’s sawmills are now being made in higher numbers. There is a focus on improving technological developments with a key interest in the industrialization side of things that can increase the efficiency of element production.
The city of Trondheim is considered a pioneer city for construction with massive wood. About half of all municipal buildings that are built are wooden houses. Further south in the town of Brumunddal, Mjøstårnet (The Mjø tower) reached a height of 85.4 meters which is the world's tallest house completely constructed of wood and has since the opening in 2019 both tenants and businesses on its 18 floors.
The increased material prices that are affecting the construction sector will force the companies to speed up their capabilities to renovate and reuse rather than building new for the near future. In a way it provides a more sustainable development which was always going to happen in Scandinavia sooner rather than later.
Mjøstårnet