Davis Langdon has released a report analysing the impact of the carbon price on the cost of construction materials. The upshot? Not much at all, especially after industry assistance, the company said.
The big question then is, will the carbon price achieve its aims of stimulating changes in design of buildings and in choice of materials?
The findings, contained in Carbon Price on Construction Costs, found that at $23 a tonne of carbon emissions the impact of the tax on “base supply cost of materials with high embodied carbon values, such as concrete and steel could be as high as 5 per cent and 2 per cent respectively.”
This contradicts recent claims by the housing development sector that the impost would be far greater.
After industry assistance, however, Davis Langdon found the impact would can be expected reduce to “less than 0.5 per cent on the individual material costs of these high carbon intensive materials.”
In two case studies using an embodied carbon metric, or ECM, of a hospital and an educational institution the report found it was possible reduce the carbon footprint of the projects and at the same time reduce costs to a level below the impact of the carbon tax.
“The current industry approach for an educational facility resulted in an overall carbon footprint of close to 8000 tonnes of CO2-e,” the report said.
“By introducing a number of sustainability initiatives such as cement replacement in concrete using fly ash and granulated blast furnace slag and by lowering of concrete strength (where suitable), an overall reduction in embodied greenhouse gas emissions of 20 per cent was achievable with cost implications less than the overall impact of the carbon price without considering the industry assistance.”
Highlights from the report include:
- When the cost impact associated with all high carbon intensive materials is translated to overall build cost (excluding design and consultant fees), the proportional impact is far less (than first expected).
- Dilution of cost through the construction supply chain results in a negligible cost impact during the earlier phases of the industry assistance period.
- When industry assistance is completely removed the total cost impact is approximately 0.5 per cent. This would indicate that despite many observations to the contrary, the opportunities exceed the cost implications for the property and construction industry.
- Given that the overall cost impact to the construction industry is extremely low, will this scheme provide sufficient incentive for alternative designs and materials selection?
On this last point, Davis leaves an open finding.
