Carbon trading in the construction industry: A systematic review and a vigorous impact assessment framework to facilitate implementation

Purpose The construction industry, contributing approximately 39% of global carbon emissions, faces challenges to reach net-zero emissions by 2050. Traditional methods for estimating and managing carbon emissions suffer from inaccuracies, low transparency and data integrity issues, highlighting the need for trustworthy and efficient solutions. This paper aims to demonstrate how blockchains can enhance the accuracy of tracking carbon emissions and streamlining carbon trading, providing a robust system to manage and reduce carbon emissions effectively. Design/methodology/approach A case study-based approach is adopted to develop a blockchain-based system (EcoConstruct) to track carbon emissions and circularity of construction materials and facilitate carbon trading in the industry. The implementation uses smart contract technology and the Beneficial Assets Ownership protocol in the Tezos blockchain to validate carbon emission tracking, carbon trading and circularity criteria. The system was evaluated and validated through expert feedback, ensuring its practical applicability and effectiveness. Findings EcoConstruct demonstrates advancements in transparency, data integrity and efficiency in carbon estimation and trading. The system’s immutable ledger securely stores carbon emissions and their compensations using non-fungible tokens called carbon rewards. This system facilitates transparent and accountable carbon trading among stakeholders (clients, contractors and material suppliers). The findings highlight the potential of blockchains to overcome current challenges in carbon emissions management and trading in the construction industry. Originality/value EcoConstruct provides a novel blockchain-based solution for managing carbon emissions and promoting sustainability in construction, moving beyond conceptualisation by leveraging blockchain’s decentralisation, immutability, transparency and security to enhance carbon estimation accuracy and streamline carbon trading.

Blockchain technology is believed to address trust and efficiency issues in the carbon trading market. This study aims to identify the factors that impact the adoption of blockchain technology in the carbon trading within the construction industry. Using the Technology-Organization-Environment (TOE) framework, this study explores the factors impacting the adoption of blockchain, proposing 18 influencing factors. Based on a survey involving 29 experts, an analysis of the interrelationships among factors was performed using the Decision Testing and Evaluation Laboratory (DEMATEL). The identification of key factors was then accomplished by analyzing the weight results of the DEMATEL-based Analytical Network Process (DANP). The results show that carbon trading companies contend with more environmental and technological influences, with the former dominating. Key determinants include network effect, top management support and government support. Furthermore, technological maturity additionally influences the decision-making process regarding the adoption of blockchain to a certain extent. This research provides insights influencing blockchain adoption for carbon emission trading within the construction sector, informing sustainable practices in emissions management.

Possible green-technology innovation motivated by China’s pilot carbon market: new evidence from city panel data

Carbon emissions trading from past studies has been recommended as effective in minimizing future levels of carbon emissions. The aim of this paper is to develop a theoretical framework for a construction industry carbon trading system by identifying the categorizations in the system and their influences. The theoretical framework in this study was developed using the PROMISE Framework. PROMISE is an acronym representing Personal, Relational, Organizational, Market, Institutional, Social, and Environmental. The Scopus database was used in the selection of articles. Using the System Dynamics (SD) Causal Loop Diagram (CLD) approach, the positive and negative influences among the variables in the seven categories were evaluated and illustrated. This study is significant and provides a foundation for future researchers to develop conceptual frameworks and models for carbon mitigation strategies. For policy makers, the proposed carbon trading framework assists in evaluating the key legal, economic, environmental, and political policies that can improve carbon trading projects in the built environment. When policy makers place significant emphasis on the influences identified in this study, it will contribute to them supporting regulations and policies that effectively mitigate these emissions.

China’s construction industry makes important contributions to energy consumption and pollution emissions. It is significant to improve energy efficiency in the construction industry. Since 2011, the introduction of China’s carbon emission trading policy has had a great impact on energy conservation and emission reduction. The implementation of the carbon emission trading policy provides us with an opportunity to find solutions to improve the energy efficiency of the construction industry (EECI) in China. In this article, the implementation of carbon emission trading is regarded as a quasi‐natural experiment, and the impact of the carbon emission trading policy on the energy efficiency of the construction industry is evaluated by analyzing the panel data related to the energy of the construction industry in 30 provincial regions from 2008 to 2016 through a difference‐in‐differences method. The main conclusions are as follows. First, the carbon emission trading policy can improve EECI. Second, the carbon emission trading policy can achieve the policy effect of improving EECI by optimizing the allocation of construction machinery resources and enhancing regional technical innovation. At the same time, strengthening government environmental regulation can strengthen the policy effect as well. Finally, some policy implications based on the study are proposed.

Nearly 40 percent of worldwide energy and process-related CO2 emissions are produced by the construction sector. China’s construction industry is the largest in the world, with Chinese construction enterprises completing a total output value of RMB 26.39 trillion in 2020; these buildings contribute to about 20 percent of China’s overall carbon emissions and 20 percent of the global total emissions. There is an urgent need to prove whether construction enterprises are benefiting from the carbon trading policy. Compared to the traditional method, a double difference model can be used to highlight the consequences of different states of construction enterprises’ responses to carbon trading regimes. In this study, we examine the following results based on cross-sectional data collected from 2006 to 2021, from listed construction enterprises: (1) Existing carbon emission policies have had a significant impact on the improvement of construction enterprises’ total factor productivity. This improvement is more pronounced in large state-owned enterprises in particular. (2) Construction enterprises’ greater involvement in carbon trading income is most strongly influenced by their green innovation level. (3) Construction enterprises located in eastern and central China benefit significantly from carbon trading, but construction enterprises based in the west do not. The research result indicates that future incentive initiatives should pay more attention to western regions and privately owned building enterprises. The leading role of large state-owned building enterprises should be reinforced.

The Problem of Social Cost

Carbon Emission Trading in South African Construction Industry

Almost all modelled emissions scenarios consistent with the Paris Agreement's target of limiting global temperature increase to well below two degrees include the use of greenhouse gas removal (GGR) techniques. Despite the prevalence of GGR in Paris-consistent scenarios, and indeed the UK's own net-zero target, there is a paucity of regulatory support for emerging GGR techniques. However, the role of carbon pricing is one area that has experienced more attention than others, including discussion about the future inclusion of GGR in carbon markets.Here we identify three risks associated with using carbon markets as the sole, or main, policy lever to encourage the deployment of GGR techniques. Our categorisation of risks stems from discussions with policymakers in the UK and a review of the broader literature on carbon markets and GGR. We present a three-pronged risk assessment framework to highlight the dangers in doing so. First, treating emissions removals and emissions reductions as entirely fungible allows for undesirable substitution. Second, carbon markets may provide insufficient demand pull to drive currently more-costly GGR techniques to deployment at commercial scales. Third, opening up a carbon market for potentially lower-cost GGR (such as nature-based solutions) too early could exert downward pressure on the overall market-based price of carbon, in the absence of adjustments to emissions caps or other safeguards. We discuss how these risks could hamper overall efforts to deploy GGR, and instead suggest a multi-pronged and intertemporal policy and governance framework for GGR. This includes considering separate accounting targets for GGR and conventional emissions abatement, removing perfect fungibility between GGR permits and carbon market permits and promoting a a wide range of innovation and technology-specific mechanisms to drive currently expensive, yet highly scalable technological GGR down the cost curve. Such a framework would ensure that policymakers can utilise carbon markets and other incentives appropriately to drive development and deployment of GGR techniques without compromising near-term mitigation, and that the representation of GGR in modelled low-carbon pathways is cognisant of its real-world scale-up potential in light of these incentives.

Previous studies mainly focus on the game analysis of green building development under carbon tax policy, while carbon trading, as one of the important means to promote low-carbon development, is rarely mentioned in promoting the development of the green building market. Based on this, to study the impact of carbon trading policy on the development of the green building market, this study combines prospect theory for carbon trading to build a three-way evolutionary game model of developer-government-consumer. It studies the influencing causes of green building market development under the carbon trading mechanism from the whole perspective. The study shows the existence of a carbon trading policy helps the development of the green building market. In the presence of a carbon trading market, the government's punishment, subsidies, and the setting of carbon prices influence the development of the green building market. In addition, the percentage of carbon emissions bought, the potential benefits, and the selling price also affect the chance of consumers buying green buildings to a greater or lesser extent. This study introduces prospect theory into the developer-government-consumer three-way evolutionary game model, which enriches the research perspective of each subject's behavior in the green building market. It provides theoretical support for developers, governments, and consumers to collaborate to promote the coordination and development of the green building market. It has policy implications for promoting the green and high-quality development of the construction industry.

Amid the technological revolution and industrial transformation, the construction industry is accelerating digitalization, green transition, and internationalization, driving the need for versatile technical talent. Traditional evaluation systems, focused solely on technical skills, are no longer sufficient. This study constructs a multidimensional evaluation framework for composite construction professionals, covering hard skills, soft skills, cross-disciplinary capabilities, and sustainable knowledge. It integrates advanced competencies such as BIM model-ing, AI tools, and carbon emission calculations, alongside ESG report-ing, interdisciplinary collaboration, and emerging fields like circular economy and carbon trading. By applying data-driven methods to determine indicator weights and benchmarks, the framework offers a scientific, dynamic approach adaptable to corporate recruitment, academic training, and career planning. Through practical feedback, the system undergoes iterative optimization. The study also proposes graduate education reforms, including curriculum adjustments, practical training enhancement, and evaluation updates, emphasizing closer industry-academia collaboration. By addressing limitations of traditional evaluations, this framework provides theoretical and practical guidance for cultivating composite talent, supporting sustainable development in the construction sector.

Evolutionary game analysis of prefabricated buildings adoption under carbon emission trading scheme

The construction industry provides infrastructure and structures to society by consuming a substantial quantity of non‐renewable energy, which results in significant carbon dioxide emissions. Carbon dioxide (CO2) could pose a serious danger to the economy of any nation if proper measures are not put in place with the country being one of the leading producers and end‐users of fossil fuels in the world. This article seeks to evaluate the barriers to the adoption of carbon trading practices (CTP) in the construction sector with the view to ensuring low carbon usage. The article adopted quantitative approach with data obtained using questionnaire. Mean Item Score (MIS), standard deviation (SD), factor analysis and Kruskal–Wallis test was carried out in relation to the research questions. The study showed that the most significant barriers to the adoption of carbon trading are difficulties in obtaining finance, attitude to environmental sustainability and climate change, lack of cost‐effective abatement options and methods, lack of awareness of carbon market opportunties and risk in changes in the rules governing participation and credit among others. This study provides valuable insights into barriers of CTP in construction and will help stakeholders concerned with building energy performance to develop a functional framework for energy analysis in buildings to prepare possible risk analysis from the onset of project design spanning through completion.

As a major source and contributor of carbon emissions globally, the construction industry faces challenges in achieving its carbon emission reduction targets. Carbon trading has been established to be a reasonable aid in greenhouse gas mitigation. Current carbon trading systems were originally not developed for the construction industry, and carbon trading system for the construction industry is lacking. The aim of this study is to present the highest level framework of a carbon trading system for the construction industry using systems theory. Systematic literature review methodology was adopted to obtain documents from Scopus which were then synthesized. From the systems theory lens, the carbon trading system for the construction industry is developed comprising input, transformed through process leading to output. Feedback between the output and input is comprised in the system. This study is significant and contributes to the built environment’s climate change mitigation agenda.

The paper investigates how serious will be the impact on India’s economy if India were to make a commitment for substantial reduction in CO2 emissions. Such investigation is done also for China. The analysis is undertaken through counter-factual simulations for the year 2001 by developing scenarios in which India and China cut CO2 emissions by a specified percentage and there exists international trading in carbon. The analysis is undertaken with the help of GTAP-E model. The analysis brings out that the cost of meeting emissions reduction commitments for Annex-I countries can be substantially reduced by engaging in block-level or global carbon trading. The simulation results, obtained under the assumptions that both China and India accept the obligation of cutting CO2 emissions between 5 and 15 percent and there is international carbon trading, indicate that emission cuts in China will reduce welfare both under block carbon trading and global carbon trading. For India, on the other hand, there is an increase in welfare by about 0.2 to 0.3 per cent. Going by the simulation results, China and India would voluntarily cut CO2 emissions if profitable international carbon trading possibilities exist. Therefore, besides negotiating for legally binding commitments for emissions reduction, efforts should be directed at developing international markets for carbon.