A sizable cohort of individuals in coastal markets treat living sustainably as a moral imperative. Each year, more and more people are driving electric vehicles, buying locally grown food, and even going vegan, all to reduce their carbon footprint. But one area that is too often neglected is perhaps the most important: their homes.
The environmental impact of buildings is staggering, with their construction and operations combining for roughly 39% of global greenhouse gas emissions. And while some municipalities are aiming to mitigate this, those efforts are largely focused on reducing emissions for existing buildings. Embodied carbon, the carbon footprint of the materials it takes to construct a building, is not widely regulated, although the Inflation Reduction Act’s Federal Buy Clean Initiative does set standards for government-owned buildings. Because of this, to move society toward truly sustainable buildings will fall in large part on builders—and no one is better positioned to take the lead than luxury home builders.
When it comes to envisioning a future with a dramatically greener built environment, it is critical to realize how much more quickly that day will come once green business practices have made some headway. It’s a business truism that per-unit production costs go down as overall production increases. Realistically, cost is always an issue for every home builder; while some sustainably produced building materials—notably low-carbon concrete—are similar in price to their alternatives, some greener building components are more expensive than traditional ones. In industry parlance, there is a ”green premium."
Luxury builders generally have a strong business argument to invest in new methods and materials because the demand for green homes is more robust in the luxury market; business leaders and celebrities are often among the earliest adopters of sustainable new products, for reputational and environmental reasons. Because of this, developers building homes targeted at the high end of the market have an incentive to use novel green methods, technologies, and materials to build lower-carbon homes—and they can drive down green premiums, thereby facilitating market acceptance of these carbon reducing and sequestering technologies and materials.
For example, when it comes to structural steel—common in the construction of buildings—a green-focused developer will use U.S.-produced 2M sustainably manufactured steel that is smelted in an electric arc furnace (EAF). While it has a moderate green premium, 2M EAF steel comprises a small portion of the market, and early adopters are essential in the quest to make it more affordable. Once demand grows, green steel plants should be able to capitalize on economies of scale, improve their processes, and price their products more closely to conventional steel manufacturers.
Of course, it should be noted that certain sustainably produced building materials have no green premium at all. Low-carbon concrete and rebar are wonderful examples; both cost home builders the same as their non-eco-friendly alternatives. Despite this, these building materials have not gained widespread adoption, for a reason that is both understandable and concerning: inertia. (E.g., the Department of Energy has noted that the cement industry “has had a ~10- to 20-year adoption cycle for new blends and materials, which delays demand and subsequent investment in low-carbon production.”)
Generally speaking, construction firms are conservative in their innovation because structural problems can be catastrophic. But while this attitude is a good one, it stifles innovation when taken too far. Luxury home builders can again play a critical role, with their access to the resources and customer demand to accelerate market acceptance of low-carbon materials that often perform as well or better than their conventional counterparts. For example, low-carbon concrete often cures at a higher strength, has increased workability, reduces heat of hydration, is more durable in corrosive soils, and is more resistant to water intrusion. The faster builders purchase green materials, the more products like low-carbon concrete will become standard operating procedure across the industry, which will lower the collective carbon footprint of building.
It should be stressed that, as we sit here in 2024, the notion of decarbonizing homes in a significant way is not a pipe dream: It is already a reality for those who are truly committed. Our firm recently completed construction on the second home in the MariSol Malibu “Zero Series,” a collection of four net-zero-carbon homes in Malibu, California, that can be prototypes for the future of green building. With FSC or California local lumber, low-carbon steel and concrete, and hybrid structural framing, the homes feature a 39% reduction in embodied carbon, a massive reduction in the carbon footprint of its construction. Additionally, once the homes are built, they will have absolutely no operating emissions—heat pumps, on-site solar power, full electrification, and 100% renewable power sourced from Ventura County’s grid ensure that the operational carbon footprint will be zero. (Zero One, the first home in the series, received the first ILFI Zero Carbon Certification for any home in California.)
The federal government is trying to push the needle on sustainable building, including with the Inflation Reduction Act, but while its strides have been important, they have been too limited on embodied carbon. So while we wait for a national standard on embodied carbon, the private sector can do its part to help decarbonize real estate. By purchasing and using novel low-carbon and sequestering materials and technologies, home builders—especially luxury home builders—can play a major part in accelerating market acceptance of net-zero carbon building practices that can help protect the planet.
