Summary of Research Findings

In October 2020, Japanese government declared a national goal to achieve carbon neutrality by 2050. This has driven sectors across industry to accelerate efforts toward carbon neutrality and decarbonization. Construction sector is no exception. Implementation of specific measures—such as adopting environmentally-friendly building materials and developing technology to recycle construction scraps—are starting to penetrate the market in full-scale in the last few years,

Scope 1 emissions (direct emissions) in the industry stem predominantly from fuel combustion in construction machinery. Efforts to curb these emissions include the introduction of electric construction equipment, the transition to alternative fuels such as bio diesel and gas-to-liquids (GTL), and the promotion to equipment operators of using low-fuel driving techniques. Technological solutions such as hydrogen-powered construction machinery are also being explored, though they remain a medium to long-term challenge.

To reduce Scope 2 emissions (indirect emissions), construction companies are increasingly procuring electricity certified as non-fossil, purchasing J-Credits for carbon offsetting, acquiring Renewable Energy Certificate (i.e., purchasing power source from certificate-qualified suppliers), and installing on-site renewable energy systems. Some homebuilders have even achieved carbon neutrality by sourcing solar power—including so-called ‘post-FIT’ electricity generated by residential systems that have completed their FIT purchase period—from individual homeowners.

Meanwhile, data reported by general construction companies, homebuilders, and developers in FY2023 indicated that Scope 3 emissions accounted for more than 90 percent of their total emissions. Given that Category 1 (emissions from all purchased goods and services) and Category 11 (emissions from the use of sold products) represent the largest shares within Scope 3, active engagement with suppliers of products and services is critical to achieving serious reductions.

Noteworthy Topics

Trends Regarding Reduction of Scope 3 Emissions

In construction industry, Scope 3 emissions arise primarily from the supply chain—most notably Category 1 (emissions from all purchased goods and services) and Category 11 (emissions from the use of sold products)—which together account for more than 90 percent of total emissions. In this context, evaluating the GHG footprint of each building material through Life Cycle Assessment (abbreviated as LCA; a methodology to assess environmental impacts from raw material extraction to end-of-life) and transitioning to lower-impact materials are central strategies to reducing Scope 3 emissions.

Suppliers are generally encouraged to obtain Science Based Targets (SBT) certification from Science Based Targets initiative (SBTi). Additionally, as eco-friendly materials such as low-carbon concrete, green steel (steel produced with significantly fewer associated emissions), timber, and recycled materials gain importance for construction companies, building material suppliers are increasingly expected to secure Environmental Product Declaration (EPD) Certification, a third-party verification of product’s environmental performance based on LCA.

Research Outline