Trane Technologies Tackles Embodied Carbon at UNGA Goals House

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welcome everyone thank you so much for joining us  at this event this morning I think it's going to   be a really interesting conversation about the  built environment and which I think is a very   appropriate kind of conversation to be having  here in the middle of Manhattan and sort of   surrounded by all these tall old buildings and I  think being in New York you really get a kind of   very visceral sense I was talking about this  with someone yesterday of the challenge with   the built environment we have all these kind of  huge towering buildings a lot of them are very   old it it gives you a sense of the scale of the  building materials issue also the sort of the time   the time scale issue the durability I mean we're  making choices now about how we build building   that are going to have very long-term implications  for the climate if you just look around all the   stuff that's you know that's here that was  built a long time ago and you know to some   extent maybe we're we're stuck with some of  that or we can talk about how to deal with   that part of the challenge but I think what's so  interesting about the work that the companies that   we're going to speak with this morning is that  they are all very focused on sort of the the   future of building you know how do we take a new  approach for whether it's you know any building   talking about data centers you know all the all  the you know infrastructure all kinds of different   stuff that is being constructed now and trying to  be very proactive and you know moving as quickly   as possible so that as we are going through this  sort of super cycle of construction that we were   just speaking about we're making the right choices  for the emissions and those things and I think   that this is an issue that has been this sort  of embodied carbon or in decarbonizing the built   environment is often overlooked we talk more  about sort of operational emissions or reducing   fossil fuel use in buildings which obviously is  important but there's this whole other piece of   the puzzle and I think the companies here you  know are also seeing that there's a business   opportunity to be had in innovating solutions  in that space so really interested to kind of   hear more about what they're working on and by  the way my name is Tim McDonnell I am the energy   climate editor for a business magazine called  Semafor that's based here in New York I have a   newsletter on the energy transition that comes out  every Wednesday and Friday morning it's free so   please sign up for that semafor.com and then I'll  just quickly introduce our guests and then we'll   dive into the conversation we have Scott Tew from  Trane Technologies Nollaig Forest from Holcim and   Tim Hill from Nucor representing you know a lot  of different pieces of this puzzle and I won't   speak too much for the guests but I maybe Scott  to start with you I would love first of all you   know just tell us a little bit about Trane and  your philosophy for approaching this challenge   that we're describing and yeah maybe we could  start there yeah thanks Tim and thanks everyone   for being here on a really nice New York morning  it's great to talk about Trane Technologies but   also this really important topic that's I've  not actually heard a lot about this week so   this is an unusual session for several reasons  Trane Technologies is one of the world's largest   cooling companies we like to think of ourselves  of a climate innovator because we use innovations   to help cool and heat the world in particular  things that are really top of mind now which is   how to electrify heating we're the world's largest  producer currently of heat pumps for commercial   spaces and one out of every two commercial  buildings in places like Manhattan depend on Trane   for some part of their solution for cooling or  heating and we have to be part of the conversation   around decarbonizing buildings because there's  a huge opportunity 15% of the emissions from   buildings is from heating and cooling so we're  either part of the problem or we're part of the   solution and I'd like to think of us as part of  the solution and I'll talk in a few moments about   what we're doing around embodied carbon because  you're right we have talked a long time about how   do we reduce operational emissions via things like  efficiency but we have an exciting announcement   around embodied carbon I'll share later Nollaig  you want to maybe tell us a little bit about   Holcim and we were just speaking backstage about  how you're sort of approaching this issue and   the opportunity that you see here yeah with  great pleasure first of all thank you so much   for gathering us here today on such an essential  topic as embodied carbon in the built environment   so Holcim is a leading Building Solutions company  we have essentially two business units building   materials that cover concrete cement that are  considered hard to abate sectors but we are   actively decarbonizing with the broadest range  of technologies and then we have our building   envelope business that has to do with roofing  and insulation we play a part in the operational   carbon to try to improve energy efficiency but  also reduce heat leakages in buildings so if   we just step back and look at the big picture  the built environment represents about 40% of   the world's greenhouse gas emissions a quarter of  those emissions are happening at the construction   phase what we call the embodied carbon link to  the construction materials where basically steel   and concrete have a huge opportunity to play a big  role and then you have the operational carbon that   was just referred to that is linked to heating  cooing and powering the building that happens   at the operational phase and there are lots of  technologies that are being deployed that are   addressing that as well so when you look at  the certifications in the market today that   are broadly used by Architects and Engineers like  the lead certification for buildings or envision   for infrastructure most of those certifications  stop at the operational phase they actually just   basically look at those three quarters and they  very rarely go into the detail of the embodied   carbon and if we want to accelerate the adoption  of low carbon solutions at that embodied phase   we need to create pull through in the market so  the more demand we get up the value chain the   more procurement standards actually specify low  carbon solutions from the building developers the   infrastructure developers the more we basically  get pulled through at our level because we're at   the very beginning of the chain at the material  solution level and the people that we engage   with directly as our customers they engage with  multiple different stakeholders but what matters   is that this procurement setter the building owner  or the infrastructure owner at the beginning of   the chain sets the most ambitious standards from  operational to embodied and if we do that we can   basically pull through a a broader scale of the  adoption of low carbon solutions and Tim tell us   a little bit about how Nucor is addressing this  and I think decarbonizing steel is one of the   most interesting parts of the energy transition  maybe tell us a little bit about how you guys   have been approaching this problem how you see it  yeah thank you and as as Nollaig said thanks Scott   and the Trane team thanks Shelby for getting all  of the hard work done in the background to get us   all here so I appreciate that Nucor is North  America's largest steel producer we are also   the largest recycler in the Western Hemisphere  so I think that's a key underpinning of how we   have helped transition the US steel industry to  being one if we would believe the lowest embodied   carbon steel industry around the globe and the  way we do that is by using electric art furnaces   by using recycled steel it's a circularity play  candidly and in you know I that's what's so cool   to be here with Trane you know kind of a first  mover in this space and one of the very earliest   customers that we had come to us and say this is  important I need you to focus on this we sell them   steel we buy their products it's very circular so  it's important with our customers to be focused   on what they're focused on obviously that's what  drives our business where this is evolved in the   last couple of years and everything that Nollaig  said I completely support we're at the front side   of this we're talking to people in in the supply  chain construction is very complicated as most all   of you probably know lots of layers of influencers  and as I'm fond of reminding people every time you   have an influencer they have margin and when you  start to move around pieces on that people get   really weird when you start to touch the margin  that they're making for doing what they're doing   that's really key number one we're talking about  moving margin around this chess board and that   becomes a challenge it's also really deep the  construction industry is really deep there's   a lot of influencers and so where we've tried  to move things is to talk to the people at the   top the developers people that are setting  the standards for what's going to be built   this beautiful building that's going up behind  us here right what are what does the owner the   future inhabitants of that building want to see  and then what solutions are available today what   we've been surprised with living in the United  States over 50% of the product that we sell goes   into construction we're shocked that most people  don't know how steels made so they come at it with   a very old thought process of this is a very dirty  business it's hard to abate we argue that we don't   think it's hard to abate at all we think it's just  going to be very expensive to abate around the   globe and so there's two areas and really to your  point Tim green iron you know where is the where's   the carbon free iron units going to come from in  the future and we've invested in some of those   technologies today there's more coming but really  the issue for all of us and it's not just steel   makers it's all of us as human beings plugging in  my watch and my phone my iPad and my laptop and   my car and everything else that I own is where the  electrons of the future going to come from energy   is clearly the issue we're leaning in on that we  believe nuclear for carbon- free firm base load   energy is absolutely critical I think the move  that Microsoft made last week with constellation   is an absolute huge move and I don't think that's  the only one that's being considered so I'm sure   we'll talk more about those that's great Scott  could you say a bit more about where the sort   of original impedes for looking at this this  problem came from is sort of was this something   that your customers were asking for you to think  about decarbonizing these materials or you know   responding to you know regulatory or policy  pressure or what how did how did this journey   kind of get started well I could say it wasn't a  policy even though we're six weeks away from an   election I think that this theme of climate week  is the important one it's time and I think that's   where we were as a company we've been working for  years on a very significant operational emissions   actually a product emissions reduction goal of  a billion metric tons by 2030 still the largest   single largest science-based commitment to reduce  product use emissions so our people been all in   we've been all in on the innovation all in on our  own activities and then talking with customers   about what's possible on the operation side and  to your point customers have asked us what else   is there what about the other end you know and  embodied carbon is the other side something we   you know at one point years ago would not have  wanted to talk about because we really had not   done the hard work of figuring out how do you  go and reduce embodied carbon because as Tim   said it can be complicated and so that led us on a  journey for the past year a little over a year our   teams have been working on how would we begin  to reduce embodied carbon and fast forward to   where we are today I'm really pleased to announce  and we announced earlier this week publicly that   we're committing to reduce the embodied carbon of  our products by 40% by 2030 that's in line with a   lot of groups WBCSD the world economic forum and  others have been working for a couple of years   now on what does it take to make a difference  what's the percentage needed by 2030 and all   this is still in line with the Paris Accord  which is the real science behind what's needed   and so we're the first company in the industry  to make this commitment what it means is we'll   be working very closely with the Holcim's with  Nucor with others on those materials of priority   materials that we have to do better on and thank  goodness we have found some great partners who   are willing to do their part in helping us reduce  that part because really my view is that embodied   carbon is sort of the hidden calories of our  buildings it's the thing you don't think about   it's that late night snack that over time sort of  becomes the problem and I think that that's where   we are on embodied carbon we both of my guests  here with me today talked about the operational   we've been talking about for years we know how to  do that one what we've not talked about are those   hidden things and so today is the day that that  begins when you're looking in your supply chain   and trying to identify those sort of opportunities  or the you know the parts that you need to address   I mean are there what what's the hardest part  of that or where are the blind spots that you've   identified or particularly tricky bits of that  process yeah so we had to really we have thousands   tens of thousands I don't even know the number  some people say 32,000 some say 25,000 we have   a lot of suppliers that's like boiling the ocean  we can't do that so we instead we categorize the   suppliers into several key groups there no it's  no surprise to anyone in this audience we make   air conditioning they're made of metal anyone want  to guess what we're after metal is first we'll go   after steel copper aluminum and those are very  complicated industries Tim was just describing   that is there a way to do better there yes so  we're meeting with those suppliers and asking   the questions of have you made a commitment are  you working on reducing emissions are you looking   at alternative materials that you can provide to  us we have to be willing to sit at the table and   ask all those questions Nollaig to go back to  your the point you were raising about sort of   reaching up the value chain for that demand signal  is that happening already I mean do you find that   you know whether it's sort of public procurement  for infrastructure like we were talking about   or you know the Amazon or whoever is building  data centers these types of sort of end use you   know the people at the top of that value chain are  they sending the right demand signal yet and if   not how do you start to change more minds about  that so you can see first mover companies like   Trane here today who is definitely sending the  right demand signals and I think that's a great   opportunity for all of the players in Trane's  value chain to put their Innovation to work to   meet that green demand we need more first movers  like Trane Technologies so there is an emerging   group of first mover companies that are putting  their green procurement to work to lead the shift   in the value chain we need just much more to  reach critical mass in our business about 40% is   government driven so we're engaging extensively  with state authorities to also make that happen   at the public procurement level so that every  single public building is showing leading the   way showing by example what's possible so I think  it's very important to basically put your money   where your mouth is like what Trane Technologies  is doing here today to lead that change now I   get very excited when I see the technologies as  you said we are a possible to abate sector the   technologies exist we have technologies today that  can basically get you to net-zero cement and even   better than that we can actually put technologies  inside that can capture CO2 like can sequester CO2   in cement and sequester CO2 in concrete so what  you're talking about is if you do the right design   you're actually going to use your bridges and your  roadways to be carbon sinks that technology exists   today so if we just figure out how to play the  value chain to unlock that market we can scale   this up so our issue right now is unlocking the  market and basically finding ways to scale up   these novel technologies and you can even take  it one step further we're basically all trying   to figure out how to figure how to deal with this  energy you know transition that's so essential for   every single sector and the MIT published a paper  recently where they combine concrete with carbon   black and they can turn concrete into a battery  so can you imagine that one day our homes can be   our batteries or that our pathways can charge our  electric cars so I mean I think we're at the verge   of a revolution in materials I think as you said  it's the missing piece of the puzzle and we're   not waiting on AI we're exactly we're like the  real things in our you know we're the backbone   of urbanization so I think we're on the verge of  being able to take these technologies to scale and   now is the moment is just one more question  on this the demand signal kind of thing is   to what extent is there a green premium for some  of these the decarbonized technologies and is that   pricing signal part of the constraint on the  demand well I think that's the whole it's the   million dollar question is that we have to invest  in these technologies that require billions of   investments so we need to make the business case  work in the US there's very interesting incentives   from the grants to the infrastructure but also  the IRA so we do benefit from some upfront support   but also if we can get some price premium in the  market it would accelerate the deployment of these   technologies for sure so at the moment is there's  you know you still have to kind of convince people   to pay a little bit more for this stuff at the  moment anybody is asking for a better solution   at a price parity point and I think that we have  to figure out how to sell the value so that we   can basically get the pricing to be in line with  the technology that's involved to put into these   products make them more advanced yeah that makes  sense Tim can to just to kind of drill in on the   technology piece of this can you just say a little  bit about how you guys are approaching greener   steel and what you're I know you're working with  Electra tell us a little bit about that and what's   your approach here yeah absolutely I touched on  it briefly just a minute ago there's really two   areas for the steel industry to think about green  iron because even if you use scrap like Nucor does   and we use 75 to 80% of all the heats that we  make have scrap as a base some of the products   that 100% some of the products that would go into  automotive or things like that they're probably   closer to 60% you're going to have a percentage  of iron units that need to go into that mix to   make the steel that we're making it's no different  for Nucor it would be no different for any other   steel maker so there's green iron we've worked  with Electra Boston Metal has some technology   that's similar it's different in concept but it's  very similar as an output the Electro product is   really fascinating because they're using waste  iron that is just leftover iron fines that   are left over after mining that are in piles  around the world they need to be used it's a   waste product they're using renewable energy low  temperature electrolysis to make a carbon- free   iron product extremely nascent technology I think  that's the other piece of this you brought up   demand signals first of all I would say you just  to make a comment on that really quickly that's   on us we're consumers right if it's important  we'll pay for it if it's really not important   we're not going to pay for it right and so that's  really the move that I think we as a society are   facing today is how important really are green  products right and I there's some demographic   shift here that's happening and you can I can  feel it this week much different than last year   the same week right there's a different shift  and a different feeling in the air as we look   at those technologies you have green iron as part  of it the other side of it is green electrons I've   touched on that we believe that's nuclear right we  because we need firm base load energy and I think   the concern obviously with nuclear is if you're in  my demographic and I'm not the youngest guy here   obviously you know most people will say if you  say nuclear they're going to say Three Mile Island   now it'll be interesting what they say now since  they're going to reopen Three Mile Island but most   people will say that then they'll say Chernobyl  then they'll say Fukushima and it's just a horror   story after horror story you know I've got my kids  are 30 and 28 they don't see it the same way they   see it as hey this is an untapped opportunity  why aren't we doing this I mean this ridiculous   right again demographics I think will open the  market Scott are there other sort of important   bottlenecks that are worth mentioning I mean we're  sort of talking about this demand signal there's a   constraint on green the availability of affordable  low carbon steady electricity I think is a really   important one for all of the technologies here  is there more that you would like to see from the   policy side that would be helpful for tackling  some of these emissions or what are the other   pieces of the puzzle that are missing yeah that's  a good question I was with Administrator Carnahan   with the GSA this week and one of the things  I echo that she said was we still need some   clear definitions we still need more data to make  better decisions because that's a bit wild west   right now LCAs the life cycle assessments EPDs  environmental product declarations we're really   lacking in these in these areas of many of these  materials some companies are doing a really good   job of trying to provide that we can't make all  the decisions that are needed without all the data   and it's just missing because is a very this is  unusual thanks to leaders like Nucor and Holcim   that's changing but you know across the spectrum  of all those providers we just we're sort of in a   huge data gap currently and we need more data  is that a role for government to mandate that   kind of thing or that was the question she got I  won't answer or give her answer but you know her   point was who should give us who should set the  definition we have groups that have done it for   the building operation side for years like lead  that you mentioned we have others like the well   building performance standard Trane Technologies  really prefers a building performance standard   that talks about how a building performs while  it's got while it's doing what it was designed   to do which is more than just how it was designed  it was how it operates we think that's important   we need something like that on the other side of  embodied carbon remember we're building a bridge   here between operational emissions and embodied  emissions yet we the bridge is not fully built yet   we're we're still building it so that's the way I  we talk about foot bridge we need something much   larger thank you to add on to what Scott's saying  I think the amount of conversations that we have   where someone says hey I need to buy green steel  and then we follow it up and say okay and this is   not Trane the cool thing about companies like  Trane is that they knew what they were talking   about when they got into the discussion I think  that's a critical element of moving progress right   so many people and this is not to shame anybody  because everybody's learning at a different scale   and there's a whole process going on the amount  of conversations we have where someone says hey   I need green steel all right what what do you  need I don't know because somebody just told   me I needed to buy green steel and there's no  definitive there's no definition in the market of   what that means right I think getting to that and  it should be carbon I mean is this a discussion   about decarbonization or is it about something  else right we think it's about decarbonization   which then says you set a carbon threshold and say  if you're at or below that you're green and then   you can have a real substantive conversation with  your customers about what they're really looking   for and then LCAs become a lot easier because you  can plug those numbers in and you can get to that   in result to build on that whole data point  so we support all of our products with EPDs   environmental product declarations our objective  is to make our low carbon concrete the mainstream   product that we can sell at price parity so no  premium and that represents a 30% CO2 reduction   versus the market standard we're trying to bring  this product in the market as much as possible   we were able to work with a number of states here  to the bike clean initiative to specify 20% lower   CO2 in concrete so we're really trying to move  the needle on that and then if we can go even   further down the chain of even lower carbon  then we can deploy other technologies but I   think to talk about that image of the bridge  and concrete and steel that we have to build   between the operational and embodied carbon this  is a moment in time in North America with that is   unprecedented I think it's a once in a generation  opportunity you have the infrastructure and jobs   act I think it's a 1.3 trillion investment by  the government in infrastructure you have the IRA   that's supporting also a whole bunch of policies  in this area you have the reshoring of supply   chains with a whole building up of manufacturing  presence in North America to strengthen the you   know made in America for America economy you also  have the digital economy that's booming we saw   earlier this week that there's been a 100 billion  fund commitment to support the infrastructure for   data centers from the building of data centers to  the renewable electricity required to support that   and then you have a housing shortage that's an  ongoing thing you take all of this together there   is a momentum in construction in this market right  now that if you could couple it with this green   demand I think would be really benefiting all  stakeholders across the value chain yeah and that   feels like that was what I was sort of alluding  to earlier about this window in time because if   you I think if you miss that opportunity or make  the wrong choices in this about material selection   or whatever in this moment then of course those  the implications of those choices last for a long   time you don't get to we're not building tons of  building you know it's not it's not an ongoing   process right so Nollaig could you say just to  jump back to the technology piece could you say   a little bit about the how Holcim is just sort  of approaching the technology of decarbonizing   concrete and you guys have done some work with  Sublime systems right or you had some news around   them recently can you talk a little bit about  that and sort of how you're working with climate   tech you know innovators like Leah in this space  yeah definitely so just to make it super simple   cement has two main drivers of CO2 reduction 40%  is linked to energy and what we're doing is we're   shifting towards alternative fuels to basically  reduce our consumption of fossil fuels we already   have about 15 operations around the world today  that can operate with over 80% of non-fossil fuels   and then the second big driver that's 60% it's  the chemical reaction of the product basically   it emits CO2 in it's in the chemical process  so what the Sublime team have done taking an   entirely fresh approach to this is they basically  have re-engineered a process where you don't use   a big heating mechanism you use electricity at an  ambient temperature and you use clean electricity   and then you take a carbon free mineral and  you melt that mineral to create essentially   a version of cement and they've been able to do  that in a way that is compatible with traditional   cement so we know today that we can take a totally  different approach using clean electricity using   carbon free materials that get you to the same  end product today their solution is about 70%   lower CO2 and we've got with our engineering teams  we've got great prospects to get it to 100% right   now they're basically getting ready to scale up  their first commercial plant that we're investing   in with them it's in Boston and then it's about  how do you take this technology and scale it up   as fast as possible so the technology pathway is  there it is feasible and then on top of that so   we're an investor in Green Town Labs which is  the largest incubator for climatech startups   in North America so we get access prime access  to all the leading startups that are working in   this area and there's another really exciting  startup that's in Colorado Travertine and they   basically can take byproduct waste from the  fertilizer industry and they can use it as a   mineral in the cement formulation that can also  capture CO2 in the product so if you combine the   Travertine technology with the Sublime technology  you end up in a with a product that is near zero   and that actually captures CO2 inside so all  these technologies exist now we have to figure   out the economics and how to open up the market  from a regulatory perspective and from a demand   perspective as Tim was mentioning the role of of  nuclear power here I mean is green electricity   a constraint on the how well you're able to  use those technologies how do you sort of get   sufficient power for doing that exactly so if you  imagine the scaling up of a solution like Sublime   you would be relying on clean electricity so you  enter that ballpark as well we're also looking   into hydrogen as another source of very promising  energy I think that's such an interesting piece   of all this because we're going through this  we're talking about data centers or EVs you know   decarbonizing industry whatever it is there's this  huge demand for clean power that's I mean I think   it's totally changing the game from the last 50  years and a lot of people have amazing innovative   solutions or you know e fuels for staff or all  this stuff very amazing technology but everyone   is sort of chasing everyone needs a lot more green  electricity so I think figuring out that piece of   the puzzle is is going to be really challenging  so and I guess just maybe one other question about   and I promised Scott that I wouldn't ask too many  questions about AI but I can't avoid talking about   data centers it's been the big theme of climate  week no but I just to kind of connect the some of   the pieces here building data centers is a big  business for you guys now we've been talking   a bit about this demand signal from you know  tech companies or others are you getting that   kind of you know when you're working with data  center clients or customers are you getting that   demand signal for them what's the appetite from  data center developers tech companies for pursuing   specifically for data centers to pursue the types  of solutions that we're talking about here yes so   the simple answer is yes we are getting the  signals they're thankfully we're all viewing   this not as a construction challenge but more  is a design opportunity it's around designing   early thank goodness these tech many of the tech  companies are their progressive thinkers on both   the construction and on the operation side so  it really plays well to what we're talking about   today and I know the conversations that Trane  Technologies is having with our customers in the   tech space is all about they're very interested  in every facet every possibility for reducing   emissions so from the embodied side of how things  get constructed and what the materials are to how   the building will operate once it's in place  so it's a compliment to two things one is their   progressive thinking but also it's a moment in  time we're not retrofitting many of these are   new builds and you can make much better decisions  on the design side of a new build than you can on   retrofit there's great opportunities on the  operational emission side of a retrofit but   the beams and the concrete they're already in  place for a retrofit the good news is that data   centers most for the most part are new builds  and so we can do it right from day one and if   you have repeatability I think that's that there's  an openness now if you go back five years ago when   we were starting into these these builds everybody  had a custom design for every data center needed   to be a little different that runs costs up and  you can't have repeatability right I think that   that willingness to replicate something that's  working that's that's changing a bit now it's   becoming more standardized absolutely and I think  it's been a super exciting also collaboration for   us to work with these big tech minds because right  now we're even putting AI to work to optimize the   mixed design of concrete they're even using their  technology to help us improve our mixes I think   that's fantastic she couldn't resist yeah exactly  no exactly so I think there's great synergy there   I think they are a game changer they're  trying to change they are force for good

2024-10-19

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