BESA CEO David Frise explains why 2022 could see some major progress on net zero driven – not by policy - but by a dramatic shift in the economics requiring a fundamental reshaping of engineering in response.
China produces more than half of the world’s steel and consumes more than three quarters of all the iron ore exported in the world. It produces more steel in one day than the UK does in a year.
So what? Why does this matter to us? Because what is happening in China is a powerful indicator of how our journey towards net zero will go and, despite its dominant position, the Chinese steel industry is facing an existential crisis.
It is one of the biggest polluters in China, responsible for between 10% and 20% of the country’s carbon emissions. President Xi has acknowledged that it will have to change if the country is to become net zero by his target year of 2060.
China was the biggest source of frustration at this year’s COP26 in Glasgow, but perhaps we shouldn’t worry so much.
China’s population is getting wealthier, but it is also getting older. Its ‘one child’ policy has now been dropped, but it was in force from 1980 until 2015. It achieved its aim of curbing population growth but had unforeseen consequences.
Many families have voluntarily stuck with the one child policy for economic reasons and so, because its construction industry has been firing on all cylinders for more than three decades, it now has the opposite problem to the UK – it has too many houses – and the bulk of its steel output has been used in its own construction industry.
As demand for construction falls, the steel industry will start to shrink creating huge supply chain knock-on effects around the world when demand for iron ore and other raw materials dries up. This will have both direct and indirect impacts on carbon emissions as the most polluting industries start to falter, leading to less requirement for supporting services like energy intensive transport.
This, in turn, has huge implications for the oil, gas and coal sectors – and so we will start to see the biggest sources of carbon emissions start to retreat.
A simplistic view? Perhaps, but one that captures a general truth – and we had a snapshot of this during the height of the pandemic when major industries around the world went into hibernation.
So, how should the UK building engineering sector respond to this kind of macro-economic issue?
We could ignore it because it is hard to grasp the enormity or see the connection with our own efforts to cut carbon. We could embrace it and, effectively, carry on as before because we recognise that whatever changes come about because of shifts in the position of the world’s biggest and most polluting economies (including the US, India, Brazil etc.) will dwarf any tinkering we do with the UK built environment – such as replacing gas boilers with heat pumps, for example.
Or we could – and this would be my hope – take it as inspiration for a fundamental change to our own conversation about net zero and use it as a springboard for refocusing our own industry and our own demographic challenges.
Last week, the Construction Products Association released figures that revealed the true extent of the exodus of expertise and skills from the sector since the start of the pandemic.
It found that almost 223,000 workers had effectively ‘vanished’ since the summer of 2019. Nearly half of this total number were aged between 45 and 55. They joined the industry during the boom years of the 1980s and had accumulated a huge amount of experience.
This loss of senior experience and expertise is a fundamental challenge to our ability to deliver projects in the short and medium term. It is arguably the biggest challenge facing employers in our sector – much more threatening than short-term inflation and materials shortages, which should be ironed out during 2022.
“This aging workforce demographic has been a concern for some time but was expected to impact in 10-15 years’ time as people came up for retirement,” said CPA economics director Noble Francis. “Like many other things, the pandemic seems to have accelerated this and plunged construction into a deepening skills crisis.”
Or has it?
It is tempting to link this phenomenon with the way Brexit has cut off one short-term solution – migrant labour – but we are not really talking about the same thing here. It has been clear for some time, as Noble Francis points out, that the construction-related field has an ageing workforce. People reaching retirement age were not being replaced at the other end of the scale – and even if they were, we would still have a sizeable expertise gap in the middle.
There is no short-term fix to that challenge and there will be a considerable amount of ‘muddling through’ to get projects completed next year. However, should we really be thinking about trying to replace like with like?
The seismic economic changes in China and elsewhere should remind us that nothing is forever. Simply looking to revamp our traditional models will not equip us for the challenges ahead. Instead, we should see the signs and take the opportunity to reset the skills challenge and redefine what we will need in future years – starting now.
COP26 showed just how difficult it is to get nations to agree on policies that they think are a threat their short-term economic interests. The final agreement was a fudge at best with some clever semantics played around the future of coal that didn’t really fool anyone.
President Xi didn’t even make an appearance in Glasgow but issued some comforting words about how China would play some sort of role in long-term climate mitigation. In truth, he will know that the economics are already driving change anyway.
For building engineers to play their full part in this future, we must have a radical rethink of what it means to be part of this profession because it means we now face very different engineering challenges.
Also, the demand for net zero professionals is growing apace as the bandwagon speeds up. It is only natural for BESA and the rest of our sector to try to cast this as an engineering challenge, but it is far more nuanced than that. Are we really ‘net zero’ professionals? Or are we outside that tent?
We are hearing more and more reports from BESA members about how they are moving in different business circles these days – and many are only marginally what you would call ‘engineering’ in the traditional sense. This is because net zero will be driven by people from financial, IT/digital, creative, energy systems, AI and many other backgrounds. Yes, engineers will be crucial, but we will not be able to operate in a vacuum.
Health, well-being, and productivity are uppermost in the thoughts of people designing indoor spaces – and while that instantly means ‘ventilation and indoor air quality’ to us; it has other connotations for people from other backgrounds. They want holistic solutions that embrace natural light, comforting acoustics etc. and simultaneously drive down carbon emissions.
There has been a surge in young people looking to get involved, but we must accept that only a small proportion immediately think ‘building services engineer’ when considering how they can best use their skills to deliver a harmonious and carbon neutral future for their communities.
The rise of Architectural Technology is a pointer for us. It is a ‘new’ profession, or at least a new badge, that creates the link between concept, innovation, and the delivery of a finished or refurbished building. Technologies and materials are key – and that includes both emerging and traditional building services systems – but it looks closely at the buildability, functionality, and performance of the design, using innovative processes and production techniques to deliver a sustainable outcome that meets the needs of every type of end user.
Are we honestly part of that conversation? If so, we will be able to cast our net much wider to attract talent – we will have to. Groups of net zero professionals are far more diverse and inclusive than our traditional industry networks. BESA members now report back that they are attending meetings where men are in the minority; where the demographic better represents the society we are supposed to serve, where technology ‘disruptors’ with their SME start-ups take the lead.
At last month’s BESA President’s Lunch Former CBI President Paul Drechsler challenged us to “test your diversity…talented people will go where they feel welcome.” He could have added that they will go where they feel they can add the most value – and we must be honest with ourselves that many do not see that opportunity in building engineering…as it is currently defined (or defines itself).
The emergence of net zero as the defining challenge of our age should inspire us all to look again at what we are doing and how we do it. It also requires us to reconsider who we partner and collaborate with and how we appeal to that wider demographic. Simply being around the net zero table gives us a chance to address our historic and ongoing age, gender, race, and disability diversity failings.
It also allows us to separate ourselves from an old-fashioned and tarnished image that was painfully exposed by the Grenfell inquiry to be part of something where competence and compliance is a given because the culture is completely different.
I’m sure some of you reading this will be sceptical…and perhaps our future will not look that different. However, we have been talking about skills shortages since the 1990s and now they are worse than ever. Could it be that we were simply having the wrong conversation?