Trane Technologies Tackles Embodied Carbon at UNGA Goals House

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