Decarbonizing the Construction Sector: Strategies and Pathways for Greenhouse Gas Emissions Reduction

Abstract

The construction sector is a significant contributor to global greenhouse gas (GHG) emissions, necessitating urgent decarbonization efforts to align with international climate goals such as the Paris Agreement and the European Green Deal. This study explores a comprehensive framework for construction companies to map and reduce their GHG emissions through a structured four-step approach: defining emission scopes, conducting GHG inventories, setting reduction targets, and planning actionable reductions. Four key pathways are proposed: electricity decarbonization through renewable energy adoption and energy efficiency measures; direct emissions reduction via fleet electrification and infrastructure optimization; recycling and resource efficiency improvements through waste diversion and material reuse; and supply chain emissions reduction by enforcing sustainability standards and responsible sourcing practices. The analysis highlights the importance of integrating technological, organizational, and policy-driven solutions, such as rooftop photovoltaic systems, virtual power purchase agreements, waste management strategies, and supplier codes of conduct aligned with global sustainability benchmarks. The study concludes that construction companies can achieve significant emission reductions by adopting a structured, multi-pathway approach; emphasizing progress over perfection; and aligning their strategies with national and international climate targets. This research provides actionable insights for the construction sector to transition toward a net-zero future by 2050.

1. Introduction

Climate change poses one of the most pressing challenges of the 21st century, with global greenhouse gas (GHG) emissions driving unprecedented environmental, economic, and social disruptions. The construction sector, responsible for approximately 11% of global CO₂ emissions and 36% of the European Union’s (EU) energy consumption, stands at the forefront of decarbonization efforts [1,2]. International agreements such as the Paris Agreement [3] and regional frameworks like the European Green Deal (EGD) [4] have set ambitious targets to limit global warming to 1.5 °C and achieve climate neutrality by 2050. These goals demand transformative action across industries, particularly in high-emission sectors such as construction, where energy-intensive processes, material production, and supply chain activities contribute significantly to carbon footprints [5].

The EU relies on a comprehensive legislative and policy framework that sets targets for the use of renewable energy, energy efficiency, and decarbonization. Reaching these objectives requires the mobilization of all actors [6]. The regulatory landscape is rapidly evolving to enforce decarbonization. The EU’s Fit-for-55 package [7], for instance, mandates a 55% reduction in net GHG emissions by 2030, while the Renewable Energy Directive (RED II) [8] raises renewable energy targets to 45% by 2030 under the RePowerEU Plan [9]. Despite these advancements, the construction sector faces systemic challenges, including a reliance on fossil fuels, fragmented supply chains, and the limited adoption of circular economy practices [1,10,11,12].

Current research emphasizes the need for integrated decarbonization strategies that address both direct and value chain emissions [1,13,14,15]. However, controversies arise in balancing short-term profitability with long-term sustainability. Critics argue that stringent supply chain regulations, such as supplier codes of conduct aligned with ISO 14001 [16], may strain SMEs lacking resources for compliance, while proponents stress their necessity for systemic change [15,17]. Furthermore, the EU’s Carbon Border Adjustment Mechanism (CBAM) [18,19,20] has sparked concerns over trade equity, underscoring the need for global cooperation in decarbonization efforts.

To the best of our knowledge, in the literature, several studies align with aspects of this research but differ in scope or methodology. More particularly, studies propose sectoral net-zero pathways but focus on policy levels rather than corporate implementation [21,22,23], or analyze material efficiency in construction but omit renewable energy integration and supply chain collaboration [24,25,26]. While EU policies like the Fit-for-55 package [7] and Renewable Energy Directive [8] are widely analyzed and modeled [27,28,29], few studies operationalize these mandates into actionable corporate strategies or provide actionable guidance for firms. Existing research highlights the circular economy potential in construction [2,30,31], but underestimates barriers like hazardous waste recycling gaps and regulatory barriers.

This study addresses the above challenges and gaps by proposing a structured framework for construction companies to map and reduce GHG emissions. Building on the four-step approach—scope definition, inventory assessment, target setting, and reduction planning—the work identifies four critical pathways: (1) electricity decarbonization, (2) direct emissions reduction, (3) recycling and resource efficiency, and (4) supply chain emissions mitigation. By synthesizing regulatory mandates, technological innovations, and organizational strategies, the research aims to bridge the gap between policy ambition and practical implementation.

This study offers a comprehensive, sector-specific approach to sustainable transition within key European industries, particularly focusing on the construction sector. On the one hand, the study presents a holistic sectoral analysis. Unlike many studies focusing on singular industries, this research evaluates four interconnected sectors—energy, environment, construction, and real estate development—highlighting how they collectively shape Europe’s sustainability trajectory [32,33]. This approach links macroeconomic factors, such as geopolitical events and supply chain disruptions, to sector-specific sustainability challenges.

While many decarbonization studies focus on energy-intensive industries like manufacturing, this research tailors GHG emission reduction strategies to construction, a sector often overlooked in climate policies [34,35,36]. The study integrates technological, organizational, and financial solutions, making the framework highly applicable. Furthermore, by linking sectoral challenges to EU policies like REPowerEU and the Energy Performance of Buildings Directive (EPBD), the study provides actionable insights for policymakers. It also provides construction firms with practical, step-by-step strategies for emissions reduction, bridging the gap between regulation and corporate sustainability.

The analysis underscores the importance of progress over perfection, advocating for incremental yet impactful actions such as fleet electrification, energy-efficient retrofits, and supplier collaboration. By aligning corporate strategies with global climate targets, this work contributes to a growing body of literature on sustainable industrial transitions, offering a roadmap for achieving net-zero emissions in the construction sector by 2050 [21,22,23,24,25,37,38,39,40].

2. The Regulative Framework

In this section, the key regulatory frameworks concerning and affecting the decarbonization efforts of construction companies towards net-zero emissions is summarized.

2.1. Paris Agreement

The Paris Agreement is a legally binding international treaty on climate change, adopted by 196 parties at COP21 in Paris in December 2015 [3]. The treaty sets a global goal of limiting the planet’s warming to well below 2, preferably to 1.5 degrees Celsius (°C), compared to pre-industrial levels.

To achieve this long-term goal, countries worldwide aim to peak the reduction in global GHG emissions as soon as possible to reach climate neutrality by mid-century. As mandated by the Paris Agreement, countries have submitted their climate action plans, known as nationally determined contributions (NDCs).

The Paris Agreement is considered a landmark in multilateral climate change action, as for the first time nations signed a binding agreement for climate change mitigation and adaptation.

2.2. European Green Deal

The European Green Deal (EGD) is the EU’s strategy for reaching the 2050 goal of carbon neutrality, delivering on the commitments under the Paris Agreement [4]. The EGD is a package of policy initiatives aiming to set the EU on the path to a green transition with the end goal of reaching climate neutrality by 2050. The package includes interlinked initiatives covering the climate, the environment, energy, transport, industry, agriculture, finance, and society.

2.3. European Climate Law

The European Climate Law [41] adopted in May 2021 turns the EU’s political ambition of reaching climate neutrality into a legal obligation for the EU. The EU and its member states have committed to cutting net GHG emissions in the EU by at least 55% by 2030, compared to 1990 levels.

2.4. Fit-for-55

“Fit-for-55” [7] refers to the EU’s target of reducing net greenhouse gas emissions by at least 55% by 2030 in line with the legally binding 2030 goal set by the European Climate Law.

The “Fit-for-55” package is a set of proposals to revise legislation relating climate, energy, and transport, aiming to align EU laws with the Union’s climate goals. The key areas of action are as follows:

• EU emissions trading system (EU ETS);
• Effort sharing regulation;
• Land use and forestry (LULUCF);
• Alternative fuels infrastructure;
• Carbon Border Adjustment Mechanism (CBAM);
• Social climate fund;
• REfuelEU aviation and FuelEU maritime;
• CO₂ emissions standards for cars and vans;
• Energy taxation;
• Renewable energy;
• Energy efficiency.

2.5. Renewable Energy Directive

The Renewable Energy Directive (2009/28/EC) [8] was first introduced in 2009, setting a target of at least a 20% share of energy from renewable energy sources (RESs) in the EU by 2020, as well as national binding targets about the share of renewables in the gross final consumption of energy. Since the introduction of the Renewable Energy Directive, the deployment of renewables has kept growing steadily, reaching more than 20% in 2020.

The Renewable Energy Directive also introduces “guarantees of origin” (GoOs) as a key tool for consumer information as well as for the further uptake of renewable power purchase agreements. GoOs are energy certificates that label electricity from renewable sources to provide information to electricity customers on the source of their energy. GoOs are standardized through the European Energy Certificate System (EECS) provided by the Association of Issuing Bodies (AIB). The EECS makes the trade, cancelation, and use of GoOs standardized across AIB members.

The first revision of the directive took place in 2018 (2018/2001/EU) [8,42]. The revised directive, aligned with the Paris Agreement target, sets a new binding renewable energy target for the EU of at least 32% by 2030. The directive also introduces new measures for various sectors of the economy (e.g., heating and cooling), as well as new provisions to enable citizens to play an active role in the development of renewable energy sources by enabling renewable energy communities and the self-consumption of renewable energy.

In 2021, the Commission proposed another revision of the directive to accelerate the take-up of renewables in the EU and help reach the 2030 energy and climate objectives. The proposed revised directive sets a common target of at least a 40% share of renewable energy in the EU’s energy consumption by 2030.

Under the RePowerEU Plan of the “Fit-for-55” package, the EC proposed an amendment to the proposed revision of the Renewable Energy Directive [9] aiming to recognize renewable energy as an overriding public interest. The amendment raises the 2030 target for renewables to 45%. The amendment also defines dedicated “renewables go-to-areas” to be put in place by member states, with shortened and simplified permitting processes in areas with lower environmental risks.

3. Current State of Key European Sectors

In Europe, some of the most pivotal sectors, such as energy, environment, construction, and real estate development, find themselves navigating environmental compliance and global economic shifts. These sectors are not only adapting to stringent environmental laws but also responding to broader challenges brought on by recent worldwide events. This comprehensive analysis aims to provide insights into the state of these sectors, outlining how they are maneuvering through regulatory landscapes while grappling with the unpredictability of the global economy.

3.1. The Energy Sector

The European energy sector stands at a pivotal crossroads, balancing the urgent need to reduce carbon emissions with ensuring energy security amid evolving global dynamics. A key challenge lies in Europe’s heavy reliance on China for critical minerals essential to the energy transition, including rare earth elements (REEs), copper, nickel, and lithium, which are vital for wind turbines, electric vehicles (EVs), battery storage, and green hydrogen production [43,44]. While scaling up the mining and production of these resources is necessary, recycling—particularly for REEs, which lack commercially viable recovery processes—remains underdeveloped, exacerbating supply chain vulnerabilities.

Infrastructure modernization is another pressing priority. A 2021 study by Eureletric and E.DSO [45] estimated that upgrading the EU’s aging grid, with 50% of infrastructure exceeding 40 years by 2030, will require EUR 375–425 billion. However, this investment promises substantial returns, including EUR 175 billion annually in reduced fossil fuel imports and EUR 27–37 billion in long-term electricity cost savings as renewables expand [46]. Despite progress, Europe’s wind and solar industries face headwinds from volatile raw material prices, supply chain disruptions, and protectionist trade policies, slowing deployment and inflating project costs [13,21]. Solar energy, bolstered by the EU’s REPowerEU strategy to cut reliance on Russian fossil fuels, has emerged as a cornerstone of Europe’s energy future, with a 43% increase in solar capacity targets. Meanwhile, new wind and solar installations are increasingly cost-competitive with existing coal plants, underscoring the economic logic of the transition.

3.2. The Environment Sector

Effective waste management is pivotal to Europe’s climate goals, yet its complexity varies regionally. While the EU has made strides in adopting circular economy principles, challenges persist in aligning waste prevention and recycling with global benchmarks. Improper waste management contributes significantly to greenhouse gas emissions, but optimized practices—such as reusing materials like ferrous metals, paper, and plastics—can reduce the reliance on primary resources and curb emissions [13,21]. In 2010, an estimated 700–800 million tons of waste were converted into secondary commodities, though only a fraction (under 25%) entered international trade [47].

Asia dominates global recycling markets due to its lower labor costs and less stringent environmental regulations, absorbing materials from more-developed nations [48]. However, hazardous waste and construction debris remain difficult to recycle, highlighting gaps in policy and technology. The Global Waste Management Outlook (GWMO) [49] emphasizes waste prevention and efficient resource use, aligning with EU goals to reduce costs, enhance public health, and mitigate supply chain risks.

3.3. The Construction Sector

The European construction sector plays a pivotal role in the continent’s economic landscape, contributing 11.1% to GDP and employing 13 million workers across 3 million enterprises [1,12]. In 2021, construction activity in the EU27 totaled EUR 1.602 trillion, representing 47.7% of gross fixed capital formation. However, the sector has faced turbulence from geopolitical shocks, such as Russia’s invasion of Ukraine, which disrupted supply chains and spiked energy and material costs [10,11,12]. In 2022, EU construction investment grew by 2.0%, with stark disparities between member states: Italy saw a 12.1% surge, while Bulgaria experienced a 23.1% decline [1,2].

Renewable energy integration offers a pathway to resilience. The REPowerEU package and streamlined permitting processes aim to accelerate solar and wind deployment, while initiatives like the Asian Development Bank’s Energy Transition Mechanism prioritize retiring coal plants [9]. The International Energy Agency (IEA) estimates annual clean energy investments of USD 4 trillion until 2030 to meet net-zero targets, underscoring the sector’s strategic role in Europe’s green transition [5,50].

3.4. The Real Estate Development Sector

Closely tied to construction, the real estate sector is transforming under EU policies like the revised Energy Performance of Buildings Directive (EPBD) and the “Fit-for-55” package [51]. Buildings account for 40% of EU energy use and 36% of CO₂ emissions, driving mandates to retrofit inefficient structures and ensure new developments meet stringent energy standards [51,52]. The EPBD aligns with the 2020 Renovation Wave strategy, targeting a doubling of annual retrofit rates to 2% by 2030 [53].

These measures create opportunities for SMEs and developers to innovate in energy-efficient designs and materials [15,17,54]. However, high upfront costs and regulatory complexity pose challenges [55]. By prioritizing green retrofits and renewable energy integration, the sector can unlock long-term economic and environmental benefits, aligning with the EU’s 2050 climate-neutrality vision.

4. Mapping GHG Emissions of Construction Companies

There is no silver bullet to address carbon emissions; instead, construction companies must consider a suite of technological and organizational solutions to meet decarbonization targets. The best path forward for each company will depend on the company’s resource availability, energy access, and regulatory environment, along with the speed and cost of technological development and scaling. Companies should focus on progress rather than perfection, and identify areas to begin to take meaningful action on the path to decarbonization.

4.1. Structured Four-Step Decarbonization Approach

A general approach to setting an effective GHG Emissions Reduction Plan includes four steps (Figure 1):

• Step I: Defining the scope of GHG-based activities;
• Step II: Conducting a GHG inventory for all categories of business functions;
• Step III: Setting targets;
• Step IV: Planning reductions over time.

Indeed, construction companies possess great potential for significant emission reduction by reducing emissions along the value chain. Companies should set ambitious climate-related targets that go beyond their obligations mandated by national and European legislation. Companies should decide on both short-term and mid-term targets to track immediate improvements while evaluating progress toward the 2050 net-zero end goal, taking a structured approach to environmental responsibility and setting concrete targets in numerous areas related to greenhouse gas (GHG) emissions, renewable energy sources (RESs), waste management, and energy storage solutions, marking a significant shift towards sustainable energy sources.

Further forward-thinking initiatives could support construction companies along this road, such as an energy conservation guide, which highlights energy conservation strategies, as well as a program for the systematic training and education of company personnel on energy saving, phasing out fossil fuels across their production activities and introducing green bonds to support sustainable projects, and taking steps to reduce the environmental impact of their subcontractors through regular internal audits and the inclusion of waste management provisions in contracts.

Regarding infrastructure, the companies’ offices could transition in order to harness more energy from renewable energy sources (RESs). Companies could also update their lighting systems across all their properties to LEDs. Water management could be a priority area, and a plan to reuse treated waste for machine cleaning and site maintenance could prove to be supportive.

Technologically, companies could integrate a power management system or a distributed control system to improve energy efficiency. Modern management systems and automation should be introduced in their manufacturing units. Waste management processes could be revised, focusing on improved sorting and recycling, ensuring recyclables are returned to the appropriate channels.

4.2. Data Sources and Methodology

To ensure transparency and reproducibility, this study employed a mixed-methods approach, combining quantitative emissions modeling with qualitative policy and stakeholder analysis. The methodology was structured into four phases, as outlined below.

4.2.1. Data Collection

Data were sourced from three primary categories: Policy and Regulatory Documents: EU directives (e.g., Renewable Energy Directive, Fit-for-55 package), national climate laws (e.g., Greece’s Climate Law 4936/2022), and international agreements (Paris Agreement and UN Sustainable Development Goals—SDGs).

Industry Reports: Emissions and energy consumption data from Eurostat, the European Construction Federation (FIEC), and corporate sustainability disclosures (e.g., CDP reports).

Academic Literature: Peer-reviewed studies on decarbonization pathways, circular economy practices, and energy transitions.

Primary Data: Surveys and interviews with industry stakeholders (e.g., engineers, sustainability managers) to capture on-the-ground challenges and solutions.

4.2.2. Emissions Calculation Methodologies

GHG emissions were calculated using a hybrid approach combining activity-based accounting and input–output analysis:

• Scope 1 (direct emissions) [56]: Calculated via fuel consumption data (e.g., diesel, natural gas) using GHG Protocol emission factors.
• Scope 2 (indirect energy emissions): Derived from electricity and heat consumption, adjusted for regional grid emission factors.
• Scope 3 (value chain emissions) [57]: Estimated using input–output analysis for upstream activities (e.g., raw material extraction, cement production) and downstream processes (e.g., waste disposal).

Activity-based carbon footprinting was applied using the following formula:

Total Emissions = ∑ (Activity Data × Emission Factor)

(1)

4.2.3. Validation Techniques

To ensure robustness, the methodology incorporated the following approaches:

Cross-Validation: Emissions estimates were compared with sectoral benchmarks from the European Environment Agency (EEA) [58].

Stakeholder Feedback: Industry experts (e.g., engineers, sustainability officers) had the opportunity to review preliminary results to validate assumptions and fill data gaps.

5. GHG Emission Reduction Pathways of Construction Companies

Taking into consideration construction companies’ production lines and the main emissions sources as identified during the company’s carbon footprint calculation, indicative emissions reduction pathways have been identified and presented in Figure 2. The pathways should be aligned with the national, European, and global climate and environmental targets set.

Each of the four pathways covers a broad area of emissions as follows:

• Pathway 1: Electricity decarbonization.
• Pathway 2: Direct emissions reduction.
• Pathway 3: Recycling and resource efficiency.
• Pathway 4: Supply chain emissions.

5.1. Pathway 1: Electricity Decarbonization

Diversifying the energy mix used both in production facilities as well as corporate buildings is key to reducing electricity-related emissions.

Rooftop PV system: One option is the installation of fixed-tilt photovoltaics (PVs) on the company’s rooftop for self-consumption, compensating the production and consumption of energy (net metering). In other words, the energy produced by the PV installation is consumed directly by the company, and if there is excess production this is injected into the grid and credited to the company. On the contrary, when the produced energy cannot meet the company’s energy needs, then the company absorbs energy from the grid under the current charging scheme. This option is the least expensive, but also of limited effect. Photovoltaics installed on a corporate building’s rooftop cannot provide enough energy to support the decarbonization of the production processes of a construction company.

Virtual Power Purchase Agreement or guarantees of origin: A Virtual Power Purchase Agreement (VPPA) does not require the installation of an on-site RES system and does not involve the physical delivery of energy produced by the RES system [59]. It only involves a financial contract to provide green electricity from a credible RES supplier. An alternative is the purchase of guarantees of origin (GoOs) through the European Energy Certificate System (EECS).

Improved energy efficiency: Construction companies, in order to minimize their carbon impact, should embark on a structured pathway to optimize energy usage across their operations. A proposed approach for indirect emissions would be the switch to energy-efficient LED lamps, for example. Additionally, companies could move forward with the installation of electricity meters at their offices. This measure aims to monitor energy usage meticulously and subsequently design conservation strategies. For direct emissions, companies should target infrastructure and fleet optimizations. To fortify energy consumption optimization, companies may conceptualize the creation of energy management teams. Some of the tasks that they could focus on are as follows:

• Reviewing energy consumption documentation;
• Addressing potential recording issues;
• The comprehensive analysis of energy usage by type and purpose;
• Monitoring energy consumption patterns;
• Actionable energy conservation planning and execution;
• Exploring funding avenues;
• Setting and tracking energy performance metrics;
• Facilitating knowledge sharing across subsidiaries.

5.2. Pathway 2: Direct Emissions Reduction

Electrifying the corporate fleet: Construction companies could outline plans to minimize vehicular emissions, prominently characterized by a pivot to electric mobility. A parallel emphasis lies in infrastructure support. Construction companies could also plan to underscore their vehicle transition strategy with the rapid establishment of charging infrastructures. A holistic approach not only signals a progressive vision for electric mobility but also manifests a concrete path toward an environmentally sustainable vehicular ecosystem. Monitoring these milestones and adapting to electric mobility’s evolving landscape will be crucial for the envisioned success.

5.3. Pathway 3: Recycling and Resource Efficiency

Construction companies under Pathway 3 could incorporate waste reduction and diversion targets within their overarching GHG emissions strategy. This integrated approach underscores the interdependence of waste management and environmental conservation.

Phased Waste Diversion Strategy: Construction companies should construct roadmaps for waste diversion.

Integration within the Environmental Strategy: Waste Diversion Strategies should align with construction companies’ broader Environmental Strategies. It should reflect the companies’ comprehensive approaches to environmental responsibility and stewardship.

Scope and exclusions: Waste diversion targets encompass all waste typologies—hazardous and non-hazardous—emanating from construction companies’ operations. This coverage spans direct operations and extends to subsidiary entities, ensuring a broad and consistent approach. The waste types include solid waste, manufacturing by-products, and common office waste. However, it is crucial to highlight that certain waste types—primarily due to regulatory, technical, or logistical hurdles—might be difficult to divert from landfills. Notably, some hazardous waste or specific industrial waste categories might remain challenging to recycle or repurpose.

Achieving the Target: A Structured Approach: The cornerstone approach should be waste prevention. Companies’ strategy should gravitate towards initial waste generation mitigation. Employee engagement also plays a pivotal role, and awareness campaigns should be set up to foster waste-preventive behaviors. Moreover, selective demolition practices should be emphasized, concentrating on material types like wood and inorganic fractions. Additionally, construction companies could be resolute in ensuring the complete on-site reuse of excavation materials.

5.4. Pathway 4: Supply Chain Emissions

Construction companies should consider practices related to the decarbonization of the supply chain, both upstream and downstream, since their emissions are mainly value chain emissions coming from purchased goods and services.

Responsible sourcing—supplier code of conduct: Construction companies should emphasize sustainability within their operations and throughout their supply chain. Supplier codes of conduct would ensure that both they and their suppliers pursue a shared commitment to environmental responsibility. Companies’ environmental policy should push beyond basic legal standards, urging suppliers to adopt a proactive approach towards environmental sustainability. Construction companies should align their values with recognized global benchmarks, including the UN Global Impact, the 17 UN Sustainable Development Goals (SDGs), and the European Green Deal’s objectives. Suppliers are encouraged to internalize these principles in their operations. Construction companies should also expect their suppliers to uphold specific international standards. This includes maintaining certification such as ISO 14001:2015 for environmental management [60], ISO 50001:2018 for energy management [61], and adhering to European standards like EMAS IIII. To ensure adherence, construction companies should actively monitor supplier practices concerning the code of conduct and be committed to providing feedback and resources, fostering a collaborative approach towards environmental responsibility.

Profitability and sustainability can coexist. Suppliers are reminded to see the broader picture, valuing long-term environmental benefits over short-term gains.

6. Empirical Exercise

In this section, we applied the four-step decarbonization framework (Figure 1—scope definition, inventory, target setting, reduction planning) to a hypothetical small-to-medium construction company (50 employees, annual revenue EUR 5M) to quantify emissions and identify actionable reduction pathways.

Steps I and II: The key inputs for this empirical exercise and hypothetical small construction company—Step I: Defining the scope of GHG-based activities; and Step II: Conducting a GHG inventory for all categories of business functions—are summarized in

Table 1. Scope of GHG-based activities and GHG inventory.

Definition of Scope of GHG Activities	GHG Inventory		Calculations
	Activity Data	Emission Factors
Scope 1: Diesel for machinery and company vehicles	Diesel consumption: 20,000 lt/year	Diesel: 2.68 kg CO2e/lt	53,600 kg CO2e
Scope 2: Electricity for offices and workshops	Electricity consumption: 100,000 kWh/year (grid electricity)	EU grid average: 0.276 kg CO2e/kWh	27,600 kg CO2e
Scope 3: Cement, steel, and timber purchased from suppliers	Cement purchased: 500 t/year	Cement: 0.83 kg CO2e/kg	415,000 kg CO2e
		Total:	496,200 kg CO2e

.

Step III—Setting Targets:

• Align with the Science Based Targets initiative—the SBTi’s 1.5 °C pathway specifies a 4.2% annual reduction;
• 2030 Target: Reduce emissions by 30% (baseline: 496,200 kg CO₂e → 347,340 kg CO₂e).

Step IV: The plans for GHG emission reductions over time for this hypothetical small construction company are illustrated in

Table 2. GHG-emission reduction plans.

Pathway 1 Electricity Decarbonization	Pathway 2 Direct Emissions	Pathway 3 Recycling	Pathway 4
			Supply Chain
Install 50 kW rooftop solar PVs (cost: ~EUR 50,000)	Replace 2 diesel vehicles with EVs (cost: ~EUR 80,000)	Recycle 20% of concrete waste (50 tons/year)	Switch to low-carbon cement (30% less emissions)
Annual generation: 50,000 kWh (50% of electricity needs)	Diesel saved: 5000 lt/year	Avoided cement use: 41,500 kg CO2e	Reduction: 124,500 kg CO2e
Reduction: 13,800 kg CO2e	Reduction: 13,400 kg CO2e

.

Based on Table 2, the total annual reductions were calculated as 193,200 kg CO₂e.

Results Interpretation and Discussion:

These proposed decarbonization strategies enabled the hypothetical construction company to achieve almost 39% of its 2030 emissions reduction target (30% below baseline), demonstrating the feasibility of aligning with global climate goals. This progress was driven by a combination of renewable energy adoption (solar PVs), fleet electrification, material efficiency (concrete recycling), and low-carbon supply chain practices. The results highlight the disproportionate impact of supply chain interventions (e.g., low-carbon cement), which account for nearly two-thirds of total reductions, underscoring the importance of Scope 3 mitigation. However, the exercise also reveals the limitations of measures like rooftop solar PVs for energy-intensive operations, emphasizing the need for hybrid solutions (e.g., VPPAs) to bridge the gaps.

While the pathways align with EU policies like REPowerEU (solar subsidies) and the Carbon Border Adjustment Mechanism (CBAM-compliant materials), challenges persist. High upfront costs for SMEs—particularly for EVs and solar installations—risk slowing adoption without targeted financial incentives. The reliance on low-carbon suppliers further exposes vulnerabilities in regional markets, where material availability and cost volatility remain barriers.

Future efforts should prioritize policy–industry collaboration to de-risk investments and standardize low-carbon procurement practices, ensuring equitable access for SMEs. This empirical exercise illustrates that even modest, structured actions can yield significant progress, reinforcing the viability of the four-step framework for diverse construction firms.

7. Challenges and Mitigation Strategies

This study tries to contribute to the discourse on decarbonizing the construction sector, providing a comprehensive and timely analysis of the decarbonization of this sector. The study effectively integrates regulatory, technological, and organizational perspectives, proposing a structured four-step framework for reducing greenhouse gas (GHG) emissions.

However, the decarbonization of the construction sector faces significant barriers, including economic feasibility, technological limitations, and regulatory inconsistencies. High upfront costs for renewable energy systems (e.g., rooftop solar, EV fleets) and low-carbon materials often deter SMEs, particularly in regions with limited access to subsidies or green financing. Technological gaps persist in recycling critical materials like rare earth elements and managing hazardous construction waste, which lack scalable, cost-effective recovery processes.

Regulatory fragmentation across EU member states further complicates compliance, as varying standards for carbon accounting, recycling mandates, and energy efficiency create administrative burdens. For instance, disparities in grid modernization priorities or permitting delays for renewables hinder rapid deployment. Additionally, reliance on global supply chains exposes firms to geopolitical risks and price volatility, undermining decarbonization timelines.

To address these challenges, a multi-stakeholder approach is essential. Economic barriers can be mitigated through blended financing models, such as EU-funded grants paired with green bonds, to offset capital costs for SMEs. Governmental and industry consortia should prioritize research & development (R&D) investments in recycling technologies and pilot circular economy hubs to localize material recovery.

Furthermore, harmonizing regulations—such as standardizing carbon disclosure frameworks under the Corporate Sustainability Reporting Directive (CSRD)—would reduce compliance complexity. Strengthening supplier partnerships through collaborative platforms, like digital material passports or blockchain-enabled traceability systems, could enhance supply chain resilience. Finally, policymakers must accelerate permitting for renewables and expand carbon pricing mechanisms to incentivize low-carbon alternatives while shielding SMEs from market shocks. By aligning financial, technological, and regulatory interventions, the sector can overcome systemic barriers and scale decarbonization pathways effectively.

8. Conclusions

This research provides actionable insights for construction companies to achieve net-zero emissions by 2050, demonstrating that profitability and sustainability can coexist through innovative and structured decarbonization efforts.

The construction sector is a significant contributor to global greenhouse gas emissions, necessitating urgent decarbonization efforts. This study outlines a comprehensive framework for construction companies to map and reduce their GHG emissions through a structured four-step approach: defining emission scopes, conducting GHG inventories, setting reduction targets, and planning actionable reductions.

In particular, this study employs a mixed-methods approach to develop a structured decarbonization framework for the construction sector, integrating regulatory analysis, case studies, and emissions modeling. The methodology is anchored in a four-step process: (1) defining GHG emission scopes (direct, indirect, and value chain); (2) conducting comprehensive GHG inventories using activity-based accounting; (3) setting science-based targets aligned with the Paris Agreement and EU climate laws; and planning reductions through four prioritized pathways: electricity decarbonization, direct emissions mitigation, resource efficiency, and supply chain collaboration. Data were synthesized from EU policy documents, corporate sustainability reports, and peer-reviewed studies on energy transitions, with validation via stakeholder interviews and scenario analysis.

The paper highlighted the potential of renewable energy adoption, the electrification of industrial processes, and waste diversion, yet gaps persist in translating policy mandates into actionable corporate roadmaps. For example, while rooftop photovoltaics (PVs) and virtual power purchase agreements (VPPAs) are widely advocated for, their scalability and economic viability in energy-intensive construction operations remain contested. Similarly, debates surround the feasibility of achieving 45% renewable energy penetration by 2030, particularly in regions with legacy infrastructure and regulatory bottlenecks.

The study concluded that construction companies actively addressing their carbon footprint with a blend of strategic investments, transparent reporting, and research collaborations may lead to the forefront of environmental stability. Furthermore, for construction companies to further emphasize their dedication to ecological preservation, they should also plan a series of forward-thinking initiatives.

Future research should focus on scaling pilot projects (e.g., industrial symbiosis networks for material reuse) to assess feasibility across diverse regulatory contexts and leveraging digital tools (e.g., AI-driven energy management systems) to optimize real-time emissions tracking.

To conclude, by bridging policy ambition with grassroots implementation, this work contributes to a holistic understanding of sustainable industrial transitions, advocating for adaptive, inclusive pathways to net-zero emissions.