- NextGenerationEUrepresents an opportunity for Irish companies to break into new markets or scale their presence in existing markets.
- EU member states are united in the push for a carbon-neutral Europe by 2050, which requires huge investment in sustainable construction and retrofitting.
- Click or scroll down for more information about the sustainable construction market in:
Sustainability is the future of construction. Since the 2015 Paris Agreement (or COP 21), countries around the world have been striving to change how they operate with a view to keeping global warming at 2C or lower. In many countries, the decarbonisation of construction comes second only to renewable energy as the sector where most impact can be had.
Concrete and cement alone account for as much as 8 percent of global CO2 emissions, while the construction industry is also a heavy consumer of energy and other resources and generates huge levels of waste. Furthermore, existing building stocks across the region emit carbon and need to be retrofitted to operate sustainably.
The push for a carbon neutral 2050
Through the €806.9 billion Recovery and Resiliency Facility (RRF), which aims to help Europe recover from the pandemic and future-proof its economy and society, the European Union also hopes to achieve its Green Deal target of climate neutrality by 2050.
“We are all on the same page in Europe,” says Alix Derigny, Market Advisor Construction & Sustainable Build at Enterprise Ireland in France, “because every state has set greenhouse gas emission-reduction targets. The EU and national governments are putting in place grants to raise ambitions, and consumers are expecting day-to-day life to be greener.”
“Similarly, the real estate and retail sectors are putting pressure on the construction sector to accelerate the ecological transition. This issue is driving all businesses in the sector, from sub-contractors to suppliers and materials manufacturers.”
In fact, at least 37% of spending in the national plans funded by the RRF must relate to climate goals. Much of that, in turn, is going to construction and infrastructure projects.
In the effort to build a truly climate-friendly, circular economy, where waste and carbon emissions are minimised or eliminated, building and renovation methods are crucial. Prefabrication, for example, can enhance efficiency and build speed, while minimising waste.
Across the board in Europe, governments are making use of this funding to enable the Green transition. From a construction perspective, this includes work around:
- energy retrofitting of public and private buildings, including homes and business premises
- enabling the circular economy, through the modernisation of recycling centres and other projects
- building green infrastructure, such as rail and other transport infrastructure.
Where the opportunity lies for Irish construction firms
As the whole industry evolves to embrace innovation, be more flexible, efficient and sustainable, many opportunities are opening up for contractors, engineering and advisory companies. It’s worth bearing in mind that large contractors are now seeking to reduce emissions across their entire value chain and will seek vendors who can meet those standards.
Irish firms are already delivering demanding construction and related projects in more than 100 countries. Ireland has particular strength in sought-after capabilities such as:
- designing and delivering advanced infrastructure across the data, pharma and energy sectors
- developing and implementing innovative digital and data-driven solutions, such as digital twins
- improving resource efficiencies
There are a number of key areas in which the construction sector across Europe, and indeed globally, will welcome the solutions Irish firms can provide. “Markets like France and Germany are mature markets with an engineering culture,” says Derigny.
“You need to be innovative or have something to reduce the customer’s carbon footprint, if you want to compete with domestic suppliers,” she adds. “If you can bring those solutions, you’ll find customers with a huge appetite for them.”
Specific areas of interest to European construction customers include:
- energy efficiency
- sustainable heating, ventilation and air conditioning (HVAC) systems
- LEED certification
- smart building solutions, including sensors, security and maintenance
- 5G Technology (for IoT solutions)
- technologies and material to reduce CO2 emissions
- solar panels
- AI-powered solutions
- any other product or service that can help lead to Leadership in Energy and Environmental Design (LEED) certified buildings
Partners and planning vital to success
Typically, says Derigny, it makes sense for Irish firms to find partners in export markets, because it increases speed to market and reduces risk, but Enterprise Ireland can advise on a case-by-case basis.
Across Europe, as for any market at present, this sector is grappling with commodity price inflation, supply chain disruption and labour shortages. None of the markets below varies from that perspective, so it’s best to be prepared and consider how you can surmount these challenges so your market entry is not derailed by external factors.
Understand the 5G market opportunity for Irish firms
The strong Irish cluster of cybersecurity firms, for example, has clear opportunities across key European markets as do Irish firms specialising in Open RAN, a technology that facilitates the deployment of 5G. Other thriving areas where Enterprise Ireland has identified significant opportunities for Irish firms include IoT and smart cities.
Among the Irish firms specialising in 5G and connectivity products and services, and thriving in EU markets, are Open RAN radio infrastructure specialists Benetel or Aspire and core cellular network software company Druid Software.
Expert advisors in Enterprise Ireland’s network of offices across Europe, together with its Market Research Centre in Dublin, can support your business as it investigates market opportunities, including by making local introductions and helping you to build your network.
If you are not sure where to start your export journey, get in touch.
The renovation sector is thriving in France as established building and energy firms seek innovative solutions to incorporate into their offerings.
The sustainable construction landscape in France
France aims to reduce energy consumption in the building sector by 28% by 2030 and to achieve a carbon-neutral building stock by 2050.
The building sector is a priority target for France’s Energy Transition Law, which came into force in 2015, and legislation also mandates high energy performance from any renovation works. Furthermore, any new building has had to be energy-efficient since 2012, with construction of ‘energy-plus’ homes expected to become the norm.
Major players such as GA Smart Building, Bouygues and Vinci have a strong culture of innovation. They are eager to scout and integrate innovative solutions into their products, so they can offer smart building solutions to their customers.
Energy providers such as EDF, Engie and Total Direct Energie are always looking for innovative start-ups to develop partnerships.
Understand the construction opportunityin France
Overall, the booming housing renovation market is worth €40 billion in France or about a third of the overall construction sector.
France Relance, the national recovery and resilience plan provides substantial additional public funding for energy-saving works, with €5.8 billion allocated to energy retrofitting works. A further €7.0 billion is earmarked for green infrastructure and mobility, which will require significant building work.
President Macron has set the goal of renovating at least 700,000 homes a year for five years, relying on his flagship MaPrimeRénov’ grant. This covers works related to insulation, ventilation, heating and heating control systems.
The construction activity is now in total evolution towards energy renovation and the construction of more efficient buildings – BIM, sensors, maintenance, energy efficiency, safety & security.
Selling into France
Time and patience are needed to manage lengthy sales cycles and due diligence processes. If it is approached correctly, however, France can be a significant and lucrative market for innovative, leading-edge Irish companies.
Irish companies thriving in France include:
- Kingspan, which anticipates turning over half a billion euro in France in 2022
- Ecocem France, a concrete products joint venture with a French firm
- Tricel, a wastewater treatment manufacturer
- LED Group, which makes lighting fittings
- Robeau, which makes water-saving systems
Key players in the market include:
- material manufacturers
- general contractors
- wholesalers and DIY stores
- Specialised distributors
Being part of a local, on-the-ground network is important in the French market. Recruiting an in-market business developer or partnering with a local company will improve chances of success.
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Huge drive for energy-efficient building and renovation represents a significant opportunity for Irish firms prepared to commit to the German market.
The sustainable construction landscape in Germany
Germany is aiming to have a completely climate-neutral building stock by 2050, but as it stands, buildings there still account for a significant proportion of its total energy use and greenhouse gas emissions.
In total, there are nearly 22 million buildings in Germany, and three quarters of them were built before the first energy efficiency standards were introduced in 1978. That means despite Germany’s long-standing commitment to energy efficiency, there is still ample opportunity for companies who can support with retrofitting and refurbishment, or the construction of new low- or zero-carbon developments
Understand the sustainable construction opportunity in Germany
Of Germany’s total €28 billion national Recovery and Resilience Plan or Deutscher Aufbau- und Resilienzplan (DARP), 42% has been allocated to support climate objectives
It includes €2.5 billion for a large-scale renovation programme to radically improve the energy efficiency in residential buildings, while the government is making a further €6 billion available for the Federal Funding for Efficient Buildings Program.
Irish firms will find particular opportunity in the German market around:
- energy management
- HVAC systems
- timber construction.
Customers for Irish firms would most typically be large companies in the residential construction sector, such as Vonovia SE, Strabag AG, Ed. Zublin AG and Bauer AG.
Selling into Germany
While the main opportunities and funding lie in the residential construction sector, this is a competitive market with numerous well-established domestic competitors. At a minimum, you’ll find a strong local partner to help you with language skills and making the most of their existing relationships on the ground.
Irish companies have not had notable success in residential construction, but have gained far more ground in the specialist high-tech construction market, where their expertise in building data centres and pharmaceutical facility is valued.
German business culture is usually risk-averse and new entrants need to show a strong commitment to the market.
Be as prepared and committed as you can. Germany isn’t a market for opportunistic sales. If possible, a physical presence there and regular visits to the market will mean you can take advantage of the long-lasting opportunity the German market offers.
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Opportunities abound for construction firms in Italy, where the government is committed to upgrading its building stock and overhauling its infrastructure.
The sustainable construction landscape in Italy
As Italy seeks to become carbon neutral by 2050, it is undertaking a huge public-private regeneration effort, largely driven by EU funding. With 30% of buildings in the country having historic or cultural value, there is extensive funding for sustainable restorations.
Urban regeneration projects alone are valued at €3.4bn, with €300m already spent in 2022.
Milan is a front runner, with 320 green buildings already certified and 4 ongoing major large-scale urban regeneration projects (Porta Nuova, Citylife, Uptown and MIND, the zero-carbon Milan Innovation District), where sustainability is a key driver of the projects.
Legislative changes and ongoing reform of the public administration will also help the country achieve its sustainability goals, especially as they should enable the construction industry to operate more efficiently.
Understand the sustainable construction opportunity in Italy
Within Italy’s €191 billion National Resilience and Recovery Plan or Piano Nazionale di Represa e Resilienza (PNRR), which is funded by the EU, €59.46 billion is devoted to the circular economy and introducing green initiatives. The government is adding a further €30 billion in grants.
Together, this spend will include:
- €5bn on social housing, including the refurbishment of a fifth of public apartment buildings
- €412m to refurbish judicial buildings
- €800m to make 40,000 schools more energy efficient.
Furthermore, the PNRR also includes significant commitments around the refurbishment of infrastructure with:
- €87bn going to construction (of which 30% will go to Lombardy, Sicily and Campania)
- €31bn allocated to upgrade railways and ports
To encourage 50,000 or more building owners to refurbish and retrofit existing properties, the Italian government has also introduced the EcoBonus scheme. This is a €14 billion fiscal incentive aimed at improving the energy rating and efficiency of existing buildings. The scheme covers the full cost of green renovations and also incentivises homeowners by offering an extra 10% (through a tax deduction of up to €100,000 per home).
Selling into Italy
Take your time and be prepared. Invest in validating the market opportunity and building the right market entry strategy. Italian customers value strong relationships so it is worth spending time investing in building your network.
Typical customers include private construction consortiums, local contractor companies, local councils and suppliers.
Competition from local companies can be a challenge, especially if you are a first time exporter in the market. Irish firms typically find it useful to have a strong local partner in this competitive market, as this can help shorten the sales cycle, deal with the language barrier and navigate local bureaucracy.
Direct relationships matter. Invest time in coming to the market and meeting your counterparts in person.
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