Resource efficiency in the construction industry, especially within the cement sector, which accounts for nearly 8% of global CO₂ emissions, remains insufficiently explored. This study develops the first Sub-national Computable General Equilibrium (SCGE) model for the UK to evaluate the regional economic and environmental impacts of improving efficiency in cement and ready-mix concrete use. Unlike costly carbon capture technologies, material efficiency strategies such as clinker substitution, cement optimization, and reducing concrete demand offer cost-effective emission reductions. While material efficiency is increasingly recognized as a key pathway for industrial decarbonization, its economic impacts at the regional level remain underexplored. The SCGE model incorporates these strategies into a regionally disaggregated framework to assess their implications for industrial decarbonization. Results show that material efficiency can significantly cut emissions while sustaining or enhancing regional economic performance. However, impacts vary across regions, driven by differences in industrial composition. This research fills a key gap by quantifying these regional disparities and offers a new methodological approach for analyzing material efficiency and circular economy interventions. The SCGE framework provides critical insights for policymakers aiming to align economic resilience with environmental goals, supporting the UK’s transition to net-zero emissions.
- resource efficiency
- Cement Sector
- Industrial Decarbonization
- Regional Economic Impacts
- Sub-national CGE model
1. Introduction
Cement is the most widely produced material on Earth by mass. When mixed with water and mineral aggregates, it forms cement-based materials like concrete, which make up a significant part of the built environment. And as a key construction material, the production of Portland cement involves a calcination process that contributes nearly 8% of global CO2 emissions, and it can further increase to over 25% by 2050 if current trends continue.
In 2015, the United Nations Environmental Program Sustainable Building and Climate Initiative (UNEP-SBCI) formed a technical working group to explore practical alternative technologies that could reduce CO2 emissions and improve material efficiency throughout the cement industry's value chain. To reduce CO2 emissions, the International Energy Agency proposed carbon capture and storage (CCS) in 2009 as a primary solution. Since then, advancements in CCS technology have been made due to extensive research across various sectors, including the cement industry. However, these technologies are energy-intensive and remain costly. Given that most cement is produced and used in developing countries, finding more affordable alternatives to CCS and carbon capture utilization (CCU) is highly desirable. However, two product-based strategies can achieve significant additional reductions in global CO2 emissions, thereby reducing the need for costly CCS investments over the next 20–30 years: one strategy is to increase the use of low- CO2 supplementary cementitious materials as partial replacements for Portland cement clinker, and the other is to use Portland cement clinker more efficiently in mortars and concretes (Scrivener et al., 2018).
On the other hand, interest in resource efficiency and circular economy concepts is growing, influenced by factors such as fluctuating commodity prices, the scarcity of critical raw materials, concerns about climate change and environmental pollution, and a focus on job creation and economic growth (UNEP 2016). The basic premise for the shift toward a circular economy (CE) is that current production and consumption patterns use scarce resources inefficiently. Sectors such as transportation, construction, and food are prime examples of inefficient resource use, as they require a significant portion of consumer income to meet needs like mobility, housing, and nutrition. Improving resource efficiency is often seen as a win-win strategy because it not only generates direct economic benefits, such as higher real income or GDP growth, but also reduces environmental impact through less pollution and more efficient resource use.
Building on this broader understanding of resource efficiency, it is important to examine its sector-specific implications, particularly in industries with high environmental and economic significance. Most existing studies do not address the regional or subnational distributional effects of efficiency improvements in the cement and ready-mix concrete industries. Our study introduces the first sub-national Computable General Equilibrium model for the UK, offering regionally disaggregated analysis focused on the cement and ready-mix concrete industries within a circular economy framework. By integrating potential material efficiency strategies—such as clinker substitution, cement optimization, and concrete demand reduction—into a spatially explicit macroeconomic model, this research advances the field by providing unique insights into how resource efficiency can influence regional economies and environmental sustainability. The focus is not only on direct impacts but also on the indirect and spillover impacts of resource efficiency, such as how these efficiencies shift sectoral output and alter regional production, regional GDP, and regional CO₂ emissions in the UK.
2. Decarbonizing Cement and Concrete in the United Kingdom
Among the various methodologies available, economy-wide modelling has emerged as a particularly powerful tool for capturing the complex interactions among companies, industries, and sectors that shape the macroeconomic effects of resource efficiency. The importance of such modelling was first highlighted by the International Energy Agency (IEA) in 2012, which demonstrated through a Computable General Equilibrium (CGE) model that energy efficiency policies could lead to a 0.4% increase in global GDP by 2035. However, the benefits were unevenly distributed, with energy-exporting countries experiencing declines in energy demand and prices.
Building on this foundation, Bohringer and Rutherford (2015) developed a multi-regional CGE model for the Ellen MacArthur Foundation, emphasizing the circular economy. Their model captured critical spillover and feedback effects at the global level and estimated that GDP could grow by an additional 12 percentage points by 2050 through efficiency improvements in the mobility, food, and built environment sectors. However, this growth primarily resulted from technological shifts, without accounting for the costs of achieving such advancements, and did not fully incorporate material-specific considerations beyond fossil fuels.
Similarly, CE & BioIS (2014) applied a macro-econometric model to assess the impacts of reducing raw material consumption across the EU28. Their findings indicated that improvements of 2.0–2.5% annually in resource productivity could yield positive GDP impacts, although gains diminished if environmental taxes were not reinvested into the economy, highlighting the critical role of revenue recycling in maximizing benefits.
Skelton et al. (2020) employed the GEM-E3 CGE model to explore rebound effects in the automotive supply chain. Their study was notable for comparing rebound effects across energy, material, and product-service efficiency improvements, revealing that material and service efficiency strategies faced significantly higher rebound risks than energy efficiency measures, thus complicating the achievement of net environmental benefits.
Further advancing this field, Winning et al. (2017) utilized the UCL ENGAGE-materials CGE model to analyze material use across production and recycling stages globally, focusing especially on China and Europe. Their technology-rich framework, with a special emphasis on the steel industry, offered preliminary insights into the circular economy's economic and sectoral impacts.
The European Commission’s 2014 study using the EXIOMOD model evaluated resource efficiency measures during both the construction and use phases of European buildings and infrastructure. Despite highlighting significant potential GDP gains across member states, the study also acknowledged limitations related to modelling building stocks, technological evolution, and saturation effects.
Complementing these efforts, the E3ME macro-econometric model developed by Cambridge Econometrics demonstrated that increasing resource productivity in the EU could lead to major macroeconomic benefits, including the creation of 2 million additional jobs by 2030, with construction materials identified as key levers for improvement.
Despite these advancements, a notable gap remains: very few studies have explored the regional or sub-national economic impacts of material efficiency strategies, particularly about construction materials like cement and ready-mix concrete. Standard CGE models often lack the spatial granularity needed to capture intra-country heterogeneity in industrial structures and resource flows. Our modeling approach, built on this study, seeks to address these gaps.