Climate-positive cities: circular economy and carbon accounting

How the construction sector can reduce CO2 emissions to make cities more climate-positive

Bird's eye view of Thimphu | Photo by Pema Gyamtsho on Unsplash


The construction industry is one of the most energy-intensive sectors of the economy and a major contributor to global climate change. It is responsible for up to 40 per cent of global CO2 emissions. However, there are ways to make construction more sustainable and hence more climate-friendly. Municipalities play a key role in initiating and supporting these processes locally.

Two examples of such municipal engagement were in the spotlight of a virtual exchange organised by Connective Cities on 27 February 2024 and were discussed by 18 (municipal) experts from six countries. The event was part of a one-year learning process that began in November 2023 with the international dialogue event “Climate-friendly construction with organic and recycled materials” in Potsdam, Germany.

Circular economy in Bhutan: bio-based materials are the future

Karma Wangchuk, an urban planner from Bhutan, explained during the virtual exchange, how this small country, most of which is located in the Himalayas, aims to transform the construction industry with a focus on a circular economy and the use of renewable and bio-based materials.

Neither approach is new in Bhutan: many villages in the mountainous landscape are difficult to reach. It has therefore always been easier for people to utilise locally available materials such as wood and reuse existing building materials instead of laboriously bringing them in from outside. However, in the country's fast-growing cities, particularly in the capital Thimphu, a different style of building has taken hold in recent decades. More and more large houses are being built from energy- and emission-intensive extractive materials such as concrete and steel. This threatens not only the natural ecosystem, but also the country's self-understanding as a deeply sustainable society and its cultural heritage.

Youth unemployment is high in the cities and the Bhutanese government wants to use a green transformation of the construction sector to create attractive jobs for young people to prevent them from emigrating.

Thimphu has set out its circular economy ideas in its Structure Plan 2023 – 2048. It outlines a vision of synergies between sustainable forestry, a robust construction sector with minimal environmental impact and healthy urban landscapes. Accordingly, timber and particularly strong glued laminated timber (also known as glulam) are to play a key role as building materials. The houses built from timber are to take up traditional Bhutanese building styles. In this way, Bhutan is combining climate-friendly construction with traditional values, a sustainable future and a green economy with high-quality jobs.


Participants in the expert exchange pointed out that this type of construction – also known as autochthonous construction – is not only ecologically sound, but also economically viable. For example, bio-based building materials have the advantage to equalise temperatures, which saves a lot of energy for heating or cooling buildings. However, in order to use wood as a building material, it must be produced sustainably and locally in sufficient quantities. This is the case in Bhutan, while in Germany, around 40 percent of the timber used is imported. The discussion must therefore also focus on achieving global climate justice. Participants were also impressed by how much can be learned today from traditional economic cycles. However, there are still many unanswered questions, such as the safety of recycled materials.

"We cannot survive as a waste-producing society because our resources are limited."
Karma Wangchuk

For climate-positive cities: CO2 accounting

Matthias Schäpers, Senior Project Manager of the Climate-Positive Cities and Communities initiative at the German Sustainable Building Council (DGNB), explained how carbon accounting can help to make the building sector more climate-friendly. The DGNB has developed a system for certifying sustainable construction that takes into account the life cycle of a building, its ecological, economic and social performance and the holistic nature of a construction project. He pointed out that the sustainability of neighbourhoods is not just about CO2 emissions, but also about biodiversity, resilience, health and adaptation to climate change. It can take a very long time for the high emissions generated during the construction phase of a building to be offset during its use. This is why it is so important to focus on the use of existing buildings when creating living space, Schäpers said.

The DGNB initiative "Climate-Positive Cities and Communities", founded in 2020, has already been joined by 85 German municipalities. They have committed themselves to comprehensive sustainability as a local standard and are focussing on climate protection and climate impact adaptation in areas such as mobility, soil, health, the water cycle and recyclability – and not just on CO2 emissions.

But when is a municipality climate-positive? According to Matthias Schäpers, key factors are energy consumption, all emissions generated in the municipality, including those from agriculture and waste management, land use, urban planning and development as well as the overarching social, socio-ecological transformation of urban society, participation and inclusion and positive visions for the future. Ultimately, psychological aspects are crucial, says Schäpers. People must want to live in a climate-positive city and appreciate its benefits. This is also the key to overcoming technical challenges.


CO2 accounting is a complex model based on extensive measurements. Such a system is very attractive, but in many countries, it cannot be implemented – either because the necessary data is not available or because the resources for such a large undertaking are lacking. Participants also pointed out that the carbon footprint of the construction sector is mainly so poor due to heating and cooling during a building’s utilisation phase. Therefore, the main effort must be to reduce the use of fossil fuels. In line with this, the “Climate-Positive Cities and Communities” initiative pursues a comprehensive approach, addressing a range of issues to make cities and communities more climate-friendly.

"We must accelerate the pace so that more and more municipalities become climate-positive. Not every municipality has to reinvent the wheel. There are already many very good approaches available."
Matthias Schäpers


Municipalities around the world must mitigate climate change and adapt to its impacts. The construction sector and urban planning have a key role to play. Because the challenges are similar everywhere, local authorities can learn from the experiences of others – for example from the climate-smart building strategy in Bhutan's capital Thimphu. They can apply concepts developed elsewhere in their own contexts. For example, the concept of climate-positive cities and communities pursued in Germany offers many ideas for (partial) replication.

The Connective Cities learning process on climate-positive construction will run until October 2024. An international event will take stock and highlight the transition to further engagement opportunities.


Further information / presentations:

Circular Economy 2025: Bio-based Materials for Construction
by Mr. Karma Wangchuk, CEO Ka-Ja Design Associates, Bhutan

Climate Positive Cities and Municipalities
by Mr. Matthias Schäpers, Senior Project Manager Climate Positive Cities and Municipalities at German Sustainable Building Council (DGNB)

Connective Cities