Deep Dive: Low-Carbon Materials (Cement, Steel, Timber) — A Buyer's Guide to Evaluating Solutions

The industrial materials sector stands at a transformation point. Traditional steel production generates approximately 7% of global CO2 emissions, while cement contributes another 8%. Together, these two materials account for roughly 15% of worldwide greenhouse gas emissions. Yet breakthrough technologies are now moving from pilot to commercial scale, creating new procurement options for sustainability-focused buyers.

The green steel market is projected to explode from $4.8 billion in 2024 to $189.8 billion by 2032, representing a staggering 60.4% CAGR. Low-carbon cement markets are growing more modestly but still substantially, from $2.03 billion in 2024 to $5.88 billion by 2034 at 11.2% CAGR. For procurement teams, the challenge is no longer whether low-carbon alternatives exist, but how to evaluate competing claims and verify actual emissions reductions.

Why It Matters

Corporate net-zero commitments are encountering the hard physics of industrial decarbonization. While renewable electricity and electric vehicles dominate climate headlines, the "hard to abate" sectors of cement and steel present fundamentally different challenges. Both involve process emissions where CO2 is released from chemical reactions, not just fuel combustion. Replacing coal with renewables addresses only part of the problem.

For steel, approximately 70% of global production still relies on blast furnace-basic oxygen furnace (BF-BOF) technology, which uses coal as both fuel and chemical reductant. Even with efficiency improvements, this pathway cannot achieve deep decarbonization. For cement, about two-thirds of emissions come from limestone calcination, a chemical process that releases CO2 regardless of the energy source used.

Supply chain emissions increasingly face regulatory scrutiny. The EU Carbon Border Adjustment Mechanism (CBAM) began its transitional phase in 2023, with definitive pricing starting January 2026. Companies importing steel and cement into Europe will pay for embedded carbon, creating direct financial incentives for low-carbon procurement. California and other jurisdictions are developing similar mechanisms.

Automotive manufacturers, a major steel consumer representing 39.2% of green steel demand, are driving procurement shifts. Mercedes-Benz, BMW, Porsche, and Volvo have all signed offtake agreements for near-zero-emission steel, validating both the technology readiness and market demand for premium green materials.

Key Concepts

Hydrogen-Based Direct Reduced Iron (H2-DRI)

The most promising pathway for near-zero-emission steel replaces coal with hydrogen as the chemical reductant. In this process, iron ore is reduced to direct reduced iron (DRI) using hydrogen rather than carbon monoxide derived from coal. The only byproduct is water vapor instead of CO2.

When powered by renewable electricity for both hydrogen production and subsequent electric arc furnace (EAF) melting, H2-DRI steel can achieve 90-95% emission reductions compared to conventional blast furnace production. This represents the most significant breakthrough in steel decarbonization.

The critical constraint is green hydrogen availability. Production requires massive electrolysis capacity powered by renewable electricity. Current projects locate in regions with abundant, affordable renewable power, such as northern Sweden where Stegra (formerly H2 Green Steel) is building the world's first large-scale H2-DRI facility.

Carbon Capture, Utilization, and Storage (CCUS)

For cement production, CCUS represents the only pathway to capture unavoidable process emissions from limestone calcination. Several capture technologies are advancing:

Amine scrubbing uses chemical solvents to absorb CO2 from flue gases. This proven technology is operational at Heidelberg Materials' Brevik plant in Norway, the world's first industrial-scale cement CCS facility, capturing 400,000 tonnes CO2 annually.

Oxyfuel combustion burns fuel in pure oxygen rather than air, producing a concentrated CO2 stream easier to capture. This approach is in pilot testing at several European facilities.

Direct separation technologies aim to capture CO2 directly from the calcination process before it mixes with combustion gases, potentially reducing capture costs.

Electric Arc Furnace (EAF) Steelmaking

EAF technology melts scrap steel or DRI using electric current rather than coal-fired blast furnaces. Already representing 42.9% of global steel production, EAF offers significant emission reductions when powered by renewable electricity. The pathway is simpler than H2-DRI for producers with access to scrap feedstock, though virgin steel production still requires primary iron reduction.

Evaluating Low-Carbon Material Claims

Emissions Intensity Metrics

Buyers should request specific carbon intensity figures expressed as kg CO2e per tonne of material produced. For steel, conventional BF-BOF production typically generates 1.8-2.0 tonnes CO2 per tonne of steel. H2-DRI with EAF can achieve 0.1-0.2 tonnes CO2, representing 90-95% reduction. EAF with scrap inputs falls between these ranges depending on electricity source.

For cement, conventional production generates approximately 600-900 kg CO2 per tonne of clinker. Low-carbon alternatives using supplementary cementitious materials, novel binders, or CCUS report varying intensities that require careful verification of methodology and boundaries.

Scope Boundaries and Methodology

Carbon intensity claims must specify measurement boundaries. Scope 1 (direct emissions), Scope 2 (purchased electricity), and Scope 3 (supply chain) emissions each contribute differently. Some producers report only Scope 1 reductions while purchasing high-carbon electricity, understating true climate impact.

Request third-party verified Environmental Product Declarations (EPDs) using ISO 14025 standards. For steel, the ResponsibleSteel certification provides independent verification of emissions claims. The Global Cement and Concrete Association (GCCA) publishes standardized reporting frameworks for cement producers.

Additionality and Green Premiums

Current green steel carries premiums of 20-30% above conventional pricing, reflecting higher production costs for hydrogen and renewable electricity. Buyers should consider whether premium payments drive additional low-carbon capacity or simply shift existing supply between customers.

Long-term offtake agreements provide producers with financing certainty to invest in new facilities. Mercedes-Benz, Volvo, and BMW have signed multi-year contracts precisely to enable project financing for facilities like Stegra's Swedish plant.

Real-World Examples

Stegra (H2 Green Steel): €6.5 Billion Green Steel Plant

Stegra, formerly known as H2 Green Steel, is constructing the world's first large-scale hydrogen-based steel plant in Boden, Sweden. The project has secured close to €6.5 billion in total financing, including €2.1 billion in equity and €4.2 billion in debt financing. Phase 1 capacity targets 2.5 million tonnes annually, expanding to 5 million tonnes by 2030.

The facility will operate a 700-1,000 MW electrolyzer, Europe's largest, powered by 8 TWh of secured renewable electricity from partners including Uniper and Statkraft. Customer commitments already exceed 1.5 million tonnes through 5-7 year offtake agreements with Mercedes-Benz, Porsche, BMW, Scania, IKEA, and others. Production ramp-up is targeted for 2025-2026.

Heidelberg Materials Brevik: Operational Cement CCS

Heidelberg Materials' Brevik plant in Norway became the world's first industrial-scale cement facility with carbon capture in 2024. The amine scrubbing system captures 400,000 tonnes CO2 annually, approximately 50% of plant emissions. Captured CO2 is transported by ship to North Sea offshore storage sites.

The company is investing €1.5 billion in CCUS through 2030 across multiple continents, with projects advancing in Edmonton, Canada (targeting 1 million+ tonnes capture), Mitchell, Indiana (approximately 2 million tonnes with $500 million DOE support), and Lengfurt, Germany (70,000 tonnes for carbon utilization in food and chemical industries).

Renault Remanufacturing: Circular Steel Economics

Renault's remanufacturing program demonstrates circular approaches to material intensity reduction. The program generates €120 million in annual revenue while using 80% less energy and 88% less water than virgin production. By extending component lifecycles through remanufacturing rather than recycling to raw materials, the approach reduces demand for both virgin steel and recycling energy.

Action Checklist

• Request EPDs and third-party certifications for all structural materials; verify claims against ISO 14025, ResponsibleSteel, or GCCA frameworks
• Specify carbon intensity requirements in procurement contracts with defined kg CO2e per tonne thresholds and verification requirements
• Evaluate scope boundaries in supplier claims to ensure Scope 1, 2, and 3 emissions are comprehensively addressed, not selectively reported
• Consider offtake agreements for strategic suppliers to enable project financing for new low-carbon capacity and secure long-term supply
• Map CBAM and regulatory exposure across supply chains to anticipate carbon pricing impacts on materials imported into regulated jurisdictions
• Assess timber and mass timber alternatives for appropriate applications where substitution can reduce overall materials carbon intensity
• Establish supplier engagement programs to support decarbonization roadmaps for current suppliers not yet offering verified low-carbon options

FAQ

Q: How do green steel price premiums compare to conventional steel?

A: Current market premiums range from 20-30% above conventional steel pricing. However, premiums are expected to decrease as production scales and hydrogen costs decline. EU CBAM implementation will effectively increase conventional steel prices, narrowing the gap. For buyers with long-term decarbonization commitments, locking in offtake agreements at current premiums may prove advantageous as carbon pricing tightens.

Q: What is the realistic timeline for scaled low-carbon cement availability?

A: CCUS-equipped cement is available today from pioneer facilities like Brevik, though volumes are limited. Multiple projects targeting 2025-2027 operation will significantly expand availability. Heidelberg Materials' Edmonton facility, targeting late 2026 operation, will be the world's first net-zero cement plant at scale. Buyers should expect regional variation in availability based on project locations and transport economics.

Q: How should buyers evaluate competing claims between different low-carbon technologies?

A: Focus on verified carbon intensity per tonne of output rather than technology labels. H2-DRI steel and CCUS cement represent different technological approaches but should be compared on actual emissions performance. Request third-party verified data using consistent methodology. Be skeptical of claims based solely on renewable energy certificates without addressing process emissions.

Q: What role does mass timber play in construction decarbonization?

A: Mass timber offers a complementary strategy by substituting for steel and concrete in appropriate structural applications while potentially sequestering carbon. Cross-laminated timber (CLT) and glulam beams can replace steel and concrete in buildings up to 18 stories in some jurisdictions. Lifecycle assessments should account for forestry practices, transportation, and end-of-life scenarios to verify net carbon benefits.

Sources

• H2 Green Steel / Stegra. (2024). Company Overview and Project Status. https://stegra.com/
• European Investment Bank. (2024). H2 Green Steel Project Page. https://www.eib.org/en/projects/all/20200902
• Heidelberg Materials. (2024). CCUS: More Future with Less CO2. https://www.heidelbergmaterials.com/en/sustainability/we-decarbonize-the-construction-industry/ccus
• Heidelberg Materials. (2024). Brevik CCS Facility Overview. https://www.heidelbergmaterials.com/en/brevik
• ResponsibleSteel. (2024). Certification Standard for Steel. https://www.responsiblesteel.org/
• Global Cement and Concrete Association. (2024). GNR Database and Reporting Framework. https://gccassociation.org/
• Canary Media. (2024). The World's Largest Low-Carbon Steel Plant Moves Closer to Completion. https://www.canarymedia.com/articles/clean-industry/the-worlds-largest-low-carbon-steel-plant-moves-closer-to-completion