Deep dive: Low-carbon materials (cement, steel, timber) — scaling challenges and breakthrough pathways

Why It Matters

Cement, steel, and timber together account for approximately 15 percent of global CO₂ emissions, with cement alone responsible for roughly 8 percent and steel for another 7 percent, according to the International Energy Agency's 2025 industrial tracking report (IEA, 2025). Global demand for these materials is not declining. The world is projected to add 230 billion square metres of new building floor area by 2060, equivalent to constructing a city the size of Paris every week (UNEP, 2024). Decarbonising these sectors is therefore not optional for any credible net-zero pathway. Yet the "green premium" for low-carbon alternatives remains stubbornly high in many applications, supply chains are locked into carbon-intensive processes, and building codes have been slow to recognise structural timber or novel cement chemistries. Understanding where breakthrough pathways are emerging and where scaling bottlenecks persist is essential for procurement teams, policymakers, and investors seeking to accelerate the transition without compromising structural performance or project economics.

Key Concepts

The green premium. The green premium is the additional cost of a low-carbon material compared with its conventional equivalent. For green steel produced via hydrogen-based direct reduction, the premium ranges from 20 to 40 percent above conventional blast furnace steel, depending on regional hydrogen costs (Material Economics, 2025). For low-carbon cement using supplementary cementitious materials or carbon capture, premiums sit between 10 and 30 percent. Mass timber products such as cross-laminated timber (CLT) are broadly cost-competitive with concrete and steel in mid-rise construction but carry higher engineering and insurance costs in markets with limited precedent. Closing the green premium requires a combination of carbon pricing, demand aggregation, and manufacturing scale.

Process emissions versus energy emissions. In cement production, roughly 60 percent of emissions come from the calcination of limestone, a chemical reaction that releases CO₂ regardless of the energy source. This makes fuel switching alone insufficient for full decarbonisation and explains why carbon capture, utilisation, and storage (CCUS) or novel binder chemistries are essential for deep cuts. Steel's emissions profile differs: approximately 75 percent of blast furnace emissions are energy-related, meaning hydrogen-based direct reduced iron (H-DRI) or electric arc furnaces powered by clean electricity can address most of the carbon footprint. Timber is a biogenic material that sequesters carbon during growth, but lifecycle emissions depend on forestry practices, transport distances, and end-of-life pathways.

Embodied carbon regulations. A growing number of jurisdictions are introducing embodied carbon limits for new construction. France's RE2020 regulation, effective since 2022, mandates lifecycle carbon budgets that tighten every three years. The Netherlands requires Environmental Performance of Buildings (MPG) scores, and Denmark introduced a 12 kgCO₂e per square metre per year limit in 2023 with plans to reduce it further. In North America, the Buy Clean California Act requires Environmental Product Declarations (EPDs) for publicly procured steel, flat glass, and mineral wool insulation, with maximum global warming potential thresholds (GSA, 2025). These regulations are the most powerful lever for scaling low-carbon materials because they create guaranteed demand.

Environmental Product Declarations (EPDs). EPDs are third-party verified documents that quantify the environmental impact of a product across its lifecycle. They serve as the common currency for comparing the carbon intensity of competing materials. The EC3 (Embodied Carbon in Construction Calculator) database, maintained by Building Transparency, now holds over 130,000 EPDs, enabling procurement teams to specify maximum carbon intensity thresholds and identify lower-carbon alternatives within product categories (Building Transparency, 2025).

What's Working

Green steel momentum. SSAB's HYBRIT project in Sweden delivered the world's first fossil-free steel to Volvo in 2021 and has since scaled to a demonstration plant producing over 1.3 million tonnes annually by 2025. H2 Green Steel, also based in Sweden, secured €6.5 billion in financing for a green steel plant in Boden expected to produce 2.5 million tonnes per year from 2026, making it one of the largest industrial decarbonisation investments in history (H2 Green Steel, 2025). ArcelorMittal has committed to three hydrogen-DRI projects in Europe, targeting 25 percent emissions reduction across its European operations by 2030. These projects demonstrate that hydrogen-based steelmaking is technically viable at scale. The remaining challenge is hydrogen cost and availability, which is tightly coupled to renewable electricity buildout.

Mass timber advancing in mid-rise construction. Cross-laminated timber has moved from niche Scandinavian applications to mainstream mid-rise construction globally. Mjøstårnet in Norway, at 85.4 metres, held the record as the world's tallest timber building until 2024, when the Ascent tower in Milwaukee reached 86.6 metres with a hybrid mass timber and concrete structure. In the UK, Waugh Thistleton Architects has completed numerous CLT projects including the Dalston Works housing scheme, demonstrating that timber can meet fire safety, acoustic, and structural requirements in dense urban settings. A 2025 lifecycle assessment by the University of British Columbia found that mass timber buildings achieved 25 to 45 percent lower embodied carbon compared with equivalent concrete and steel structures when sourced from sustainably managed forests (UBC, 2025).

Supplementary cementitious materials and novel binders. Heidelberg Materials (formerly HeidelbergCement) opened the world's first full-scale carbon capture facility at its Brevik cement plant in Norway in 2024, designed to capture 400,000 tonnes of CO₂ per year, approximately 50 percent of the plant's emissions (Heidelberg Materials, 2024). Meanwhile, companies like Solidia Technologies and Brimstone are developing novel cement chemistries that avoid limestone calcination entirely. LC3 (Limestone Calcined Clay Cement), promoted by the Swiss Federal Institute of Technology, reduces clinker content by up to 50 percent using calcined clay and limestone as substitutes, achieving 30 to 40 percent emissions reductions at minimal cost premium. LC3 is particularly promising for emerging economies where clay is abundant and affordable.

Demand aggregation through procurement commitments. The First Movers Coalition, convened by the World Economic Forum, has secured commitments from over 100 companies to purchase low-carbon steel, cement, and aluminium, representing over $12 billion in forward demand signals (WEF, 2025). ConcreteZero, led by the Climate Group, counts 70 member companies committed to using 100 percent net-zero concrete by 2050 with interim targets for 2030. SteelZero has over 55 members covering 50 percent of global steel demand. These coalitions aggregate buyer power and provide producers with the demand certainty needed to justify capital expenditure on new production technologies.

What's Not Working

CCUS deployment pace in cement. Despite the Brevik milestone, the pipeline of cement CCUS projects remains thin relative to the sector's scale. Globally, only five commercial-scale cement CCUS projects were operational or under construction by early 2026, covering less than 1 percent of global cement production (Global CCS Institute, 2025). High capital costs, the need for CO₂ transport and storage infrastructure, and uncertain carbon pricing signals deter investment. Without a dramatic acceleration, the cement sector will miss its 2030 interim targets.

Green premium persistence in steel. While early-mover green steel projects in Scandinavia benefit from cheap hydropower and wind energy, replicating these conditions elsewhere is difficult. In regions dependent on fossil-based electricity, the hydrogen premium pushes green steel costs 30 to 50 percent above conventional steel. Automotive and construction buyers have shown willingness to absorb premiums in high-profile pilot orders, but widespread adoption at commodity scale requires either significant carbon pricing (above €100 per tonne) or sustained subsidies. The EU's Carbon Border Adjustment Mechanism (CBAM) is designed to address this, but its effectiveness depends on implementation rigour and scope expansion.

Timber supply chain constraints and fire safety concerns. Sustainable forestry certification covers approximately 11 percent of global forest area, and CLT production capacity remains concentrated in Austria, Germany, Scandinavia, and North America (PEFC, 2025). Expanding mass timber construction in regions without established supply chains increases transport emissions and costs. Fire safety regulations vary widely: some jurisdictions cap timber buildings at six to eight storeys, while others permit taller structures with engineered fire protection. Insurance premiums for mass timber buildings remain 10 to 25 percent higher than for concrete equivalents in many markets, reflecting perceived rather than actual risk.

EPD coverage gaps. While the EC3 database has grown rapidly, EPD coverage is uneven across geographies and product categories. Many manufacturers in Asia, Africa, and Latin America lack EPDs entirely, making it impossible to compare carbon intensity for global procurement. Industry-average EPDs, which fill data gaps, tend to overestimate emissions and penalise producers who have invested in lower-carbon processes but lack product-specific declarations.

Regulatory fragmentation. Embodied carbon regulations are emerging in a patchwork fashion. France, Denmark, the Netherlands, and parts of North America lead, but most jurisdictions globally have no embodied carbon limits. This fragmentation makes it difficult for material producers to plan investments and for multinational developers to standardise specifications across markets. Harmonisation around ISO 14040/14044 and EN 15978 is progressing but remains years from universal adoption.

Key Players

Established Leaders

• Heidelberg Materials — World's second-largest cement producer, operating the first full-scale cement CCUS plant at Brevik and investing in LC3 and novel binder technologies.
• ArcelorMittal — Largest global steelmaker, committed to hydrogen-DRI projects in Hamburg, Ghent, and Gijon with a target of 25 percent European emissions reduction by 2030.
• Stora Enso — Finnish-Swedish forestry company and one of the world's largest CLT producers, supplying mass timber for projects across Europe.
• Holcim — Global cement leader with ECOPact low-carbon concrete range and partnerships with carbon capture startups including CarbonCure and Solidia.

Emerging Startups

• H2 Green Steel — Swedish startup building a €6.5 billion fossil-free steel plant in Boden, with first production expected in 2026.
• Brimstone — US startup developing carbon-negative Portland cement using calcium silicate rock instead of limestone, eliminating process emissions.
• CarbonCure Technologies — Canadian company injecting captured CO₂ into fresh concrete during mixing, mineralising it permanently while improving compressive strength.
• Timber Finance Initiative — Swiss organisation developing financial instruments to channel investment into sustainable forestry and mass timber value chains.

Key Investors/Funders

• Breakthrough Energy Ventures — Invested in Brimstone, CarbonCure, and Boston Metal, targeting hard-to-abate industrial emissions.
• European Investment Bank — Financing green steel and cement CCUS projects under the InvestEU programme with over €2 billion allocated to industrial decarbonisation.
• Amazon Climate Pledge Fund — Invested in CarbonCure and other building material innovators as part of its 2040 net-zero commitment.
• First Movers Coalition — Aggregating over $12 billion in demand signals for low-carbon industrial materials from corporate purchasers.

Sector-Specific KPI Benchmarks

Action Checklist

• Set maximum embodied carbon thresholds in procurement specifications. Use EPDs and the EC3 database to benchmark products and reject materials above sector upper quartile carbon intensity.
• Specify low-carbon concrete mixes by default. Request SCM-blended cements, LC3, or geopolymer alternatives for non-structural and moderate-strength applications where code permits.
• Engage with demand coalitions. Join SteelZero, ConcreteZero, or equivalent industry initiatives to signal demand and access preferential supply agreements for low-carbon materials.
• Require EPDs from all material suppliers. Product-specific EPDs should be a baseline procurement requirement. Where unavailable, use industry-average data with a carbon uplift factor to incentivise supplier disclosure.
• Evaluate mass timber for mid-rise projects. Conduct feasibility assessments for CLT or glulam structural systems in buildings of four to twelve storeys, accounting for lifecycle carbon, programme speed, and insurance implications.
• Track regulatory developments across operating markets. Monitor France RE2020, EU Level(s), Buy Clean Acts, and national building code updates to anticipate tightening embodied carbon limits.
• Invest in skills and design capability. Train structural engineers, architects, and quantity surveyors in whole-life carbon assessment, mass timber design, and low-carbon concrete specification.

FAQ

How close is green steel to cost parity with conventional steel? In Scandinavia, where renewable electricity is abundant and affordable, the green premium for H-DRI steel is approaching 15 to 20 percent and is projected to reach parity before 2030 as electrolyser and renewable costs continue to fall. In other regions, parity depends heavily on local energy costs and carbon pricing. A carbon price above €100 per tonne, which the EU ETS approached in 2025, effectively eliminates the green premium for steel in European markets. Government subsidies such as the US Inflation Reduction Act's hydrogen production tax credits also narrow the gap significantly.

Can novel cement chemistries fully replace ordinary Portland cement? Not yet at scale. LC3 and SCM-blended cements can substitute 30 to 50 percent of clinker content while meeting existing structural standards, making them the most deployable near-term solution. More radical alternatives like Brimstone's calcium silicate cement and geopolymer binders show promise in laboratory and pilot settings but require years of standards development, performance testing, and regulatory approval before widespread structural use. The most likely pathway is a portfolio approach: blended cements for most applications, CCUS-equipped conventional plants for high-strength requirements, and novel chemistries gradually gaining code acceptance.

Is mass timber genuinely lower carbon than concrete and steel? When sourced from sustainably managed forests and accounting for biogenic carbon sequestration, mass timber buildings consistently show 25 to 45 percent lower embodied carbon than concrete and steel equivalents in lifecycle assessments. However, the carbon benefit depends on sustainable forestry practices, transport distances, and end-of-life scenarios. If timber is landfilled at end of life, sequestered carbon may be released as methane. Best practice involves designing for disassembly so timber elements can be reused or recycled into new products, extending the carbon storage period.

What role does carbon capture play in decarbonising cement? CCUS is considered essential for deep decarbonisation of cement because roughly 60 percent of emissions come from limestone calcination, a chemical process that cannot be addressed through fuel switching or efficiency alone. However, CCUS adds 50 to 100 percent to production costs and requires CO₂ transport and geological storage infrastructure. The Brevik plant in Norway demonstrates technical feasibility, but scaling to cover even 10 percent of global cement production would require hundreds of similar installations and massive infrastructure investment. In the medium term, combining CCUS with clinker substitution offers the most practical pathway.

How can procurement teams verify that materials are genuinely low-carbon? The gold standard is a product-specific EPD verified by an accredited third party under ISO 14025 and EN 15804. Procurement teams should cross-reference EPD data with databases like EC3, check that system boundaries include all lifecycle stages (A1 to A3 at minimum, ideally A1 to C4), and verify that the declaration is current. For steel, specific production route documentation (EAF versus BF-BOF, hydrogen versus fossil) should accompany the EPD. For timber, chain-of-custody certification from FSC or PEFC provides assurance of sustainable sourcing.

Sources

• IEA. (2025). Tracking Industrial Energy and Emissions: Cement and Steel Sectors. International Energy Agency.
• UNEP. (2024). Global Status Report for Buildings and Construction: Material Demand Projections. United Nations Environment Programme.
• Material Economics. (2025). The Green Premium Tracker: Low-Carbon Steel and Cement Cost Benchmarks. Material Economics, Stockholm.
• H2 Green Steel. (2025). Boden Plant Progress Report: Financing, Construction, and First Production Timeline. H2 Green Steel AB.
• Heidelberg Materials. (2024). Brevik CCS: World's First Full-Scale Cement Carbon Capture Facility. Heidelberg Materials AG.
• Building Transparency. (2025). EC3 Database: 130,000 EPDs and Growing. Building Transparency.
• UBC. (2025). Lifecycle Assessment of Mass Timber Buildings: A Comparative Study Across Climate Zones. University of British Columbia, Faculty of Forestry.
• WEF. (2025). First Movers Coalition: Progress Report on Industrial Decarbonisation Commitments. World Economic Forum.
• Global CCS Institute. (2025). Global Status of CCS in Cement: Project Pipeline and Deployment Gap Analysis. Global CCS Institute.
• PEFC. (2025). Global Forest Certification Statistics: Area Certified and Chain of Custody Growth. Programme for the Endorsement of Forest Certification.
• GSA. (2025). Buy Clean: Federal Procurement Requirements for Low-Embodied-Carbon Materials. US General Services Administration.