Explainer: Low-carbon materials (cement, steel, timber) — what it is, why it matters, and how to evaluate options

In 2024, cement and steel production alone contributed approximately 6.5 gigatons of CO₂ to the atmosphere—representing nearly 15% of global greenhouse gas emissions (IEA, 2024). Meanwhile, the green steel market surged to $7.4 billion in 2024, with projections exceeding $19 billion by 2025, signaling unprecedented momentum in industrial decarbonization. At the same time, cross-laminated timber (CLT) construction is experiencing a 16% compound annual growth rate, as developers recognize that one square meter of CLT can sequester approximately one metric ton of greenhouse gases over its lifecycle (Yale Environment, 2025). These converging trends mark a pivotal moment: the construction materials sector—historically among the most emissions-intensive industries—is undergoing a fundamental transformation that sustainability leaders must understand and leverage.

Why It Matters

The building and construction sector accounts for nearly 40% of global energy-related carbon emissions, with materials production representing the largest upstream contributor. Cement production generates approximately 2.4 gigatons of CO₂ annually, while steel manufacturing adds another 4.1 gigatons—together exceeding the emissions of the entire aviation and shipping industries combined (World Steel Association, 2025; Global Cement and Concrete Association, 2025).

These emissions present both an urgent climate challenge and a significant economic opportunity. With infrastructure investment accelerating globally—driven by urbanization in Asia-Pacific, renewable energy buildout, and climate adaptation needs—the demand for construction materials will only intensify. The International Energy Agency projects that cement demand could increase 12–23% by 2050 under current development trajectories, making decarbonization not merely an environmental imperative but an economic necessity.

From a regulatory standpoint, the European Union's Carbon Border Adjustment Mechanism (CBAM), California's SB 596 mandating net-zero cement by 2045, and emerging procurement standards in the First Movers Coalition are reshaping market dynamics. Organizations that fail to address embodied carbon in their supply chains face escalating compliance costs, stranded asset risks, and reputational exposure. Conversely, early movers in low-carbon materials procurement can capture preferential access to green premium markets estimated at $50–100 billion annually by 2030.

Key Concepts

Embodied Carbon vs. Operational Carbon

Understanding low-carbon materials requires distinguishing between embodied carbon—the emissions associated with material extraction, manufacturing, transportation, and construction—and operational carbon, which relates to building energy use over time. While building efficiency improvements have reduced operational carbon, embodied carbon now represents 50–75% of a new building's lifecycle emissions in high-performance structures. This shift places unprecedented importance on material selection decisions made at the design stage.

Carbon Intensity Metrics

The primary metric for comparing materials is carbon intensity, typically expressed as kilograms or tonnes of CO₂ equivalent per unit of material. Current benchmarks include:

Material	Standard Production	Low-Carbon Alternative	Reduction Potential
Cement	0.58 tCO₂/tonne	0.02–0.30 tCO₂/tonne	50–97%
Steel (BF-BOF)	2.1 tCO₂/tonne	0.4–0.6 tCO₂/tonne (EAF/H₂-DRI)	75–90%
Timber (CLT)	-50 to +150 kgCO₂/m³	Net carbon negative	Carbon sequestration

Decarbonization Pathways

For cement, three primary pathways exist: (1) clinker substitution using supplementary cementitious materials like fly ash, slag, or calcined clay (LC3); (2) carbon capture, utilization, and storage (CCUS), which can reduce emissions by up to 36%; and (3) novel chemistries that eliminate limestone calcination entirely, as demonstrated by companies like Brimstone and Sublime Systems.

For steel, the transition centers on replacing blast furnace-basic oxygen furnace (BF-BOF) production with electric arc furnaces (EAF) powered by renewable electricity, or hydrogen-based direct reduced iron (H₂-DRI) processes. EAF using recycled scrap already achieves 75% lower emissions, while H₂-DRI with green hydrogen can approach 90% reductions.

For timber, the equation inverts entirely. Sustainably sourced mass timber products store carbon captured during tree growth, with net storage of 430–988 kg CO₂ equivalent per cubic meter of CLT after accounting for manufacturing emissions. When buildings are designed for disassembly, this carbon remains sequestered for decades or can be reused in subsequent construction.

Environmental Product Declarations (EPDs)

EPDs provide standardized, third-party verified documentation of a product's environmental footprint across its lifecycle. For procurement decisions, EPDs enable direct comparison between suppliers and products, though methodology variations require careful interpretation. Leading certification bodies include the International EPD System, UL Environment, and NSF International.

What's Working

What's Working

Hydrogen-based steel production has moved from pilot to commercial scale. H2 Green Steel secured $4.54 billion in 2024 to construct the world's first large-scale green steel plant in Boden, Sweden, targeting 5 million tonnes annually by 2030. Similarly, ArcelorMittal committed €1.8 billion to a hydrogen-based facility in Dunkirk, France, demonstrating that capital markets view this technology as bankable.

Federal and regional policy support is catalyzing cement innovation. The U.S. Department of Energy allocated $1.6 billion to six cement decarbonization projects in March 2024, including $500 million to Heidelberg Materials for the first full-scale CCS-equipped cement plant in North America. California's regulatory framework has attracted over $700 million in clean cement investment, with RMI facilitating more than $560 million in project grants.

Mass timber adoption is accelerating in residential and commercial construction. Milwaukee's Ascent building—at 25 stories, the tallest CLT structure in North America—offset 7,200 metric tons of CO₂. The International Code Council approved 14 mass timber code changes in December 2024, enabling structures exceeding 12 stories and removing regulatory barriers that previously constrained adoption.

Corporate procurement commitments through the First Movers Coalition have generated $12 billion in purchase commitments for low-carbon materials, creating demand signals that de-risk producer investments. Microsoft's landmark agreement with Sublime Systems for 622,500 metric tons of CO₂ reductions demonstrates how tech sector buyers can accelerate cleantech commercialization.

What's Not Working

Steel sector emissions have not peaked despite net-zero commitments. Only 25 of the world's top 50 steel producers have committed to net-zero by 2050, and the number of companies with 2030 reduction targets actually declined from 20 to 17 between 2023 and 2024 (SEI LeadIT Report, 2024). Global steel emissions remain at 3.7 gigatons annually with no clear inflection point.

Cement CCUS deployment lags technology readiness. While carbon capture could reduce cement emissions by 36%, only one industrial-scale CCS cement facility—Heidelberg's Brevik plant in Norway—is operational as of early 2025. The high capital costs ($300–500 million per facility) and lack of CO₂ transport infrastructure remain significant barriers outside Northern Europe.

Green premium economics remain challenging in price-sensitive markets. Low-carbon steel commands 20–40% premiums, while alternative cements may cost 10–30% more than conventional products. Without carbon pricing mechanisms or mandatory procurement standards, many buyers default to lower-cost conventional materials, particularly in developing economies where construction demand is highest.

Mass timber supply chain constraints limit scalability. North America has only 13 CLT manufacturing facilities, with production capacity insufficient to meet projected demand. Additionally, concerns about sustainable forestry certification and potential deforestation risks in tropical regions require robust chain-of-custody verification.

Key Players

Established Leaders

• ArcelorMittal (Luxembourg): World's largest steel producer, investing €10 billion in decarbonization through its XCarb™ initiative, including hydrogen-based production and carbon capture technologies.
• Heidelberg Materials (Germany): Global cement leader pioneering CCUS with the Brevik plant and U.S. investments totaling $500 million for carbon capture infrastructure.
• SSAB (Sweden): Pioneer of the HYBRIT technology for fossil-free steel production, delivering the world's first commercial fossil-free steel in 2021.
• Stora Enso (Finland): Major CLT manufacturer and integrated forest products company, operating advanced mass timber facilities across Europe.
• Holcim (Switzerland): Leading cement producer with aggressive sustainability targets, developing low-clinker cements and carbon capture solutions globally.

Emerging Startups

• H2 Green Steel / Stegra (Sweden): Secured $4.54 billion to build the world's first large-scale green steel plant, with production commencing in 2025.
• Brimstone (USA): Developing carbon-negative cement using calcium silicate rocks instead of limestone, eliminating process emissions entirely. Received $189 million from DOE.
• Sublime Systems (USA): Commercializing electrochemical cement production at ambient temperatures, backed by $200 million in funding and Microsoft purchase agreements.
• Fortera (USA): Creating carbon-neutral cement through CO₂ mineralization, partnering with CalPortland for commercial deployment.
• Kalesnikoff (Canada): Vertically integrated mass timber producer expanding CLT manufacturing capacity in North America.

Key Investors & Funders

• U.S. Department of Energy: $6 billion Industrial Demonstrations Program, with $1.6 billion directed to cement decarbonization projects.
• Breakthrough Energy Ventures: Bill Gates-backed fund investing in transformative industrial decarbonization technologies including green steel and cement.
• Lowercarbon Capital: Major investor in Sublime Systems and other climate technology companies.
• European Investment Bank: Financing large-scale green steel projects including H2 Green Steel's Boden facility.
• First Movers Coalition: Demand-side platform with $12 billion in low-carbon materials purchase commitments from leading corporations.

Examples

1. H2 Green Steel's Boden Plant (Sweden): This €4.5 billion facility represents the largest single investment in green steel production globally. Using green hydrogen produced from 800 MW of renewable electricity, the plant will produce 2.5 million tonnes of near-zero emission steel by 2026, scaling to 5 million tonnes by 2030. Customer commitments from Mercedes-Benz, BMW, and Scania demonstrate automaker appetite for decarbonized supply chains.

2. Heidelberg Materials Mitchell CCS Project (Indiana, USA): With $500 million in federal support, this initiative will retrofit an existing cement plant with carbon capture technology capable of sequestering 2 million tonnes of CO₂ annually—equivalent to removing 430,000 cars from roads. The project establishes a replicable model for decarbonizing America's 91 cement plants, which collectively emit 68 million tonnes annually.

3. Ascent Mass Timber Tower (Milwaukee, USA): Completed in 2024, this 25-story residential tower used CLT structural systems that offset 7,200 metric tons of CO₂ compared to conventional concrete construction. The project demonstrated that mass timber can meet stringent fire safety, structural, and acoustic requirements while delivering 25% faster construction timelines and enhanced occupant wellbeing.

Sector KPIs for Low-Carbon Materials

Sector	Key Performance Indicator	Baseline (2024)	Target (2030)	Target (2050)
Cement	CO₂ intensity (tCO₂/tonne)	0.58	0.47	0.02
Steel	CO₂ intensity (tCO₂/tonne)	2.18	1.5	0.4
Steel	EAF production share	28%	40%	60%
Cement	Clinker-to-cement ratio	0.72	0.65	0.50
Timber	CLT market size (USD)	$1.1B	$3.5B	$10B+
Cross-sector	Green premium tolerance	10–20%	5–10%	0% (parity)

Action Checklist

• Establish embodied carbon baselines: Conduct lifecycle assessments of current material procurement to quantify Scope 3 emissions and identify reduction priorities.
• Develop EPD requirements: Mandate Environmental Product Declarations for key material categories in procurement specifications, enabling supplier comparison.
• Engage suppliers on decarbonization roadmaps: Request science-based targets and transition plans from cement and steel suppliers, incorporating progress metrics into supplier scorecards.
• Evaluate mass timber feasibility: Assess structural timber applicability for upcoming projects, engaging architects and engineers experienced in CLT design.
• Join demand aggregation initiatives: Participate in First Movers Coalition or similar platforms to strengthen collective purchasing power and signal demand to producers.
• Implement internal carbon pricing: Apply shadow carbon prices to material decisions, making low-carbon options economically competitive in capital allocation.
• Monitor regulatory developments: Track CBAM implementation, Buy Clean standards, and building code updates that may affect procurement requirements and timelines.

FAQ

Q: How do low-carbon materials compare in cost to conventional alternatives? A: Green premiums vary significantly by material and region. Low-carbon steel currently commands 20–40% premiums, though this gap is narrowing as production scales. Alternative cements may cost 10–30% more, while mass timber is often cost-competitive or even cheaper than concrete when accounting for faster construction times and reduced labor costs. Importantly, these premiums should be evaluated against carbon pricing trajectories—with carbon at $100/tonne, conventional cement's true cost increases by approximately $58/tonne, potentially eliminating green premiums entirely.

Q: What certifications and standards should we require for low-carbon materials? A: For comprehensive verification, require ISO 14025-compliant Environmental Product Declarations (EPDs) from accredited Program Operators. For steel, look for ResponsibleSteel certification and Science Based Targets initiative (SBTi) commitments. For timber, FSC or PEFC chain-of-custody certification ensures sustainable forestry practices. Additionally, emerging standards like the Carbon Leadership Forum's EC3 tool and the First Movers Coalition's procurement guidelines provide benchmarking frameworks.

Q: Are low-carbon materials available at commercial scale today? A: Availability varies by material type and geography. Electric arc furnace steel using recycled content is widely available globally. Low-clinker cements using supplementary cementitious materials are commercially deployed in most markets. However, hydrogen-based steel and carbon-captured cement remain in early commercial stages with limited capacity. Mass timber is commercially available in Europe and North America, though supply chain constraints may affect large-scale projects. Strategic early procurement agreements can secure access while supporting market development.

Q: How should we evaluate trade-offs between low-carbon materials and other sustainability criteria? A: Material selection involves balancing embodied carbon with durability, recyclability, local sourcing, and social impacts. Mass timber offers carbon sequestration but requires verification of sustainable forestry and may not suit all structural applications. Recycled steel has lower emissions but depends on scrap availability. A holistic lifecycle approach—considering end-of-life scenarios, regional grid emissions, and supply chain resilience—provides the most robust decision framework. Tools like the EC3 database and One Click LCA enable multi-criteria analysis.

Q: What role does policy play in accelerating low-carbon materials adoption? A: Policy is increasingly determinative. The EU's CBAM will impose carbon costs on imported cement and steel starting in 2026, fundamentally altering competitive dynamics. California's SB 596 mandates net-zero cement by 2045, while federal Buy Clean provisions require carbon intensity disclosures for infrastructure projects. These regulations create both compliance obligations and market opportunities—organizations that anticipate regulatory direction can build supply chain relationships and operational capabilities ahead of mandates.

Sources

• International Energy Agency (IEA). "Iron and Steel Technology Roadmap" and "Cement Technology Roadmap." 2024. https://www.iea.org/energy-system/industry/
• Global Cement and Concrete Association (GCCA). "Net Zero Progress Report 2025/26." 2025. https://gccassociation.org/
• World Steel Association. "Sustainability Indicators Report 2025" and "Climate Action Report." 2025. https://worldsteel.org/
• Stockholm Environment Institute (SEI) and LeadIT. "A Matter of Transparency: 2024 Insights on the Steel Industry's Evolving Commitments." 2024. https://www.sei.org/publications/a-matter-of-transparency-leadit/
• Yale School of the Environment. "Global Land and Carbon Consequences of Mass Timber Products." Nature Communications, 2025. https://environment.yale.edu/
• U.S. Department of Energy. "Industrial Demonstrations Program: Cement and Concrete Selections." 2024. https://www.energy.gov/oced/industrial-demonstrations-program-selections
• National Renewable Energy Laboratory (NREL). "State of Innovation 2024: Paving the Way for Low-Carbon Cement and Concrete." 2024. https://docs.nrel.gov/
• World Economic Forum. "Net-Zero Industry Tracker 2024: Cement Sector." 2024. https://www.weforum.org/