Trend watch: Low-carbon materials (cement, steel, timber) in 2026 — signals, winners, and red flags

Cement and steel production together account for roughly 15% of global CO2 emissions, releasing over 4.4 billion tonnes annually. Yet the green premium for low-carbon alternatives has fallen sharply: near-zero-emission steel now trades at just 20 to 30% above conventional product, down from 50% or more only three years ago, while cross-laminated timber (CLT) has reached cost parity with reinforced concrete for mid-rise buildings in several North American and European markets. These shifts signal that 2026 may be the inflection year when low-carbon materials move from niche specification to mainstream procurement.

Why It Matters

The built environment is responsible for approximately 37% of global energy-related carbon emissions. Roughly half of that figure comes from operational energy use (heating, cooling, lighting), which has received the bulk of regulatory attention over the past decade. The other half, embodied carbon locked into cement, steel, glass, and other structural materials, has only recently entered the policy spotlight.

This matters because embodied carbon is front-loaded. Every tonne of CO2 released during material manufacturing is emitted before a building opens its doors. As operational efficiency standards tighten, embodied carbon represents a growing share of a building's total lifecycle footprint. The World Green Building Council estimates that embodied carbon will be responsible for nearly half of total new construction emissions through 2050.

For executives and procurement leaders, the calculus is changing. Regulations like the EU Carbon Border Adjustment Mechanism (CBAM), Buy Clean mandates in California and the federal U.S. government, and Environmental Product Declaration (EPD) requirements in public tenders all create tangible compliance pressure. Meanwhile, major developers including Skanska, Lendlease, and Hines have set internal embodied carbon budgets, creating demand pull that cascades through supply chains.

Signals to Watch

Regulatory acceleration across major economies. The EU's CBAM began its transitional phase in October 2023, with full financial obligations taking effect in 2026 for cement, iron, steel, and aluminum imports. California's Buy Clean Act now mandates maximum Global Warming Potential (GWP) thresholds for steel, glass, and mineral wool used in state-funded projects. At the federal level, the U.S. General Services Administration requires EPDs for concrete and steel across all new construction. Watch for copycat legislation in Canada, Australia, and Japan through 2026.

Green steel capacity announcements outpacing demand commitments. SSAB's HYBRIT project in Sweden produced the world's first fossil-free steel in 2021, and the company plans commercial-scale deliveries by 2026. H2 Green Steel secured over EUR 6.5 billion in financing for its Boden facility, targeting 2.5 million tonnes of near-zero-emission steel annually by 2030. ArcelorMittal is investing EUR 1.7 billion in decarbonization projects across its European operations. The critical signal to track is whether offtake agreements keep pace with announced capacity.

Mass timber codes expanding globally. The 2021 International Building Code raised allowable heights for mass timber structures to 18 stories. Canada, Austria, and the UK have adopted or proposed similar expansions. In 2025, Milwaukee completed Ascent, a 25-story mass timber hybrid tower, the tallest of its kind in North America. These code changes unlock addressable markets that were previously off-limits to engineered wood products.

Carbon capture integration in cement production. Heidelberg Materials began operating the world's first full-scale carbon capture facility at its Brevik cement plant in Norway in late 2024, targeting 400,000 tonnes of CO2 capture annually. Holcim and CEMEX are piloting similar technologies at facilities across Europe and North America. If capture costs fall below EUR 80 per tonne, this pathway could decarbonize existing cement infrastructure without requiring entirely new chemistries.

EPD adoption becoming table stakes. The number of published EPDs globally has grown from roughly 10,000 in 2020 to over 120,000 by early 2026. Major procurement platforms like EC3 (Embodied Carbon in Construction Calculator) now aggregate EPD data for real-time comparison. Organizations without published EPDs face growing exclusion from public and institutional tenders.

Winners and Red Flags

Winners:

Companies that have invested early in hydrogen-based steelmaking, such as SSAB and H2 Green Steel, are positioned to capture premium pricing as Buy Clean mandates expand. Mass timber manufacturers like Stora Enso, Mercer Mass Timber, and Katerra's successors are scaling production to meet growing demand from mid-rise commercial and residential construction. Cement producers with carbon capture pilots, particularly Heidelberg Materials and Holcim, hold first-mover advantage in a sector where retrofit pathways are critical, since the world cannot simply replace 4.1 billion tonnes of annual cement capacity overnight.

Red flags:

Producers relying solely on carbon offsets rather than process-level decarbonization face growing regulatory and reputational risk. CBAM explicitly targets embedded process emissions, not offset portfolios. Steel and cement companies without credible transition plans and published EPDs risk losing access to European and North American public procurement markets. Additionally, green hydrogen supply constraints could delay steel decarbonization timelines: electrolyzer capacity must scale roughly tenfold by 2030 to meet announced green steel targets, and renewable electricity availability remains a bottleneck in many regions.

Watch for "greenwashing by blending," where producers mix small quantities of low-carbon material into conventional products and market the entire line as sustainable. Rigorous EPD verification and third-party certification (such as ResponsibleSteel) separate credible claims from marketing exercises.

Sector-Specific KPI Benchmarks

Cement and concrete:

• Embodied carbon intensity: best-in-class producers achieve 400 to 500 kg CO2e per tonne of cement, versus the industry average of approximately 620 kg CO2e per tonne
• Clinker-to-cement ratio: leading performers target below 0.65 (global average is approximately 0.72)
• Supplementary cementite material (SCite) substitution rate: top quartile exceeds 40%

Steel:

• Carbon intensity: near-zero-emission steel targets below 0.4 tonnes CO2 per tonne of crude steel, compared to the blast furnace average of 1.8 to 2.2 tonnes CO2 per tonne
• Scrap utilization rate: electric arc furnace (EAF) operations typically use 90%+ scrap, with a carbon intensity of 0.4 to 0.6 tonnes CO2 per tonne
• Green premium: currently 20 to 30% above conventional hot-rolled coil pricing, down from 40 to 50% in 2023

Mass timber (CLT/glulam):

• Carbon sequestration: CLT stores approximately 1 tonne of CO2 per cubic metre of wood
• Cost competitiveness: CLT structural systems have reached cost parity with reinforced concrete for buildings of 8 to 12 stories in markets with mature supply chains
• Construction speed: mass timber buildings typically complete 25 to 30% faster than comparable concrete structures

What's Working

Demand-side mandates are driving real procurement shifts. California's Buy Clean Act has directly influenced material specifications for over $6 billion in state infrastructure projects since 2022. The federal Buy Clean Task Force, established by the Biden administration, extended similar requirements across GSA, Department of Defense, and Department of Transportation procurement. These mandates create stable demand signals that justify capital investment in low-carbon production capacity.

Electric arc furnace (EAF) steel continues to gain market share. EAF production, which relies primarily on recycled scrap and electricity rather than coking coal, now accounts for roughly 30% of global steel output and over 70% of U.S. production. Nucor, the largest steelmaker in the United States, operates entirely on EAF technology and produces steel at approximately 0.45 tonnes CO2 per tonne, less than one-quarter the blast furnace average. As renewable electricity costs continue to decline, EAF economics improve further.

Mass timber is proving its value in commercial construction. Stora Enso's CLT production capacity has grown to over 200,000 cubic metres annually across three European facilities. In North America, projects like the 18-story Brock Commons Tallwood House at the University of British Columbia, completed in 2017, demonstrated that mass timber can deliver structural performance comparable to concrete at competitive cost. The building's timber structure was erected in just 66 days. Since then, dozens of mass timber projects exceeding 10 stories have been completed or are under construction globally.

Carbon capture at cement plants is reaching commercial scale. Heidelberg Materials' Brevik CCS project represents a proof point that the cement industry has long needed. Capturing 50% of the plant's emissions at a reported cost of EUR 80 to 100 per tonne, the project demonstrates technical feasibility at industrial scale. If carbon prices under the EU Emissions Trading System remain above EUR 60 per tonne (they have averaged EUR 70 to 90 through 2024 and 2025), capture becomes economically rational even without additional subsidy.

What Isn't Working

Green hydrogen supply remains the critical bottleneck for steel decarbonization. SSAB's HYBRIT process and H2 Green Steel's planned facility both depend on abundant, affordable green hydrogen. Current electrolyzer costs, combined with the massive electricity requirements (roughly 50 to 55 MWh per tonne of hydrogen), mean that hydrogen-based steel remains significantly more expensive than EAF or conventional BF-BOF routes. Until renewable electricity capacity catches up with demand in key steel-producing regions, hydrogen-based steelmaking will remain limited to pilot and early commercial scale.

Alternative cement chemistries struggle to scale. Companies like Solidia Technologies and Brimstone Energy have demonstrated promising low-carbon cement formulations in laboratory and pilot settings. However, the construction industry's conservatism around structural materials, combined with lengthy code approval processes and performance testing requirements, means these alternatives capture less than 1% of the global cement market. Builders and engineers remain reluctant to specify unproven chemistries for load-bearing applications.

Fragmented EPD standards create confusion. While EPD adoption is growing rapidly, inconsistent Product Category Rules (PCRs) across program operators make direct comparisons difficult. A concrete mix evaluated under one program operator's PCR may show materially different GWP results than the same mix evaluated under another's. This undermines the credibility of EPD-based procurement and creates opportunities for selective reporting.

Mass timber supply chains remain geographically concentrated. CLT production capacity is heavily concentrated in Austria, Germany, Scandinavia, and western Canada. Projects in regions without local supply face significant shipping costs and lead times that erode both the economic and carbon advantages. Expanding production capacity in the southeastern United States, Latin America, and Asia-Pacific is essential for mass timber to fulfill its global potential.

Key Players

Established Leaders

• Heidelberg Materials operates in 50+ countries and is leading cement decarbonization with the Brevik CCS project and LC3 (limestone calcined clay cement) initiatives
• Holcim is the world's largest building materials company, investing over CHF 2 billion in sustainable solutions including ECOPact low-carbon concrete
• SSAB pioneered fossil-free steel through the HYBRIT joint venture with LKAB and Vattenfall in Sweden
• Nucor is the largest steelmaker in the U.S. and the largest recycler of any material in North America, operating exclusively on EAF technology
• Stora Enso is a leading global producer of CLT and other engineered wood products with production facilities across Finland, Austria, and the Czech Republic

Emerging Startups

• H2 Green Steel raised over EUR 6.5 billion for a greenfield near-zero-emission steel plant in Boden, Sweden, targeting 2.5 million tonnes per year by 2030
• Brimstone Energy is developing a carbon-negative Portland cement process using calcium silicate rock instead of limestone, eliminating process CO2 emissions
• CarbonCure Technologies injects captured CO2 into fresh concrete, mineralizing it permanently while improving compressive strength and reducing cement content
• Sublime Systems is commercializing an electrochemical process to produce low-carbon cement at ambient temperature, avoiding the kiln emissions that account for 60% of cement's carbon footprint

Key Investors and Enablers

• Breakthrough Energy Ventures has backed Brimstone, CarbonCure, and other low-carbon materials startups
• The U.S. Department of Energy allocated over $4 billion through the Industrial Demonstrations Program for decarbonization of steel, cement, and other heavy industries
• The European Investment Bank provided EUR 300 million in financing for H2 Green Steel and has prioritized industrial decarbonization lending

Action Checklist

• Audit your current material specifications to establish a baseline embodied carbon footprint for cement, steel, and timber across active and planned projects
• Require EPDs from all structural material suppliers and integrate embodied carbon limits into procurement contracts and tender evaluation criteria
• Evaluate mass timber feasibility for upcoming mid-rise projects (4 to 12 stories), comparing lifecycle cost, schedule, and carbon against conventional reinforced concrete
• Engage with EAF steel producers to secure low-carbon steel supply, particularly for projects subject to Buy Clean or CBAM compliance requirements
• Monitor CBAM implementation timelines and prepare documentation for carbon intensity reporting on imported materials entering the EU market
• Pilot supplementary cementite materials or carbon-mineralized concrete (such as CarbonCure) on at least one project to build internal experience with alternative concrete formulations
• Join industry coalitions like the First Movers Coalition or ConcreteZero to align procurement commitments with peer organizations and signal demand to producers

FAQ

Q: What is the current green premium for low-carbon steel? A: Near-zero-emission steel (produced via hydrogen direct reduction or high-scrap EAF routes) currently trades at approximately 20 to 30% above conventional blast furnace steel. This premium has declined significantly from 40 to 50% in 2023 as production scales and competition increases. For projects subject to Buy Clean mandates, the premium is effectively offset by compliance requirements.

Q: Is mass timber as fire-resistant as concrete or steel? A: Engineered mass timber products like CLT perform well in fire testing because large timber sections char on the outside, forming an insulating layer that protects the structural core. CLT assemblies routinely achieve 2-hour fire ratings, meeting or exceeding code requirements for most building types. The 2021 International Building Code allows mass timber structures up to 18 stories with appropriate fire protection measures.

Q: How does CBAM affect material procurement for construction projects? A: The EU Carbon Border Adjustment Mechanism requires importers of cement, iron, steel, and aluminum to purchase certificates reflecting the embedded carbon in their products, based on the carbon price under the EU Emissions Trading System. Full financial obligations begin in 2026. Projects sourcing materials from regions with lower carbon pricing or no carbon regulations will face additional costs, creating a competitive advantage for producers with lower carbon intensity.

Q: Can alternative cement chemistries fully replace Portland cement? A: Not yet at scale. While companies like Brimstone and Solidia have demonstrated promising alternatives, Portland cement benefits from over a century of performance data, established building codes, and massive installed production capacity. Near-term decarbonization is more likely to come from clinker substitution (using fly ash, slag, or calcined clay), carbon capture at existing kilns, and CO2 mineralization in concrete rather than wholesale chemistry replacement.

Sources

• International Energy Agency. (2024). "Cement Technology Roadmap: Carbon Emissions Reductions up to 2050." https://www.iea.org/reports/cement
• World Steel Association. (2025). "Steel Statistical Yearbook 2025." https://worldsteel.org/steel-topics/statistics/
• Heidelberg Materials. (2024). "Brevik CCS Project: First Full-Scale Carbon Capture at a Cement Plant." https://www.heidelbergmaterials.com/en/brevik-ccs
• H2 Green Steel. (2025). "Building the World's First Large-Scale Green Steel Plant." https://www.h2greensteel.com
• Stora Enso. (2025). "Mass Timber Solutions for Sustainable Construction." https://www.storaenso.com/en/products/mass-timber
• World Green Building Council. (2024). "Bringing Embodied Carbon Upfront." https://worldgbc.org/advancing-net-zero/embodied-carbon/
• CarbonCure Technologies. (2025). "CO2 Mineralization in Concrete Production." https://www.carboncure.com
• European Commission. (2024). "Carbon Border Adjustment Mechanism Factsheet." https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en