FEATURE: How carbon finance is being used to tackle GHG emissions from the built environment
Quantum Commodity Intelligence - Buildings are currently responsible for 39% of global energy-related carbon emissions, according to the World Green Building Council NGO. Twenty-eight percent from operational emissions — the energy needed to heat, cool and power them — and the remaining 11% from materials and construction.
Earlier this month, a study from academics at the University of California and published in the journal Science concluded that replacing all conventional building materials with CO2-storing alternatives has the potential to store as much as 19.3 billion tonnes of carbon dioxide equivalent (tCO2e) a year.
The researchers noted that there are several challenges, such as the cost of alternative materials, limited access to necessary feedstocks, and the conservative nature of the construction industry.
But, they noted, many of the carbon-storing building materials considered in the report "have the potential to be cost competitive with the conventional materials they replace owing to the low cost of feedstocks needed (such as mineral waste or biomass residues)".
Incentives
The study called for incentives and policies to help drive the uptake of these new materials in the buildings sector, but without explicitly mentioning carbon finance.
The sector has for a long time not been a focus for carbon crediting, and some NGOs argue that concrete and cement cannot be defined as carbon removals due to the relative length of time that the CO2 is stored in the building materials.
In 2023, Brussels-based Carbon Market Watch said that for an activity to count as a carbon removal that contributes to achieving the Paris Agreement target of keeping global heating below 1.5C, it must actually remove carbon from the atmosphere and store it for at the very least a few centuries.
"Storage in cement or concrete does not meet these criteria because the captured carbon comes from the production process and it is only stored for as long as the material remains physically intact," it noted.
Moreover, when accounting for removals it is important to include the full life cycle of the removal project to ensure that there is an actual net-removal from the atmosphere, it said. "As cement on average has a lifespan of only 50-100 years, its absorption of carbon cannot be considered removals," the NGO said.
To prolong the life of cement, CMW said the industry would have to adopt a circular economy approach to its waste streams, using cement and concrete from demolished buildings as feedstock for new cement, and avoid releasing the captured emissions back into the atmosphere.
But, despite the critics, in recent times an increasing number of companies have begun offering products that aim to cut or remove CO2 from the atmosphere and trap it long term in construction products, such as concrete.
These companies are being supported by several carbon registries that have had methodologies developed to provide a variety of ways for companies to use carbon finance to help cut greenhouse gas emissions in the building sector (see pages 7-8). Examples include reducing the use of Portland cement, which alone accounts for around 7% of all global CO2 emissions - mostly from calcination to produce clinker - as the key binding agent for concrete.
Cutting cement use
One company focussed on cutting the use of cement in the concrete mix and claiming carbon credits is Canada-based CarbiCrete. The CarbiCrete process was initially developed at McGill University by the company's chief technology officer, Mehrdad Mahoutian, during his post-doctoral studies.
"He was trying to find a by-product or waste material that would react with CO2 in a way that would enable the production of construction products that sequester carbon dioxide," Yuri Mytko, CarbiCrete's chief marketing officer, told Quantum. "After testing a variety of materials, he found that steel slag, a steel-making by-product, could be used as a one-to-one replacement for cement when ground to the correct consistency."
In addition, CarbiCrete 'cures' its concrete in a specialised chamber with CO2, which reacts with the steel slag. "The CO2 is mineralised, and this gives the concrete its strength. So, the process avoids 100% of the emissions associated with cement production while permanently removing CO2 from the atmosphere during curing," said Mytko.
In December, the company announced an agreement with Facebook parent company Meta to finance the expansion of capacity of its existing special equipment at Patio Drummond, the largest manufacturer of concrete products in North America, near Montreal, and to install similar equipment at masonry producer Canal Block's factory located near the southeastern city of Port Colborne in Ontario.
Earlier last year, CarbiCrete teamed up with California-based climate solutions provider 3Degrees, with the latter overseeing the quantification and verification of the emissions reductions generated by Canadian firm's technology and managing the sale of the "environmental attributes" such as carbon dioxide removal (CDR) credits.
Mytko said concrete made with the company's technology "meets or exceeds all industry performance requirements", while costs are dependent on geographies, "but the prices we are seeing for engineered removals would allow our customers to offer products at cost parity".
Another company that is focussed on concrete CDR is Bahamas-based Partanna, which produces a product similar to Portland cement by blending magnesium compounds derived from brine, a by-product of desalination, and other recycled ingredients including steel slag at room temperature. The patented process not only avoids CO2 but also removes it naturally from the atmosphere, the company said.
In November, Partanna had a project (VCS3823) registered under Verra's Verified Carbon Standard. VCS3823 is to be implemented across the Caribbean and US, with 1.46 million cubic yards of concrete a year to be produced at a facility in the Bahamas, according to the project description document (PDD). This would result in the construction of 5,798 homes and estimated emission reductions of 547,605 tonnes of CO2 equivalent a year, the PDD said.
The company expanded operations in December with a new manufacturing facility in Abu Dhabi following an agreement with the Abu Dhabi Investment Office. The plant will produce 3 million tonnes of its binder a year, with which Partanna aims to capture 10% of the UAE's cement market, and look to expand across the Middle East.
Asia
Beyond the Middle East in Asia, Hong Kong-based company CS Tech Solutions is also using carbon finance to cut emissions from the building sector. It provides an "end-to-end" carbon capture utilisation and storage (CCUS) solution that covers the CO2 capture, liquefaction, and injection and storage through carbonation in a variety of concrete products, both ready-mix and pre-cast, said Dixon Chan, chief executive and founder of CS Tech.
The company was spun out of another local firm active in the concrete industry called Tiostone a couple of years ago to help small and medium-sized entities meet decarbonisation plans, offering a 'one-stop-shop' to capture and store CO2. CS Tech's technology captures CO2 at source and so costs vary depending on a number of factors, said Chan. "It really depends … on the flue gas compositions, the temperature, and the humidity. And the efficiency of the capture really relies on the CO2 concentration in the flue gas," he said.
Other factors influencing cost are the pre-treatment of flue gas needed for the capture and liquefaction as well as the electricity charge in Hong Kong. The op-ex for pre-treatment, capture and liquefaction is currently about £200 ($250)/tCO2e, depending on the concentration of CO2 in the flue gas, said Chan.
For the carbon crediting, the company is using Verra's methodology for ready mix concrete, but Chan said CS Tech is developing its own methodology under another US-based standard, ACR, for use with pre-cast concrete products. He estimated that the methodology should be completed in about six months.
Chan said the products developed using its technologies currently cost about 20-30% higher than conventional concrete materials. However, this can be offset through reduced use of cement in the concrete manufacturing process and revenue from the sale of carbon credits once generated, as well as companies meeting carbon targets.
Another CDR technology that is being utilised in the building sector to cut emissions is biochar. Germany-based EcoLocked is developing a variety of products that it calls "biochar-based concrete admix materials" that sequester CO2 in the built environment by reducing the need for cement and other materials in the concrete mix.
"Our first product, eLM Zero, enables concrete producers to 'inset' carbon, compensating for embodied emissions from materials like cement to achieve CO2 neutral concrete," said Stefanie Gerhart, co-CEO and co-founder of the company. "It seamlessly integrates into existing concrete production infrastructure, partially replacing cement and sand without costly retrofits. It can be used in various concrete application from precast to ready-mix concrete," she said.
The company's total production costs will range between €160-€220 ($166-$229)/tCO2e by 2026. "However, the 'net' cost per tonne of CO2e can be as low as €100 thanks to the functional value of EcoLocked materials and the price that construction industry customers pay for them. We target a long-term price of €100-200 per tonne of CO2 for carbon removal credits," Gerhart said.
In November, EcoLocked was one of eight companies to receive support from Netherlands-based Remove under the latter's CDR accelerator programme. This followed an announcement a month earlier by the German company that it had raised €4 million to "expand its production plant, launch additional product lines, and accelerate the offtake of its products". The company aims to scale up and remove more than 5 million tCO2e year by 2030 and a cumulative 1 gigatonne by 2040.
And like all CDR technologies, scale is the key to reducing costs, as well as making a real contribution to combatting climate change. But what is needed to scale the sector in the buildings industry? Gerhart noted three things are necessary: seamless integration into existing processes; education of the value chain; and what she calls "regulatory and normative advocacy".
"Adoption hinges on making EcoLocked materials easy to integrate into concrete production with no perceived risks. This includes addressing challenges associated with packaging, material handling, and ensuring compatibility with existing production processes. The more effortless the transition, the higher the likelihood of widespread acceptance," she said.
Education is also "critical to building trust and awareness" across the value chain. "From concrete producers to end-users, all stakeholders need to understand the benefits … and how they align with sustainability goals without compromising quality or safety," she added.
Building codes should "shift toward a whole-life carbon approach, establishing thresholds for embodied carbon to create clear incentives toward carbon neutrality", such as what has been introduced in Denmark, while in Europe as a whole there should be a shift to "performance-based standards to ensure no compromises in safety while embracing the expanding range of sustainable material options".
CarbiCrete's Mytko noted the importance of continuing to raise awareness among the architectural, engineering, and construction communities that products are available today and that "their specification is the most cost-effective way to reduce the embodied carbon of building projects". He said legislation and procurement guidelines that require lower carbon materials would also be helpful.
"As far as the CDR community is concerned, we'd love to see more lower-volume offtake agreements. Our CDR solution is as permanent as it gets and the removals are happening right now, but at the moment, we can't offer the kinds of volumes that, say, geological storage can," he said.