Published on 10 July 2023

From Gray to Green: Eco-Cement is paving the way to a more sustainable future

Published on 10 July 2023

Construction companies will be required to use lower-carbon cement mixes in the future.

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Concrete as an adjective means “clear and certain, or real and existing in a form that can be seen or felt”, and this definition accentuates its ubiquity in everyday life. The building material has cemented its position as the world’s most consumed commodity after water. Still, it is not environmentally friendly to make, use or dispose of – concrete is responsible for up to 6-7% of the world’s total carbon emissions.

Net-zero concrete is one of the construction industry’s most perplexing puzzles – the basic chemistry of cement, the bonding agent used in concrete, is at odds with decarbonization. In 200 years, Portland cement has changed very little and remains energy intensive and reliant on fossil fuels. When the limestone is heated in a kiln, it releases carbon dioxide and this changes its molecular structure. The chemical reaction is responsible for as much as 70% of emissions, with the remainder coming from the energy taken to heat the kiln.

Efforts are underway to solve the concrete carbon conundrum. Currently 17 major firms have signed up to ConcreteZero – a goal for 100% net zero emissions from concrete by 2050. The pledge includes the milestones of 30% lower emissions by 2025 and 50% by 2050. The Global Cement and Concrete Association has also launched a roadmap to achieve net zero by 2050.

Reaching net zero could double the cost of cement, leading to concrete prices increasing by a third and the overall cost of construction rising by 3%. Annual cement production is set to increase from 4 billion tons to 5 billion tons over the next 30 years. There are 14 billion cubic meters of concrete produced per year - the equivalent to 32 billion tons. Who is prepared to pay more for buildings constructed with zero-carbon cement? How will this transition change concrete’s risk profile and how long will it take the insurance industry to catch up?

Andrew James

Managing Director | Marine Hull

+44 7834 489373

Andrew started his career with Lowndes Lambert in 1994 where he gained extensive knowledge of Hull and Machinery and affiliated coverages, and P&I. He joined Alesco in 2004 as a producing broker, taking on his current role in 2011.

Andrew has extensive market knowledge and long term client relationships. He also sits on The London & International Brokers Association Marine Executive Committee.

Annelie Noble

Executive Director | Mining & Heavy Industries

+44 7523 920694

Annelie has over twelve years of experience in the insurance industry. Having joined Gallagher in July 2020 as a mining and heavy industry specialist she has since focused on African and Australian mining clients across multiple commodities and mining/processing methodologies.

Prior to joining Gallagher she spent 10 years at Aon where after gaining a broad range of occupancy and geographical knowledge she specialised in mining and heavy industry accounts with a particular focus on steel, across Europe, Russia, and the Middle East.

She is experienced in the design and execution of large complex property risks, policy wording negotiations, and placement strategy and is able to support clients in either a wholesale or retail broking capacity as required.

Sustainability as it stands

There is no existing set standard for what constitutes green or low carbon cement. Eco cement is a "catch-all" term that covers a variety of less environmentally damaging forms of cement. Sustainable cement can use industrial or agricultural waste, recycled sand, gravel, crushed stone, slag, concrete and geosynthetic materials, and sand substitutes such as ash from incinerators or sewage sludge combined with clay or limestone. The main aim of eco cement is to lower carbon dioxide emissions, but, in certain forms, it can have other benefits, including being easier to work with, more economical and a practical use for waste materials.

However, eco cement generally performs less well than traditional cement mixes, and the cost of reinforcing it could counteract any initial cost advantage it may have. It also tends to absorb more water, and structures made with eco cement currently have a shorter lifespan.

Low-carbon cement alternatives have been under development for decades, but the focus on sustainability in the wake of the climate crisis has encouraged high-profile investment and spurred a flurry of activity. Start-ups producing low-carbon cement have attracted investment – receiving more than USD 100 million in venture funding in the last 18 months, as well as the attention of Bill Gates and Jeff Bezos.

One example is CarbonCure, which recycles carbon dioxide during its concrete-manufacturing process. The carbon dioxide reacts with calcium ions and mineralizes, then becomes embedded in the concrete product, reducing its carbon footprint. On the other hand, another start-up, CarbonBuilt uses raw waste materials and hardens the cement with carbon dioxide from flue gas.

Despite significant investment, there is no clear market-leading alternative that could be deployed across the industry at scale. However, innovation is rife, with the University of Cambridge claiming to invent the world’s first zero-emissions cement in May last year. Whoever cracks the Co2 code at scale stands to benefit greatly – the cement market was worth USD328 billion in 2021, and this is likely to increase to USD443 billion by 2027.

Unchartered Territory

Currently, eco cement carries extra risk – it is more flammable, it doesn’t have the same longevity as Portland cement and repairs to structures using eco cement can be costly to resolve. Different concrete formulations can also create risk issues, and any non-standard concrete mix needs to undergo thorough pre-construction testing.

Underwriters are also deterred by the lack of historical data – an issue for the entire green construction industry. Fires, natural disasters and defective products are the top causes of construction site claims, but green construction is changing the nature of these risks as the world transitions towards net zero. The property and casualty market has not kept pace with innovation and risk exposures, and it can be difficult to secure capacity for eco cement in local markets.

The challenge beyond insurance is the lack of financial incentive for large cement companies to reduce emissions. In Europe, these firms have to purchase allowances to cover their carbon emissions, but in much of the rest of the world, there are no such policies in place. Activity currently underway in the industry has been prompted by the anticipation of tighter emission regulations, which are slowly coming down the tracks.

The General Service Administration (GSA), the procurement arm of the US federal government, oversees USD 75 billion in annual contracts. In March last year, it released new standards that require federal contractors to use “climate-friendly” concrete in all of the agency’s projects.

Construction companies will be required to use lower-carbon cement mixes in the future; it is only a matter of time. Ultimately, eco cement is a new construction risk and requires expertise and unique insurance solutions. While domestic markets play catch up and become comfortable with green construction, Alesco and its access to the London market is well-positioned to help source the innovative cover the construction sector needs to help address the challenges it faces.

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