A new report from The Climate Group, based in London with a New York office, looks beyond carbon dioxide emissions reduction cost factors in concrete and steel to price premiums the market might bear when presented conventional versus low-carbon material options. “The Steel and Concrete Transformation: 2024 market outlook on lower emission steel and concrete” was released late last month at Climate Week NYC, an event Climate Group hosts in conjunction with United Nations General Assembly. Climate Week aligns with its Concrete Zero and Steel Zero industry initiatives, each involving producers that commit to CO2 emissions reduction on timetables leading to 2050.
The report examines results from a global survey of construction and other industry stakeholders. Authors weigh production basics, citing the respective high and moderate emissions reduction potential of substituting combustion with electricity in steel and cement production. They question whether major concrete and steel consumers in real estate, infrastructure, manufacturing and energy sectors are willing to incur cost premiums, adding: “The survey is intended to build transparency on this topic to support sound decisions.”
Among survey respondents, 40 percent say they would be willing to pay a premium for emissions reductions of 25 percent or higher for concrete, while 47 percent would be willing to do so for reductions exceeding 50 percent. The respective numbers were 45 percent and 57 percent for steel. Nearly 80 percent of respondents expect lower emissions concrete and steel will be standard for new projects or products within the next decade, owing to market demand and regulatory pressures.
Climate Group prepared “Steel and Concrete Transformation” with Ramboll Group A/S, a Copenhagen architectural/engineering firm with North American offices. Researchers analyzed responses from 250-plus companies across 42 countries and 21 business sectors. While the outlook is broadly positive for climate-centered procurement, report authors examine respondent-cited barriers to low emissions concrete and steel adoption: Cost (84 percent of respondents), industry conservatism (37 percent), and lack of knowledge (33 percent). Businesses see financial levers such as tax incentives, credits, and subsidies (69 percent of respondents), carbon pricing (50 percent), plus minimum product standards or embodied carbon limits (43 percent) as priorities for regulators and other public officials.
“This report is a real temperature check of the market,” says Climate Group Head of Industry Jen Carson. “It’s encouraging to see the appetite is here, now, for organizations to pay a premium for lower emission steel and concrete. Actors across the value chain—suppliers, governments, and investors—should take note.”
“The fact that more companies are now willing to pay a premium for lower emission steel and concrete sends a strong signal to the market,” adds Ramboll Chief Operating Officer Michael Simmelsgaard. “To accelerate progress, all actors now need to come together—from policymakers and investors to off-takers of steel and concrete, as well as end users who will need to accept a price premium until the market matures.”
“Steel and Concrete Transformation” references how companies across the globe are committing to ambitious climate targets leading to attainment of net zero GHG emission operations by 2050. Credit the authors for pondering whether concrete and steel buyers are prepared to transform their supply chains toward a net zero pathway and have sustainability commitments “crucial enough for them to be willing to alter their cost structures?”