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Carbonfuture Closes Series A Round, Led by SIX, to Transform Global Carbon Removal Market
Carbonfuture Closes Series A Round, Led by SIX, to Transform Global Carbon Removal Market
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November 7, 2024
Few sectors are as crucial to achieving net-zero as the buildings and construction sector. In 2022, it contributed 37% of global greenhouse gas emissions, with concrete itself representing 7% of global emissions. In Europe, the figure stands at 4%. Concrete is the second most used substance behind water and the most common building material on earth; between 30 and 50 billion tonnes are produced annually. In short: We need to clean up this industry if we are to achieve our climate objectives. At the same time, the construction of new buildings is only set to increase globally: as countries and economies develop, so does the need for buildings.
Carbon capture and storage, or CCS, is often touted as the potential solution to this problem. The reality, however, is that it remains prohibitively expensive, set to increase the price of cement, from a current $90 to $130 per tonne to at least $160 to $240 by 2050. While the unit economics might improve in the future, it is unlikely to enable the emission reductions needed in the foreseeable future. We need a better alternative.
That’s where carbon dioxide removal (CDR) comes in, which encompasses a broad variety of solutions all focused on removing CO₂ from the atmosphere and safely storing it away for long periods of time. It is a rapidly growing sector projected to reach over a trillion dollars in size and eventually scaled to remove anywhere between 5-10Gt of CO2/year by 2050. For reference, this is bigger than the oil and gas industry today, which stands at more than 5Gt per year.
CDR could prove crucial in the decarbonization of the building industry, offering numerous symbiotic technological solutions as well as specific policy vehicles. In this short blog, we shall explore what the potential of CDR truly is.
A number of highly innovative companies have emerged over the last years aiming to help decarbonize the construction industry. There are two main approaches:
As you can see, startups are developing promising approaches to produce low carbon building materials. However, to reach climate relevant scale, appropriate policy is needed. Fortunately, there are clear, existing avenues for such policy. Let’s highlight three:
Emission trading systems, or ETS, have been established all around the world as a key policy tool to tackle decarbonization, particularly of energy-intensive industries. Globally, there are 36 ETS in place accounting for 18% of global emissions. By far the largest is the European ETS, or EU ETS, which covers 40% of European emissions, including cement production.
The price for an emission allowance, or EUA, has steadily increased over the last years, reaching around €70/tonne of CO₂. According to the London Stock Exchange Group, the cost of an EUA is projected to reach €150/t in 2030, €250 in 2035, and up to €400/t in 2040. Meanwhile, the European Commission is currently working on a legislative proposal - expected mid-2026 - on the inclusion of CDR into the EU ETS, starting in 2031. Given we expect the cost of CDR to decrease below €200/tonne in the 2030s, CDR could quickly become one of the most cost-effective tools available to the cement industry to stay competitive amidst rising EUA prices.
Further, there is already a draft delegated act on permanent CCU and the ETS, which exempts products that use mineralization to create low-carbon products, such as concrete or cement, from the EU ETS. Currently, only products using fossil CO₂ qualify. It is hoped that products using biogenic CO₂ will be included in the future, providing yet another avenue for the use of CDR to companies operating within the ETS.
Government-funded construction activities are responsible for up to 17% of total sector procurement-related emissions, with cement alone contributing 4% globally. This is also true in funding figures. In the US, procurement spending accounted for 23% of total construction spending in 2023 and 25% of sector funding on concrete, giving governments significant leverage. As a reminder, 40% of all concrete in the US is procured for public projects. This means that government procurement could potentially be leveraged to increase CDR in building materials and generate huge potential for the CDR industry.
A great example is the Low Embodied Carbon Concrete Leadership Act (LECCLA) in New York State. LECCLA directs the state to establish global warming potential (GWP) percentage reduction thresholds for concrete specified for state construction projects. All concrete used in state projects must fall below GWP percentage reduction thresholds to be eligible for the performance tax incentives created by the bill. Thresholds will be adjusted over time, following bi-annual evaluation by designated state agencies. This bill is largely a product of the Open Air Collective’s advocacy - check out more details here.
The International Energy Agency states that to achieve net zero by 2050, all new buildings need to be net zero from 2030, up from less than 5% of new buildings today. In my view, this seemingly insurmountable challenge can only be addressed through clear, top-down building regulation.
A great example is the European Union's Green Home Directive, adopted on 8th May 2024, which contributes to the objective of reaching emission reductions of at least 60% in the building sector by 2030 compared to 2015, and achieving a decarbonized, zero-emission building stock by 2050. In line with the call from the IEA mentioned above, this regulation mandates zero-emission standards for new buildings by 2030 and for public buildings by 2028 to achieve EU buildings' climate neutrality, explicitly stating that "member states shall also address carbon removals associated to carbon storage in or on buildings". Implementation is now left to the EU’s 27 member states with Germany leading the way, already legislating that the entire building stock in Germany must become carbon neutral by 2045.
Another European policy of great relevance is the revision of the Energy Performance of Buildings Directive which will require the calculation of full life-cycle carbon for new buildings, highlighting the need for accurately accounting for embodied emissions and CDR within construction materials.
Moreover, under the updated Construction Products Regulation for all products marked with the CE marking, all essential characteristics related to environmental sustainability must be disclosed. These are all important signals of growing accountability for the construction industry to provide data proofs for how carbon flows are managed along the value chains.
We need to clean up the cement and construction industry if we are to hit net zero. The good news is that there are already a number of promising approaches and technologies available that can permanently store CO₂ in concrete, asphalt, and other building materials.
While some forward-looking companies in the building sector are already forming partnerships to experiment with carbon dioxide removal, and to harmonize streamlined carbon accounting along industrial value chains, we will need policy to see systemic and climate-relevant adoption of CDR to decarbonize the sector.
The most promising policy avenues are the inclusion of CDR in emission trading systems, public procurement guidelines mandating or at least incentivizing the use of carbon-negative materials, and clear building regulations to reduce the footprint of renovated buildings and ensure net-zero buildings from 2030 onwards.
We have all the tools we need. It’s time to get to work.
At Carbonfuture, we build trust throughout the carbon removal journey with our rigorous, data-driven approach, ensuring unmatched quality and reliability of carbon removal.
