Edison explains: The cement challenge – can the world’s dirtiest building material go clean?

Cement is the quiet foundation of the modern economy and one of its largest climate problems. Producing roughly 4.5bn tonnes each year, cement production accounts for around 7–8% of global CO₂ emissions, with demand expected to grow by more than 30% by 2050. For investors, this is no longer a distant environmental issue but a near-term financial one. As decarbonisation requirements tighten across construction and infrastructure, scrutiny is falling on the materials that sit at the base of every project.

Regulation is accelerating the shift to the decarbonisation of the built environment. The EU’s Carbon Border Adjustment Mechanism has entered its compliance phase, carbon pricing under the EU Emissions Trading System (ETS) continues to rise and procurement standards are tightening around embodied carbon. Producers that fail to adapt face a structurally worse position: higher costs, reduced access to capital and potential exclusion from key markets. In that sense, cement is moving from a commodity to a screened input where carbon intensity directly shapes competitiveness.

Where do the emissions come from?

At the centre of the problem is clinker, the binding ingredient that gives cement its strength. Producing clinker requires heating limestone to around 1,500°C, a process that is both energy-intensive and chemically emissive. Roughly 40–50% of emissions come from calcination, where limestone releases CO₂ as it decomposes, while another c 40% comes from burning fossil fuels to sustain kiln temperatures. Approximately 85% of cement’s CO₂ is inherent to the production process itself and cannot be eliminated by switching to renewable electricity alone. This is what places cement firmly in the difficult-to-decarbonise category and why the industry requires a range of solutions.

What are supplementary cementitious materials?

The most immediate and proven pathway to lower emissions is simply to use less clinker. This is achieved by blending in supplementary cementitious materials (SCMs), which reduce the volume of clinker required while often improving the structural performance of the final product. Even a 1% reduction in clinker content can deliver a savings of 8–9kg CO₂ per tonne of cement.

The main SCMs currently deployed are ground granulated blast-furnace slag (GGBS) and coal fly ash. GGBS, a by-product of blast furnace steelmaking, offers up to 80% CO₂ reduction alongside excellent durability and chloride resistance. Key GGBS producers and suppliers include Heidelberg Materials, Holcim, Boral and Ecocem Materials. Coal fly ash is a by-product of coal combustion and a pozzolan, meaning it reacts with the calcium hydroxide released during cement hydration to form cementitious compounds. The key advantage in using coal fly ash is its exceptional workability characteristics, which result in a reduction in water used. Leading producers and suppliers of fly ash include Eco Materials Technologies (a CRH company), Charah Solutions and Cemex.

However, a significant supply risk runs through the SCM landscape. GGBS and coal fly ash are by-products of industries that are themselves decarbonising. As steelmaking transitions away from blast furnaces, GGBS supply will decline. Furthermore, as coal power is phased out, with all UK and many European plants having closed in 2025, coal fly ash availability will fall. This creates a structural tension; just as demand for low-carbon cement rises, the materials that enable those reductions are becoming scarcer.

What materials could replace traditional SCMs at scale?

Attention is increasingly shifting to alternatives that are not dependent on declining industrial by-products. Calcined clays, particularly in the form of metakaolin, stand out because of their global abundance and ability to deliver meaningful emissions reductions, typically in the range of 30–50%. Argos and Imerys are among the key producers in this space. Like coal fly ash, calcinated clay is a pozzolan, so it reacts with calcium hydroxide to build cementitious strength. It is most commonly used in the LC3 system (limestone calcined clay cement) as a ternary blend that can cut clinker content by up to 50%. However, the main drawbacks include the energy required to calcine kaolinite clay at 700–900°C and reduced workability of cement at higher inclusion rates.

Natural pozzolans offer a complementary pathway. Materials like volcanic ash, pumice and zeolitic tuffs require little to no processing and can deliver durable, lower-carbon performance, often with additional benefits such as improved resistance to chemical degradation. Natural pozzolans are abundant in the western US, Italy, Australia and parts of Africa and the Middle East, and they offer around 20% CO₂ reduction potential, strong long-term durability and excellent alkali-silica reaction mitigation. Their principal limitations are variable reactivity by geological origin and a slow early-age strength profile, both addressable through blending and mix design. Critically, unlike GGBS and coal fly ash, natural pozzolans do not depend on the output of any declining industry, making them a strategically resilient source as conventional SCM supply contracts. Companies active in this space include CR Minerals, Sunrise Resources and Atlas Metals Group, which is in the process of acquiring Universal Pozzolanic Silica Alumina, the owner of a significant natural pozzolan deposit in Australia.

Is carbon capture essential for net-zero cement?

Even with aggressive clinker substitution, some CO₂ emissions remain unavoidable due to the chemistry of calcination. This is where carbon capture, utilisation and storage (CCUS) become critical. Most credible industry pathways assume that CCUS will account for a substantial portion of total emissions reductions by mid-century. The challenge is not theoretical feasibility but economic viability. Capture costs remain high, estimated at $50–70 per tonne of CO₂, potentially raising production costs by 30–60%, and commercial-scale deployment is not expected before 2030.

Heidelberg Materials brought the Brevik CCS facility in Norway into operation in June 2025. It is the first large-scale CCS project in the global cement industry. In the UK, its Padeswood plant in North Wales targets up to 800,000 tonnes of CO₂ captured annually from 2029. The Peak Cluster project in Derbyshire and Staffordshire, involving Tarmac, Breedon, Lhoist and Aggregate Industries, aims to capture more than 3m tonnes of CO₂ per year by 2030, covering around 40% of all UK cement and lime production and has secured £28.6m from the National Wealth Fund. Holcim is targeting net-zero cement production from its Lägerdorf facility in Germany by 2029. These are early markers of an infrastructure buildout that will define whether net-zero targets are achievable.

What role could emerging technologies play?

Beyond CCUS, a range of emerging technologies are gaining traction. Cambridge Electric Cement is commercialising a process that co-produces clinker in an electric arc furnace by substituting recycled concrete paste for the lime-flux conventionally used in steelmaking. At an industrial demonstration, the process produces 30 tonnes per hour of clinker from used concrete. Plasma and microwave electrification of kiln heat are also under investigation, although both remain at the early laboratory stage.

At the same time, digital tools are delivering more immediate gains. AI-driven optimisation is already improving kiln efficiency, stabilising operations and providing real-time emissions tracking, enabling producers to reduce fuel consumption and better manage carbon intensity. While many of these innovations remain at an early stage, they signal a broader shift from incremental improvement to structural reinvention.

How is policy shaping the transition?

The regulatory backdrop is tightening in ways that will increasingly separate those with credible transition plans from those without. Carbon pricing mechanisms such as the EU ETS are raising the cost of emissions, while the Carbon Border Adjustment Mechanism is extending that cost to imported cement and clinker, narrowing the gap for European producers facing higher decarbonisation costs.

The EU’s Innovation Fund is expected to reach around €40bn by 2030, with a portion directed at industrial CCUS. In the UK, the Industrial Energy Transformation Fund supports fuel switching and efficiency investment, and the Peak Cluster and Padeswood projects have both received government backing. Carbon pricing and public finance are accelerating the transition for those positioned to benefit from it.

What should investors be watching?

For investors, the cement sector presents a mix of structural risk and transition-driven opportunity. The barriers to decarbonisation are real: CCUS infrastructure is capital-intensive and permitting is slow, SCM supply will tighten as allied industries decarbonise, and, without a sufficiently strong carbon price, signal producers face limited incentive to absorb the cost of early adoption. Standards for novel binders are also lagging the technology, which constrains uptake.

Yet the direction of travel is clear, and early movers are beginning to differentiate themselves. Companies with access to alternative SCMs, credible carbon capture strategies and the financial capacity to invest ahead of regulation are better positioned to capture the emerging premium for low-carbon construction materials and access green bonds and concessional capital. Those without a credible pathway face rising costs of capital and growing procurement risk as embodied carbon standards tighten across the built environment. The question is no longer whether the sector will transition, but which players will do so fast enough to capture the upside.

Edison insight

Cement accounts for 7–8% of global CO₂ emissions and decarbonising it is structurally hard, as roughly 85% of emissions are inherent to the production chemistry, not just the energy used. The most immediate lever is clinker substitution through supplementary cementitious materials, though the most widely used (GGBS and coal fly ash) are by-products of industries that are themselves decarbonising, making supply increasingly constrained. Carbon capture remains essential for residual emissions but will not reach commercial scale before 2030. Investors should focus on producers with credible substitution strategies, funded carbon capture, utilisation and storage pipelines and the balance sheet resilience to absorb a capital-intensive transition.

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