EU decarbonisation rules: redefining building materials

Europe wants industry to become carbon neutral at an accelerated pace, including the production of building materials. This is no easy task if builders continue to work with concrete, steel, and oil-based chemicals. Is zero carbon in construction even feasible?

With the announcement of the Clean Industrial Deal on 26 February this year, the European Commission signalled a turning point for Europe’s energy-intensive industries. Part of this deal is the so-called Industrial Decarbonisation Accelerator Act (IDAA), in which the Commission states that emissions from heavy industry must be reduced more quickly.

This means that the rules of the game are changing radically, not only for industry, but also for builders’ merchants. Purchasing, pricing and customer enquiries will increasingly revolve around CO₂ performance, in addition to quality and availability. Those who are ahead of the curve can gain a competitive advantage.

The challenge is considerable. According to the European Environment Agency, the production of building materials (known as embodied carbon) accounts for 10 to 12% of total CO₂ emissions in the EU. Roughly one third of this is attributable to cement and concrete. Steel contributes 10–15%, and the rest consists of glass, plastics, insulation materials, wood, and other materials.

This makes cement and concrete by far the largest source of CO₂ in the construction chain. This is not only due to the high energy consumption of kilns, but mainly to the chemical process by which limestone is converted into clinker. This process inevitably emits CO₂. Greening concrete production is therefore a logical first step towards making construction more sustainable.

But how feasible is that? Various companies are already working on initiatives to make concrete production more sustainable: from bio-concrete for street furniture to recycling rubble and small-scale experiments with biogenic carbon. Two solutions with much greater potential deserve special attention: zero-carbon cement production using plasma technology from SaltX and the use of minerals such as olivine by Paebbl to permanently capture CO₂ in concrete (see inserts)

A striking element of the Industrial Decarbonisation Accelerator Act is the CO₂ label for industrial materials such as steel and cement. From 2026, this may become mandatory in tenders. However, the sector already works with Environmental Product Declarations (EPDs).

Additional labels risk creating confusion, especially among smaller companies. The message for traders is therefore clear: focus on reliable, standardised data such as EPDs, and ensure that customers have easy access to that information.

Another new development is the introduction of a CO₂ shadow price. This mechanism calculates the emissions of a product (e.g. from an EPD) against the current price of CO₂ in the European Emissions Trading System (ETS). The result is used as an additional criterion in tenders.

This means that products with a low carbon footprint will become more attractive in the market. Suppliers who can substantiate their figures will have an advantage. It is therefore important for retailers to critically review their product range and choose manufacturers who are transparent about emissions.

CO₂-intensive materials will also become more expensive due to the disappearance of free emission allowances in the ETS and the introduction of the Carbon Border Adjustment Mechanism (CBAM) in 2026. CBAM ensures that manufacturers from outside the EU pay the same “carbon price” as manufacturers within the EU. At the same time, contractors and developers are under pressure to make projects more sustainable.

This raises tough questions for traders. Which products combine performance with a low footprint? Which suppliers provide credible data? And how do you explain the benefits and trade-offs to customers?

FIEC, the European umbrella organisation for construction companies, warns that the additional costs for cleaner materials must be visibly invested in sustainability. Only then will the system remain credible and stimulate innovation.

There is also a downside. If labels are too rigid, innovative products may be left out. New materials do not always fit neatly into existing categories. There is a risk that they will therefore not be eligible for tenders.

This is certainly true for concrete. Policy often focuses on cement, while concrete itself offers many opportunities for CO₂ reduction. Think of mixtures with less clinker, smart optimisation on the construction site or entirely new recipes. For traders, this is an opportunity to actively promote innovative products – provided they are supported by reliable documentation.

Two European directives will set the tone in the coming years:

For traders, this means that they must already start collaborating with suppliers who comply with these rules. It is also becoming increasingly important to help customers interpret the data.

The coming years will be decisive. Retailers who wait and see run the risk of being overtaken by regulations and competition. Those who take the lead can play a vital role. Five actions are essential:

Decarbonisation of the building materials supply chain is not a distant prospect, but an ongoing process. Cement and concrete will remain the largest sources of CO₂ for the time being, yet innovations such as those from Paebbl, SaltX and many others show that solutions are already emerging.

For builders merchants, this carries a double message: pressure from regulation and customers is increasing, but there are also clear opportunities to stand out. Those who focus on transparency, sustainable alternatives and sound advice will remain trusted partners to the construction sector and help shape an industry ready for a greener future.