Concrete: Square one for scaling distributed direct air capture?

Concrete is a massive global industry that is projected to grow significantly in the coming decades to meet the demand of increased urbanization and infrastructure renewal. New technological solutions that utilize carbon dioxide (CO2) in the concrete manufacturing process are creating a near term opening for distributed direct air capture (DAC) adoption.

Introduction: Niche discovery and early stage DAC scale up.

The ultimate relevance of direct air capture (DAC) as a climate solution will depend heavily on the level and rate of cost reduction that is achieved over the next decade. Rapidly advancing DAC to a point of broad economic viability will be a function of both innovation and the extent to which scale-up and learning by doing are realized across the value chain. 

Early stage niche discovery and penetration is a key factor enabling new technologies to secure an initial market foothold, and gain a critical first measure of scale, validation and resilience that can be leveraged for subsequent growth. Niches offer defined use cases in particular sectors where new solutions meet real business needs, or mitigate existing challenges and risks without significant or even any policy support. 

In the earliest and most tenuous commercialization period – the so-called Valley of Death – successful niche penetration generates initial revenue; which, in turn, can trigger incremental cost reduction from first stage scale-up and learning. The more niches that are accessed early on, the more resilience the technology will gain in the face of unpredictable market fluctuations. In some instances, when the technology in question is versatile enough to add value across a variety of use cases, a virtuous cycle can be created by which cost reduction unlocks new market opportunities, accelerating scale-up and learning, further driving down cost, and unlocking yet even more markets. 

Modular, distributed DAC can solve problems for certain sectors today. Concrete is potentially a very big one.

There is good reason to believe that DAC, especially in its modular and distributed forms, is a technology that fits the above profile well. Carbon dioxide (CO2) is a commonly used input in a variety of sectors, ranging from heavy commodity industries, to agriculture and food and beverage production. If DAC providers can gain customers in any of these stable, high-magnitude sectors by adding distinct value or solving real problems it stands to hook on to the first rungs of such a virtuous scale-learning-cost reduction cycle. 

Recent analyses suggest that relatively modest scaling of modular forms of DAC could have profound impacts on cost decline. A recent paper by Lackner and Azarabadi (2021) estimates that roughly 300 DAC deployments, each with a 5 year lifetime and removal capacity of 1,000 tons CO2 per year, could be sufficient to bring the cost of DAC to below $100/ton. These cost reductions will depend on learning rates, which to date have only been modeled and have yet to be observed. However, distributedness and design modularity are often strongly associated with high learning rates, whereas the converse (i.e. units that are centralized, complex, and deployed only on a large-scale) more typically experience comparatively low learning rates. Further, the scale contemplated by Lackner and Azarabadi in order to achieve the $100/ton price point for DAC can be met with demand from the concrete sector if the opportunity is seized.

The emergence of CO2 utilization in concrete is creating a clear business rationale for distributed DAC.

Among a variety of prospective near-term niches for DAC penetration the global concrete sector is among the most ready and robust. New technologies and processes that use CO₂ as an input in the production of concrete are gaining traction in the marketplace today and represent the vanguard of an emerging future, trillion dollar carbontech industry. These diverse carbon utilization (CU) solutions incorporate CO₂ to realize performance and durability advantages, as well as embodied carbon reductions for a booming and increasingly climate conscious global construction industry.

And as the most common construction material on earth concrete holds promise as a future gigaton-scale carbon sink. The material naturally absorbs CO2 from the air post-construction through the very gradual process of carbonation. This special capability can be accelerated and augmented using novel carbon mineralization techniques that have application across the concrete component palette and supply chain: from the production of cement substitutes and aggregate materials, to the final concrete curing process.

Pioneering firms like CarbonCure, CarbonBuilt, Solidia, Carbicrete, Carbon Upcycling Technologies, and Neustark are prominent early entrants in this space, but are not alone in attracting investment and helping lay the foundation for this new CU concrete sector.

Concrete CU technologies and business models vary considerably. However, all are predicated on access to CO₂ as an input. And for these solutions to qualify as a net beneficial use from a climate standpoint, the CO₂ utilized must be supplied from either a post-industrial or biological sources, or directly from the atmosphere. This factor, combined with potential logistical and supply advantages that could be realized through DAC integration with carbontech concrete applications, presents near-term opportunities for commercial partnerships and engineering integrations that are only limited by the present readiness of DAC providers.

The expansion of CU concrete technology is unfolding in parallel with DAC’s own early commercial emergence. As these two nascent sectors mature, the business case for their integration in the near future will likely become more compelling. Modular, distributed forms of DAC, in particular, map onto the technical and operational profile of many CU concrete solutions now entering the market.

Backgrounder: Concrete, Cement and Climate.

• Concrete is the most common building material on earth, with at least 18 billion tons produced annually. It’s main binding ingredient, Portland cement, is a leading carbon dioxide source, accounting for approximately 7% of global emissions – roughly four times that of commercial aviation.
• A millenia old material, concrete has changed relatively little since the introduction of Portland cement less than two centuries ago. Today, concrete’s unique physical, performance and cost characteristics make it an integral component of the modern built environment, and one without any viable substitute to realistically replace it, at scale, within a timeframe relevant to any serious climate response.
• A highly trade-exposed global commodity, Portland cement faces deep challenges to full decarbonization, as tensions between competitiveness and the high capital cost of critical emissions reduction technologies, namely carbon capture and sequestration (CCS), arise. But the downstream incorporation of CO₂ from post-industrial sources and ultimately from the air stands to play an important role in offsetting upstream cement emissions in a permanent and verifiable way that also creates co-benefits in the form of superior structural performance and durability, and greater material efficiency.

Drivers and pre-conditions for DAC + concrete niche formation

If DAC can cost-effectively solve one or more problems for different CU concrete firms and their customers in this new space, demand generated through partnerships could boost DAC production, deployment and learning, driving down cost and increasing sector resiliency in the process.

Here are 4 key drivers that are setting the stage for DAC+concrete sector integration.

1. The carbonated concrete industry is still tiny, but its future is bright.

CU concrete technologies have enormous demand upside, given the scale and growth of global concrete production. The sector is dominated by B2B firms offering solutions that integrate directly with conventional ready mix, precast, and masonry concrete facilities. This means that companies in the space are not aiming to disrupt or compete with an existing, entrenched industry, but rather sell to it. According to the National Ready Mix Concrete Association (NRMCA), there are approximately 6,800 ready-mix concrete manufacturing facilities in the United States alone. This constitutes a massive market opportunity. If DAC providers can capture even a fragment of it through partnerships with CU concrete companies and their clients, adoption in this space can drive non-trivial gains in scale and learning.

2. Distributed DAC can overcome logistical complexity and supply uncertainty for CO2 in a highly fragmented concrete marketplace. 

Unlike the global cement industry which is dominated by a small cohort of vertically integrated multinational firms, concrete remains a highly fragmented sector in which small, local and regional providers make up the majority of supply. Ready mix concrete batch plant operators and block, paver and precast manufacturers have converged on relatively uniform equipment and operating models that are highly calibrated for standardization and repeatability. Further, concrete is a commodity business characterized by tight scheduling, razor thin margins, and extreme cost sensitivity. Such conditions contribute to a high degree of aversion to risk, avoidable uncertainty, and unnecessary complexity among the small firms that dominate the industry.

These factors create barriers to adoption for carbontech concrete applications, even those that are relatively simple and plug-and-play. While many CU concrete companies provide hardware that is installed directly at concrete facilities, their operation requires clients to contract and manage their own supply of CO₂ from merchant providers. This alone adds a new and unfamiliar moving part to the client’s deliberately simple and static supply chain nexus.

Further, as a new and scattered CO₂ customer category with relatively small volume purchases per plant, at this early stage concrete manufacturers could initially have difficulty negotiating cost effective, long-term contracts for supply. And today’s  post-industrial CO₂ market is increasingly characterized by price volatility, delays, and even force majeure supply disruption – risks that are all magnified for relatively low volume CU concrete buyers. Even short supply disruptions will disable and render carbontech applications unprofitable, while complicating batch scheduling.

All of these conditions in combination underscore the substantial value that would be gained if CO₂ supply could be brought under the same roof as utilization. Modular DAC applications are uniquely well suited for this purpose, across different carbontech concrete use cases. This includes solutions that require very small annual amounts of CO₂ (<100 tons/year), that would otherwise face the steepest pricing from merchant providers; as well as medium and high CO₂volume solutions (>10k tons/year) that are most exposed by the threat of supply irregularities. The certainty of on-site DAC CO₂ supply, provided robust and dependable maintenance service agreements, would enable predictable long-term contracts and pricing.

The value of logistical simplicity, greater certainty and predictable long-term costs could command modest premium pricing for DAC-based CO₂, compared to merchant sources. This could help narrow price disparities between DAC and merchant sources, making the former more competitive.

3. Concrete facilities are conducive to DAC integration, and favorable emissions and environmental life cycle performance.

Modular DAC integrated at concrete plants can reduce the technology’s environmental footprint. Many DAC technologies require significant thermal inputs for sorbent regeneration which are difficult to meet with renewable energy sources alone, potentially increasing the carbon intensity of the overall process. Multiple concrete manufacturing processes generate low grade waste heat that can be captured and recycled for DAC’s regeneration needs, boosting efficiency. Environmental lifecycle performance is further enhanced from onsite DAC with the elimination of the carbon emissions and other pollutants produced by long-distance CO2 transportation. Finally,  DAC integration within existing facilities reduces potential impacts associated with dedicated land use for industrial activities.

4. CDR credit revenue can narrow price gaps and incentivize adoption.

The sequestration of CO₂ from the atmosphere in concrete using direct air capture (DAC) is in perfect alignment with the Oxford Principles for Net-Zero Aligned Carbon Offsetting. It is a carbon dioxide removal application (Principle 2) that delivers long-lived CO₂ storage (Principle 3). The carbon removed is easy to affirm as additional; in mineralized form it has near zero risk of reversibility (Principle 1). Direct coupling capture and sequestration at the same location within the existing footprint of a well understood, relatively climate benign industrial facility type limits potential negative unintended consequences (Principle 1).

Because carbon captured and sequestered can be metered in real time and subjected to audit, it is relatively easy to verify and account for (Principle 1). Finally, DAC+concrete applications have powerful potential to support a net-zero aligned emissions framework because they leverage the scope of one of the world’s most ubiquitous global commodities as a platform for high quality carbon offsets (Principle 4).

Such conditions will likely place DAC + concrete CDR in a privileged position within voluntary and compliance carbon offset schemes in the future. In such a scenario, offset revenue streams could help close pricing gaps between DAC CO₂and conventional merchant CO₂, while also underwriting new types of adoption incentives designed to overcome customer uncertainty during the sales process.

Conclusion:  Accelerating Real World DAC+Concrete Integration

Identifying Barriers

Notwithstanding strong support conditions for successful DAC+concrete niche formation,  barriers preventing or slowing down this ultimate convergence do exist.

CU Concrete is a new and still small sector. First and perhaps most fundamental is the fact that CU concrete, as a new and still emerging sector, is not that far ahead of DAC in its own market development. High potential for rapid growth within a massive global industry certainly exists, and possibly in the near-term; but such an outcome hasn’t happened yet, nor is it guaranteed to. As a consequence, concrete’s relevance as a future DAC niche must wait for compatible carbontech solutions to gain higher rates of penetration. However, as detailed in the previous section, DAC can play more than a passive role in this process. Because the technology can mitigate CO₂ supply uncertainties that give concrete companies pause, its availability could help actively bolster demand for carbontech technologies.

The high cost of DAC CO2 supply. Second, while the cost competitiveness of DAC for this application can be increased by carbon offset revenue and buffered by the premium value it offers as a solution, it remains to be seen if these factors will be sufficient to close the gap. The price/ton of merchant CO₂ is highly segmented by market, with food and beverage customers often paying higher prices than industrial customers, due to differences in volume and purity. If DAC providers cannot come within range of parity with industrial merchant CO₂ prices, demand will likely be limited in a price sensitive, commodity industry like concrete, in spite of DAC’s distinct advantages.

DAC sector strategic priorities may lie elsewhere. Finally, yet another barrier may relate to some of the fundamental strategic commitments and technical directions that the young DAC industry and its investors choose to pursue in the coming years. It is unclear if the niche opportunity summarized in this report will sufficiently compel DAC companies to make the technical and business adjustments necessary to cultivate and seize it. This speaks to broader questions concerning whether the pathways that will lead to DAC scale and sustainability fastest involve distributed,  modular, and application-integrated forms, or larger and more centralized deployments. How this question is answered, through business model evolution and regulatory change, will influence the ultimate prospects of this niche opportunity.

Fostering Opportunities

DAC + Concrete integration can be accelerated through a mix of public policy interventions, and novel private sector and civil society strategies, including:

 Public procurement. As much as 39% of all concrete in North America is purchased by public agencies. Therefore the purchasing power and procurement choices of U.S. federal and state governments have the potential to accelerate market maturation of carbontech concrete, including applications that incorporate DAC. Legislation is in place and being explored in California, Colorado, New York, New Jersey, Hawaii, and many other jurisdictions.  Low carbon procurement programs that include performance-based scoring criteria and grant preference to bids with superior embodied carbon scores, as measured by life cycle assessment, will, by design, encourage adoption of high impact DAC+concrete applications.

Innovative financing of new projects. Funding the deployment of first of its kind DAC+concrete projects could help stimulate this nascent sector. As an alternative to voluntary carbon markets, private capital could be mobilized to support retrofitting  concrete plants with carbon curing technologies developed by CarbonCure, Carbicrete, CarbonBuilt, Solidia, and others, as well as the deployment and integration of DAC units at concrete plants. Financing deployment in this way would be an additional, permanent removal of CO2, while deploying new DAC units that would, over time, bring down its cost.

Educating the public and the concrete sector. The broader public is generally unaware of concrete’s significant carbon footprint. Educating the public about the carbon intensity of concrete production, and DAC+concrete as a solution to this problem will help generate demand and justify a “green premium” among the broader public for this new technology.

Glossary terms:

• Business to business (B2B) firms: businesses that provide products and service for other businesses
• Calcination: the process through which limestone is heated to ~900°C and decomposed into lime and CO2
• Cement: the binding agent in concrete. Portland cement is the most common type of cement.
• Embodied carbon: the total greenhouse gas emissions generated to build something, including the extraction, manufacturing, transportation, and assembly of every component, as well as the disposal and end-of-life of the material, excluding operational emissions of the product.
• Environmental product declarations (EPDs): an independently verified document that communicates information about the life cycle environmental impact of products in a transparent and comparable manner.
• Global warming potential (GWP): a measure of the greenhouse gas emissions associated with the manufacture and use of a product or service.
• Life cycle analysis (LCA): a comprehensive analysis of the environmental impact of products, processes, or services through their life cycle (including production, usage, and disposal).
• Niche markets: portions of the market with specific demands and needs.
• Mineralization: a chemical reaction that transforms CO₂ into a solid mineral, such as a carbonate.
• Process emissions: emissions resulting from chemical reactions that are an integral part of cement production.