Setting it in Stone: Carbon Utilization and Insetting for Low-Carbon Construction

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“So, you are throwing this biochar into concrete, and then you’re calling the concrete carbon-neutral. Isn’t that greenwashing? I could just put that stuff in the trunk of my car and call it carbon-neutral!”

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Sometimes it happens, and we receive this kind of inquiry. It can be frustrating, but it is also understandable. We have all seen the John Oliver episode on worthless carbon offsets and projects lacking additionality – there is some reason to be skeptical of products or services being marketed as carbon-neutral, green, climate-friendly, …you name it. At the same time, our team at ecoLocked is full of well-educated young people and parents who want to ensure that their daily work has a truly positive environmental (and social) impact. So, we felt that it was time to get into the weeds about climate additionality in the construction sector context.

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In this article, we discuss the need for durable carbon dioxide removal (CDR) in construction. Chapter 1 outlines how this need arises from the inherent difficulty of decarbonizing the production of building materials, such as concrete, which is expected to still emit residual CO₂ worth ~25% of today’s emissions by 2050. We explain how the combination of carbon storage and utilization in building materials benefits both the construction and CDR sectors by creating a new value stream. Chapter 2 introduces carbon insetting, the counterpart to carbon offsetting, in which CDR projects become inherent parts of product value chains. Chapter 3 proposes requirements for making a truly net positive climate contribution with CDR investments and explains how the “carbon-neutral car” idea breaks down due to a high risk of reversal and a lack of physical additionality. Chapter 4 provides a synthesis and outlines how biochar insetting in building materials can complement emission reduction to enable a more sustainable built environment.

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Chapter 1

The Need for Carbon Dioxide Removal in Construction

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For thousands of years, the construction sector has provided the foundation of human societies – in the most literal sense. However, buildings have also been contributing close to 40% of all green house gas emissions, of which about 15% arise before the building is ever used: during the production of building materials. Concrete production alone accounts for approximately 8% of global CO₂ emissions​​. Similarly, the production of aluminum and steel is highly carbon-intensive. But populations are growing – and so, raw material use for construction is predicted to double by 2060.

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Naturally, the industry is exploring diverse options to decarbonize cement and concrete. Quick wins such as concrete recycling, reduction of the clinker share in cement through substitution with supplementary cementitious materials (SCMs), and energy efficiency measures have allowed the industry to reduce the footprint of cement by as much as 40-50% (in markets like Germany, from a baseline of 1t of CO₂ per ton of cement). However, novel low-carbon technologies designed to go further are still in development and may not be scalable for years. As a result, even under the most favorable scenarios, studies suggest that an average of 25% of annual cement production emissions will remain unmitigated by 2050 (Figure 1). Moreover, while transitioning to low-carbon production technologies is critical, the accumulated emissions from decades of heavy construction activities are already affecting the earth’s climate today.

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At this point, many cement companies have started investing in retrofitting cement kilns with point-source carbon capture (CCS) systems. At $60-$120 per ton of CO₂, CCUS may represent the most cost-effective way to deal with the tail end of residual emissions from cement plants. However, the roll-out of CCUS across global cement plants will take decades and hundreds of billions in investment – and it does not address the historical carbon debt of the construction industry. To achieve climate impact fast – consider the ‘time value of carbon’ – and scale up to the required level of gigatons of negative emissions by 2050, carbon dioxide removal (CDR) is essential.

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Considering the cost pressures in the construction industry, solutions that combine carbon removal and carbon utilization in building materials are especially attractive: in this case, captured carbon/CO₂ is not just locked away but becomes a physical input to the production process of building materials, thus reducing the need for conventional ingredients and lowering the net abatement costs per ton of CO₂. Engineered CDR solutions like direct air capture (DAC), biochar carbon removal (BCR), and bioenergy with carbon capture and storage (BECCS) are all applicable for carbon utilization.

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Chapter 2

Insetting & Offsetting

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Having established a need to address residual and historical emissions via CDR, companies can choose between two pathways to realize negative emissions: Insetting and Offsetting. Put simply, both involve investing in carbon removal projects and accounting for the negative emissions in your own sustainability reporting (at product, business segment, or company level). The key difference: Offsetting means purchasing carbon credits from a third party via a broker or marketplace. These credits typically stem from CDR projects not related to the buyers’ business activities. Meanwhile, removal insetting involves the creation of negative emissions within a company’s value chain, meaning that CDR projects are inextricably linked to the user’s business activities.

In the words of the World Economic Forum, carbon insetting “focuses on doing more good […] within a value chain” when opportunities to do “less bad” have been exploited. This can have a direct positive impact on the net footprint of that value chain’s end products, typically demonstrated via LCAs (Life Cycle Assessments) and EPDs (Environmental Product Declarations).  For example, food producers paying suppliers to adopt regenerative farming practices that foster soil carbon might be able to count the negative emissions created towards the foods’ net climate footprint. The same applies when building materials producers integrate CDR into their core value chain by adding CO₂ to their product recipes. In the latter case, the insetting company’s business activities are both financially and physically additional, as they provide CDR financing and create new carbon sinks. Figure 2 shows an example of an LCA for our CO₂-negative admix material eLM Zero.

Both insetting and offsetting have a role to play in the global endeavor to achieve 10Gt of negative emissions by 2050. However, we believe that corporates’ and policymakers’ awareness of the specific benefits of insetting should be fostered:

1. Insetting creates a direct link between physical product and CDR activity, whereby every ton sold of an end product increases the demand for carbon removal
2. Integrating CDR into a product value chain typically means higher geographical proximity and fewer intermediaries between CDR operations & production. This can lead to
   • Facilitated Measurement, Reporting, and Verification (MRV) and lower costs
   • Easier compliance with local emission regulations, as projects are within the same jurisdiction
   • The ability to engage the local community and create additional income for smallholders
3. Insetting allows for within-value chain co-benefits such as enhanced soil health and reduced chemicals use in agriculture or, in combination with carbon utilization, reduced raw materials extraction and performance enhancements for building materials.
4. When combining insetting and carbon utilization, negative emissions are bundled with the physical carbon product, enabling
   • Multi-year offtake agreements with higher planning certainty for project operators, often lowering overall costs for the end customer
   • Reduced reliance on carbon credits and volatile prices in secondary markets

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Sometimes, the practice of reducing value chain emissions, e.g., when using low-carbon cement or low-carbon fuels, is referred to as (reduction) insetting. We strongly advocate against this terminology: in carbon removal, insetting describes a distinct way of creating and handling negative emissions. In contrast, replacing one material with another, less CO₂-intensive material is simply emission reduction and does not require a new name. There is also a growing consensus that any effects from emission reduction and avoidance activities that can be clearly attributed to an industrial value chain (e.g. renewable energy projects, timber construction) should not be converted into credits but accounted for within the value chain where they are physically situated – not least, to prevent double-counting.

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Chapter 3

Requirements for Making a Net-Positive Climate Contribution with CDR

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Returning to the case of our ‘carbon-neutral car’ from the introduction: how can companies ensure that, by investing in CDR, they are making a net positive contribution to the reduction of greenhouse gases in the atmosphere? The answer is not trivial, particularly when considering the novelty of insetting as a concept and its various forms, including ecoLocked’s ‘biochar-to-concrete’ method.

To help companies in assessing CDR opportunities, we have established a few requirements which, in our view, should be met to ensure a genuine contribution to climate change mitigation:

1. CDR must complement, not replace, emission reduction. When it is possible to reduce emissions from your own or your suppliers' and customers' emissions, that should be a priority. As explained in Chapter 1, the concrete value chain has a clear need for additional CDR activities given the limitations of available reduction options. Chapter 4 further deep-dives on the risk of displacement of reduction activities by CDR investments.
2. No double-counting. The same negative emissions from a CDR project can only be counted once. If CDR project operators sell credits to a third party, there can be no removal insetting. In fact, insetting does not even require carbon credits (= tradeable financial assets), but merely an audited certificate of carbon removal that can be accounted for in EPDs. Nevertheless, if credits are created, they must be immediately retired on behalf of that end customer who accounts for the negative emissions. Meanwhile, other parties who contributed to the project are financially compensated on a contractual basis (e.g., a % of the fair value per ton of CO₂).
3. Like-for-like principle and permanence. Removals should match the emissions they offset/inset in terms of type, scale, timing (no compensation of today’s emissions with future CDR projects), location (as the accessibility of climate projects varies globally), and, most importantly, permanence. Long-lived industrial CO₂ emissions should not be offset by short-lived removals. For example, biochar carbon removal has been shown to prevent emissions for several hundred years (depending on the storage solution), whereas afforestation often only results in a few years of carbon sequestration activity due to external threats to forests. In the EU, the Carbon Removal Certification Framework (CRC-F)  is set to provide guidelines on like-for-like compensation, whereby fossil fuel emissions must be matched by permanent carbon removal.
4. Additionality guaranteed by independent MRV. Carbon removals should be additional, meaning that the negative emissions claimed would not have been generated without the specific intervention funded by the end user. To pre-assess the additionality of insetting, we propose a simple counterfactual question: Would the same amount of carbon have been removed and stored in the same period if my value chain didn’t exist? Validating additionality is then one of the key purposes of MRV, which involves systematically Measuring, Reporting, and Verifying the real amount of additional negative emissions achieved through CDR projects based on established protocols. MRV providers also assess the permanence of negative emissions to enable like-for-like compensation, rule out double-counting, and, ideally, validate that CDR investments do not displace reduction activities.

So, why is biochar storage in concrete suitable to compensate for production emissions, and throwing biochar into the trunk of your car to compensate for driving emissions is not? The biggest issue is permanence, and thus, a violation of the like-for-like principle: There is simply a very high risk of reversal as the trunk of your car, in contrast to a concrete wall, does not protect the carbon and is not a very long-lived asset. Moreover, physical additionality is lacking: Your car does nothing to create a permanent carbon sink, unless biochar is used as a raw material for car parts, such as seat shells, and the associated negative emissions are counted towards the net footprint of those parts. Unfortunately, with an average lifetime of 12 years and a polymer recycling rate of 20-30%, storage in car parts generally does not qualify for compensating long-lived CO₂ emissions from production. In contrast, residential and commercial buildings have a lifespan of 50-100 years, with used concrete regularly being recycled after demolition, ensuring that carbon particles remain bound within the cement matrix.

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Chapter 4

Synthesis: Balancing Emission Reductions and CDR in the Concrete Sector

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As we have seen in Chapter 1, humanity needs carbon removal for two reasons: First, to compensate for residual emissions and thereby bridge the time until low-carbon production processes are broadly rolled out. Even in 2050, the IPCC expects residual emissions to account for 5-10% of today’s emissions. Second, to make up for historical emissions and eventually reduce the concentration of greenhouse gases in the atmosphere.

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These needs have motivated us to develop ecoLocked Materials. We wanted to provide a scalable end-use case and permanent sink for Biochar Carbon Removal AND give the construction industry a tool to take climate action already today, when residual emissions are still at 50-60% of the 1990 baseline. This scope for action is particularly important for concrete producers and real estate developers, who typically cannot directly influence innovation at the cement factory.

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Nonetheless, it is crucial to ensure that the opportunity to invest in CDR does not disincentivize companies from pursuing emission reduction (a phenomenon also referred to as ‘mitigation deterrence’). The key instrument in this context is the price per ton of CO₂. If that price is too low, as experienced in the first two trading periods of the European Emission Trading Scheme (ETS) when emission allowances were temporarily available at €5/ton, there is a high risk that business-as-usual will continue. For this precise reason, prices for durable negative emissions, whether traded over the counter or in markets such as the VCM, should not be below the abatement costs of accessible measures. A potential integration of CDR into the ETS might, therefore, come with a price floor or a refined supply cap mechanism.

Considering the cement and concrete sector specifically, Figure 3 shows that many decarbonization measures come at relatively low (or even negative) costs, including clinker substitution, energy efficiency, and waste heat recovery. Moreover, some innovative binders being researched, such as calcium silicate derivates or bio-cement, promise even lower costs once market-ready. Contrasting these with a net cost of $80-140 per ton of CO₂ removed and stored via insetting solutions like ecoLocked Materials, economically rational companies will continue to invest in decarbonization until effective measures have been exhausted. Only for the remaining portion – the 25% from Figure 1 – will CCUS and CDR be used. In this context, biochar insetting represents a cost-effective and globally scalable solution that is increasingly part of a portfolio of sustainable concrete technologies, with local conditions (e.g., availability of alternative fuels, alternative clinker inputs, local waste biomass) determining the technology mix applied by manufacturers.

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Reporting from the field, this line of thinking is indeed very prevalent with our partners: while already implementing cost-effective reduction measures, they have an environmentally conscious customer base demanding low-carbon product lines today. Instead of waiting for green cement to become available at scale, they engage with ecoLocked to tackle the remainder of embodied emissions – and often even go beyond, to do their share in building a greener future.

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By Mario Schmitt.

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