A Decarb Deep Dive Into the Concrete Industry with ecoLocked
At Startup Basecamp, we’re diving deep into the intersection where technology meets climate action, through our engaging series of blog posts inspired by conversations from our “Tech 4 ClimatePodcast.”
Through the lens of our podcast, we’ve had the incredible opportunity to converse with a diverse array of climate tech founders, seasoned investors, and industry experts hailing from Silicon Valley and beyond. Their stories, journeys, and insights into the climate tech industry have been nothing short of inspiring.
We’re thrilled to share this wealth of knowledge with you through our new blog series titled, “The Factor of 6”. This series meticulously dissects each conversation into six pivotal aspects:
Addressing the Macro Issue: We begin by assessing the larger problem at hand, analyzing how specific sectors contribute to climate change and the corresponding data.
Innovation Snapshot: Then we navigate through the existing landscape of solutions – spotlighting the leading innovations shaping the industry.
Market Dynamics & Incentives: A closer look at the market reveals the organizational structures and incentives steering its course.
Navigating Regulatory Landscape: We demystify the intricate web of regulations, providing you with insights into how legislative tailwinds impact the sector.
Meet the Visionaries: A personal rendezvous with the brilliant minds behind the initiatives, delving into their stories.
Fundraising Insights: We unravel the fundraising journey, presenting insights and invaluable tips from successful players.
This series promises to be a rich in insights, stories, and actionable knowledge, serving as a comprehensive guide for those looking to further immerse themselves in the climate tech ecosystem.
1. Addressing the Macro Issue
Concrete is the second most used material in the world, trailing only behind water. Its significance in the global market is hard to understate, with a staggering value of approximately $600 billion. As various construction methods evolve, there has been a growing interest in alternative materials like wood, particularly for residential constructions. Nevertheless, predictions by the World Resources Institute suggest that the global consumption of concrete is set to double by 2060.
This massive reliance on concrete contributes to an important environmental challenge. At present, the production of concrete accounts for about 8% of the world’s total emissions. Moreover, the concrete industry is notoriously difficult to decarbonize.
The versatility of concrete is evident in its various forms and applications, ranging from the dominant ready-mix concrete, which constitutes 80% of the market, to precast elements like floor slabs and roof tiles. Moreover, there’s the DIY decorative concrete and the cutting-edge 3D printed variants. At its core, the production of concrete requires three primary ingredients: cement, water, and aggregates, including gravel and sand.
The environmental footprint of concrete isn’t just limited to carbon emissions. The demand for specific types of sand, unsuitable for substitution with desert sand due to its texture, has surged. This rise in demand poses a significant threat to biodiversity, especially in central Europe, where such sand is depleting rapidly. To meet this demand, increased dredging from riverbeds has become common, leading to severe ecosystem disruptions.
Yet, the heart of the climate issue lies in the production of cement. Cement comprises several components, including calcium oxide, aluminum oxide, and silica oxide. The key challenge arises during the production of cement clinker, a pivotal ingredient. The process involves the transformation of calcium carbonate (limestone) into calcium oxide and CO2. This requires heating up to around 1,450 degrees Celsius, causing a reaction that releases vast amounts of CO2. Given that cement acts as a binder in concrete, its production, and the subsequent emissions, have become almost unavoidable, making the path to sustainable solutions more complex.
2.Innovation Snapshot: Current Landscape of Concrete Alternatives
In the continuous journey to decarbonize the concrete industry, several technological alternatives to traditional concrete are gaining traction. Here’s a breakdown:
Concrete Recycling: An already prevalent method in the industry where disassembled buildings result in broken and ground concrete. The resulting particles are primarily used as an aggregate replacement, with a minor fraction replacing cement. This approach offers emission savings and is being widely adopted.
Secondary Cementitious Materials (Geopolymers): These are materials like fly ash, a by-product from coal burning, and blast furnace slag. By substituting cement with these by-products, significant CO2 reductions can be achieved. For instance, while a ton of cement typically has about 800-900 kilograms of CO2, using these alternatives can reduce it to around 500-550 kilograms. However, as fossil coal burning is being phased out, sourcing such materials in the future could pose challenges.
CCUS (Carbon Capture, Use, and Storage): This is an emerging approach involving point source capture systems. However, implementing it on a large scale is expensive and might take until at least 2040 for widespread adoption.
3.Understanding the Market Dynamics and Incentives of the Concrete Industry
The concrete industry, with its intricate structure and broad range of players, can be described as follows:
a) The Decision Makers: At the forefront are entities commissioning the construction – real estate developers, residential owners, and municipalities. Historically, primary concerns for these stakeholders were aesthetics, functionality, and cost. Recently, however, environmental footprints, especially CO2 emissions, have become paramount.
b) The Procurement Process: Construction companies are responsible for material procurement. Their decisions are often dictated by budget constraints, leading to a focus on cost-effective solutions.
Among these companies, there’s a spectrum: from those handling raw structures (often subcontractors) to main turnkey providers or general contractors. These entities wield significant influence, pulling demand for specific materials based on cost, functionality, and increasingly, environmental impact.
c) The Manufacturers: This sector is notably fragmented, with numerous local players catering to specific regions due to the logistics of transporting ready-mixed concrete.
d) Cement Powerhouses: Dominating the beginning of the supply chain are a few major cement producers like Holcim, Semex, and Heidelberg. Their expansive operations supply cement to manufacturers globally.
e) Incentive Structures: For end users like real estate developers or municipalities, increasing emphasis is placed on minimizing the embodied CO2 footprint of a building, i.e., the carbon emitted during its construction. While currently, this is mostly for reporting purposes, strict criteria are on the horizon, especially in Europe.
With sustainability becoming a focal point, various certification programs, such as BREEAM, LEED, and DG& B, have emerged. These not only enhance a project’s value but also open avenues to sustainable financing.
For cement and concrete producers at the heart of the value chain, the game is predominantly about costs. Yet, environmental regulations, such as the European Emission Trading Scheme (ETS), are starting to alter this landscape. Though the incentives for sustainable practices aren’t stringent yet, the tides are slowly turning.
In essence, while the concrete industry’s motivations have long been centered on cost and functionality, the winds of change, fueled by environmental consciousness and impending regulations, are reshaping its future dynamics.
4. Navigating the Regulatory Landscape
The pressing need to reduce carbon emissions, or decarbonize, is imminent. Europe seems to be at the forefront of this initiative, offering a structured approach compared to the fragmented strategies found in other markets. For instance, in the United States, while there may not be a mandatory requirement as of yet, the country has made significant strides by incentivizing innovative technologies aimed at decarbonizing concrete through subsidies.
A major challenge for emerging concrete materials is gaining approval. When a new concrete material is developed, it might initially be used for specific projects with individual approvals. However, to mainstream its use and obtain certifications like the CE mark in Europe (with equivalents in other markets), one has to navigate a bureaucratic approval process. Interestingly, this process leans more towards the aesthetic resemblance of the new material to traditional ones in terms of shape, color, and appearance. If a material significantly deviates from the norm, the approval process becomes stringent, even if performance data supports its efficacy.
In practical terms, this means that while we can showcase performance data for materials suited for ready mix concrete, the approval process could span one and a half to two years. Nonetheless, certain segments within the concrete industry don’t demand such stringent approvals. By presenting internal data alongside external validation, manufacturers might be convinced of the material’s effectiveness for a project. This flexibility is particularly noticeable in many precast segments, allowing for some Ready-Mix Concrete (RMC) projects based on individual approvals. Yet, for substantial scaling and especially for RMC, broader approval is crucial.
5.Meet the Visionaries
Mario Schmitt is the co-founder and CEO of ecoLocked. Mario’s dedication to addressing major global issues, such as the climate and biodiversity crises, stands at the forefront of his journey. With a background in economics and a deep understanding of the pressing challenges our planet faces, Mario found his calling through the lens of tangible solutions. His experience in consulting made him realize the gap between strategic recommendations and their actionable implementations, especially when financial constraints in large industries became apparent.
The Genesis of ecoLocked: 2021 marked a significant turning point for Mario. Driven by the ambition to provide a game-changing technological solution, he co-founded ecoLocked with Stefanie Gerhart (CCO) and Micheil Gordon (CTO).
The company’s innovative vision is to utilize captured carbon, particularly in the form of biochar or biocarbon, transforming it into valuable products for the concrete sector. With their product platform, ecoLocked makes use of the variability in biochars, creating concrete additives that not only store carbon in buildings for 1.000 years but also offer performance benefits such as insulation and weight reduction.
A Global Aspiration: ecoLocked’s solutions transcend geographical boundaries and are designed to be versatile regardless of feedstock, emphasizing the brand’s vision for global reach and impact. Beyond the goal of creating impactful products for the construction sector, Mario and his team at ecoLocked are set on facilitating large-scale carbon removal worldwide. They see immense potential in biochar, viewing it as a cost-effective and market-ready solution.
The mission? To find it a scalable application, and ecoLocked aims to be that very platform.
6. Fundraising Insights
For startups, especially those in the hardware domain, it might be advantageous to initiate with smaller funding rounds, partnering with angel investors who align with the company’s vision. This approach provides the breathing room needed to refine the business model and further develop prototypes.
Joining accelerator programs can offer significant advantages, especially during early stages when the technological product is promising, but the business direction is unclear. Accelerators like the “Carbon to Value Initiative” by Greentown Labs have been beneficial for companies like ecoLocked, guiding them through these initial challenges.