Growing attention to sustainability and an urgent need for scalable solutions have encouraged innovation in built-environment materials. Carbon-negative concrete, green steel, recycled bricks, and other new products are emerging to sustain global development while reducing environmental harm. Proactive governments have pledged to use public procurement preferences to advance low-carbon concrete and steel, and there is an active venture ecosystem for climate tech. A true breakthrough in this space could access a market in the tens of billions of dollars — perhaps hundreds of billions — a tantalizing prospect for startups and investors alike.
Yet, the construction industry is notoriously slow to change its materials and methods. Labor productivity has not improved in decades. Building-material production is fragmented and dependent on regional economics — consider the differences in built environment between urban and rural, Europe and Asia, desert and tropics. The most famous construction tech startup, Katerra, which did prefabricated and modular construction, declared bankruptcy in June 2021.
Setting aside construction methods and digital solutions for future publication, this Insight examines 12 technology innovations in common construction materials that represent a major break with the status quo. In general, the sustainability focus has been reducing greenhouse gas emissions, but new technologies also address waste mitigation, material circularity, and quality-of-life issues. Some also help solve the acute labor shortage in the construction industry. We present these technologies with a Lux Take that reflects our overall recommendation to companies.
Mass timber: Engage. Laminated timber beams (aka glulam), cross-laminated timber (CLT), and related engineered wood innovations gestated for over 20 years before gaining traction in the late 2010s. More recently, dowel-laminated timber (DLT) shows promise as a technique with minimal adhesive use and better end-of-life prospects. The claimed benefits of building with mass timber versus concrete or glass and steel are reductions in carbon footprint, labor, and time required, although sustainability is predicated on sourcing from well-managed forests. As the material supply increases and expertise diffuses, mass timber construction will take up a greater share of commercial projects, often as hybrid construction. Related companies: Structurlam, XLam.
Transparent wood: Monitor. Researchers at the University of Maryland claim to have developed a low-cost method to create transparent wood by removing opaque pigment with sodium hypochlorite and then penetrating the wood with polyvinyl alcohol (thus, it’s actually a wood-polymer composite). Wood is a better thermal insulator than glass, is stronger, has a superior carbon footprint, and splinters instead of shattering. The French startup Woodoo produces its own version of transparent wood and has created demonstration panels capable of touch control. This technology is at a very early stage, but if a pathway to large-scale production is viable, transparent wood could take a significant portion of the glass market.
Low-carbon substitutes for cement: Engage. Approximately 75% of the CO2 emissions from concrete are generated in the production of cement, the key binding ingredient of concrete. Innovative companies are developing drop-in replacements for cement that can significantly shrink the carbon footprint and achieve the same or better performance without a cost premium. CarbiCrete uses steel slag industrial waste as a cement replacement. Fortera recarbonates calcium oxide with CO2 emissions to create a supplementary cementitious material. Related companies: Carbon8, Blue Planet, Mineral Carbonation International.
CO2 curing: Engage. Several companies offer solutions to inject captured CO2 emissions into wet concrete mix, where calcium ions absorb CO2 during the curing phase to become calcium carbonate nanoparticles. The resulting concrete typically is stronger, hardens faster, and consists of 5%–15% CO2 by weight. Market leader CarbonCure Technologies has deployed its technology for CO2 sequestration at more than 400 concrete plants worldwide. Related companies: CarbonBuilt, Solidia.
3D printing: Monitor. Companies have been building concrete structures with 3D-printing methods — depositing layers of quick-drying concrete — for over a decade, and this technology at last appears to be scaling up and gaining traction in the market. Advantages of 3D-printing construction include reduced labor hours, less material waste, and reduced build times; sustainability claims have not been a major driver. Related companies: Mighty Buildings, Icon, Contour Crafting, Apis Cor, WASP.
Dynamic shading: Ignore. Despite a decade-plus of startups offering high-tech solutions for dynamic-shaded windows (aka smart glass) and despite the potential energy savings, there does not appear to be a robust market for these products. Does your office have dynamic-shaded windows? Market leader View has seen its stock price cut in half since its special-purpose acquisition company listing in March 2021, and its current market capitalization ($1.1 billion) is lower than the total amount of funding it has raised ($1.5 billion). Related companies: Gauzy, Tynt.
Energy-harvesting windows: Monitor. Windows that directly convert UV and infrared light into electricity help commercial buildings draw less power from the electric grid. Built-in photovoltaic systems face a critical challenge in proving durability and a short paypack period to justify the cost premium. Next Energy Technologies has been developing a small-molecule organic photovoltaic film since 2010 and plans to commercialize after raising $13.4 million in June 2021. Related company: Ubiquitous Energy.
Hydrogen direct reduced iron (DRI): Engage. The DRI steel-making process replaces the traditional blast furnace with a reducer and electric arc furnace. Natural gas DRI accounts for 7% of primary steel production worldwide; powering the process with green hydrogen could eliminate CO2 emissions. SSAB, a pioneer in this technology, has produced showcase quantities of zero-emission steel in Sweden. Although hydrogen DRI is a more expensive method, no other steel decarbonization technology is ready for near-term deployment. Related company: H2 Green Steel.
Molten oxide electrolysis (MOE): Monitor. MOE uses electricity to reduce molten iron ore directly into pure molten iron in a single step, a complete transformation of the steelmaking process that would enable deep decarbonization. (The Hall-Héroult process, a type of MOE, dominates in aluminum production.) Boston Metal has been developing MOE technology since it spun out of MIT in 2012 and raised $70 million in Series B funding in early 2021. MOE has disruptive potential, but it probably will not achieve commercial deployment in steelmaking until the late 2020s or 2030s.
Agricultural waste upcycling: Monitor. Because of low cost, wide availability, and a sustainable image, agricultural waste byproducts are enticing feedstocks for walls, paneling, bricks, etc. Startups and cooperative organizations have developed methods for upcycling rice husks, kenaf fibers, hemp stems, peanut shells, and more. Ecovative Design and Mogu have produced insulation and flooring panels from mycelium and biowaste substrate. However, the inherent challenges of collecting, transporting, and storing agricultural waste — not to mention seasonality — make centralized, high-volume production difficult and unprofitable. Related companies: Ricehouse, DTE Materials, Kokoboard.
From construction and demolition waste (CDW): Engage. Recycling CDW into bricks is a scalable way to close the loop for building materials. StoneCycling produces bricks with more than 60% CDW content and has supplied dozens of projects. Kenoteq is still in the development stage but claims it can produce bricks composed of 90% CDW without firing them in a kiln, thus greatly reducing the carbon footprint. Although there are logistical challenges with sourcing CDW, the potential supply is massive. Related company: Ciclo.
From plastic waste: Ignore. Several companies have developed methods to convert heterogenous plastic waste into building blocks. As Lux has written before, this approach raises concerns about path dependency: The risk that adopting a better but imperfect solution will block adoption of more impactful solutions in the future. Although it’s better to use waste plastic as a building material than to throw it in the landfill, end-of-life environmental problems remain, and there are better solutions for sustainable building materials that deserve investment. Related companies: ByFusion, Gjenge Makers, Conceptos Plásticos.
Attaining commercial success from innovation in sustainable construction materials is not easy, as illustrated by the technologies analyzed above. There are several dimensions of sustainability to consider, not only greenhouse gas emissions but also waste mitigation, circularity, and end-of-life outcomes. Adopting one technology in isolation does not guarantee meaningful impact on reducing emissions or the holistic life cycle analysis (LCA). Careful LCAs are necessary to ensure that a wooden skyscraper, for instance, is delivering the expected abatement in emissions. On top of these metrics, cost is critical. Buyers of commodity materials are notoriously cost sensitive. When it comes to office buildings, few companies have the ambitions and deep pockets of Google. Companies that develop and construct new property are rarely the ones who pay the utility bills years later, creating the potential for misaligned incentives. The most innovative structures often come from institutions like Google or universities that build for themselves with a long-term mindset.