## Unlocking Capital to Scale Low-Carbon Cement and Concrete

7 November 2025


## The cement and concrete sector sits at the heart of the global decarbonization challenge. These materials are among the world’s most used and among the most carbon intensive, responsible for roughly 8% of global CO₂ emissions.

This makes the sector both one of the hardest to decarbonize and one of the most consequential opportunities for climate impact. Whilst several core low-carbon solutions (such as clinker substitution and carbon capture) are technically proven and piloted, others (e.g., novel chemistries and process innovations) remain earlier-stage. Each technology requires distinct financing pathways to scale – but one thing they have in common is that the financial architecture which will be needed to deploy the capital to scale those solutions remains underdeveloped.  A key New York Climate Week 2025 question up for discussion was the financing of the transition to low- and near-zero emissions cement and concrete. The First Movers Coalition (FMC) co-hosted a roundtable with Arup and Concrete Transition Capital on September 23, 2025 at the Arup Office that brought together major buyers, suppliers, financiers and innovators to explore collaborative actions across the value chain to address this challenge. The discussions highlighted both the areas of progress and the persistent gaps that must be closed to turn promising technologies into bankable, replicable projects across global markets.


## Financing as the Key Bottleneck in the Cement Transition

Although many low-carbon technologies have achieved technical readiness, deployment is still constrained by financing and scale-up challenges. A key bottleneck often arises further downstream, when materials are procured by construction players. Although higher material costs are challenging for procurers, the actual impact on total project costs is marginal. When spread across the full construction of a home or building, low-carbon cement typically results in only minor cost increases, meaning distributing costs across the value chain can make the transition both economically and operationally feasible. However, often the business case remains difficult for producers – margins are thin, carbon prices and offtake incentives insufficient, and cost recovery uncertain without stronger policy and demand signals.  Today, the challenge lies in structuring the business case to ensure that financing flows efficiently through all layers of capital. Understanding risk-adjusted returns across these layers and identifying where mezzanine capital can bridge gaps between equity and debt finance, is essential to unlock sufficient funding. Over the lifecycle of assets, “green premiums” can break even, but aligning incentives and risk tolerance across investors is critical to ensure early capital mobilization. A set of structural financing barriers, spanning from challenges in scaling proven technologies to bridging early-stage development gaps for emerging solutions, impede further scaling of low-carbon cement and concrete: High capital intensity and long paybacks. Roll-out of low-carbon technologies such as carbon capture, utilization and storage, full electrification, and new process chemistries demand hundreds of millions of upfront investments, with long cost curves and uncertain offtake dynamics. Mission Possible Partnership estimates that green cement requires ~$1.42T investment by 2050.  Regional price disparities. Cement and concrete are local commodities: production, transport and pricing depend on regional conditions. Therefore, achieving cost parity in one region doesn’t guarantee competitiveness elsewhere. Hence, financing approaches need to account for local context while still being globally scalable to attract institutional capital. Investment in entire local value chains is required rather than isolated facilities. Gap of risk absorption. Early-stage innovation (e.g., alternative chemistries) relies on venture equity, whereas demonstration and first commercial-scale projects for proven technologies (e.g., carbon capture or substitution) require blended capital structures combining strategic corporate equity, concessional funds, and early project finance. There is a persistent gap between equity and full-scale project finance. Equity is costly and time-consuming, while banks remain hesitant to lend to unproven technologies. Someone must carry risks to allow non-recourse debt to flow, whether it be government, corporates, insurers, or blended finance platforms. Lack of data and standards. Investors and insurers struggle with fragmented, non-comparable information on emissions intensity, production processes, and project performance. The absence of standardized frameworks and verified data across markets increases due-diligence complexity and cost, deters underwriting, and slows the replication of financing structures needed to scale low-carbon cement and concrete.It has become evident that innovation must now occur in financing models as much as in technology itself. The pace of market transformation will depend on how effectively financing solutions evolve to bridge the current financing gap.


## An Expanding but Fragmented Financing Landscape

Despite these challenges, momentum is building. A more diverse set of financiers is entering the space. Each type of capital plays a distinct role along the project lifecycle:  Public and philanthropic capital (e.g., development finance institutions, climate/special funds, specialized government agencies and foundations), is playing a growing role in absorbing early-stage risk, providing the confidence needed for subsequent rounds of (private) investment. Philanthropy, however, should remain a temporary bridge and needs to be replaced by predictable policy signals and market mechanisms in the long term. Private wealth (e.g., family offices) offers flexible tools such as (venture) equity, joint ventures, and concessional debt, tailored to project-specific needs. Institutional and private capital providers (ranging from venture capital and growth equity for emerging technologies to infrastructure and private equity funds for deployable, proven solutions) are supplying the scale-up equity needed to move technologies from pilot to commercial deployment. Corporate capital (e.g., corporate venture capital, general corporate financing) are emerging as strategic investors, pairing capital with technical partnerships and industrial expertise. Banks and debt providers (e.g., venture debt funds, regular debt funds) are starting to experiment with early-to-growth-stage lending, though risk perception remains high.  Yet diversity alone is not enough. To unlock real scale, capital must flow in the right sequence – from early risk-bearing investors to long-term lenders – aligned with each technology’s maturity and project stage.


## Matching Capital to Project Stage

For first-of-a-kind (FOAK) projects based on mature technology, multi-layered capital stacks are becoming the norm. The projects typically move from developer-funded or concessional spending toward large-scale capital expenditures over 3-5 years. Each stage introduces distinct cost drivers and financing, requiring a sequenced funding approach that evolves with the project: Early-stage phases rely on public and concessional capital (e.g., from development finance institutions, climate funds, and foundations) to absorb risk and fund feasibility, engineering, and permitting. These actors provide grants or recoverable grants that help projects reach bankability. As projects move into Front-End Engineering Design (FEED) and Engineering, Procurement and Construction (EPC) stages, where capital needs accelerate, financing shifts toward private equity, venture capital, export credit agencies, and banks, supported by loan guarantees or mezzanine debt. This blend of catalytic and commercial capital bridges the “valley of death” and mobilizes debt earlier. Once operational, projects can transition to long-term, low-cost debt, leveraging cash flows to attract institutional investors. Strong public funding and value chain coordination remain critical to unlocking private capital. Introducing modest early-stage leverage through additional de-risking layers (e.g., insurance, price guarantees, escrow mechanisms) could build investor confidence and move the sector toward sustainable project finance models.  There is an opportunity to introduce debt earlier in these projects, even at modest levels of leverage, to build “investor intelligence” and normalize lending practices. Doing so would help move the sector away from solely grant- or equity-dependent financing towards more sustainable project finance models. Yet even the most sophisticated financing structures depend on one critical factor: credible market demand. Without clear offtake signals, capital remains hesitant to move, no matter how well the financing is designed.


## Creating Demand Signals that “Bank”

A Catch-22 situation may exist in the cement & concrete sector: capital will flow only when offtake markets are credible, transparent, and scalable, but demand signals are unclear without certainty of low-carbon cement supply. That said, public and private sector demand-side action is central to unlocking investment. Buyers are beginning to experiment with dual-track offtakes, leveraging book & claim frameworks, combining physical purchase commitments with additional and verified environmental attribute contracts (EACs). This dual structure creates exchangeable revenue streams for suppliers, improving project bankability by offering investors multiple sources of value and more predictable returns. At the same time, loan innovation on the buyer side is emerging as a crucial lever. Instruments such as Commercial Property Assessed Clean Energy (C-PACE, which allows building owners to finance energy or carbon-reducing upgrades through long-term, property-linked loans repaid via local taxes in the US) or Credit-Tenant Loans (CTLs, which leverage the creditworthiness of investment-grade tenants with long leases to secure lower-cost project financing) can offset the higher upfront cost of low-carbon materials by lowering the cost of capital for real estate and infrastructure projects that use them. Public procurement is another driver of market pull. Initiatives such as “Buy Clean” programs at state and city levels have introduced embodied carbon thresholds, project-level life cycle assessments (LCAs), procurement frameworks that favor a combination of price and Global Warming Potential (GWP) in winning bids, that can provide investors and suppliers with the market confidence needed to invest ahead of regulation. International public procurement pledges, such as those from the Industrial Deep Decarbonisation Initiative, are also helping to show demand from national governments. Together, these public and private demand levers are beginning to build the foundation for bankable markets. The next challenge is to translate these early signals into coordinated action that can scale investment and replication across regions.


## Priorities for Action A set of near-term priorities was defined at New York Climate Week’s roundtable to help transform fragmented pilots into cohesive and financeable portfolios:

Develop catalytic financing platforms that can fill gaps to de-risk construction and the early years of operation for new materials producers.Codify buyer playbooks that outline procurement pathways, performance-based specifications, and bundled physical-plus-attribute contracts. Scale adoption of EPDs and LCAs to establish a robust emissions baseline and enable the progressive tightening of embodied carbon limits. Create linked real estate and infrastructure finance tools such as C-PACE, CTLs, and transition insurance to offset the green premium through lower overall cost of capital. Establish a neutral data-sharing consortium to pool pilot performance data and reduce underwriting risk in line with applicable antitrust laws. Each of these solutions addresses a different point in the capital chain, but all share a common goal: to make low-carbon cement and concrete financeable, repeatable, and scalable.


## From Dialogue to Deployment

The roundtable at New York Climate Week clarified that the cement and concrete transition will rely on a combination of technologies and financing instruments across the value chain. With trillions of dollars in global infrastructure investment expected this decade, there is a timely opportunity to integrate lower-emissions solutions into construction finance – enhancing resilience, innovation, and long-term competitiveness.  The message from New York Climate Week was clear: The transition is no longer held back primarily by technology invention, as many key solutions such as clinker substitution and carbon capture are technically proven. Yet their deployment faces significant project and financing risk, requiring mechanisms for risk absorption and blended capital. Meanwhile, earlier-stage innovations such as novel cement chemistries still depend on both technological progress and venture-type financing to reach maturity. Solving these challenges in financing and coordination depends on the pace at which financiers, markets, demand drivers and policymakers converge to create the conditions for low-emissions cement and concrete to be scaled and implemented across the globe. The window to embed decarbonization into construction finance is open, but closing the gap between ambition and bankability now demands coordinated, near-term action across the value chain.