The hardest molecules to clean up

Steel and cement release carbon dioxide as an inherent part of their chemistry, not just from the heat used to make them. That makes them genuinely hard to decarbonise, and it is why they remained untouched while easier sectors moved.

Historically there was no commercial reason to change. Conventional processes are mature, cheap, and enormous, and no customer would pay a premium for the alternative.

The structural driver is border carbon adjustment mechanisms and procurement rules. When importing high carbon steel carries a levy, and when public projects require low carbon materials, a premium market appears by regulation.

The technology layer spans direct reduction of iron using hydrogen instead of coal, electric arc furnaces, carbon capture on cement kilns, alternative cement chemistries including calcined clay, and the certification that verifies embodied carbon claims.

Adoption economics depend entirely on who absorbs the premium. Automotive and construction buyers have signed offtake agreements at higher prices to secure supply and meet their own targets.

The beneficiaries include steelmakers investing in direct reduction, alternative cement producers, carbon capture technology suppliers to industrial sites, certification bodies, and the engineering firms building plants.

The value chain runs from input through production to construction and manufacturing customers. Offtake agreements are the mechanism that makes projects financeable.

The overlooked layer includes electrode and refractory suppliers, certification and embodied carbon measurement firms, engineering contractors, and the scrap processing businesses feeding electric arc furnaces.

Competitive dynamics are policy dependent to an unusual degree. Without border adjustment or procurement mandates, low carbon product cannot compete on price.

Risks: border carbon mechanisms face legal and political challenge, green premiums have proved fragile when budgets tighten, projects are enormously capital intensive, and hydrogen supply is itself unsettled.

What to watch: border carbon adjustment implementation, offtake agreements signed at premium pricing, direct reduction plant commissioning, and public procurement rules on embodied carbon.