Tackling the Carbon-Heavy Core of Construction

Concrete and steel are the structural pillars of modern civilization. Every bridge, skyscraper, highway, and airport depends heavily on them. However, their production emits immense levels of CO₂. Cement production alone releases over 1.6 billion metric tons of CO₂ annually, more than 3 times the emissions of global air travel. Steel contributes another 2.5 billion metric tons per year. If cement were a country, it would be the third-largest emitter in the world after China and the U.S.

This pollution is not incidental. Cement requires kilns heated to 1,450°C, fueled largely by coal and petcoke. Meanwhile, traditional steelmaking relies on blast furnaces powered by coking coal. As developing nations urbanize, global demand for concrete and steel is projected to rise by nearly 80% by 2060. Despite its centrality to infrastructure, the sector has lagged behind in decarbonization.

Embodied Carbon: The Hidden Polluter

Embodied carbon refers to emissions embedded in materials before they reach a building site, from mining, manufacturing, and transport. In many modern buildings, this can account for up to 50% of total lifecycle emissions, especially in high-rises and public infrastructure.

To decarbonize at scale, builders must go beyond energy efficiency and address the emissions locked into every slab of concrete and girder of steel. However, green materials are often scarce, expensive, or geographically inaccessible. That's where Environmental Attribute Certificates come into play, bridging availability gaps without compromising climate integrity.

Bridging the Gap with EACs

EACs act like carbon offsets but for embodied materials. They decouple physical procurement from climate impact. A buyer in London, for instance, could purchase green steel certificates from a verified low-carbon steel plant in Sweden, even if local availability is limited.

Inspired by Renewable Energy Certificates, which revolutionized green energy markets in the 2000s, these certificates allow corporates, governments, and developers to finance sustainable practices, support first movers, and meet carbon disclosure requirements.

Microsoft and Carbon Direct’s guide, Criteria for High-Quality EACs in the Concrete and Steel Sectors, brings rigor to this emerging tool, preventing greenwashing and ensuring actual climate benefit. The document has already been distributed across public procurement offices, real estate developers, ESG investors, and engineering firms.

Defining High-Quality Environmental Certificates

The guide outlines six essential principles:

• Additionality: Projects funded via EACs must go beyond baseline regulatory practices. No credit for business-as-usual activities.

• Catalytic Impact: EACs should trigger wider industry transformation, such as scaling pilot technologies or incentivizing innovation clusters.

• Verifiability: All emissions data must be independently validated and tied to traceable production batches using digital monitoring systems.

• Procurement Flexibility: Buyers can fund green steel or concrete anywhere and still apply the emissions benefits to their internal carbon accounting.

• Safeguards: Projects must demonstrate no adverse effects on human rights, biodiversity, or water systems.

• No Double Counting: Each tonne of CO₂ reduction can only be claimed once, by the buyer, not the producer, to preserve accounting integrity.

This structure is designed to align with corporate ESG disclosure rules, Science-Based Targets initiative guidance, and emerging EU Carbon Border Adjustment Mechanism compliance.

Standards for Concrete & Steel

The framework adapts existing industry standards and certifications into the EAC model:

• For concrete, the focus is on reducing the use of Portland cement, the biggest carbon contributor. It encourages:

  • Clinker substitution using fly ash, slag, or calcined clay

  • Use of supplementary cementitious materials

  • Carbon capture from kilns

  • Electrification of mixers and transport logistics

• For steel, the emphasis lies in:

  • Transition from blast furnaces to Electric Arc Furnaces powered by renewable energy

  • Increasing scrap content in production

  • Scaling hydrogen-based Direct Reduced Iron (H₂-DRI) methods

  • Participation in ResponsibleSteel and ISO 20400 (sustainable procurement)

Together, these innovations could cut steel emissions by 60% and cement emissions by 50% by 2040 if adopted at scale.

Growing Appetite for Green Materials

There is surging global interest in green building materials:

• McKinsey & Co. predicts demand for green steel will exceed 50 million metric tons/year by 2030, with buyers like Volvo, Apple, and Maersk already piloting clean steel procurement.

• Low-carbon concrete is expected to grow at a 13% CAGR through 2032, with startups like CarbonCure, Solidia, and Ecocem attracting $500M+ in venture capital.

• Regulatory momentum is mounting:

  • U.S. Buy Clean mandates low-emission materials in federal projects

  • EU CBAM will tax carbon-intensive steel imports from 2026

  • LEED & BREEAM now award points for verified low-carbon construction inputs

Green materials are no longer niche, they are becoming procurement mandates.

Microsoft’s Climate-First Supply Chain Vision

Microsoft aims to be carbon negative by 2030 and remove all historical emissions by 2050. Much of this hinges on Scope 3 emissions, which represent 95% of its carbon footprint, from supplier factories, construction partners, and hardware vendors.

Julia Fidler, Microsoft’s Fuel and Materials Decarbonization Lead, noted,

“We want to send a clear market signal: high-quality climate action matters. EACs help unlock funding for clean production while giving buyers assurance that emissions savings are real, durable, and independently verified.”

Microsoft’s Climate Innovation Fund has already invested $1 billion in low-carbon materials, carbon removal, and sustainable energy, including backing firms like Heliogen, CarbonCure, and Terra CO₂. Their internal procurement policy now embeds EACs for steel and cement used in data centers and office parks.

A Market on the Cusp of Transformation

While the EAC model is still developing, the Microsoft–Carbon Direct playbook is a foundational document. It offers building owners, architects, and financiers a concrete roadmap to align projects with net-zero pathways.

Governments are also taking notice, with California, Denmark, and Singapore exploring national-level EAC registries. If adopted globally, EACs could redirect billions of dollars toward decarbonizing industrial processes that have remained untouched for decades.

For the first time, buying greener isn’t just an ethical option, it’s a standardized, measurable, & economically viable climate strategy.

Key Takeaways

• Cement & steel account for 13% of global CO₂ emissions; cement alone emits 1.6 billion metric tons/year

• Microsoft & Carbon Direct released a guide to verify and scale Environmental Attribute Certificates

• EACs allow companies to support low-carbon material production even if they cannot physically procure those materials

• Steel & concrete EACs must meet standards of additionality, verifiability, and no double counting

• Green steel demand could hit 50 million metric tons/year by 2030; low-carbon concrete is growing at 13% CAGR

• Microsoft is using EACs to reduce Scope 3 emissions in its data centers and office buildings