“We Need To Make Decarbonization A Standard. That Will Only Happen If Construction Leaders Partner With Regulators,” Alfredo Carrato, Investments Advisor At Cemex Ventures

"We Need To Make Decarbonization A Standard In The Industry, That Will Only Happen As Construction Leaders Partner With Regulators," Alfredo Carrato, Investment At Cemex Ventures - Carbon Herald
Alfredo Carrato, Investment and Open Innovation Advisor at Cemex Ventures. Credit: Cemex Ventures

As any industry right now trying to cut on emissions, the construction industry, historically a heavy greenhouse gas emitter, is making efforts to face the changing climate and adapt to a more sustainable future. Cemex Ventures – the corporate venture capital and open innovation unit of Cemex – one of the world’s largest multinational construction companies, is aiming to accelerate the next generation of innovation and decarbonization solutions in the sector.

We asked Alfredo Carrato, Investment and Open Innovation Advisor at Cemex Ventures to share some insights with us on how the construction industry is currently reducing its emissions and what is needed for zero-emission cement production to become a global standard.

Mr Cerrato, would you please explain what activities Cemex Ventures is involved in? What does the company do? 

Cemex Ventures is the corporate venture capital and open innovation unit of Cemex. This means that our objective is twofold: we simultaneously search for strategic investment opportunities and innovation outside of the company. As Cemex’s eye outside of the company, we invest in, accelerate (with our Cemex Ventures Leaplab Acceleration Program), and partner with startups to fulfill our mission of driving the construction industry revolution.  

    Since it was established in 2017, Cemex Ventures looks for disruptive startup solutions that fall under its four focus areas: Green Construction, Enhanced Productivity, Construction Supply Chain, and Future of Construction. Contech & Cleantech startups in their early stage or commercialization phase can approach us looking to test their solutions, initiate new collaboration agreements, obtain new clients, or raise capital.

    What is the VC scene like for cleantech startups in the construction industry right now? 

      We see the VC scene for Cleantech startups as being not only very positive at the moment, but crucial for the future of construction. Cleantech investments showed a lot of resilience over the past year in a period where VC funding across the board declined. The race to decarbonize construction processes and operations is on for companies of all sizes across all geographies, so CVCs and VCs are highly invested in solutions that can make our industry more sustainable and circular.

      At Cemex for example, we are fully aware that our production processes have a carbon footprint, which is why we have set the most ambitious 2030 targets available to the industry through our Future in Action sustainability program. And one of the ways we intend to achieve our objectives is through Innovation & Partnerships with powerful and scalable Cleantech solutions.

      How challenging is it for the sector to scale new decarbonization technologies and truly reduce emissions? Is access to funding difficult right now?

        Construction is the largest industry in terms of global GDP but also in terms of size, which is why scaling new tech and reducing emissions are both challenging endeavors for a few key reasons. First, decarbonization technologies are typically capital intensive and require lots of upfront investment, meaning companies have to come to terms with a lack of competitive short-term results. 

        In addition to high costs, there is typically a complexity in terms of implementation. Before scaling occurs, startups and their clients (building material manufacturers, for example), need to run FEED studies and pilot projects to determine the viability of the technology on-site. This is not only time intensive, but requires the support and collaboration of multiple teams and stakeholders, which can cause delays. 

        Relevant: Cemex Ventures Bolsters Investment In Decarbonization Company Carbon Upcycling

        As to whether access to funding is difficult right now, it has definitely dipped in the past two years. This can largely be attributed to microeconomic causes that have affected funding regardless of industry, but venture capital has always been a competitive industry. I will say, however, that although the overall investment has decreased, investors are still investing – they are just being more selective and demanding with their terms. 

        What kind of technologies possess the highest potential to reduce emissions in the construction industry? Could you please share some examples of successful projects and their top approaches? Where are they now?

          Some of the top technologies that we would list are circular construction & waste management, green building materials, Carbon Capture, Utilization and Storage (CCUS), alternative fuels and new energy resources, as well as solutions that treat water efficiency and encourage sustainability from the design & architecture phases. 

          We’ve seen a lot of potential for cement alternatives to reduce emissions. The main problem right now is that there are a lot of cement alternatives, but they each don’t necessarily fulfill all the requirements of traditional cement in terms of strength and durability. So there’s certainly more work to be done in finding alternatives. Still, there has been a lot of progress. 

          Relevant: Cemex Ventures Increases Stake In HiiROC, A Revolutionary Hydrogen Production Startup

          Then there is the holy grail: Carbon Capture, Utilization and Storage (CCUS), which focuses on capturing carbon dioxide emissions from industrial processes such as cement and steel production, which are significant sources of global emissions. The captured CO2 can then be transported and stored in underground geological formations, or converted into new products and services.

          Lastly, alternative energy sources that replace carbon intensive fossil fuels are very probably some of the most mature technologies available today in terms of effectively tracking and increasing energy efficiency and reducing emissions in the industry.

          Source: serato via Shutterstock

          Synhelion, who has developed a unique technology to turn sunlight into fuel, and WtEnergy, who provides advanced solutions to convert biomass and non-recyclable waste into clean energy, are just two examples of Cleantech solutions with the potential to decarbonize the construction industry. At Cemex Ventures we are working with both of these companies in our cement plants to help decarbonize our operations and just last year we received a €4.4M ($4.7M) grant from the European Union for our work with WtEnergy at Cemex’s Alicante cement plant.

          What are the common ways the construction industry is decarbonizing now and is there a next generation of technologies coming up now that could disrupt these more mature technologies like carbon capture that have historically been involved with greenwashing and under-delivering?  

            Low(er)-hanging decarbonization methods include the circular economy of relevant (waste) streams, the increase of alternative fuels (vs. fossil), and the replacement of carbon-intensive materials with those that have a lower footprint. I think alternative sourcing is the most common decarbonization method right now. The construction industry is using a lot more recycled materials and other more sustainable alternatives to traditional construction materials. 

            Technology adoption can take time, especially in an industry as horizontal and complex as construction, so in the long-term, other levers such as CCUS, electrification and new building materials will gradually kick in as technology derisking progresses over time.

            What do you think of novel methods of cement making (such as Sublime’s process) that eliminate fossil fuels from cement production? Do you think they could become the new norm in how the construction industry is looking to decarbonize operations? 

              New production processes are proliferating and some of these promising solutions will even scale up to industrial and commercial scales, however, for that to happen many milestones must be overcome – namely technology derisking, market acceptance (unit economics), regulation compliance, scalability, etc. To this effect, no major changes are expected or foreseen in the short term albeit the traction and momentum novel solutions are already building up.

              What are other ways the construction industry is decarbonizing?

                A couple years ago, modular construction was touted as a major way for the construction industry to decarbonize. Modular construction refers to when companies prefabricate structures in a factory setting and then assemble those pre-built pieces on-site, rather than building everything on-site. In theory, it reduces waste generation because the construction takes place in a controlled environment where it’s easier to track and reduce emissions and waste. 

                But statistics are very inconsistent when it comes to how effective modular construction actually is. Early optimistic estimates claimed that modular construction could reduce emissions by up to 45 percent. However, more recent studies have found that modular construction only reduces emissions by two percent. Based on this discrepancy, I think we need to be careful when it comes to sustainability reporting.

                Of course, there’s also a significant trend away from diesel-powered machinery and towards electric models. Since electricity is a comparatively renewable resource, I think these efforts are significant, but there’s a lot more work to be done in making electric machinery more energy efficient, since energy costs can become very expensive. 

                Source: Pexels

                And finally, there’s policy and regulation. Until governments can implement stricter regulations and offer more incentives for green building practices, a lot of construction companies simply won’t comply. We need to make decarbonization efforts standard in the industry, and that will only happen as construction leaders partner up with regulators to help build policies and incentives that make sense and are actually effective at reducing emissions. 

                You recently launched the next edition of one of the biggest competitions for startups in the construction and cleantech industries – the Construction Startup Competition 2024. Would you please share what it is trying to achieve?

                  Historically, Construction Startup Competition has been a platform for startups from around the world to gain exposure, network with industry leaders, and secure investment and partnership opportunities. The competition has been going on for seven years already and has served as a launching pad for nearly 3,000 startups. 

                  The competition also demonstrates exactly what I was saying earlier: we need more collaboration in the construction industry if we want to meet those sustainability goals. So we’re hosting the Construction Startup Competition 2024 alongside some other top construction companies and VCs (Cemex Ventures, Caterpillar, Dysruptek by Haskell, Ferrovial, Hilti, VINCI Group’s Leonard, NOVA by Saint-Gobain, Trimble, and Zacua Ventures) to help foster innovation within the construction industry by working with new companies with groundbreaking ideas. 

                  The competition will showcase startups that can significantly impact the industry in areas like sustainability, efficiency, and productivity. The four themes we’re looking at are Green Construction, Enhanced Productivity, Construction Supply Chain, and Future of Construction. Contech, Cleantech, and Climatetech startups who want to “Build Something Bigger Together!” – the slogan of this year’s competition – can apply directly on our website: https://www.cemexventures.com/constructionstartupcompetition/ 

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