Green Building Materials Market to Jump to $571B by 2013

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Cement and lumber will never be as sexy as an electric sports car, but there are still plenty of business opportunities in developing innovative materials for the growing green building market. A report published this week by NextGen Research estimates the global green building materials market will grow about 5 percent per year to reach $571 billion by 2013, up from about $455 billion last year. The sweet spots in this growth are cement, engineered wood and insulation products.

“This is the way the market is going,” said Larry Fisher, research director for NextGen. “Increasingly when people are forced to make a choice on which building materials to use, they are going toward the more environmentally responsible approach.”

The study assessed the worldwide outlook for the use of greener building products, which the report defined as those having less of an environmental impact than standard building materials. Fisher said the drivers behind the trend were many: shifting attitudes among builders and consumers, government mandates, and the higher prices that green buildings often fetch on the market. The study didn’t look at the prices for green materials relative to their conventional competitors. But Fisher said he believes the cost savings — from recycling waste materials or using less energy-intensive manufacturing processes — in making greener products will often offset higher costs elsewhere in their production.

Cement is a good example. Chemical reactions during its creation emit large amounts of CO2, and energy is needed to heat and dry its constituent products.  Many cement manufacturers still rely on coal-fired kilns, and for every ton of cement made, about a ton of CO2 is released. Fisher said that’s led an increasing number of manufacturers to embrace the practices recommended by the Cement Sustainability Initiative, which, among other things, outlines ways for cement makers to reduce their carbon footprints. But Fisher said established cement makers currently aren’t focused on developing new products to replace conventional cement. Instead, they are searching for ways to reduce the energy intensity of their manufacturing processes and adopting cleaner sources of energy.

A handful of startups, however, are working on significantly different products and processes for replacing conventional cement. One is Los Gatos, Calif.-based Calera, which is developing a way to create some of the main ingredients of cement from CO2, effectively sequestering it into their products. The Khosla Ventures-backed company estimates its cement will retail for about $100 per ton versus about $110 per ton for conventional cement. Another is the relatively stealthy Newark, Calif.-based CalStar Cement, which is backed by Foundation Capital and is developing a process for using industrial by-products to make a cement replacement.

As governments increasingly place limits and prices on carbon emissions, the old guard may stop just tinkering with its manufacturing processes and start looking more seriously at innovative ways to produce cement. Cement manufacturers reportedly have already invested millions of dollars in green programs, like the Cement Sustainability Initiative.

The NextGen report found that commercial office buildings, new residential buildings and home improvements will likely present the biggest opportunities in green building products. Fisher expects green materials to take an especially strong hold in commercial and residential rebuilds and retrofits.

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