A Better Foundation: Addressing Consolidation in the Cement and Concrete Industries to Secure Low-Carbon Alternatives
By Krista Brown, Kalen Pruss
The cement and concrete industries in the United States are dominated by large incumbents. Due both to the dearth of competition and to inertia among government agencies, these incumbents receive the bulk of public procurement contracts. Dominant firms also lead an ecosystem of engineers and construction professionals in the standard-setting process. Both the procurement and standard-setting processes are key bottlenecks slowing the decarbonization of cement and concrete.
Though most cement incumbents acknowledge the need to reduce emissions, the consolidated nature of the industry minimizes their incentive to innovate. Thus, dominant firms’ investments amount to procrastination: they are focused on demonstrating the potential of low-carbon technologies but not on commercializing and deploying them.
Despite the consolidated nature of the cement and concrete industries, new firms have emerged. Capital is flowing to these entrants from dominant cement companies, as well as from energy and technology monopolies. While capital investment is a hopeful sign of the potential of low-carbon cements and concretes, there are also signs that dominant firms are acquiring or investing in smaller, cleaner companies merely to thwart them or to lock up intellectual property. Antitrust enforcers and procurement officers should scrutinize future mergers and contracting among dominant firms to ensure they do not engage in “killer acquisitions” or consolidate intellectual property without deploying it.
Policymakers should also make efforts to build a stronger and more competitive cement and concrete market. This can be accomplished by updating procurement criteria to incentivize and preference low-carbon cements and concretes, and to encourage performance-based standards.