The Green Premium in Construction

Prepared by: Ruta Ozolina, Caitlin Fuge

As the construction industry faces growing pressure to reduce its carbon footprint, switching to sustainable materials often involves a financial tradeoff known as the green premium.

Our latest research explores the environmental and economic impact of using low-carbon alternatives for four high-emission materials: cement and concrete, steel, aluminum, and glass. While some alternatives like GGBS-blended concrete and recycled steel are already cost-competitive, others such as hydrogen-based steel or low-carbon glass can carry premiums of up to 40%.

In the Gulf region, this premium is shaped by energy costs, local production capacity, and policy. Long-term decarbonization will depend not only on material innovation but also on cleaner energy infrastructure and stronger regulations.

Key takeaways from the research:

• Cement and Concrete can be significantly decarbonized using industrial by-products like slag, with little or no cost increase.
• Steel from recycled sources shows negligible green premiums, but breakthrough technologies like hydrogen steel require investment.
• Aluminum’s green premium is largely driven by electricity source.
• Glass alternatives are promising but still face market and awareness challenges.

View the full report below for a deeper dive in pricing benchmarks and material specific insights.