Carbon Direct and Microsoft establish criteria for high-quality environmental attribute certificates in the concrete and steel sectors
10 min. read
Last updated May 22, 2025
Key takeaways
Concrete and steel contribute 13% of global CO2 emissions. These materials represent substantial scope 3 emissions for companies that are building new infrastructure, including data centers.
Low-emission alternatives and production technologies are nascent and not yet widely deployed.
Environmental attribute certificates (EACs) are an innovative solution that can stimulate manufacturing of sustainable commodity materials and overcome market barriers to direct physical procurement.
Carbon Direct and Microsoft developed criteria to guide Microsoft’s high-quality EAC procurement, accelerate decarbonization, and catalyze market expansion for decarbonized materials across supply chains. These criteria cover seven key areas: qualifying conditions, social harms and benefits, environmental harms and benefits, additionality and baselines, catalytic impact, verifiability, and leakage.
A vision for low-carbon concrete and steel
Concrete and steel are essential for modern construction, but carbon intensive. Combined, they account for approximately 13% of global carbon dioxide (CO2) emissions. As the demand for data centers and infrastructure development continues to grow, so do the embodied emissions from concrete and steel. There is an urgent need to decarbonize these sectors so that construction of new facilities remains consistent with climate commitments.
However, the markets for low-carbon concrete and steel are still in their infancy. Market barriers such as low production volumes, contracting complexity, geographic concentration of supplies, and long-distance transportation limit buyers’ ability to directly procure low-carbon building materials. As buyers and sellers overcome these barriers, the market for low-carbon building materials will mature, giving producers the confidence to invest in new manufacturing facilities, and giving buyers access to decarbonized materials directly in their supply chain.
EACs represent the sustainability attributes of a material commodity, unbundled and transacted separately from the physical commodity. EACs are transacted at a price that reflects the additional cost of sustainably producing the material. While barriers to direct procurement of low-carbon materials persist, environmental attribute certificates (EACs) can serve as a powerful tool to signal demand for low-carbon concrete and steel, catalyze market expansion, and accelerate decarbonization.
Microsoft’s approach to emissions from building materials
To address embodied emissions and help achieve its ambitious 2030 carbon-negative goal, Microsoft aims to deeply reduce its scope 3 emissions, including from building materials, by more than half compared to a 2020 baseline. In 2023, scope 3 emissions made up over 96% of Microsoft’s total greenhouse gas footprint. To meet its 2030 target, Microsoft is focusing on addressing supply-chain emissions related to data center construction and the embodied carbon of the commodity materials used to build them. Microsoft is already working to decarbonize its building material supply chain using the following three tactics:
Reduce the need for concrete and steel through innovative building design or the use of lower-carbon alternatives, such as sustainably sourced mass timber.
Directly engage with suppliers to procure low-carbon alternatives to conventional concrete and steel.
Invest in and help pilot new low-carbon production pathways.
EACs represent a fourth approach to decarbonization that can both reduce emissions and catalyze industry growth. Taken together with Microsoft’s design, procurement, and investment tactics, these actions underpin a comprehensive strategy for long-term decarbonization of the built environment.
High-quality EACs support decarbonization
EACs offer a virtual, market-driven solution to decarbonize the built environment by allowing companies to support low-carbon material production when physical supply chain barriers impede direct procurement. EACs for concrete and steel function similarly to other market-based decarbonization mechanisms such as sustainable aviation fuel certificates (SAF credits) in the aviation sector and renewable energy certificates (RECs) in the energy sector.
These mechanisms work by decoupling the environmental benefits of low-carbon production from the physical materials themselves. EACs allow companies to claim the environmental benefits of physical low-carbon concrete or steel production, even if they do not directly or physically source those materials. EACs provide a verified claim that a purchaser has procured a product with lower emissions, enabling companies to meet climate targets and demonstrate their commitment to sustainability.
Due to their virtual nature, which limits physical oversight of the supply chain, EACs also exacerbate risks such as double counting, greenwashing, fraud, social harms, and environmental harms. Therefore, adhering to transparent, rigorous criteria is foundational to mitigating these risks.
New criteria to guide procurement of high-quality EACs
To support the integrity and effectiveness of EACs in these sectors, Carbon Direct and Microsoft have co-developed Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors. These robust criteria serve as a public resource for companies seeking credible and impactful EAC procurement pathways for low-carbon concrete and steel.
The criteria address seven key areas:
Qualifying conditions: EACs must complement, not displace, direct procurement and represent significant emissions reductions.
Social harms and benefits: EACs must not further social harms and should promote community engagement and social benefits such as meaningful workforce development opportunities and community climate resilience.
Environmental harms and benefits: EACs must not perpetuate environmental harm, but instead should mitigate risks and, ideally, provide additional environmental benefits.
Additionality and baselines: Projects funded by EACs must drive real, meaningful emissions reductions in terms of financial, regulatory, and common practice additionality.
Catalytic impact: Prioritize transformative technologies with sector-wide decarbonization potential.
Verifiability: Set a high bar for documentation, transparency, and independent auditing.
Leakage: Address risks of emissions displacement to support net-positive outcomes.
These criteria provide a robust framework for companies and stakeholders to evaluate and implement commodity EACs effectively, supporting impactful change. They balance rigor with flexibility and acknowledge the nascent state of the markets for low-carbon concrete and steel. Sectoral decarbonization will advance over time, shifting the thresholds for what is considered significant, additional, and catalytic in EAC transactions. This science-driven framework can adapt to advancements in policy, industry practices, and technological readiness, ensuring EACs remain a relevant and impactful tool for years to come.
Sector-specific insights
In addition to providing overarching criteria and guidance on procuring EACs for the built environment, Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors also provides insights into the unique challenges and opportunities of decarbonizing concrete and steel.
Decarbonizing concrete
EACs can support innovative decarbonization strategies for concrete, such as producing alternatives to clinker and cement, adopting supplementary cementitious materials (SCMs), and reducing emissions from cement kilns through electrification or integrating carbon capture and storage (CCS). Performance-based standards and evolving building codes may also unlock new opportunities for low-carbon concrete.
The Global Cement and Concrete Association (GCCA) publishes a rating system, Low Carbon Concrete (or Cement) Ratings, which defines eight separate low-carbon grades (AA through G). These grades correspond to the depth of decarbonization and are based on a sliding scale related to the material’s compressive strength. Microsoft currently considers grades AA through D to be eligible for consideration in its EAC procurements.
Decarbonizing steel
EACs can support transformative technologies for decarbonizing steel, like direct reduced iron (DRI) with electric arc furnaces (EAF) powered by green or blue hydrogen. This support can enable the steel sector to move beyond incremental improvements and focus on capital-intensive solutions that have the potential to reshape the industry.
ResponsibleSteel, an independent standards and certification organization with membership that is broadly representative of the steel industry, publishes decarbonization progress levels, with four separate grades (PL1–PL4). These grades correspond to the depth of decarbonization and are based on a sliding scale related to the fraction of recycled scrap use in the steel manufacturing process. Microsoft currently includes levels PL2 through PL4 for consideration in its EAC procurements.
A blueprint for EAC market development
Carbon Direct and Microsoft crafted Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors as a public resource that can help shape the future of the commodity EAC market.
These criteria are designed to:
Communicate intent: Communicate Microsoft's intent to support the decarbonization and scaling of physical commodity supply chains where they have been previously limited.
Guide decision-making: Serve as a public guide for Microsoft's decision-making process, explaining the rationale behind pursuing or declining specific EAC pathways.
Set high-integrity standards: Maintain high integrity for EACs at an early stage, ensuring they are used to enable future physical procurement by supporting market development.
Stimulate partnership opportunities: Encourage potential partnerships and purchasing pipelines by clearly describing criteria for high-quality EACs.
Public sharing of detailed thinking: Build on previous work and publicly share detailed thinking, aiming to stimulate market development and guide procurement decisions.
Practical recommendations for implementing EACs
Whether you are a supplier, buyer, policymaker, or sustainability advocate, these new criteria offer actionable insights to help you navigate the complexities of EACs in the built environment. From setting significance thresholds to ensuring verifiability to avoiding double counting, the criteria provide clear guidance to maximize the impact of EAC-supported projects.
Beyond the technical aspects of EACs, these criteria aim to address their broader social and environmental implications. The criteria focus on the importance of community engagement, transparency, and equitable distribution of benefits in EAC project planning, ensuring that decarbonization efforts contribute to a more sustainable and just economy. The criteria are backed by extensive research, stakeholder consultations, and industry expertise.
Gain a deeper understanding of how EACs can help overcome barriers to direct procurement of building materials, mobilize financial resources, decarbonize scope 3 emissions from construction, and accelerate the transition to a low-carbon economy.
Acknowledgments
Meera Atreya, John Dees, David Madrid Garcia, Katherine Gomes, Grant Gutierrez, and A.J. Simon authored the Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors. We appreciate Julio Friedmann and Colin McCormick for their valuable technical insights. Adrianna Sutton, Molly Tucker, and Britt Warthen provided essential editorial and production support.
We are especially grateful to Julia Fidler and Brian Sifton at Microsoft for commissioning this report, providing detailed input, and engaging deeply with the Carbon Direct Science Team every step along the way. Special thanks to Katie Ross at Microsoft, whose leadership and coordination made the report possible.
We also extend our appreciation to the teams at RMI and Environmental Resources Management for their time, thoughtful feedback, and prior publications, which helped inform and complement this work.
