CO2 Storage in Construction: Uncomfortable Truths That Investors Consistently Ignore—and Why Real Returns Will Remain an Illusion Without Clear Regulation

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For years, we have been working to design buildings that, on the one hand, generate minimal embodied energy (CO₂ emissions) and, on the other hand, remove CO₂ from the atmosphere over the long term. This is the only way the construction industry can make a significant contribution to combating climate change. Unfortunately, we often encounter a lack of interest among investors. Today, we analyze why this is the case and provide a brief, fact-based overview of CO₂ storage in the building sector. We explain why the technologies and capacity already exist, but the necessary transformation is not being driven by the market itself.

Let’s start with a quote from the founder of Openly:

“Buildingsas a Carbon Sink — Why Real Estate Investors Won’t Take the Lead: Expecting investors to voluntarily prioritize carbon sinks (or carbon avoidance) over returns is naive.”
- Andy Keel
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1. Structural barriers instead of moral appeals

The assumption that investors would voluntarily choose CO₂ sinks over returns is unrealistic. The physical storage of CO₂—whether underground or in buildings—is technically feasible and scalable. Nevertheless, the real estate industry focuses on traditional metrics such as development margin, rental income, exit valuation, and IRR (internal rate of return) over a five- to ten-year period. Stored CO₂ does not influence rent, cap rates, or exit multiples; rather, it entails additional costs and complexity. The typical holding period for real estate is usually shorter than the storage horizon. This is not a moral failure, but a structural problem: as long as stored CO₂ has no monetary value, it is not factored into investment decisions. Change can only be achieved through regulation—for example, via CO₂ pricing, verified storage, adapted building codes, or targeted subsidies.

2. Scientific Evidence: Three Studies, a Clear Picture

Three recent peer-reviewed studies provide the key facts:

  • The review article “How can carbon be stored in the built environment?” (Kuittinen et al., 2023) and the Nature study “Buildings as a global carbon sink” (Churkina et al., 2020) demonstrate: Biogenic building materials such as wood, straw, hemp, biochar, and carbonated concrete can store 109–300 kg of CO₂ per square meter. The global potential is enormous and immediately scalable—a genuine alternative to underground storage.

  • The meta-study “Reviewing the 95 sociotechnical barriers to the decarbonization of buildings” (Heinz et al., Nature Communications 2025) analyzes 95 barriers worldwide. The result: Economic hurdles such as high initial investments, uncertain return on investment, and long payback periods dominate. Long-term co-benefits such as CO₂ storage are systematically ignored due to their short duration and lack of market value.

  • All three studies emphasize that without regulatory incentives—such as carbon pricing, incentives for verified long-term storage, new building codes, and targeted subsidies—carbon storage will remain a niche solution.

3. Our conclusion: Regulatory action must and will come

The scientific evidence is clear. The technology and potential for CO₂ storage in buildings are already available. What is needed now is a clear regulatory framework to ensure that sustainable construction becomes the norm.

Over the next few years, the EU will consistently implement regulatory measures to ensure that buildings serve as carbon sinks—exactly as investor logic dictates: By May 29, 2026, member states must transpose the revised Energy Performance of Buildings Directive (EPBD) into national law; Starting in 2028 (large new buildings) and 2030 (all new buildings), the calculation and disclosure of whole-life carbon emissions (including embodied carbon and CO₂ storage capacity) will be mandatory in energy performance certificates—and will be directly linked to the Carbon Removal Certification Framework (CRCF). Its methodology for “carbon storage in bio-based construction products” (wood, straw, biochar, etc.) is expected in 2026 (Q4), making certified long-term storage tradable and giving it real market value for the first time.

The CO₂ pricing mechanism for buildings via ETS2 will take effect in 2028. ETS2 is the regulatory tool that, while it does not (yet) directly reward stored CO₂, finally imposes financial penalties on operational emissions from buildings—thereby breaking precisely the short-term return logic we have described. Starting in 2028, CO₂ will no longer be a “nice-to-have” on heating bills, but a hard cash flow factor.

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