Case study: How Mercato Materials cut Scope 1 emissions by 40% in three years

Published with permission from Mercato Materials.

In late 2022, Mercato Materials — a 480-employee building-materials manufacturer with three plants in Southern Europe — set what was, at the time, an aggressive Scope 1 reduction target: a 40% absolute cut by end-of-2025, against a 2021 baseline.

Mercato hit the target in October 2025. They cut Scope 1 emissions from 78,400 tCO2e to 47,200 tCO2e. The work cost €4.2M in capital spend over three years and produced €1.9M of annual operating savings. The payback on the investment was just over two years.

We worked with Mercato across the engagement, from initial baselining to year-three review. Here's what actually drove the reduction, with the proportions clear-eyed rather than rounded for press.

Where the emissions came from

Mercato's Scope 1 in 2021 was dominated by three sources:

• Natural gas combustion for material drying and curing kilns (62%)
• Diesel for on-site material handling (forklifts, internal transport) (19%)
• Process emissions from raw material decomposition (17%)
• Other (vehicle fleet, refrigerants, etc.) (2%)

The natural gas and diesel sources were energy-intensity problems with mature technology solutions. The process emissions were harder — chemistry rather than energy. We addressed them in that order.

Phase 1: Natural gas (Years 1–3, biggest impact)

The kilns ran on natural gas because that's how they'd always run. The replacement: electric resistance heating for two of the three plants, electrified by the existing grid supply (gradually decarbonizing as Spain's grid mix improved). The third plant, in a region with weaker grid carbon intensity, was upgraded with high-efficiency gas burners and waste-heat recovery — a 35% efficiency improvement that bought time.

Capital cost: €2.8M across the three plants.

Annual operating savings: €1.4M (gas displaced at then-current prices; electricity costs varied by region).

Emissions impact: 19,300 tCO2e reduction (24.6% of baseline).

The math: electrification works at current EU energy prices when the kiln is replaced anyway, and the equipment was due for replacement on a normal lifecycle. We didn't ask Mercato to scrap working assets — we timed the transition with their existing replacement schedule.

Phase 2: Diesel handling (Year 2)

The forklift fleet was 31 units across three plants. We oversaw the transition to electric Class I and Class III lifts. Standard kit; nothing exotic.

Capital cost: €1.1M (lifts + charging infrastructure).

Annual operating savings: €380K (diesel + maintenance — electric lifts have fewer wear parts).

Emissions impact: 12,800 tCO2e reduction (16.3% of baseline).

Payback: 2.9 years on a 10-year asset life.

Phase 3: Process emissions (Year 3, partial)

Process emissions from raw material decomposition were harder. The chemistry is the chemistry. We identified one product line where a less carbon-intensive raw material substitute (a calcium-rich industrial byproduct from a nearby cement producer) could replace 22% of the primary input without changing product performance.

Capital cost: €310K (testing, certification, minor process changes).

Annual operating savings: actually positive — the substitute material was cheaper than the virgin input (€140K/year).

Emissions impact: 800 tCO2e (1.0% of baseline). Smaller in absolute terms but high-margin work.

What didn't work

Two initiatives that we proposed and that didn't pan out, in the interest of intellectual honesty:

Biogas substitution. We spent eight weeks evaluating biogas as a partial replacement for natural gas at the third plant. The local supply was insufficient and the price was 60% above natural gas. Killed.

Behavior-change programs for energy reduction. We piloted a plant-floor energy-savings campaign. Six weeks of measurement showed no statistically significant reduction. Pulled.

Sustainability work always includes the things that don't work. The companies that pretend otherwise are usually the ones overselling.

What the next three years look like

Mercato has set a follow-up target: another 35% reduction by 2028, this time against the new 2025 baseline. The remaining Scope 1 work is harder — the third plant still needs the full electrification path, process emissions remain mostly untouched, and the diesel work is done. The plan calls for:

• Full electrification of plant 3 kilns when the regional grid passes 65% renewable (currently forecasted 2027)
• Continued raw material substitution across two more product lines
• A green hydrogen pilot for the high-temperature curing process (technology-readiness contingent)

The target is plausible. It is not a sure thing. We'll write a follow-up post in 2028 with the actual numbers, including any miss.

What we'd say to a similar company

• Set the baseline carefully. Mercato's reduction looks better than it is because the 2021 baseline year had unusually high production. We disclosed this.
• Time investments with replacement cycles. Don't scrap working equipment for ESG reasons; replace it with cleaner equipment when it would have been replaced anyway.
• Sequence by economics first, then chemistry. Energy efficiency upgrades and electrification pay back in years; process chemistry takes a decade. Both matter, but the order matters too.
• Document the misses. The biogas evaluation and behavior-change pilot don't appear in Mercato's external reporting. They should. We'll be advocating for that in next year's disclosure.

If you're considering a similar engagement, we're available.