There are about 2.8 million miles of roads in the United States, and 94% of that is made of asphalt.
The biggest player in this space is an Irish company, CRH, which made $10.2 billion paving roads in the United States and Canada in 2022. Federal legislation in the U.S., like the $1.2 trillion Infrastructure Investment and Jobs Act, is bringing about what might be a “golden age” for infrastructure, according to CRH’s chief operating officer, Randy Lake. That bill is set to boost federal funding for highways between 40% and 50%.
“The magnitude is what’s really significant here,” Lake said. “When we look at the magnitude of that opportunity, we’re encouraged, because I think we play in the markets where much of that dollar will flow.”
CRH’s business is heavily concentrated in the U.S. More than 60% of its total revenue in 2022 came from the U.S. and Canada. The $10.2 billion in road paving revenue it generated went to its Americas Road Solutions business, the largest road paver in North America. It has operations in 41 U.S. states and two Canadian provinces.
But there are some strings attached to additional federal dollars. More money is going to projects that prove they are better for the environment — like those that prioritize carbon emission reduction and recycling.
So companies such as CRH are adapting to become more eco-friendly. A variety of asphalt called “warm mix asphalt” can be made at lower temperatures and with lower carbon emissions. There’s also recycled asphalt pavement, which is exactly what it sounds like: pavement that has been scraped off a road, ground up and used again. It is typically mixed in with virgin pavement.
Industrywide, about 95% of the asphalt scraped off roads in America is recycled, but the recycled product often makes up only a small share of the final product on any given road.
Right now, CRH says about 25% of every mile of road it paves is recycled asphalt pavement, though there are some places where the share of recycled asphalt is much higher. That percentage is common in the industry.
Many of CRH’s customers — mostly state-level transportation agencies that own the lion’s share of the country’s highways — have been reluctant to buy pavement that includes more than about 20% to 25% recycled pavement.
The reason: When recycled pavement was first introduced, it had a tendency to degrade faster, simply because it was older.
The industry, represented by the National Asphalt Pavement Association, wants to raise the level of recycled asphalt in any given road to about 50% of the mix that is laid down. This will help meet federal sustainability targets while also saving money.
“It keeps the cost down in terms of the overall product for ourselves, but also more importantly for our customers,” Lake said. “That allows a state department of transportation to take on more projects than they would typically do because of that leading focus on sustainability and circularity.”
Source: Consumer News Business Channel