With the construction business in the United States slowing down considerably, startups that are developing environmentally friendly building materials might have to look outside of the country for market opportunities.

The sagging U.S. economy and credit crunch have caused no small amount of heartburns for housing and commercial building developers. The value of new construction projects in the country is expected to plummet from 12 percent in 2008 to 7 percent in 2009 to $515 billion, said a recent report by McGraw-Hill Construction, a news and research firm tracking the construction industry.

In September, the rate of new private home construction fell 31.1 percent below the housing start rate in September 2007, according to the U.S. Department of Commerce.

In light of the dim outlook, Marianne Wu, a partner at Mohr Davidow Ventures in Silicon Valley, said startups working on green construction materials should explore markets abroad, such as Saudi Arabia and China. Wu spoke on a green-building panel at a Tuesday conference organized by law firm Cooley Godward Kronish in Redwood City, Calif.

"When it comes to industrial tech, it has worldwide applications. You need countries in infrastructure-building stages," Wu said.

Mohr Davidow has invested in Carlstadt, N.J.-based Hycrete, who has added waterproofing and rebar corrosion protection into concrete. The startup has won a $1 million contract for a new building in Mumbai, India (see Green Buildings: No Subsidies Needed?).

Wu pointed out that the ambitious plans by several states of the United Arab Emirates, such as Abu Dhabi, to build massive high-tech parks and residential communities are markets that green-building startups should investigate (see Masdar Breaks Ground on $230M Solar Factory).

China, too, presents an attractive market. Tom Pounds, a fellow panelist and COO of CalStar Cement, marveled at the breakneck pace at which China has planned cities to accommodate its booming manufacturing sector and migrant workers from the countryside. He said 15 percent of the energy used in China every year goes to making cement alone.

"Over the next 10 or 20 years, China plans to build an urban infrastructure that is equivalent to the United States' by moving 300 million people to cities that [don't] yet exist," Pounds said. "If those structures aren't as energy efficient as they can be, then China will face a huge energy crisis in the foreseeable future."

China, in fact, developed a set of energy-saving standards for the cement industry last year. The country also has stricter tailpipe emissions rules than the United States, as well as laws in place to regulate other types of emissions, Wu said. But lax enforcement has rendered these laws ineffective.

As alluring as China is, Pounds said, CalStar Cement will focus on the U.S. market for now. The startup, based in Newark, Calif., plans to launch its first product next year, but if you were expecting the company to offer cement, hold onto your hat. CalStar will instead offer "green" bricks, given that "the adoption curve for new cement will take too long for a venture-backed company," he said (see Here Comes the Green Brick).

CalStar, which has raised $19 million in two rounds, plans to use fly ash to make the bricks, the startup's CEO Marc Porat told TechPulse360 last month. Fly ash bricks will be 10 times less polluting to produce than conventional bricks, Porat said. Ultimately, the company does plan to introduce cement made with fly ash.

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