The European insulation material market is undergoing structural change. Tightened energy standards from the EU Building Directive EPBD, rising heating costs, and the climate goals of the Green Deal are fundamentally changing demand for insulation solutions. ISOVER (Saint-Gobain), a leading manufacturer of mineral wool, is experiencing increased demand for energy-efficient products. However, the boom is not creating only winners – it is shifting market shares, putting pressure on prices, and testing established supply chains.
Regulatory pressure as market driver
The revised EU Building Directive EPBD significantly tightens energy efficiency requirements for new and existing buildings. By 2030, all new buildings in the EU must be zero-emission buildings, and by 2050, the entire building stock should be climate-neutral. These requirements significantly increase the need for high-quality insulation materials. At the same time, rising energy prices are making investments in thermal insulation economically more attractive – amortization periods have halved in many cases.
For manufacturers like ISOVER, this initially means favorable market conditions. The company, part of the French building materials group Saint-Gobain, primarily produces glass wool and stone wool – materials that have been established in the market for decades due to their high insulation performance and non-combustible properties. However, increased demand is meeting a market that is diversifying technologically and ecologically.
Mineral wool versus bio-based alternatives: Shifting market shares
The dominance of mineral wool in the European insulation material market is undisputed. Around 60 percent of the volume is accounted for by glass and stone wool, produced by manufacturers such as ISOVER, ROCKWOOL, and Knauf. The advantages are clear: proven processing, good fire protection properties, acceptable insulation values, and established approvals. In addition, major manufacturers are investing heavily in reducing the carbon footprint of their production – for example, through the use of recycled glass or electric melting furnaces.
However, the Green Deal focuses not only on operational energy efficiency, but increasingly on the embodied energy and circularity of building materials. This is where bio-based insulation materials such as wood fiber insulation, hemp, flax, or cellulose score points. Manufacturers such as STEICO are recording double-digit growth rates, even though absolute volumes still lag significantly behind mineral wool. Their advantage: considerably lower CO₂ emissions in manufacturing, CO₂ storage in the material, and complete compostability at end of life.
The European Commission is promoting this development through the Taxonomy Regulation and the planned revision of the Construction Products Regulation, which could make environmental product declarations mandatory in the future. For mineral wool manufacturers, this means: They must not only meet demand but also improve their environmental balance sheets simultaneously to avoid falling behind regulatorily and in competition for public contracts.
Price development: Energy costs versus economies of scale
The production of mineral wool is energy-intensive. Glass or stone is melted at temperatures above 1,400 degrees Celsius and spun into fibers. Energy costs account for 15 to 25 percent of production costs depending on location. The energy crisis of 2022/23 therefore hit European insulation material manufacturers hard – mineral wool prices temporarily rose by 30 to 40 percent.
Energy prices have since normalized, but remain significantly above pre-crisis levels. Manufacturers are responding with process optimization, switching to renewable energy sources, and long-term power purchase agreements. ISOVER, for example, has switched to renewable energy at several European locations and is investing in waste heat recovery. However, price sensitivity remains high – particularly in the price-driven segment of thermal insulation composite systems (ETICS), where mineral wool competes with EPS (polystyrene).
EPS insulation materials are less energy-intensive to manufacture and accordingly cheaper. However, they are combustible, fossil-based, and harder to recycle – three disadvantages that are increasingly weighing against them under the new framework conditions. Initial projects for chemical recovery of EPS are underway, such as at Austrotherm, which has commissioned a recycling facility for XPS insulation boards. However, scaling is still pending.
Supply chains and capacity bottlenecks
Rising demand is meeting a production network that has undergone little expansion in recent years. Many European insulation material plants are already operating near full capacity. However, new capacity requires high investments and long planning horizons – a mineral wool plant costs several hundred million euros and takes three to five years from planning to commissioning.
There are also bottlenecks in precursors. Phenolic resin-based binders used in mineral wool production were sometimes in short supply. The availability of scrap glass, which is increasingly being used as a raw material, also fluctuates regionally. Major manufacturers are responding with vertical integration and long-term supply contracts; smaller suppliers are coming under pressure.
The situation is different for bio-based insulation materials. The raw materials – wood, hemp, flax – are fundamentally available, but the production facilities are considerably smaller and designed for lower volumes. Capacity expansions are more cost-effective here, but scalability remains a challenge. Moreover, manufacturers compete with other industries for the same raw materials, such as the wood composite industry.
Winners and losers in market change
In the short term, large, integrated mineral wool manufacturers benefit most from the demand boom. They have the capacity, distribution networks, and technical expertise to meet tightened requirements. Saint-Gobain as the parent company of ISOVER has the additional advantage of having a broad portfolio of building materials – from gypsum board to mortar to facade systems. This systems expertise is becoming increasingly important in the context of holistic building concepts.
However, in the medium term, bio-based manufacturers could gain market share, particularly in ecologically oriented new construction and public projects that apply stricter sustainability criteria. The regulatory trend is clearly moving toward life cycle assessment and circularity – issues that are also in focus in the DGNB study on climate-friendly building.
Losers could be EPS manufacturers if they do not invest in recycling and bio-based alternatives. Smaller, regionally based mineral wool producers without their own energy supply or access to cheap scrap glass are also under margin pressure. Consolidation in the European insulation material market is likely to continue.
Standards and approvals as a competitive factor
The technical equivalence of insulation materials is regulated through European standards and national approvals. Here, established materials such as mineral wool have an advantage: they are approved for building construction in all common applications, processors know them, planners can draw on decades of experience data.
Bio-based insulation materials must first build this foundation of trust. While there are now comprehensive approvals for wood fiber insulation, hemp, or cellulose, reservations – for example regarding fire protection or moisture resistance – persist. Standards are sometimes lagging behind market development. New requirements, such as for deconstruction or recycled content, still need to be translated into standards.
For manufacturers, this means: Investments in research, testing, and lobbying are necessary to secure regulatory acceptance. Large corporations like Saint-Gobain are at an advantage here – they can afford the necessary resources and have access to standards committees.
Outlook: A fragmented market with new rules
The insulation material market will continue to differentiate in the coming years. Mineral wool will remain the backbone of European insulation supply, but must improve ecologically. Bio-based alternatives will occupy niches and gain market share in certain segments – ecological timber construction, protected monument renovation, public buildings. EPS will come under pressure but can remain relevant through recycling and technical advancement.
What will be decisive is how quickly manufacturers adapt their business models to the new framework conditions. Circularity, CO₂ transparency, and systems solutions will become central competitive factors. The former market leaders have better cards – but only if they actively shape the transformation instead of clinging to existing structures.
For purchasers and planners, the change means: Material selection becomes more complex, but also more differentiated. Anyone who today looks only at the price per square meter overlooks tomorrow's regulatory risks. Life cycle costs, environmental impact assessments, and deconstruction potential must be factored into the decision – even if the data situation is still incomplete. The market is resorting itself, and those who recognize the signals early can secure competitive advantages.
