Cement industry counts its carbon

In the cement industry, all the numbers are staggering - particularly emissions, which are worse than in aviation. Mike Scott reports on a huge sustainability initiative, and its impact on the developing world

Cement is the glue that holds together much of the modern world's infrastructure. The industry produces 1.5B tonnes of cement a year, which goes into everything from roads to hospitals, schools to dams and water treatment plants. It is such a key ingredient for economic development that consumption can be seen as a rough proxy for economic growth - sales of cement in developing countries generally run at about twice the rate of economic growth as basic infrastructure is built.

Unlike many other products, the North American and European markets are relative minnows, accounting for just 10% of global cement production each - the real engine of growth is emerging markets, responsible for the other 80% of demand, with half of the world's entire cement consumption coming from China.

Fossil fuels
But the sector has a serious emissions problem - cement production is responsible for 5% of global CO2 emissions. For every tonne of cement produced, about a tonne of CO2 is emitted, according to the World Business Council for Sustainable Development (WBCSD). Not only do you need to heat a kiln to almost 1,500ºC, which invariably involves the use of fossil fuels, but that is not even the most carbon-intensive part of the process. The key ingredient of cement is limestone, which is passed through the kiln with the express intention of removing all the CO2 from it to make clinker - the main ingredient of cement.

Cement is not a product that lends itself well to global trade - it is so heavy that transporting it any distance massively increases costs, particularly at current fuel prices. Cement production plants also need to be located near to a steady supply of limestone - which is also heavy and not easily transported, as well as central to the process. This means it will remain a locally produced product subject to local emissions standards and controls.

In Europe, cement companies are subject to the EU's Emissions Trading Scheme, whereby companies receive a certain amount of allowances and have to buy allowances if their emissions exceed their targets, which become more stringent over time. This encourages participants to take steps to cut their emissions both to meet their targets and to generate a profit by selling their surplus allowances. Such restrictions do not exist in other markets, so environmental considerations do not have such a high priority. Cement production in China, for example, relies a great deal on vertical shaft kilns, which are cheaper than more modern rotary kilns but are considered obsolete in many other markets because they use 15-20% more coal per tonne of clinker produced than rotary kilns, according to the Financial Times.

A group of cement companies saw the way the wind was blowing back in 2002 and set up the Cement Sustainability Initiative (CSI), under the auspices of the WBCSD. Its 18 members account for 28% of cement production, including some of the industry's biggest names such as Lafarge, Holcim, Heidelberg and Cemex.

Sustainability plans
For the cement companies, the impetus for taking action is obvious. The nature of the manufacturing process made it inevitable that there would be a focus on reducing the industry's impacts, so it made sense to start thinking about how to make the transition less painful, as well as how to cut the industry's fuel costs. The result is one of the largest global sustainability plans ever undertaken by a single sector.

Progress has been mixed, it is fair to say. While average emissions of CO2 per tonne of cement (emissions intensity) have fallen, from 760kg/tonne in 1990 to 670kg in 2007 - for CSI members - even the members of an initiative designed to cut emissions have seen their absolute emissions rise from less than 350M tonnes in 1990 to 447M tonnes in 2005 because of the huge growth in demand for cement driven by surging economic growth in the developing world.

Another problem is the limited reach of the CSI - while it covers the majority of production in the EU, North America, Latin America and India, coverage in the former Soviet Union is less than 20%, in Asia only a tenth of production is covered and the proportion of Chinese output is around 5% - a glaring gap given the size of the Chinese market. But the CSI has moved forward - it developed a CO2 measuring and reporting protocol that is now being used by 80% of the world's cement industry - while CSI members' data must be independently verified, as of 2007. Meanwhile, the CSI has recently completed compiling the first database of CO2 emissions from over 700 cement kilns that will help the industry and policy makers to work out the best kiln technology and type of fuel for cutting emissions.

Companies have taken measures to cut fuel use. These include the use of wind power or burning coffee husks in kilns instead of fossil fuel, by French company Lafarge. And Thai group Siam Cement generates electricity using excess steam from the cement production process. This cuts its power bills, fossil fuel use and its emissions. Other materials burnt include household waste, used tyres, rice and palm oil husks, plastic, paper and textiles.

The CSI itself admits that it needs to reach out more to developing countries, particularly China. But it thinks its own experience offers a possible basis for sectoral approaches to tackling emissions in industries like steel and aluminium. "With 80% of the industry using the common CO2 Protocol, we are close to having everyone talking the same language on emissions," says Bruno Lafont, chairman and CEO of Lafarge, who is currently co-chairman of the initiative.

The CSI and the WBCSD pushed the sectoral approach at the recent G8 meeting in Japan. Bjorn Stigson, WBCSD president, says it offers a number of benefits. "It offers a way of mobilising emerging economies in CO2 mitigation, which is important when we consider that 80% of emissions in the cement sector come from developing regions. Sectoral approaches also enable a small number of key players, or indeed countries, to become engaged quickly."

The G8 hosts are also pushing sectoral schemes, and the idea has been met with a cautious welcome from both China and the UK. Companies in the EU like the idea because it deals with the problem of carbon leakage. This means businesses subject to stringent legislation such as the EU Emissions Trading Scheme are at a competitive disadvantage to countries with fewer restrictions unless they move to those lower-regulation countries.

Technology transfer
The bottom-up approach also has attractions for some developing country governments. They are reluctant to accept binding targets being imposed at a national level but would find it politically more acceptable to see certain sectors subject to targets as part of a global industry scheme. It could also encourage technology transfer from developed countries to emerging markets. The EU is reluctant to endorse any approach that diverts from national targets as embodied in its ETS and its 2020 targets to increase the use of renewables and improve energy efficiency by 2020. And some countries, such as India, fear that this is just an attempt to introduce targets by the back door.

But the EU is coming round to the idea that the sectoral approach may have a role to play. "The bottom-up approach proposed by Japan is useful to identify the technically possible mitigation potential based on aggregated sectoral reduction amounts," said EU Commission President José Manuel Barroso in a joint statement with Japanese prime minister Yasuo Fukuda. "This is a constructive contribution to setting cost-efficient, fair and equitable targets."

The sectoral approach should not be an alternative to national and international action, said Stigson. "While discussions are under way to reach a global climate agreement, complementary sectoral approaches could be put into place under which key industry players could work together to accelerate CO2 reductions."

For the industry, the biggest impact of the CSI may have been in terms of public perception. A number of other industries with fewer emissions, such as aviation, have come in for fierce criticism. Yet the cement industry has been able to point to the CSI and say, as Lafont did recently: "We have not waited for governments to introduce regulations - companies have agreed voluntary targets that have led to measurable reductions in CO2 intensity."

Looking forward, the CSI is working on a standard methodology for cement industry Clean Development Mechanism projects, which would speed the adoption of carbon-cutting measures in emerging markets if approved. It is also looking at ways to recycle concrete and using its technical expertise and policy experience to help address sustainability concerns in emerging economies, particularly in China and India.

Although Chinese companies are under-represented in the CSI's membership, there is a strong dialogue between the initiative and the Chinese industry, Stigson said. "There is a regular dialogue and there is no contradiction between where we are going and what China is doing," he added.

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