Cement Industry Struggles to Adapt to Low-Carbon Diet: Q&A

By Richard Stubbe, BloombergNEF. This article first appeared on the Bloomberg Terminal.

Decarbonization hasn’t been easy for the cement industry.

The sector, which produces about 4 billion metric tons of the world’s most common building material every year, also puts almost 4 billion metric tons of carbon dioxide into the atmosphere, or about 7% of the world’s total. About half of the emissions come when the base materials in cement — primarily limestone — break down in the superheated kilns that are used to make clinker, which is then crushed to make cement.

“That’s the toughest part to abate,” Ian Riley, chief executive officer of the World Cement Association, said in an interview with BloombergNEF. “Even if you had perfect energy efficiency and all renewable energy, you’d still have that.”

And yet the industry is under growing pressure to find lower-carbon solutions. Major investing groups are demanding that top cement makers cut their emissions. Europe and China have taken different tacks to coax changes out of the industry, which still uses the same basic process invented almost 200 years ago to make the most common building material in the world.

Riley, a 15-year veteran of the industry who took his post in September, answered questions from BNEF in a December phone interview.

Q: The World Cement Organization is relatively new, having begun in 2016. What are its goals?

A: We’re trying to provide some practical sharing of best practices across different countries and help our members to understand what they can do to reduce their carbon footprint — what technologies are available, what makes sense for them economically given their particular situations.

Q: What’s the industry snapshot on carbon emissions?

A: The industry is responsible for about 7% of greenhouse gas emissions. About 60% of that comes from the raw materials — you put the limestone in the kiln and it breaks down into calcium oxide and carbon dioxide.

About 30% is fuel-related, meaning what’s used to operate the kiln. This is typically coal. There’s been a movement over 20-plus years to use waste as a fuel for cement kilns. This can reduce the amount of coal that’s used and help dispose of difficult-to-handle wastes.

The last 10% is power. The challenge there is essentially the same as everybody else’s challenge.

Q: What will it take to make progress on cutting emissions?

Cost and carbon footprint have gone hand in hand. This gets us to the question of incentives. Companies will only do this if it makes sense to them economically. The Chinese approach has involved mandates; the Europeans have tried a carbon-trading scheme that hasn’t been very successful. The cement industry made hundreds of millions of dollars out of the European carbon trading scheme, but not in the way the organizers had in mind.

Q: How did that happen?

A: It was before the recession, and the trading system didn’t consider that demand for cement would go down. They offered free tradable credits to emitters, who were able to keep getting their whole quota as long as they were operating at 51% capacity. Everyone was running their plants at or near that level, when it would have been more efficient to shut down some of the plants and run the most efficient plants flat-out.

Q: What else has been tried?

A: The Chinese still haven’t implemented a nationwide system because they’re not confident they can implement a system that will achieve the goals. The approach the Chinese have taken is a practical one. They’ve introduced standards for energy usage. Initially there were no penalties for not complying with the standard, and then there was a modest penalty, and two or three years ago, if you couldn’t comply with the standard, you shut down.

They also mandated waste-heat-power generation. Now, with a few exceptions and special cases, all of the Chinese plants have waste-heat power generation, but outside of China I’d guess it’s less than 20% that have it.

Q: What incentives do cement makers need to decarbonize?

A: In some countries, it’s really just a question of companies doing the analysis and realizing the return that they get is reasonable. Maybe in some countries, just public opinion would be enough. In the U.S., power costs are relatively low, so probably more incentives will be needed.

Q: Cement plants have rather long lives. What do you do about that?

A: This is a really big issue for developed countries. The average performance of cement plants in Europe and North America is a lot worse than best practices because of the age, primarily. Most of the plants in Europe and North America would not be allowed to operate in China.

Q: What would you do with a magic wand to reduce the environmental impact of the industry?

A: One issue is fuel efficiency. Another is what kind of fuel you use. If you’re using waste, you can argue that the waste has to be disposed of, and that you’re providing society with a service. That use of alternative fuels started 20 years ago, and the cement companies are making progress on using more. They’re typically between 20% and 25%.

Q: Clinker calcination is the biggest part of the equation. How do you deal with that?

A: The traditional way to approach this is to try to reduce the clinker factor. It’s not at all clear that reducing clinker factor gives you what you really want at the end of the day, which is less clinker use.
Cement is a raw material and concrete is the product, but what people want is not concrete. They want a living space or tunnels or bridges. So we have to determine whether we’re actually using less clinker when it comes to building a bridge. Maybe, but often not. Recent studies have shown that by using high-strength concrete, you can reduce the amount of concrete in a particular construction by 40%.

Q: And even beyond that, what you want is for CO2 emissions to come down.

A: The emissions have probably come down 20-25% on a per-ton basis since 1990. We’ve also tried to look at different clinker chemistries that have less limestone involved and therefore lower emissions. There has been some progress.

The difficulty with making a breakthrough in these clinker chemistries is that new materials have to undergo very substantial and long-lasting testing, so it’s very difficult for them to gain acceptance in construction industries around the world. When you build a bridge, not only do you not want it to fall down today, you don’t want it to fall down in 10 years time, either. There may be some less critical applications where they can be tested.

Q: A 25% improvement over 30 years sounds a little slow.

A: And it’s the easiest 25%. We all understand that the fundamental problem is what do we do with the carbon from the limestone. The industry has accepted now that we will have to have carbon capture and either usage or storage. Carbon capture and usage is much more likely in the end to fly than carbon capture and storage. We can see the possible uses of carbon in building materials. We need more investment on that.

It’s almost impossible to believe we can replace cement with anything else. All of the raw materials in cement are extremely common all around the world, and it’s very cheap, it’s durable, it’s strong. There just isn’t an alternative, but we need to find a way, so that’s really where we are.

Q: Is a combination of government subsidies and mandates the best solution?

A: It’s like household rubbish — the cheapest thing you can do is dump it on the side of the road. But if everybody dumps it on the side of the road, it’s a problem. And then you realize it isn’t the cheapest solution. That’s where we are with carbon.

Now, obviously, the cheapest thing you can do is release it into the atmosphere, if you’re allowed to do that. What we do with waste disposal is say we’ll come and pick up your waste and you will pay us so much per month or per ton. I think it will have to be the same with carbon. Not just for the cement industry but for all industries. It really has to be comprehensive.

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