Insight: Concrete makers face heavy lift on climate pledges

Asia Cement (China) Holdings

01/07/2021 11:00

By Cassandra Garrison
    MEXICO CITY, July 1 (Reuters) - Cemex, North America’s
biggest concrete producer, has vowed to slash carbon dioxide
emissions by 40% before 2030 and to eliminate them by 2050,
ambitious goals reflecting growing pressure on the industry from
regulators and investors.
    But steep challenges in technology, cost-control,
environmental regulation and building-code compliance could
snarl the effort, underscoring the difficulty in cleaning up an
industry that is among the world’s biggest greenhouse-gas
emitters, according to interviews with Cemex officials, cement
and concrete industry groups and specialists in industry
emissions.
    Cement, a key ingredient in concrete, contributes about 8%
of global carbon dioxide (CO2) emissions, according to Chatham
House, a London think tank. That’s far more than global
aviation, according to data from the Air Transport Action Group,
an industry group. The cement industry produces more CO2 than
any nation except for the United States, China and India,
according to the International Energy Agency. (See graphic https://tmsnrt.rs/3dq4PPN.)
    The industry emits carbon dioxide at every step of the
manufacturing and supply chain, making it particularly difficult
to reduce emissions. The CO2 pollution starts with mining of
limestone and continues with the chemical process used to turn
it into cement, the power for factories and kilns, and the fuels
for shipping it worldwide for projects from patios to
skyscrapers.
    The challenges facing Cemex  CEMEXCPO.MX  are common across
the industry, and other major cement and concrete makers -
including Breedon Group  BREE.L , Asia Cement  0743.HK  and
UltraTech Cement  ULTC.NS  - have set similar targets for
producing “carbon-neutral” concrete. Cemex may have a harder
time than some firms, however, because construction codes in the
United States - one of its most important markets - don’t allow
many alternative cement ingredients that could lower
manufacturing emissions.
    Skeptics of the industry pledges say the companies are
relying largely on carbon-capture technology that remains
unproven and uneconomical. Further, they contend, the companies
can’t meet their climate goals without the cooperation of
regulators, architects, builders and consumers all enabling the
shift to lower-carbon processes and materials.
    "We're talking about some really, really ambitious goals for
what is arguably the hardest industrial sector to decarbonize,”
said Gaurav Sant, an engineering professor at UCLA and director
of its Institute for Carbon Management. "Pending major
technological breakthroughs, it's not clear to me how they're
going to be met.”
    The Cemex pledge applies only to its concrete, not its
cement. But meeting the concrete goals will necessarily involve
major emissions reductions in cement-making, which produces the
bulk of the industry’s CO2 emissions.
    Cemex and other companies also plan to use offsetting
programs to meet their goals. That involves separate investments
in projects that reduce emissions - such as mass tree-plantings
or solar-power farms - to offset the carbon produced by
polluting industries. Cemex, however, said offsetting will
represent only a small portion of its planned reductions.
    The central challenge facing the cement industry reflects
that facing all polluters: Cutting emissions without cutting
profits. Cement sells so well, after all, because it’s
relatively cheap. The sector's growth also depends on demand
from developing countries, where builders can ill-afford more
costly materials.
    CEMEX has a new concrete, branded Vertua, that’s made with
lower-emission products and processes that sells mostly in
Europe. But it costs up to 50% more, a premium the company says
can be justified by faster drying times that speed construction.
    Cemex says it can meet its climate goals by using renewable
energy, carbon-capture technology, and alternative fuels in the
kilns used to make cement. Davidé Zampini, Cemex director of
Research and development, said the company is “quite confident”
it can meet or exceed its environmental goals “if we do some
technologies right, and we really hit a home run.”
    That confidence prompted the company in June to raise its
goal for emissions reductions by 2030 to 40% from 35%. Cemex
said it plans to spend $60 million annually on that effort.
    Cemex officials acknowledge, however, that success relies on
further development of carbon-capture technology and on
favorable regulatory regimes in nations where it operates to
encourage waste recycling, alternative fuels and greener cement
and concrete ingredients.
    “We will actively advocate in our markets” for such
regulatory changes, said Cemex Chief Executive Fernando González
in a virtual presentation in June.
    
    MOUNTING PRESSURE
    Governments and investors worldwide are pressuring companies
to reduce greenhouse-gas emissions. Billionaire climate activist
Bill Gates recently put cement in the spotlight when he called
it the most concerning sector in the effort to reduce
greenhouse-gas emissions.
    Concrete is the world’s most popular man-made building
material. Cement makes up between 10% and 15% of the typical
concrete mix but produces much of its CO2 emissions.
    The emissions start with mining raw materials such as
limestone and crushing it to prepare for a process called
calcination. That process - a huge source of CO2 - involves
heating the raw materials in massive kilns, often powered by
coal or natural gas, at temperatures up to 1,450C (2,642F). The
heating produces marble-sized balls known as clinker, which are
then ground up and mixed with other ingredients to make cement.
    Cemex officials said the company plans to lower emissions in
part by using clinker substitutes that are byproducts of other
industrial processes, such as burnt shale oil or glass furnace
slag.
    It plans to eventually outfit plants with carbon-capture
technology, which aims to capture emissions from industrial
activity and store the CO2 underground. Oil firms also use
captured carbon by injecting it into wells to release oil.
    Cement and concrete firms sometimes get help from
governments along with the pressure to reduce emissions. Cemex,
for instance, was recently awarded $6.5 million in U.S. federal
grants to develop carbon-capture technology. 
    Other times governments put up obstacles to cleaning up the
concrete business. In Mexico, where Cemex is based, President
Andes Manuel Lopez Obrador has other priorities. The
administration encourages the use of oil-and-gas from state oil
firm Pemex. The administration doesn’t specifically oppose
renewable energy, but its policies favor domestic companies over
foreign firms, which has slowed development of renewables.
    That makes it unlikely that more renewable energy will be
available or affordable to companies such as Cemex under the
administration, said Vicente Saisó, the firm’s sustainability
director.
    "It's a very tough situation we are facing," Saisó said.
    Lopez Obrador’s office declined to comment. 
    RESTRICTIVE U.S. BUILDING CODES
    Cemex officials said their plans for climate-friendly
concrete would also require major regulatory changes to building
codes in the United States, which accounts for about 22% of its
sales. Building standards and codes for some U.S. projects can
be "completely restrictive,” Saisó said.
    The ingredients in U.S. concrete are typically mandated by
local building codes and are based on Portland cement, a common
variety since the 19th century. They often do not accommodate
new, lower-carbon mixes that companies including Cemex are
developing, Saisó said.
    Officials from the U.S.-based Portland Cement Association
(PCA) said they support more climate-friendly products but they
cited liability fears as a hurdle for architects and engineers
in adopting them. Industry experts say concrete products made
using greener ingredients are capable of providing the same
strength and safety as those using Portland cement.
    Cemex has an easier time producing and selling greener
concrete products in Europe, where taxation on energy and
pollution under the EU’s new Green Deal encourages a switch to
cleaner alternatives. The EU also has an emissions trading
system that essentially charges facilities for emitting specific
amounts of carbon dioxide.
    That type of regulation has driven updates to Cemex's
European operations, including a more efficient kiln at its
plant in Rudniki, Poland, resulting in a 16% drop in carbon
dioxide emissions since 2018. The company also has set a higher
bar for itself in the region, targeting a 55% emissions
reduction by 2030.
    "Good regulation that incentivizes us to both remain
competitive within Europe, and to drive our carbon reductions,
is welcome," said Andrew Spencer, vice president of corporate
affairs for CEMEX Europe.

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The cement industry's carbon problem    https://tmsnrt.rs/3dq4PPN
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 (Reporting by Cassandra Garrison; editing by Frank Jack Daniel
and Brian Thevenot)
 ((Cassandra.Garrison@thomsonreuters.com; +52 55 6200 7873;))