You are here

Cement companies must do more than double efforts to meet Paris climate goals..

NEW DELHI: A new report ‘Building Pressure’ analysing 13 of the world’s largest publicly-listed cement companies reveals that they need to more than double their emissions reductions if they are to limit global warming to below two degrees, as agreed in the Paris climate deal. The companies analysed in the report from CDP – voted no. 1 climate change research provider by institutional investors – have a total market capitalization of US$150 billion and represent 16% of global cement production. The cement sector itself accounts for 6% of global CO2 emissions.

Cement is the second most polluting industrial sector and is used in concrete, which after water is the most consumed product in the world. The built environment, which includes offices and residential buildings, uses concrete extensively and accounts for over a third of global emissions. Regulation of the sector so far has been light but rising ambitions for low carbon cities and tightening building regulations could drive change up the chain.

Indian companies top the CDP league table thanks to reducing their carbon footprint during the cement making process, in part due to better access to alternative materials from other carbon intensive sectors. They also benefit from newer and more efficient cement plants driven by high market growth in the region, in contrast to their European peers that rely on older cement plants.

Paul Simpson, CEO of CDP commented: “Cement is a heavy and largely invisible polluter, yet taken for granted as a necessary building block of basic civilization. With potential pressure coming from multiple sources, including down the value chain in the form of building and city regulation, cement companies need to invest and innovate in order to avoid impending risks to their operations and the wider world. This may seem challenging at first, but every year it is delayed, the cost becomes greater, so management teams, regulators and investors need to think long term. There is a solution – cement companies just need to invest properly in finding it.”

Damandeep Singh, Director CDP India, said: “It is encouraging to see Indian companies taking the lead, but a lot remains to be done.”
There are however opportunities for companies who act early on climate risk. Companies can reduce costs by making their cement plants more energy efficient and secure their position in future sustainable cement markets by investing in low-carbon products. Governments can facilitate the development of these markets through regulation and incentives.
The report also highlights other potential risks and opportunities for the sector:
1) Carbon Capture and Storage (CCS) is an important technology for creating low-carbon cement yet CCS projects are still largely at pilot stage in the sector. Heidelberg shows some investment in CCS across various technologies, but otherwise progress is limited.

2) European players benefit from alternative fuels sourced from organized waste collection, which becomes the fuel source for cement production. Emerging market producers are behind on this, due to limited infrastructure.

3)Five companies do not use an internal carbon price, which is a significant risk in a sector where carbon pricing legislation could have a material impact.

4)Carbon regulation such as the EU’s Emissions Trading Scheme is the key mechanism to regulate emissions from the sector in Europe. However, structural issues and lobbying of policymakers have undermined the potential for change for the sector..!!