How to Decarbonize Cement in Emerging Markets
Cement is the building block of infrastructure. Cement manufacturing contributes ~8% of total CO2e emissions in emerging markets. Demand is high in emerging markets because of its affordability as a building material. It is also one of the most expensive industries to decarbonize.
Builders have tried approaches to minimize emissions by lowering usage (ie pre-cast concrete, 3D printing, recycling demolition waste, building information modeling) and substitution with alternative building materials (i.e. cross-laminated timber). However, a McKinsey report stated that 80% of future emissions reductions would come from new technologies.[i]
Unfortunately, technological developments are proceeding slowly because of the cement industry’s low technology readiness. While the steel industry is close to commercial utilization of decarbonization technologies (carbon capture, green hydrogen, electric arc furnaces and enhanced recycling),[i] the cement industry is still far behind. Market players have low risk tolerance due to slim profit margins, high capital intensity, and long asset lives.
Let’s take the example of India, the second largest cement producing country in the world. [ii] Due to rapid urbanization and government initiatives such as 100 Smart Cities, cement production is projected to increase by 6–7% annually till 2025.[iii] The Indian cement industry is recognized as one of the most energy efficient of the emerging markets. India has been able to scale fuel replacement (waste, biomass), clinker substitution and blended cement production. Despite this, India’s cement industry still produces 7–9% of country emissions (255 million tCO2 in 2020[iv]) and generates the most CO2 emissions per dollar of revenue among all heavy industries.[v]
Decarbonizing the cement industry is integral to India reaching its 2030 NDC target of reducing CO2e emissions intensity of GDP by 33%-35%. While the cement industry in emerging markets such as India feel the pressure from investors and the public to abate, what market players lack is the economic rationale to decarbonize. They need policy action:
- Government subsidies/grants provided for nascent technologies
- Mechanisms promoting ‘green premiums’, similar to how a Feed-In-Tarif stimulated further investment into efficiencies of renewable energy
- Green procurement standards for national infrastructure projects
Mechanisms such as these would lower costs by promoting investments into the most promising technologies:
1. Carbon-cured concrete start-ups: For large projects that use cement mixers or pre-cast, CO2 captured during production can be injected into a concrete mix to accelerate the curing process. Injected CO2 may strengthen concrete while reducing the cement needed. Current technologies can sequester ~5% of CO2, and potentially 30% by 2050.[v] This technology is scalable, yet has not yet been widely adopted despite minimal cost difference to a large-scale project.
An alternative to this is Carbon Capture, Utilization or Storage (CCUS). CO2 can be stored in large underground caverns or used in the production of fuels, glass, or plastics. However, these alternatives necessitate further investments in long-distance infrastructure such as pipelines. Additionally, the investment case for storing CO2 depends on carbon prices, which are significantly lower than estimated abatement costs ($40 — $200/tCO2) without government support.[vi] However, CCUS is viable if utilization were to happen in proximity to the cement plant such as in Lafargeholcim’s Colorado facility which is 40km from a nearby oil pipeline.
2. Electric kiln retrofitters: CO2 produced in calcination constitutes ~60% of cement’s embodied CO2. Electrification could significantly reduce CO2 released.
The use of electrifying kilns is a more effective decarbonization strategy than clinker substitution in long run. While clinker substitution is a viable strategy in the short term, substitution with industrial by-products (fly-ash) may become uneconomical as supply drops due to fewer coal plants in operation in the coming decade.
3. Electrolyzer manufacturers for green hydrogen: Energy required to power a cement manufacturing facility, currently mostly fossil fuel, represents 30%-40% of CO2e emissions. Hydrogen energy can be blended into natural gas to mitigate Scope 2 emissions or be a fuel on its own during the calcination process. Electrolysis is a mature technology, but still costly unless advances in manufacturing large-scale electrolyzers are made.[vi] The Indian electrolyzer market (proton, alkaline, solid oxide) is projected to grow from 958 tons ($3.2m) in 2020 to 95,033 tons ($116m) by 2028.[vii] A zero-carbon alternative supported by more economical electrolyzers would substantially lower CO2e.
[i] McKinsey (2018, July 13). Decarbonization of industrial sectors: the next frontier: https://www.mckinsey.com/business-functions/sustainability/our-insights/how-industry-can-move-toward-a-low-carbon-future
[ii] Brookings Institute (2021, June). https://www.brookings.edu/wp-content/uploads/2021/06/FP_20210623_industrial_gross_v2.pdf
[iii] WBCSD (2018, November 2018). Low Carbon Technology Roadmap for the Indian Cement Sector. https://www.wbcsd.org/Sector-Projects/Cement-Sustainability-Initiative/Resources/Low-Carbon-Technology-Roadmap-for-the-Indian-Cement-Sector-Status-Review-2018
[iv] ClimateGroup (2021, March 22). A spotlight on decarbonizing heavy industry. https://www.theclimategroup.org/our-work/publications/spotlight-decarbonising-heavy-industry-india-narratives-iron-and-steel-cement
[v] McKinsey (2020, May 14). Laying the Foundation for zero-carbon cement. https://www.mckinsey.com/industries/chemicals/our-insights/laying-the-foundation-for-zero-carbon-cement
[vi] Ford N. (2021, June 17). Reuters Events “Rapid scaling of electrolyzers accelerates wind hydrogen savings,” https://www.reutersevents.com/renewables/wind/rapid-scaling-electrolyzers-accelerates-wind-hydrogen-savings.
[vii] Allied market research (2021, May). Green Hydrogen Market, 2021–2028: https://www.alliedmarketresearch.com/green-hydrogen-market-A11310
Disclaimer: This post reflects my personal views and not those of the International Finance Corporation, World Bank, or any other member of the World Bank Group