The cement industry accepts its responsibility and shares the objectives of the European Union in the reduction of emissions.
The Kyoto protocol has been a turning point in the attitude of all sectors and socio-economical agents responsible for emissions, the regulations and management position of Public Administration and in social awareness faced to the climate change reality.
The trading emission rights Directive establishes the following emission rights for the period 2013-2020. Each of the 27 state members top cap will be substituted by an European wide cap: 20% reduction in green house gases in 2020 compared to 2005 levels, thus reducing 21% emissions of all sectors under the EU ETS (European Union Emission Trading System) and a 10% for the rest.
The CEOE has commissioned Garrigues Medio Ambiente to conduct an independent study. This report states that the total cost of CO2 in the sectors under study (siderurgical, refined, chemistry, paste, paper, cardboard, cement, lime, wall, floor and roof tiles, bricks, glass and ceramic frits) would rise to approximately €4.070 billion (a 69% of the aggregate turnover of the sectors under study), of which approximately €1.091 billion would correspond to the cement industry (164.9% of its turnover) in 2020.
In addition, 30.382 direct jobs would be lost in Spanish industry, which amount to 24.8 % of the direct employment in the sectors analysed, affected by the Directive. The cement industry would lose 5.500 direct jobs (77.5% of the industry's current jobs), being one of the industries running the greatest risk of carbon leakage (offshoring), along with a significant number of indirect jobs.
Offshoring and the phasing out of facilities would start in the short-term as a result of a lack of investment and would progressively gather force up to 2020, when the aforementioned figures would come about.
The Spanish cement sector would be vulnerable to imports from countries not affected by the Emission Trading Scheme Directive, taking no account of the environmental impact – increase of CO2 emissions- transporting the material by sea. This problem affects Spain strongly because of the high amount of accessible ports. This is how countries such as Morocco, Algeria, Egypt, Libya, Turkey and Tunisia belonging to the Mediterranean Basin, together with China and India could easily import.
The figures set out above make us reflect on the need the industry has of receiving free emission rights on the basis of its development capacity to attain best available technologies (BAT). In this regard, the Spanish cement industry, would be very close to obtaining 100% of the emission rights for free, as it only has a 4.26% possibility of improvement compared to the BAT minimum.
On the other hand, the European Cement Association (Cembureau) has commissioned Boston Consulting Group to carry out a study to assess the impact of the Allowance Allocations Plan which will be defined in the 2013-2020 EU Emission Trading Scheme.
The intention to reach a 21% reduction, though not yet defined in sectors, will require an additional effort for the cement sector because 60% of the emissions come from the process of limestone decarbonation. It is important to point out that in these last years European companies have invested in technology to improve energy efficiency, reducing CO2 emissions and optimizing production process.
The main conclusion of this study based on public and objective facts implies that the Spanish cement sector would suffer offshoring if it has to pay more than 23 euro/tonne of CO2 equivalent. According to the post Kyoto scenario, only 80% of total CO2 emissions generated in 2013 will be free of charge while the remaining 20% will be auctioned. This approach will reduce free of charge percentages until 2020, when 100% of the emissions shall be auctioned by the Member States at the price set by the EU ETS.
Reaching this goal according to BCG, represents the loss of 35,000 direct jobs and € 3,600 million of gross added value.
The industry would still be vulnerable to offshoring even if the full cost of CO2 because cement and clinker are exposed to international competition from countries not included in the Kyoto protocol.
Therefore, legislation should favour continuous investment in research and innovative technology to face climate change effectively. Europe, as a whole, should continue to work to ameliorate research and manufacture becoming in this way part of the solution to offshoring and climate change.
Garrigues Medio Ambiente and Boston Consulting Group agree on the need to define and reach a consensus on emission reduction objectives and the possible mitigation instruments.
We must bear in mind that the cement sector has made strong efforts since the first oil crisis to reduce its energy consumption per tonne of cement. Although overall CO2 emissions per tonne of cement have been reduced constantly since 1975 to today, the industry still works to improve these figures and believes it is absolutely necessary to have a stable market to promote capital investments.
Ways to reduce specific emissions