Select Committee on Environment, Food and Rural Affairs Written Evidence

Memorandum submitted by the British Cement Association (U21)


  1.  The cement industry has been one of the sectors in the vanguard of those addressing the challenges posed by climate change and the need to secure a more sustainable future for all. Internationally, the 10 leading companies have established the Cement Sustainability Initiative through the auspices of the World Business Council for Sustainable Development. The UK cement industry has a Climate Change agreement with the Government and will be a participant in the European Emissions Trading Scheme.

  2.  The UK Government has received a significant degree of international acclaim for its pioneering policies to tackle climate change. The BCA welcomes the introduction of forward-looking approaches to environmental and other measures, but believes that there are important lessons to be learned from the experience to date in a number of areas. In reviewing its climate change programme it is vital that the Government learns and acts upon the experience gained from its own current policies, and those of the European Union.

  3.  Any future trade and cap measures should only be taken at least at an EU wide level, be well considered and planned and underpinned by clear principles of certainty with sufficient time allocated for proper implementation.

  4.  UK level measures, implementing either EU schemes, or other UK specific policies should involve all those Government departments with an interest and be integrated with and complimentary to other policies. They should not have a negative impact on the competitiveness of domestic industry.

  5.  To date, industry has been the primary focus for measures designed to tackle climate change. This base needs to be broadened to include transport and the domestic sectors.

  6.  Government should procure by example, setting the benchmark for a more sustainable built environment and infrastructure.

  7.  The UK Chair of the G8 and Presidency of the EU provides a good opportunity to ensure rigour in EU implementation of climate change policies, and to explore opportunities for global trading mechanisms.


  1.  The UK Cement Industry. The British Cement Association is the trade and research organisation that represents the interests of the United Kingdom's cement industry in its relations with Her Majesty's Government, the European Union and relevant organisations in the United Kingdom. The members of the BCA (Buxton Lime Industries, Castle Cement, Lafarge Cement UK and Rugby Cement) are the major domestic manufacturers of Portland Cement producing over 90% of the cement sold in the UK.

  2.  Energy represents approximately 35% of the variable costs of cement manufacture and it is therefore a primary concern of the industry to take all cost effective measures to improve energy efficiency and thereby reduce its emissions of carbon dioxide.

  3.  The cement industry supports the principle of emissions trading. Through their parent companies, Lafarge Cement UK, Castle Cement, and Rugby Cement are committed to carbon reductions through the World Business Council for Sustainable Development Cement Sustainability Initiative, (WBCSD CSI). In addition, Buxton Lime Industries has undertaken to adopt the commitments within the WBCSD CSI.

  4.  UK Climate Change Levy Scheme. The BCA and its members have Climate Change Agreements (CCA) with government, signed in 2000, which will deliver a 25.6% improvement in energy efficiency over the period from the baseline year 1990 to 2010. At the first milestone reporting in 2002 it was on course to deliver the target with a 13.2% improvement.

  5.  Ahead of the reporting of the second milestone phase of the Agreement at the end of this year, the targets for 2006, 2008 and 2010 have been reviewed by Government and industry, and revisions agreed. A further review is to be undertaken in 2008.

  6.  Trading of Emissions within the UK. One of the BCA's members, Lafarge Cement UK, is a direct participant in the UK Emissions Trading scheme. Other members have experience of trading carbon through their membership of the Climate Change Levy Scheme.

  7.  EU Emissions Trading Scheme, (EU ETS). The industry is one of the sectors prescribed for mandatory inclusion in the EU ETS, either from its initial implementation in January 2005, or from January 2008 under the "opt out" provisions.

  8.  BCA and its member companies have been working with Defra, Dti, and their consultants in relation to the development of the EU ETS and its implementation within the United Kingdom. These discussions have taken place with Government and the sector or member company, as appropriate, and have been supplemented by the discussions of the Emissions Trading Group, ETG, with Government. BCA is an active participant of the ETS.

  9.  At the European level, BCA has been working with other European cement manufacturers, through CEMBUREAU. In addition to the development of common issues, CEMBUREAU is in direct communication with the European Commission.


  10.  The cement industry welcomes the opportunity to comment on the review of the UK Climate Change Programme. With the prospect of medium- to long-term requirement of greenhouse gas reductions of 60% or more, all sources of greenhouse gases must be addressed at an early stage.

  11.  The UK Government has received a significant degree of international acclaim for its pioneering policies to tackle climate change. The BCA welcomes the introduction of forward-looking approaches to environmental and other measures, but believes that there are important lessons to be learned from the experience to date in a number of areas:

  11.1  Adoption of realistic timetables for development of Green house gas (GHG) reduction scheme and introduction of appropriate measures by the parties concerned.

  11.2  Provision of adequate level of certainty to assist industry and others concerned to make the necessary commercial decisions.

  11.3  No ex post government intervention in established trading markets.

  11.4  Ensuring equitable targets from all participants in any given scheme, ie no discrepancies such as in the National Allocation Plans of many other Member States.

  12.  The Climate Change Levy, (CCL), which was introduced by the UK Government in 2000, was based on improvements in energy efficiency as a way to deliver reductions in carbon emissions. The basis of the EU ETS is the reduction of carbon dioxide emissions. The development of the two different mechanisms for measuring, reporting and verification purposes has placed a significant burden on industry and has introduced the entirely avoidable issue of working out an equivalence between the two schemes, as well as possible opt-out opportunities for UK businesses.

  13.  UK government was aware that the EU ETS would be introduced in the short- to medium term, yet continued to pursue its policy of introducing the CCA, then its own Emissions Trading Scheme, and now insists in trying to run them in parallel with each-other; it is the most clear cut example of over regulation of UK industry and has had a direct impact on its competitiveness. None of its EU competitors has had to negotiate its way through three separate and incompatible systems within a four year period, instead concentrating on the one EU wide scheme.

  14.  BCA has commented directly to Defra about the Government's proposal to intervene in the current UK Emissions Trading Scheme. We are concerned at the prospect of intervention into a market-based regulatory instrument. The intention of environmental regulation using economic instruments is to deliver environmental improvement at the lowest cost. It should be left to the market to decide the price and supply of allowances and this enables industry to choose between abatement and trading. With the EU ETS about to start in 2005, any interference in the UK scheme will provide a poor example and send the message that emissions trading does not work.

  15.  Any future cap and trade mechanism for the other GHGs should have much simpler mechanisms than those developed for the National Allocation Plan as part of the EU ETS.


  16.  BCA understands that Defra is working on a five year programme to be released this year and a new sustainable development strategy for early next year. In drafting these programmes and in considering what new policies it wishes to implement it is essential that Defra and the Government as a whole should avoid any scheme to be imposed on business that is not an agreed EU wide one and learns from the experience to date of UK industry.

  17.  EU-wide or global trading mechanisms for the other GHGs are the preferred option for the UK cement industry.

  18.  Although the European Kyoto target is 8%, and the UK's contribution is set at 12.5%, the UK Government has set its own goal of 20% by 2010, with a commitment to implement the recommendation of the Royal Commission on Environmental Pollution's longer term 60% reduction by 2050.

  19.  These ambitions, although environmentally laudable, fail to take into consideration the way in which they may be achieved. To date, the Government has implemented its programme without considering the impact on the competitiveness of UK business.

  20.  In implementing a future EU-wide or global trading mechanism for the other GHGs it is vital that there is parity with other European countries and the Government seeks to implement the UK's contribution in an equitable way, which does not have a detrimental impact upon the competitiveness of domestic industry.

  21.  Although Government has talked of the need to address the contribution of transport and domestic energy usage to climate change, to date it has concentrated the majority of its efforts towards encouraging or demanding efficiencies and behaviour change towards industry.

  22.  For credibility and fairness governmental action should be broadened beyond this concentration on what industry can deliver to encompass both of these significant contributors to climate change.

  23.  It is vital that there is a coordinated approach across Government to any review of the Climate change Programme. From the perspective of the cement industry a clear understanding needs to be established by HM Treasury, Defra, ODPM and Dti between environmental taxation, waste policy, construction and building regulations.

  24.  Defra, ODPM and Dti has already made a start to this process via its Sustainable Buildings Task Force which published its report over the summer and the cement industry supports its recommendation for the introduction of a Code for Sustainable Building.

  25.  Nevertheless, we would caution against the current push for quick-fixes via off-site production of light weight prefabricated buildings. Such solutions are short-term and will not fulfil the future building performance requirements as climate change results in warmer summers. Investment in our build infrastructure should be on the basis of permanence for long-life.

  26.  As the largest procurer of construction industry services, Government should be setting the benchmark for sustainable construction projects for schools, hospitals, other public buildings, as well as transport infrastructure projects. These too should not be short term solutions, but look to the longer term and be based on whole life performance not just initial or lowest cost. The same principles should be extended to local government.


  27.  Holding the simultaneous Chair of both the G8 and the EU provides an ideal opportunity for the UK Government to champion and coordinate it environmental policies. BCA notes that the Prime Minister has already indicated his Government's intention to do so.

  28.  The Joint Implementation and Clean Development Mechanism (JI & CDM) are important components of the EU ETS and BCA hopes that the UK will use its time in the Chair of these two international bodies to promote and foster their use.

  29.  There has been much comment, not least from the European Commission itself, on the lack of vigour or ambition in the National Allocation Plans (NAPS) of many member states. The UK should use the opportunity of the European Presidency to reinforce the need for rigorous implementation and regulation of EU wide schemes to help prevent inconsistencies that can distort the internal market.

  30.  The EU ETS is not alone as an emissions trading mechanism, and other schemes exist outside of Europe. It would be a positive step if the UK Government could work towards true international schemes and markets, especially as the EU starts to consider the other GHGs. Perhaps the UK could explore the possibility of a role for the World Trade Organisation?

1 October 2004

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