Supplementary memorandum by The British
13. Can you summarise trends in your industry
since 1990, both as regards total energy consumption and greenhouse
The trends in specific energy consumption and
CO2 emissions are given in the following graph and table.
Data on CO2 emissions from cement manufacture
|total tonnes CO2/tonnes cement||0.96
|fuel tonnes CO2/tonnes cement||0.435
|Note: The "fuel tonnes" relates to the CO2 emissions from all non-biomass fuels, [ie conventional plus waste-derived fuels], as in the EU ETS.|
14. What proportion of total UK industrial and business greenhouse gas emissions is represented by your industries? How has this changed since 1990 and what changes are predicted between now and 2020?
In 1990, the cement industry CO2 emissions accounted for
2.19 per cent of the UK total anthropogenic CO2 emissions. By
2002, this had fallen to 1.84 per cent. [Data from National Air
Emissions Inventory 1990 to 2002].
These are the total CO2 direct emissions from the industry
of which about 40 per cent is from the fuel, ("fuel CO2"),
and 60 per cent from the decomposition of limestone, ("process
CO2"), [ie in a typical modern 5-stage precalciner kiln].
15. How do you monitor and calculate the greenhouse gas
emissions produced in your industry? What is the process of verification?
Involvement in trading of carbon credits through the UK Climate
Change Levy, UK Emissions Trading Scheme and the EU Emissions
Trading Scheme requires external verification of the components
from which CO2 emissions are calculated, ie coal, petroleum coke,
waste-derived fuels, and electricity.
For example, the EU Monitoring and Reporting Guidelines are
covered by Commission Decision of 29 January 2004 establishing
guidelines for the monitoring and reporting of greenhouse gas
emissions pursuant to Directive 2003/87/EC of the European Parliament
and of the Council.
Through the World Business Council for Sustainable Development
Cement Sustainability Initiative, WBCSD CSI, the industry has
agreed on a global protocol for the reporting of greenhouse gas
emissions. This forms the basis of the reporting of emissions
in the UK and EU, with certain modifications to accommodate the
relevant legislative framework.
16. How far have such changes since 1990 been as a result
of restructuring, changes in output, export of capacity overseas,
and so on, and how far as a result of technical developments in
The UK industry currently manufactures ~90 per cent of the
cement used in the country, but this level of domestic production
is under threat from imports from countries in which the financial
burdens associated with emissions trading are substantially less.
In addition to this competition on the price of cement, cement
manufacturers face strong internal pressure from within their
own companies for the capital funding of new plant with which
to meet increasing demands of low CO2 emissions.
The installation of new, energy efficient plant, and/or the
shifting of production to large modern, efficient kilns requires
substantial investment. This is dependent upon securing the requisite
funding which in turn demands a high level of certainty in the
legislative regime. The development cycle [ie from planning to
full scale operation] for plant in the energy intensive sector
is many years and is generally longer than the phases of the Kyoto
agreement. In the case of cement, this development cycle is ~7
years, and once installed, the plant will have an operational
lifetime of 30 years or more.
Within the United Kingdom, the cement industry is engaged
in a £400 million programme of investment in new plant. As
part of larger international groups, UK cement companies must
compete for funding of capital projects on an international basis,
and consequently, any "gold plating" of European legislation
or additional national controls provide strong disincentive for
investment in UK projects. Uncertainty over future phases of the
EU Emissions Trading Scheme has resulted in the postponement of
the proposed new cement plant and the installation of a terminal
for the import of cement from elsewhere in the group.
17. What is the scope for further reductions in both energy
consumption and greenhouse gas emissions within your industry?
What are the main difficulties and the main opportunities you
An analysis of the cement industry in 2002 by the World Business
Council for Sustainable Development, (WBCSD), indicated a worldwide
potential to reduce CO2 emissions by approximately 30 per cent
by 2020 using conventional approaches such as those described
above. In order to deliver CO2 reductions of 60 per cent or more
by 2050, it indicated that the industry must explore a number
of advanced CO2 management approaches, and three potential options
are: the use of non-limestone based binders; produce cement and
electrical energy on hybrid cement-energy facilities; employ carbon
capture and sequestration.
Cement companies within the UK are investigating the use
of biomass as fuels (including energy crops), and the siting of
wind power generators adjacent to their quarries.
18. In assessing the opportunities for reducing energy
consumption within your industry, how do you interpret the term
"cost-effective"? How far are energy efficiency gains
just a by-product of normal investment in improved equipment,
and how much of conscious investment?
Unlike the primary production of aluminium for which electricity
is the principal energy source, in the cement industry coal, coke
and petroleum coke account for 82.5 per cent of the fuels used
on an energy basis.
MAKING (BCA DATA,
|Heavy Fuel Oil||<0.1
|Waste derived fuels||5.0
The cement industry is continually seeking to reduce energy
consumption, improve its energy efficiency and thereby reduce
CO2 emissions. Worldwide, the cement industry is responsible for
~5 per cent of anthropogenic CO2 emissions, but within the United
Kingdom the contribution is 1.8 per cent. Within the industry,
each company is engaged in a programme on continual improvement
of its processes through:
Improved kiln control systems;
High efficiency motors and drives;
Improved energy management procedures;
Higher efficiency crushing and grinding techniques;
Optimization of raw material chemistry.
Although individually these result in relatively small, progressive
reductions in CO2 emissions, together they lead to significant
overall improvements. However, large "step changes"
in fossil fuel CO2 emissions can only be achieved by replacing
fossil fuels with waste-derived fuels, or investing in new plant.
The replacement of fossil fuels with waste-derived materials
provides an important means of reducing CO2 emissions. The range
of waste-derived materials used has now expanded from used oils
and solvents, sometimes referred to as SLF (Substitute Liquid
Fuels), or RLF (Replacement Liquid Fuels), to include: used tyres;
pelletized sewage sludge (PSP); meat & bone meal (MBM); packaging
(such as Profuel); refuse-derived fuel (RDF).
The use of these waste-derived material as fuels in cement
kilns is an efficient means of recovering their energy content
which would have been lost had they been landfilled, or generated
CO2 in an incineration process. This avoidance of emissions, such
as methane from landfills and CO2 from incinerators, through the
use of waste derived materials in the cement industry is an important
component in the overall reduction in GHG.
The development of replacement fuels has been more marked
mainland Europe, where from a level of 3 per cent substitution
in 1990, the average rate has risen sharply to 12.2 per cent in
2001, and in many countries extremely high levels of waste-derived
fuel are used: >80 per cent, Netherlands; >40 per cent,
Switzerland, Austria; >30 per cent, Belgium, France, Germany,
Norway, (Sweden 29 per cent).
Typically, the time involved in gaining permanent authorisation
for a new fuel is 15-30 months. In addition the up-front costs
of plant required to trial are £1 million to £2 million,
with trial costs adding a further £600,000 to £800,000.
All of these costs are essentially risk capital, which is forfeit
if permanent permission is not forthcoming. These lengthy authorization
periods have a significant effect on the payback period. Delays
between the end of trials and the granting of permits are problematic
in terms of continuity of supplies (of alternative fuel to required
quality standards) and operational conditions.
In addition to cutting down CO2 emissions, other significant
environmental benefits result from the use of waste-derived fuels:
reduced emissions of NOx and particulates; conservation of resources;
and avoidance of the use of waste treatment options at the lower
end of the waste hierarchy. In 2001, the recovery of energy from
4.37 million tonnes in European cement kilns saved 3.5 million
tonnes of coal and yielded significant reductions in stack emissions.
Of these wastes, approximately 1/3 was hazardous.
19. How has the burden of environmental regulation on
your industry changed in since 1990?
The graph below indicate the cumulative effect of European
legislative measures in the area of the environment since 1990,
In addition, the recovery of energy from the use of waste-derived
materials as fuels is subject to the Substitute Fuels Protocol,
an extra-statutory provision administered by the Environment Agency.
Modifications to streamline this procedure were introduced
in February 2005, but these controls only apply to the cement
and industries, although waste-derived materials are used in a
number of industries without these restrictions.
Furthermore, these are "vertical" controls, applied
on a plant-by-plant basis on each occasion when a waste-derived
fuel new to a specific plant is used. More appropriate would be
"horizontal" controls that used a single assessment
of each fuel used in cement kilns, and used this across the industry
in conjunction with local stakeholder consultation at a plant
20. How high a priority is energy efficiency within your
industry? Do individual companies have energy efficiency representation
at Board level? How are investments in energy efficiency measures
handled and budgeted?
Energy accounts for approximately 35 per cent of the variable
costs of cement manufacture, and this is strongest driver towards
the improvement of energy efficiency, particularly during times
of rapidly escalating energy costs. Mandatory measures are counter
productive for energy intensive industries such as cement.
21. How effective have the Climate Change Levy and Climate
Change Agreements been in your industry? What progress has been
made towards achieving your 2010 targets?
The industry met its targets in the "target years"
of 2002 and 2004, and the graph/table given in response to question
13 indicates that it is on course to meet the 2010 targets.
22. What impact will EU Emissions Trading have on your
industry? How will it interact with the Levy and Climate Change
Agreements, both in the initial phase and in phase 2, post-2007?
As noted in the response to question 16, there is a long
investment cycle for the cement industry. This has precluded investment,
in addition to that already planned, which is necessary to reduce
the impact for Phase 1 of the EU ETS. Thus the effect of the European
scheme will be to add costs to our members, since as overall it
appears to be unlikely that the Phase 1 allocations will meet
the industries needs.
The interaction of the EU ETS and CCL is a burdensome bureaucratic
duplication of effort, which does nothing to further reduce CO2
emissions. There are two different monitoring systems and the
rules for interactions between the two for indirect emissions,
process emissions and waste fuel derived emissions are convoluted
and unnecessarily complex.
The UK Government presentation to the European Commission
recommending the UK "opt out" argued the equivalence
CCA and EU ETS on the basis of the same inputs and outputs of
The BCA believes that installations covered by the EU Emissions
Trading Scheme should be excluded from the Climate Change Levy,
and thereby reduce the duplication of effort by government and
23. It is widely argued that the most effective way to
reduce energy consumption is to increase prices, either across
the board, or, if the object is to reduce carbon emissions, through
targeted "eco-taxes". What would the impact of such
an approach be on your industry?
The World Business Council for Sustainable Development Cement
Sustainability Initiative (WBCSD CSI), estimated that a carbon
tax of $50/tonne (
38.9/tonne), an amount implicit in a number of potential (worldwide)
government policies would add an average of ~$12/tonne (
9.3/tonne) to the manufactured cost of cement.
Compared with other materials, cement has the highest CO2
emissions per unit of profit, and along with lime, the highest
CO2 emissions per unit of turnover. Furthermore, unlike steel,
cement is a low value product with limited ability to absorb additional
costs. It is thus very susceptible to any additional carbon dioxide/energy
For example, emissions trading at
15/tonne CO2 will approximately double the variable cost of cement
production. The value of
15/tonne equates to about the cost of transport per tonne of cement
from the Far East, thus placing domestic manufacture at a severe
[Since emissions trading under the EU ETS came began on 1
January, carbon prices have risen from
4-5 per tonne to about
15-16 per tonne].