Displaying items by tag: European Union
Update on cement and concrete standards
03 May 2023Betolar has called today for a global performance-based standard to replace existing prescriptive standards. Riku Kytömäki, the head of Betolar, argued at the London-based Concrete Expo that the lack of a performance-based standard is holding back the use of low-carbon materials from replacing cement in concrete production. He said “the current regulations across the markets are restricting the use of circular materials allowed in concrete buildings.” Betolar produces Geoprime, an additive designed for use in cement-free concrete production with ash and ground granulated blast furnace slag (GGBFS). This gives the company a financial reason to want standards to change, as it will potentially allow it to sell more of its product. However, as the company points out, “there is a huge need for new alternatives.” The world needs around 4Bnt/yr of cement but there is only 300Mt/yr of slag available.
Building materials producers and related companies wanting to change rules and standards in response to new trends is a common refrain. For instance, the increased use of alternative fuels by the cement sector has prompted all sorts of regulatory changes. However, rather than simply asking for amendments to the existing ways of doing things, Betolar is advocating for more wholesale change. It isn’t alone. Also this week the ASTM in the US announced that it is writing a specification to include a wider range of secondary cementitious materials (SCM). In addition, many of the interviews Global Cement Magazine has conducted with companies developing and marketing new types of cement and concrete in recent years have said similar things. Examples include the use of graphene, carbon nanotubes or sequestering CO2 into industrial by-products to create novel secondary cementitious materials (SCM).
Prescriptive versus performance-based approaches to buildings and building materials tie into wider design philosophies about construction. The prescriptive approach provides detailed descriptions of regulations, methods and components, such as cement and concrete standards. With respect to concrete standards, this might mean setting mandatory SCM and cement proportions, determining allowable water content, certain types of aggregate to be used and so on. The performance approach focuses on the end results, although it can be just as codified and standardised as the prescriptive route. For concrete, for example, this means that performance is measured by standard test methods with defined acceptance criteria stated in the contract documents with no restrictions on the parameters of concrete mixture proportions.
For cement and concrete standards the prescriptive approach dominated in Europe and North America in the 20th century. However, this began to change in the US in 2002 when the National Ready Mixed Concrete Association (NRMCA) started working on its roadmap towards its Prescription to Performance (P2P) initiative. The key aim of the scheme was to shift the emphasis from prescribing (or indeed proscribing) the ingredients and their proportions in a concrete mixture to an emphasis on the performance properties of the combined materials. A decade later in the mid-2010s it found during a progress review that about half of the sample of project specifications studied were classified as ‘prescriptive.’ The biggest prescriptive restriction was on the quantity of SCMs set by specification writers. These were often percentages required in certain circumstances, such as freezing and thawing cycles, but imposed on all usage.
The current bout of interest in performance-based standards appears to be driven by the growing demand for cement and concrete products to lower their clinker factor by using higher amounts of SCMs. A far wider range of SCM-based products are being developed and coming to market and then encountering regulatory burden. These new material manufacturers are meeting up with the sustainability lobby, which also has an interest in decarbonising building materials. In 2022, for example, the Belgium-based Environmental Coalition on Standards (ECOS) started pushing for performance-based standards for cement. In a statement it said that, “it is commonly accepted that prescriptive specifications are convenient, but that this convenience is obtained at the expense of (eco-) innovation and decarbonisation.” It added that the switch to performance-based standards would also strengthen the European internal market for construction products as part of the Construction Products Regulation (CPR). It noted the ASTM standards for hydraulic cements (ASTM C-1157), that were developed in the 1990s in the US, and more recent developments in the field in Latin America.
It is worth pointing out that the prescriptive route does have its advantages. Using a prescriptive system is easier for less-experienced practitioners or generalists as it sets a minimum standard, even if it is over-engineered. Responsibility is shared out among the supply chain under a performance-based system for the quality of concrete. Under a prescriptive system, the supplier or contractor can be held responsible for quality control issues. For the performance approach this has to be specifically defined, although systems are in place to help. Making it harder via ‘red tape’ for new products to enter a market may stifle innovation but it also gives these new products far more time to be tested rigorously.
The whole prescriptive-performance standards issue opens up the wider implications of decarbonising construction materials. Where once there was a relatively small number of different types of cement and concrete now there are potentially hundreds, each looking for market share. Whether this situation will be the same in a decade’s time remains to be seen. A few common SCM-based cement and concrete products and formulations may predominate. For now, the future seems wide open and bigger changes, such as the global performance-based standards Betolar is advocating, may be required to support this. Considering the massive variation between countries and states, even within the US and the European Union, let alone the rest of the world, this seems ambitious. But it is not impossible!
Belgium: France-based Air Liquide has signed a memorandum of understanding with Holcim to supply and operate a Cryocap Oxy carbon capture unit for the forthcoming upgrade to the Obourg cement plant. The intention is that 95% of the CO2 generated from the new production line will be captured and then transported via the Antwerp@C export terminal for under-sea sequestration. Air Liquide and Holcim have co-applied for the European Innovation Fund to support the project.
Pascal Vinet, Senior Vice President at Air Liquide Group, said “The decarbonisation of the industry is at the heart of our Advance strategy. We are committed to accompany our customers through providing a wide range of innovative solutions. As an example, Air Liquide's proprietary Cryocap technology is particularly well suited to decarbonise the cement industry.”
Building new buildings from old ones
19 April 2023Holcim launched its formal take on construction and demolition waste (CDW) this week with the unveiling of its ECOCycle technology platform at the BAU architecture fair in Munich. This amounts to managing the distribution, processing, grinding and recycling of CDW back into new building material products. It claims that its concrete, cement and aggregate products can contain 10 - 100% of CDW with no drop in performance.
It is hard to gauge whether this is marketing for existing operations or the start of something new. Yet, in its 2022 Sustainability Report, Holcim said that it recycled 6.8Mt of CDW back into building products and that it is on track to meet its target of 10Mt by 2025. This target was neatly put into words as wanting “to build more new buildings from old ones.” Ahead of the announcement of the launch of ECOCycle, it added that it was going to roll out its Susteno product around Europe. This product, made from 20% CDW, was originally released in Switzerland in the late 2010s. Notably, recent acquisitions by Holcim that connect to its growing focus on CDW include Poland-based Ol-Trans in July 2022, UK-based Wiltshire Heavy Building Materials in October 2022 and UK-based Sivyer Logistics in April 2023.
As covered by Global Cement Weekly in February 2023, Holcim is not the only heavy building materials company pivoting to CDW. The European Union (EU) set a 70% recovery target for it in 2020 and various cement company sustainability reports have described the region as being receptive to moves into this sector. Cemex set up a global waste management subsidiary called Regenera at the end of January 2023. This division covers both alternative fuels, CDW and industrial by-products, so it is more general than Holcim’s current effort, but it shows intent in the same direction. Cemex previously set a target of recycling 14Mt/yr CDW by 2030.
Heidelberg Materials has been working on developing recycled concrete paste and its ReConcrete-360° concrete recycling process. As of its last sustainability report, this process had been tested at the pilot scale and is now being developed and scaled for industrial application. In addition to acquiring UK-based Mick George Group in December 2022 Heidelberg Materials has also purchased Germany-based RWG Holding in January 2023 and Germany-based SER Group in February 2023. All three companies operate in the CDW sector.
The other notable contribution that Heidelberg Materials has been making is as a partner of the ‘Circular City - Building Material Registry for the City of Heidelberg’ project. When Heidelberg Materials announced its involvement in the initiative in mid-2022 it said it was the first city in Europe to apply the principles of urban mining. The goal of the project is to take an inventory of the city’s buildings and then compile it in a digital material registry. The basis for the registry is the Urban Mining Screener developed by EPEA (Environmental Protection Encouragement Agency). This programme can estimate the composition of buildings based on building data such as location, year of construction, building volume or building type. Circular economy supply chains can then act accordingly when a building is retrofitted, demolished or deconstructed. So, for example, at the start of the project it worked out that a former US Army housing estate conversion site was calculated to contain approximately 466,000t of material, with about half in the form of concrete, a fifth in the form of bricks and 5% as metal.
That last example compares to a European Commission estimate that, as a whole, Europe generates around 450 - 500Mt/yr of CDW. A third of this is concrete. As with alternative fuels and slag previously, this may be money going into the ground. Recycling building materials is not new but any significant increase in reusing CDW that can reduce the clinker factor of cement (and the cement factor of concrete) offers a potentially cheaper route to building materials decarbonisation than carbon capture and utilisation/storage at current costs. Hence the continued interest.
Update on Hungary, April 2023
05 April 2023Heidelberg Materials’ reaction to changes in the law in Hungary received attention this week in the German press. The government introduced its Act on Hungarian Architecture in March 2023 that will enable it to set production levels and prices upon foreign-owned cement producers when the new legislation takes force in July 2023. An unnamed executive at the Germany-based Heidelberg Materials told Der Spiegel that, "These regulations represent a complete violation of all rules of the European single market.” They added that the Hungarian government appeared to be trying to force the producer to sell up. The report further alleges that the owners of Duna-Dráva Cement, Heidelberg Materials and Schwenk Zement, also received an offer to buy them out in mid-2022 from an individual with links to Prime Minister Victor Orbán.
This latest move to corral the cement sector in Hungary follows a number of recent changes in legislation. Notably, Decree 404 was introduced in July 2021. This set a 90% tax on the ‘excess’ profits of cement, plaster, chalk, gravel, sand, clay, lime and gypsum producers with the stated intention of wanting to prevent rising prices. The government set a threshold price for cement of Euro56/t at the time. At the same time it also blocked exports of cement and other raw materials of declared strategic importance unless affected companies had registered with the Ministry of the Interior. The European Commission (EC) responded to a parliamentary question on the matter in November 2021 saying that it had sent a formal letter to Hungary informing it that it was breaching some parts of the Treaty on the Functioning of the European Union (EU) on the free movement of goods. Although it noted that the new law also affected exports outside the EU, which was beyond the EC's remit. It added that the so-called ‘mining royalties’ did not seem to breach EU tax law.
Concerns over these issues between Hungary and Germany also surfaced in October 2022 when Orbán met with the German Chancellor Olaf Scholz. At this time Thomas Spannagl, the head of Schwenk Zement, said that the windfall profit tax in Hungary had a "serious negative" impact on business and that importers were not affected in the same way.
Heidelberg Materials’ subsidiary Duna-Dráva Cement is the largest cement producer by production capacity in Hungary with two integrated plants at Beremend and Vác. Together they have a production capacity of 2.8Mt/yr, according to the Global Cement Directory 2023, or about 70% of the country’s active national capacity. Heidelberg Materials reported that its result from equity accounted investments fell by 27% year-on-year to Euro262m in 2022 from Euro356m in 2023 due to a decline in earnings particularly in China and Hungary. This compares to a 4% drop to Euro3.74bn in its result from current operations before depreciation and amortisation across the whole business. Despite this it also noted that Hungary’s overall economic output had grown by 5% in 2022.
Just before the new laws affecting cement companies starting arriving in mid-July 2021, the Hungarian Competition Authority started an investigation into a “drastic” increase in raw material prices. This followed a warning a year earlier in 2020 that it had started competition supervision proceedings against the three main market participants: Duna-Dráva Cement, Lafarge Cement and CRH. All three are foreign-owned companies.
Lafarge Cement Hungary operates the Kiralyegyháza plant and it is due to change its name to Holcim in May 2023. Its predecessor companies, Holcim and Lafarge, also used to run plants at Hejocsaba and Lábatlan before the merger in 2015. However, the Hejocsaba plant ran into legal problems between Holcim and another investor, shut in 2011 and was later forcibly taken over by the other party in 2014. Today the plant operates as Hejőcsabai Cement- és Mészipari (HCM) but cement production is reportedly yet to restart nearly a decade later and Holcim says that legal proceedings are still ongoing. The Lábatlan plant, meanwhile, closed for good in the early 2010s. CRH took over some of Holcim’s other operations in Hungary in 2015 at the same time as the formation of LafargeHolcim but does not run any cement plants in the country at present. It does own cement plants in nearby countries that are able to supply the Hungarian market as well as running 19 concrete units. It describes itself as the “number two player” in the local market. It wasn’t specific on Hungary in its financial results for 2022 but it did describe sales in its Europe East region as being ahead of 2021, “due to a strong focus on commercial actions to offset significant cost inflation.”
Construction costs in Hungary do appear to have grown faster than other European countries in the second half of 2021 as the country came out of the coronavirus pandemic. However, the country's anti-immigrant labour stance may have also contributed to the situation, in addition to the high-energy prices and supply chain bottlenecks experienced elsewhere. In addition, cement companies are also capable of monopolistic behaviour. For example, Duna-Dráva Cement’s proposed acquisition of Cemex Croatia was blocked by the EC back in 2017 on competition grounds. However, given how international the cement industry has become, it is surprising to see this kind of treatment from a government within the European Union.
Belgium: Cembureau, the European cement association, has warned against a proposed 2041 phase-out date for industrial CO2 in the Commission draft Delegated Act on renewable fuels of non-biological origin (RFNBOs). The European Commission’s (EC) draft Delegated Act on the greenhouse gas saving criteria for RFNBOs sets the rules under which such fuels can qualify as sustainable. The European Commission considers that CO2 from industrial sources should not be allowed for the production of synthetic fuels as of 2041, as this would go against the objective of carbon neutrality by 2050.
Koen Coppenholle, the chief executive officer of Cembureau, said “By proposing an arbitrary deadline on the use of industrial CO2, the EC severely restricts the deployment of carbon capture and utilisation (CCU) in the cement sector.” He continued “We regret that this phase-out date was established without a thorough impact assessment. This risks negatively impacting several on-going carbon capture projects in the European Union (EU), at a time of a global race for green investments.” Coppenholle also called for a “real, thorough debate on CO2 utilisation” to ensure that EU policies support CCU and the deployment of CO2 transport infrastructure and storage.
The association is objecting against this proposal because in its view: manufacturing synthetic fuels using industrial CO2 make a “decisive” contribution to climate mitigation in the short to medium term; no impact assessment has been presented by the EC; the delegated act threatens the viability of existing CCU projects in the cement sector, which require a payback time of 30 - 35 years; and the Delegated Act does not recognise the reality of industrial installations like cement plants, which are faced with unavoidable CO2 emissions, and may not have access to CO2 geological storage sites.
The Delegated Act will be passed to the European Parliament and Council for further scrutiny until April 2023 whereupon they will either accept to reject the proposals. The scrutiny period can be extended to June 2023 at the request of either body.
Poland: The European Union (EU) Innovation Fund has awarded Euro228m towards the Go4ECOPlanet carbon capture and storage project at Lafarge Poland’s Kujawy cement plant. The project has a total cost of Euro380m.
It will use Air Liquide's Cryocap FG technology to capture the CO2 at the plant. The CO2 will be liquefied and transported by rail to a port and then injected into a depleted oil field for permanent storage. The transport and storage of CO2 once it has left the cement plant will be accomplished by cooperation with other partners with knowledge and experience in the liquefaction, transport and storage of gases. The goal is to create a complete carbon capture and storage industrial and logistics chain. Commissioning of the cement plant upgrade is planned for 2027.
Bulgaria: The European Union (EU) Innovation Fund has awarded a Euro190m grant to Devnya Cement and oil and gas producer Petroceltic for their 800,000t/yr ANRAV carbon capture, transportation and storage project. Devnya Cement's parent company Heidelberg Materials says that the partners expect to commission the full-chain project in 2028.
Heidelberg Materials Northern and Eastern Europe-Central Asia board member Ernest Jelito said "Devnya Cement's Devnya plant will be the first carbon-neutral cement plant in the country and the region. ANRAV will also enable other industrial players to join the carbon chain in the future and share storage capacity. In this way, we want to not only decarbonise our company in Bulgaria, but also provide opportunities for the whole region."
Energy for the European cement sector, November 2022
30 November 2022This week’s Virtual Global CemPower Seminar included an assessment on how interventions in European power markets might affect efforts to decarbonise industry. The presentation by Thekla von Bülow of Aurora Energy Research outlined how different countries in the European Union (EU) were implementing the forthcoming electricity price cap on ‘inframarginal’ producers to 180Euro/MWh. Each of these different proposals will entail differing levels of structural change to the wholesale energy market. For example, the Agency for the Cooperation of Energy Regulators (ACER) has recommended establishing a series of frameworks including a stronger focus on Contracts for Difference (CfD) schemes to promote renewable energy sources.
These changes are a consequence of the EU’s response to the Russian invasion of Ukraine. Gas prices surged and then pushed up other energy prices in turn to record levels. As this column covered in September 2022, the price of electricity shot up in the summer of 2022 whilst at the same time Russian gas imports ceased. Cembureau, the European Cement Association, called for urgent action to be taken to support cement production due to large increases in the cost of electricity. For example, in its latest overview of the German cement industry, the German Cement Works Association (VDZ) said that the sector has an electrical consumption of 30TWh/yr. Clearly energy policy is of great interest to the industry.
Since then, in late September 2022, Heidelberg Materials’ chief executive officer Dominik von Achten told Reuters that his company was preparing to shift production at its Germany-based plants to times and days when power prices are lower including at the weekend. However, this was dependent on negotiations with the unions. Von Achten also warned of plant closures being a possibility. Then, in November 2022, it emerged that Zementwerk Lübeck’s grinding plant in northern Germany had reportedly been only operating its grinding plant at night and at the weekend due to high electricity prices. Also in November 2022 European energy news provider Energate Messenger reported that Heidelberg Materials was preparing its cement plants in Germany with emergency backup power to keep critical services running in the case of electricity power cuts. One view from the outside came from equipment supplier FLSmidth’s third quarter results where it noted it had, “...started to see the first cases of budget constraints imposed by customers to counter the increasing energy cost. A high utilisation is still driving service activity in Europe, but some customers have put large capital investments on stand-by and we have experienced a slowdown in decision-making processes.” On the other hand it also pointed out that this trend is driving sales of products that helped reduce energy usage and/or switch to alternative fuels.
On the financial side, Holcim reiterated in its half-year report that, on the country, level the group uses a mixture of fixed price contracts, long-term power purchase agreements, on-site power generation projects and increased consumption of renewable energy at competitive prices to reduce the volatility from its energy bills. Both Cemex and Heidelberg Materials said similar things in their third quarter results conference calls. Cemex said that nearly 70% of its electricity requirements in Europe were fixed in 2022 with nearly 30% fixed for 2023. It went on to reveal that around 20% of its total costs for cement production in Europe derived from its electricity bill. Interestingly, it added that a higher proportion of its electricity costs in Germany were fixed than elsewhere in Europe, due to the use of a waste-to-electricity system owned by a third party that is fed with refuse-derived fuel (RDF), but that it was more exposed to floating fuel rates in Spain. Heidelberg Materials added that it supported energy price caps in both Germany and the EU whether they affected it directly or not.
So far it has been a mild start to winter in Europe. This may be about to change with colder weather forecast for December 2022. This will stress test the EU’s energy saving preparations and in turn it could force the plans of industrial users, such as the cement sector, to change. Some of the cement producers have commented on the financial implications of rising fuel costs but they have been quieter publicly about how they might react if domestic consumers are prioritised. Plant shutdowns throughout cold snaps are the obvious concern but it is unclear how likely this is yet. The variety of energy policies between fellow member states, their own supply situations and the differences between cement plants even in the same country suggest considerable variation in what might happen. If large numbers of cement plants do end shutting throughout any colder periods, then one observation is that it will look similar to winter peak shifting (i.e. closure) of plants in China. The more immediate worry in this scenario though is whether these plants actually reopen again.
The proceedings pack from the Virtual Global CemPower Seminar is available to buy now
Electricity supplies to cement plants in Europe
07 September 2022Cembureau called for urgent action on electricity prices from European governments this week to protect cement plants. Its maths was crushingly simple. One tonne of cement takes around 110kWh of electricity to produce. Electricity prices started to top Euro700mWh in some European Union (EU) countries at the end of August 2022. The association says that this represents added costs of Euro70/t of cement and a tripling of the total cost of production. This kind of sudden extra cost to cement production could lead to the widespread closure of cement plants and lead to chaos in the construction supply chain.
Previously, Cembureau reported in 2020 that electricity accounts for about 12% of a cement plant’s energy mix. In a dry production process plant 43% of this is used for cement grinding, 25% goes into raw material preparation, another 25% on clinker production and the final portion is typically used for raw material extraction, fuel grinding and for packing and loading. However, the cost of the electricity can make a big difference to the overall energy bill for a cement plant. When a report by the European Commission’s (EC) Joint Research Centre (JRC) modelled a reference northern European cement plant with a production capacity of 1.0Mt/yr back in 2016, it concluded that the EU cement industry was spending around half of its energy costs on electricity compared to smaller ratios at plants in China, Egypt, Algeria and... Ukraine. That last country in the list is poignant given its unwitting participation in the current energy crisis. One other thing to note is that cement producers, as large scale users, may well be paying less than the wholesale prices Cembureau appears to be quoting.
The timing of Cembureau’s proclamation is pertinent because the EU and individual states have mostly been waiting until the autumn before revealing their energy support plans. However, the dilemma for Cembureau, and other industry lobbying groups, is how to protect their sectors whilst domestic consumers are threatened. The aftermath of the coronavirus lockdowns has shown what can happen when production of key commodities stops: supply chain disruption, shortages and price rises. One ironic shortage in the UK during the lockdown periods was that of CO2, as high gas prices forced the main producer to shut down, leading to unexpected knock-on problems along the supply chain in areas such as food production. The same situation is reportedly at risk of happening again now too.
Cembureau’s wider solution is to link domestic and industrial consumers of electricity. So, some of its suggestions to policymakers are to use all available means of power generation, implement emergency measures such as price caps immediately, change the rules of the electricity market more generally to prevent future price shocks and to promote large scale renewable power source development. These are all things that could help both individual and industrial users of electricity.
Compare and contrast, then, with the MPA’s (Mineral Products Association) approach to the same problem in the UK. Its strategy instead has been to ask the UK government for tax cuts and freezes and to hurry along the forthcoming policy on support for Energy Intensive Industries. That’s not to say that Cembureau’s suggestions don’t also include some sector specific requests. It has asked that the EU temporary state aid framework adopted in late March 2022 should allow all energy intensive industries to have access to state aid covering 70 - 80% of eligible costs. It has also encouraged the wider use of alternative fuels, although it doesn’t link the reason why beyond reducing imports of fossil fuels. Lastly, it bangs the drum for its recent preoccupation, the EU Carbon Border Adjustment Mechanism, this time adding electro-intensity as a main criterion for eligibility for compensation under EU emission trading scheme (ETS) indirect state aid guidelines.
Government support packages for the energy crisis are starting to be announced in European countries but the question for everyone is whether they and other actions will be enough. One problem for the cement industry will be simply staying on the radar of policy makers facing a crisis looming over their citizens. Yet if there is not enough energy to go around then rationing of some kind will be inevitable and heavy industrial users will be the first obvious targets to be told to cut back. Some months later building material supply shortages will hit. One national cement sector to watch in the coming months may be the Spanish one as it has long warned of the risks of high electricity prices.
Belgium: Cembureau, the European Cement Association, has called for urgent action to be taken to support cement production due to large increases in the cost of electricity. It said that, if no measures were taken at both the European and national level, the current energy prices would lead to widespread plant closures across the European Union (EU). This in turn could create a crisis in the construction supply chain. It explained that one tonne of cement normally takes around 110kWh of electricity to produce. Therefore, with electricity prices now between Euro700 - 1000mWh, as observed in several EU member states, electricity costs amount to Euro70 – 110/t of cement, tripling the total cost of production.
The association has called for: all available sources of electricity generation to be used to boost power supplies; the immediate introduction of emergency measures, such as price caps; that the EU temporary state aid framework adopted in late March 2022 should allow all energy-intensive industries to have access to state aid covering 70 - 80% of eligible costs; and that co-processing in cement kilns should be actively encouraged and promoted at EU, state and local levels.
It added that further measures should also be considered, including: the electricity market design rules, including the marginal price setting mechanism, should be changed to prevent further electricity price hikes in the future; the cement sector should be made eligible for financial compensation under the EU emission trading scheme indirect state aid guidelines and that indirect emissions should be included in the EU Carbon Border Adjustment Mechanism (CBAM); the large-scale deployment of renewable energy should be supported across the EU; and that the pace of the EU climate agenda ('Fit for 55') should be maintained, and the CBAM should be implemented in a timely manner.