Displaying items by tag: Cembureau
It looks like Cembureau, the European Cement Association, got its own way on the proposal to amend the European Union's (EU) Emissions Trading Scheme (ETS) that the European Parliament voted on last week. The system has been tightened but not enough to make the cement industry suffer, for now. Naturally, the environmentalists are outraged.
The key reform was that the carbon credits reduction rate (the linear reduction rate) will increase and the market stability reserve (MSR) will double its capacity to absorb excess allowances on the market. However, the big battle was fought over whether to include an importer inclusion scheme (or Border Adjustment Measure) or not. Lots of political 'horse-trading' took place right up to the vote on 15 February 2017 to adopt the draft proposal, with particular battles over the importer inclusion scheme. Negotiations will now continue with the Council of the European Union before the proposal returns to the European Parliament for a final vote.
Cembureau seemed pleased with the outcome. It supported the proposal principally for maintaining competitiveness and for not ‘deliberately discriminate between sectors.' It also liked the inclusion of dynamic allocation, a benchmark based on what it said was real data, a flexible reserve in relation to the allowances available for free and those designated for auctioning and an impetus towards funding carbon capture and storage. It also singled out its pleasure that an amendment for an importer inclusion scheme had not been accepted.
This last point caused a spat between Cembureau and Bruno Vanderborght, a former executive at Holcim, at the end of January 2017 in the lobbying frenzy before the vote. In robust language Vanderborght accused the European cement industry of using the ETS for negative leakage. His argument was that the free allocation of carbon credits given to the cement industry had been used to 'maximise gross margin.' Instead of spending the money on upgrading inefficient units, the industry had used its same inefficient units to increase exports of clinker to outside the EU, to places like Africa. Cembureau countered that it had been taken out of context by Vanderborght and that arguments he levelled, such as data from the Cement Sustainability Initiative (CSI) suggesting that the EU has the highest share of clinker production in old, energy-intensive installations worldwide, were misleading since CSI reporting may not be as thorough outside of Europe.
Predictably, the proposal didn't please the environmental lobby, which denounced the deal as toothless. Environmental campaign group Sandbag has been on the case of the cement industry for several years, pointing out that its own research shows that cement producers have 'abused' the free allocation scheme for profit and that emissions have actually increased under the ETS so far. Its headline figure in the wake of the vote was that the cement sector was set to rake in a surplus of allowances worth Euro2.8bn by 2030.
Following the vote Sandbag took no time to point out that the ETS carbon price had sunk below Euro5/t. In its assessment, a carbon price of least Euro50/t is required to stimulate low carbon investment. However, the carbon price soon rose back up. Little impartial analysis is available on whether the amended proposal will actually deliver its aims, although a Thomson Reuters analyst did describe the outcome as one that 'significantly tightens the market balance.'
In a final twist, the lead rapporteur for the reforms to the EU ETS is a UK member of the European Parliament (MEP). Depending on how the Brexit negotiations go, the guy marshalling the amendments to the EU ETS won't be subject to its eventual implementation.
The EU ETS is slowly starting to improve through reforms such as those voted on last week but it remains very much in doubt whether it will be able to deliver solid meaningful reductions in carbon emissions. Cembureau is rightly protecting the industry it represents but at present the price of coal appears to be a better driver of measures such as increased use of alternative fuels than the ETS. The ETS has had the misfortune in operating for the last few years throughout a market depression in Europe where it has been propping up some cement producers and now it’s helping them get back on their feet as they export their products out of the continent. In a world awash with excess clinker the policy makers are eventually going to have to decide how much they want to damage industry in order to meet their environmental aims. We need cement and we need to cut carbon emissions. Someone is always going to be unhappy in this situation.
Belgium: Cembureau has issued it support for the decision by the European Parliament to amend the Emissions Trading Scheme (ETS). The European cement association has welcomed the decision that its says does not ‘deliberately discriminate between sectors and to apply a fact-based approach to policymaking.’ It added that the changes would make European industry more CO2 efficient, while maintaining its competitiveness.
Particular parts of the decision it welcomes include the inclusion of dynamic allocation, a benchmark with a minimum reduction of 0.25%, the introduction of a 5% flexible reserve in relation to the allowances available for free and those designated for auctioning and the impetus given to funding for carbon capture and use. It added that it was pleased to see that the amendments for an importer inclusion scheme, which it viewed were targeted at the cement sector, were not accepted. Finally, it reinforced its call for a ‘sector-neutral’ policy that does not differentiate between industries.
Cembureau lobbies for revised European emissions trading scheme
07 February 2017Belgium: Cembureau, the European cement association, has lobbied members of the European Parliament with its opinion that the European Union (EU) Emissions Trading Scheme (ETS) must maintain free allowances at the level of best-performers in order to achieve real emission reductions whilst maintaining a competitive industry in Europe. It expressed its views ahead of a scheduled vote in the plenary session of the Parliament in February 2017. One of its key demands was that fairness should be a key principle of policy making and that jobs in one sector are just as important as those in other sectors.
Cembureau called for the proposal to amend the EU ETS to ensure that all energy-intensive industries are on the carbon leakage list and all installations receive a free allocation based on ‘ambitious but realistic’ benchmarks, and benefit from free allocation based on actual production. It wants a sufficient number of free allocations for energy intensive industries at risk of carbon leakage to be made available, hence the auction share should not be higher than 52%. It also wants no further burden to be imposed on EU-ETS sectors. The 43% reduction objective and the 2.2% linear reduction factor for phase IV should not be further increased. Lastly, it has asked for support for innovation focus on energy intensive industries with an extension to cover the whole range of low carbon technologies including industrial carbon capture and utilisation (CCU). The Innovation Fund should be fully financed from the auctioning share.
In response to an amendment made by the Environment, Public Health and Food Safety committee (ENVI) the cement association said that it did not believe that this proposal could work. Its main concerns were: that introducing such a mechanism with a consequential loss of free allowances could create legal uncertainty and hamper further investments by the cement sector in Europe; that it would be impossible to measure the CO2 performance of third country producers; an overall lack of clarity as to how such scheme would operate; serious concerns about World Trade Organisation (WTO) compatibility; that application to a few sectors would only lead to discrimination in the downstream market where cement competes with other building materials (steel, glass, wood, asphalt) that are not subject to such a scheme; and that the suggested scheme would lead to a competitive disadvantage for European cement producers on export markets where local cement players are not subject to similar CO2 constraints.
Cembureau also used the opportunity to highlight some of the research projects the local sector is undertaking to improve its environmental performance, reduce CO2 emissions and improve energy efficiency.
Europe: Cembureau, the European Cement Association, has raised concerns that amendments submitted by the European Parliament’s Environment Committee, which foresee in an introduction of a Border Adjustment Measure (BAM) with the loss of free allowances for the cement sector in Phase IV of European Union (EU) Emissions Trading Scheme (ETS), starting in 2020, will be detrimental to the local cement industry. The association is concerned that the changes unduly affect the cement industry, although lime, brick and tile industry have been included also.
The association described included that a BAM against certain but not all sectors as 'discriminatory and legally flawed.' It raised the problems that the policy would bring for the competitiveness of the cement industry both globally and internally. It also blamed the influence of reports by non-government agencies upon policymakers.
Environmental campaign group Sandbag defended the changes as ones that could put a stop to the, ‘cement sector’s windfall profits from the ETS.’ It argued that the proposed import inclusion carbon mechanism would expand the scope of the ETS to
include imported materials for a number of sectors, meaning that products sold in the EU would face the same costs for carbon compliance, regardless of their origin.
"In a number of ways, this proposal marks a huge step forward in the evolution of the ETS. The proposed border adjustment measures are a good starting point for levelling the playing field for all cement producers," said Wilf Lytton, Industrial Carbon Researcher at Sandbag.
Belgium: European cement production grew by 0.9% year-on-year to 248Mt in 2015, according to newly published data in the 2015 Activity Report from the European Cement Association (CEMBUREAU).
Individual European countries recorded a mixed performance. Cement production in Spain grew by 3.3% in 2015. However, in Italy production fell by 3.4% and in France it fell by 5%. CEMBUREAU reported strong performance from its members in Eastern Europe, notably in the Czech Republic, Hungary and Romania. In the European Union (EU28) the association reported a 3.7% increase in cement production to 172Mt fro 165.8Mt. However, CEMBUREAU reinforced the face that EU28 cement production remains 37.7% below the production levels recorded in 2007.
CEMBUREAU data uses estimates for some countries where the data is unavailable including Germany, the UK and Poland. The association represents the national cement industry associations and cement companies of the European Union with the exception of Cyprus, Malta and Slovakia plus Norway, Switzerland and Turkey. Croatia and Serbia are associate members of the organisation.
Sandbag, a climate policy think tank, published its report on the European cement sector entitled ‘Cement - The Final Carbon Fatcat’ last week on 16 March 2016. Amongst its findings the report accused the European Union (EU) Emissions Trading Scheme (ETS) of pushing up emissions created by the cement industry. Unsurprisingly, Cembureau, the European Cement Association, took exception to some of the content of the report and issued a rebuttal. Notably, it said that ‘allegations that the ETS has incentivised overproduction are based on thin air.’
Here we present a section of the executive summary of Sandbag’s report that describes the current situation with the EU ETS and how Sandbag argue this has distorted the European cement industry.
The depressed carbon price under the EU ETS has done little to effect a reduction in emissions from the European cement sector. A surplus of more than 2bn EU allowances (EUAs) has built up in the European carbon market since 2008 with no expectations for the situation to change significantly over the medium term. Industry sources cite that the costs of upgrades to best available technology are tantamount to greenfield investments. The current low carbon price alone is not enough to render such investments economic, especially in the context of a depressed cement market. This applies even more so in the case of capturing and storing/using direct emissions (CCUS) which at this stage seems to be an expensive technology merely in the development stages across Europe.
Figure 1: Expected development of allowance surpluses for major industrial sectors until the end of Phase 3. Source: EUTL (Sandbag calculations).
The rules governing free allocation of allowances have failed to incentivise abatement in the cement sector. In particular, the sector’s inclusion on the list of sectors exposed to the risk of carbon leakage, as well as insensitivity to production changes, will cause its over-allocation to balloon. As we reveal in Figure 1, if activity levels continue at 2014 levels, by 2020 this surplus will be larger than 2.5 years’ worth of emissions. This is more than would be the case for almost any of the other major industrial sectors, practically all of whom expect to lose all or most of their earlier surpluses by the end of this decade.
The chronic oversupply of EUAs to the cement sector is partly due to the fact that cement firms are able to optimise their production of different products across different facilities to maximise their free allocation. Free allocation to cement installations is based on benchmarks relating only to the manufacture of clinker, an intermediate product. Many firms have been able to retain maximum free allocation, corresponding to peak production, by keeping a range of their facilities operating at just above 50% of their historic activity levels – the level required to retain 100% free allocation.
Figure 2: EU net clinker trade. Source: UN COMTRADE (Sandbag calculations).
This free allocation loophole has resulted in both windfall profits and a de facto production subsidy for highly carbon-intensive clinker. This clinker is then either blended in higher than necessary shares into cement or, as we show in Figure 2, actually exported, as EU cement subsidised by free allowances has a competitive advantage compared to manufacturers outside the ETS. This creates a net import of emissions to the EU – the complete reverse of the carbon leakage threat that many industry groups have emphasised. As we show in Figure 3, this stimulation of clinker exports to countries outside the EU has been the single most damaging factor to the decarbonisation of this sector, pushing 2013 emissions nearly 15Mt higher than they could have been.
Figure 3: Different factors’ contribution to cutting the cement sector’s emissions EU-wide during 2005 - 2013. Source: Cement Sustainability Initiative ‘Getting the Numbers Right’ database (Sandbag calculations).
As well as causing a surge in emissions, the insufficiently responsive free allocation rules leave cement companies strongly over-allocated. Table 2 shows the surpluses we estimate that the five cement majors have accumulated (or monetised) since the beginning of Phase 2.
Company | 2008 - 2014 surplus | Value | 2014 emissions |
(Million EUAs) | (Million EURO) | (Mt) | |
Lafarge-Holcim | 49.8 | 299.7 | 18.2 |
Heidelberg-Italcementi | 45.8 | 275.5 | 28.1 |
CRH | 31.9 | 191.8 | 10.3 |
Cemex | 26.2 | 157.5 | 8 |
Buzzi Unicem | 10.4 | 62.5 | 7.3 |
Table 2: Largest cement companies’ surpluses and emissions (millions of EUAs, euros and tonnes). Source: EUTL (Sandbag calculations).
These five companies from the cement sector have collectively received nearly Euro1bn worth of spare EU allowances (EUAs) for free between 2008 and 2014. As the number of free allowances available to all industry is fixed, over-allocation to cement companies reduces the allowances available to other sectors that might really need protection.
The ETS therefore provides few incentives for these firms to invest in decarbonisation technologies. Given widespread expectations for an over-supplied carbon market well in to the 2020s and, consequently, a low carbon price, the opportunity cost of holding onto allowances is negligible when compared to the high cost of investment in abatement technologies.
Thanks to Alex Luta and Wilf Lytton at Sandbag for letting Global Cement publish this extract of their report. The full version of ‘Cement - The Final Carbon Fatcat: How Europe’s cement sector benefits and the climate suffers from emissions trading flaws’ is available to download from Sanbag’s website.
Belgium: Cembureau has taken exception with a report published by Sandbag on the emissions trading scheme and European cement sector entitled ’ Cement - The Final Carbon Fatcat - How Europe’s cement sector benefits and the climate suffers from emissions trading flaws.’ The European Cement Association alleged that the report contains factual and numerical errors. It also criticised the conclusion that the European Union (EU) emissions trading scheme (ETS) has incentivised overproduction.
“The allegations that the ETS has incentivised overproduction are based on thin air and do not acknowledge the strides the cement sector has made through investments in the reduction of its CO2 emissions. The ever-recurring mantra on over-allocation ignores that the cement industry has always called for an allocation closer to production and will continue to do so,” said Cembureau in a statement. It pointed out efforts by the cement industry to reduce the clinker content of cement and the presence of cement at the start of the building supply chain.
Cembureau also disagreed with the concept of a tiered approach as suggested by Sandbag. It has lobbied for a revision of the auctioning/free allowance of shares so as to allow the best performers to receive full free allocation, in line with the European Council Conclusions of 23 October 2014. It pointed out risks of a tiered approach to include unclear and unverifiable criteria to distinguish between sectors that could be discriminatory and open to legal challenge.
Despite its complaints Cemburea did partly agree with Sandbag’s views on the need for innovation funding to stimulate breakthrough technologies, a closer alignment between allocation and production in the form of a dynamic allocation and a stronger recognition of the role of alternative fuel and raw material use in emission reductions, with the inclusion of a landfill ban on recoverable and recyclable raw materials.
In its report Sandbag suggested that the EU ETS may have caused emissions in the cement sector to have risen beyond ‘business as usual.’ It estimated that emissions may have risen by more than 15Mt due to the scheme. It also flagged up five ‘Carbon Fatcat Companies’ from the cement sector who have collectively received nearly Euro1bn worth of spare EU allowances for free between 2008 and 2014. The cement producers cited by Sandbag were LafargeHolcim, HeidelbergCement and Italcementi, CRH, Cemex and Buzzi Unicem.
CEMBUREAU welcomes new president and vice president
17 June 2015Belgium: Daniel Gauthier, CEO of Western Europe-Africa and member of the managing board of HeidelbergCement, has been elected as president of CEMBUREAU for a two-year term after having completed his mandate of vice president over the last two years. He takes over from Peter Hoddinott, executive vice president of performance and member of the executive committee at Lafarge. In addition, Gonçalo Salazar Leite, CEO of Secil, has been elected as vice president of CEMBUREAU for a two-year term.
"The industry must now build upon the accomplishments of 'The Concrete Initiative," said Gauthier. The initiative was launched one year ago. "Concrete is essential to Europe's future, providing the buildings and infrastructure that society needs, as well as growth and jobs. The circular economy, competitiveness and climate change will also remain at the forefront of CEMBUREAU's activities."
"With the election of Gauthier, CEMBUREAU and the priorities of the european cement sector are in excellent hands," said Hoddinott. "He will advance and reinforce the agendas of putting the cement industry forward as a solution provider, where concrete can fulfill both the aspirations of the end users of construction and act as a partner in fulfilling the needs of policymakers."
"I take this opportunity to thank Peter Hoddinott for his commitment to the Association over the last two years," said Koen Coppenholle, CEMBUREAU chief executive. "We are now at a turning point. After a protracted period of negative growth, Europe is getting back on its feet. Indeed, our 2014 activity report shows some glimmers of hope for our sector."
Compared to 2013, 2014 cement production in the CEMBUREAU member countries saw a very moderate recovery, rising by 0.3% year-on-year to 235.5Mt after the drops recorded in 2013 and 2012 (1.4% and 8.2% respectively) and having fallen by 27% since 2007. Developments in cement demand were in line with the upturn in the general economic and construction environment, particularly over the second half of the year, reflecting somewhat improved sentiment and activity, despite tight budgetary conditions in many member states. Global cement production has been estimated at 4.3Bnt in 2014, translating into a 6.7% increase compared to the 4Bt recorded in 2013. The CEMBUREAU member countries accounted for 5.5% of global production, with China representing 56.5%, compared to 58.3% in 2013. Without taking into account China, global cement production increased year-on-year by 11.3%.
Cembureau calls for circular economy policy
04 July 2014Belgium: Cembureau, the European cement association, believes that the European Commission's proposed headline resource efficiency target fails to capture real resource efficiency improvements by adopting the weight-based Raw Material Consumption (RMC) as a proxy.
While the cement industry is raw-material intensive by mass, it is also one of the biggest contributors to the circular economy. Cembureau believes that in order to enhance resource efficiency in the cement industry, the following factors should be ensured:
- When applying the waste hierarchy (prevention, re-use, recycling, recovery, disposal), options that deliver the best overall environmental, social and economic outcomes should be encouraged and assessed at the local level;
- Efficient use of resources throughout the value chain spanning from extraction, manufacturing, construction, use, to end-of-life stages;
- Use of resources in such a way that has the lowest environmental, social and economic burdens over the long term;
- Use of resources appropriate to the reserves available, i.e. scarcity/abundance are critical factors, which mean sustainability needs to be approached in different ways for different resources.
Cembureau issues joint statement on European Commission air policy review proposals
11 December 2013Belgium: Cembureau has issued a joint statement with other members of the Industrial Emissions Alliance declaring its concern for aspects of the upcoming European Commission proposals regarding the Air Policy Review. In particular the European Cement Association (Cembureau) singled out emissions reduction targets and the target year of 2025.
The statement calls for 50% 'gap closure' for emission reductions as it views a proposed rate of 75% as 'unobtainable' due to issues with how emissions reductions will be delivered by current legislation, the costs of going beyond current legislation and the environmental benefits of further measures. It added that the high rate would damage European Union (EU) industrial competiveness and EU jobs. The statement also calls for the target year to be extended to 2030 to align it with the Framework for Climate and Energy Policies dates.