"China Accelerates towards Carbon Neutrality" Cement: A path to carbon reduction in the cement industry

Energy efficiency improvements are a no-regret step for technology maturity and could contribute about 5% of the carbon reduction in the cement sector by 2050. The energy efficiency reform of the cement industry includes two aspects: first, the emission reduction contribution of power saving (including raw material grinding, precalciner, cement workshop electricity, etc.), in order to avoid double calculation, we will put this part of the potential in the power industry carbon emission reduction analysis; The second is the emission reduction contribution of fuel savings, which is expected to save 5% of fuel consumption by 2030 and 14% by 2050.

Alternative fuels are a higher priority and more cost-effective means to drive about 10% of the industry's carbon reduction by 2050. If we take a case-by-case look at the main fuels that can heat cement production, we find that renewable waste is the most viable alternative to coal:

1. Coal: Currently more than 95% of the cement production heating, is the main fuel source used for limestone calcination at this stage. Due to the low price of coal, coal fuel is unlikely to be completely replaced, but it will continue to reduce its share in the process of fuel mix improvement, and coal is expected to account for 20-30% of the fuel used in cement production in 2050.

2. Biomass: Currently heating less than 1% of cement production, it is considered a clean resource with no emissions, and combined with carbon capture technology may produce net negative emissions. However, China's biomass resources are overall tight, and many industries have the possibility of significant growth in demand, and there are still no companies in the industry to use biomass to heat the cement workshop. Given the uncertainties on the biomass supply side, it is expected that biomass will comprise 5-10% of the fuel used in cement production in 2050.

3. Waste: Currently, waste provides less than 5% of the heat for cement production, and we believe waste is a better potential carbon reduction resource. On the one hand, organic waste can be used as fuel, and on the other hand, solid waste can replace clinker, reducing the use of limestone, thus further reducing carbon emissions in the production process. At the same time, waste utilization in China has three aspects of favorable policies, relatively sustainable supply, and continuous improvement of garbage classification. It is estimated that by 2050 waste will constitute 55-75% of the fuel used in cement production.

Electric heating: For cement production, the use of electric heating is not very feasible in terms of technical requirements (requiring higher temperature and power), equipment transformation or operational economics, and may not become an important means of emission reduction in the future.

4. Natural gas: Although natural gas cannot help the cement industry achieve zero carbon emissions of fuel, it can significantly reduce the carbon emission intensity of fuel, so it may play an important transitional technical role in future carbon emission reduction; At the same time, natural gas as an alternative fuel is also facing challenges such as rising costs and equipment technological innovation. This paper does not quantitatively analyze the role of natural gas in the future carbon emission reduction roadmap of the cement industry.

In the case of declining demand, improved energy efficiency, and alternative fuels, there is still a large gap between the expected carbon reduction results and the carbon reduction target under the 1.5 ° C scenario, and the support of emerging technologies is needed. Given the characteristics of clinker process emissions in cement production, in the absence of mass replacement of clinker by emerging technologies, carbon capture and storage (CCS) will be the only option for the cement industry to achieve carbon neutrality and is expected to contribute approximately 50% of the industry's carbon reduction by 2050. CCS requires matching geological conditions, such as proximity to declining oil fields, saltwater formations, etc. Moreover, due to the small scale and scattered locations of cement plants, it is difficult for a single enterprise to undertake large-scale CCS infrastructure construction, so it can be considered to participate in the "CCS industrial park" model, and carry out pilot projects with other industries that rely on CCS technology to reduce emissions (such as steel, coal power, etc.). For example, trials can start from Hebei or Shandong, where the industry concentration is high.

A leading domestic cement production company launched China's first cement CCS demonstration project in the second half of 2018, and is currently the only cement company CCS project in China. With an investment of more than 50 million yuan, the CCS project will capture about 50,000 tons of carbon dioxide per year with a capture rate of about 1/30, making it a small-scale pilot project. The future CCS pilot in the cement industry will focus on innovative breakthroughs in capture technology, a substantial increase in the scale of capture, and the gradual construction of the CCS industry chain.