Carbon reduction path of cement industry

The necessity of carbon neutral transition in China's cement industry：

Cement industry is an important basic industry of our national economy, and also constitutes the trunk of modern urban architecture. Globally, the cement industry contributes 7% of total carbon emissions. If the global cement industry were a country, it would be the third largest carbon emitter after China and the United States. China produces nearly 60% of the world's cement, and the carbon emissions of the cement industry are more than half of the total carbon emissions of the global cement industry.

Carbon dioxide emissions in cement production mainly come from the clinker production process (see Figure 1), in which the carbon dioxide emissions in the process of calcination of limestone to produce quick lime account for about 55-70% of the total carbon emissions in the whole production process. The high-temperature calcination process requires the burning of fuel, so the carbon dioxide produced accounts for about 25-40% of the total carbon emissions of the entire production process.

With input from the Integrated Energy Transition Committee (ETC), the International Energy Agency (IEA), McKinsey's Global Cement Demand Forecast Model, and China's cement industry experts, we estimate that the decline in conventional demand will contribute about 27% of the carbon reduction in China's cement sector by 2050, driven primarily by urbanization and slower growth in the construction industry. As China's urbanization rate stabilizes, GDP-driven cement demand is expected to decline further, and maintenance and renewal of existing buildings will gradually dominate cement demand in the future. In addition, alternative building materials for concrete (e.g., steel, prefabricated materials, cross-laminated wood, etc.) will further reduce cement demand. However, the accuracy of demand forecasts is affected by the reality of urbanization and construction, and if demand does not fall as expected, other drivers will need to be relied on to drive carbon reduction, especially carbon capture and storage (CCS).

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:

Coal: Currently heating more than 95% of cement production and is the main fuel source used in 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.

Biomass, which currently provides heat for less than 1% of cement production, is considered a clean, emissions-free resource and, when combined with carbon capture technologies, 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.

Waste: With less than 5% of cement production currently heated by waste, we see waste as a better potential source of carbon reduction. 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.

Natural gas: Although natural gas cannot help the cement industry achieve zero carbon emissions of fuels, it can significantly reduce the carbon intensity of fuels, and therefore may play an important transitional technical role in future carbon 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 cement production company in China launched China's first cement CCS demonstration project in the second half of 2018 (Figure 3), which 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.

Enlightenment to cement enterprises

Capture the business model change opportunities brought about by the low-carbon trend, and actively adapt to downstream trends: cement companies should rethink their product structure, partnerships and their value in the entire construction industry, assess the changes in demand of major downstream customers such as construction developers in a low-carbon environment, and layout new growth opportunities as soon as possible. For example, cement companies can consider promoting technology research and development and enterprise acquisition in the field of alternative building materials, and advance layout of new building materials, building information models, and prefabricated and modular building solutions that may appear in the downstream builders, combining production and building information models to expand more business possibilities downstream. For the future access to sustainable fuel sources (such as biomass), cement companies should be positioned as early as possible according to the characteristics of the region, because other industries will also participate in the carbon neutral race and also want to achieve carbon reduction targets through sustainable fuels.

Under the theme of high-quality development in the "14th Five-Year Plan", vigorously promote the operational transformation of "low-carbon + digital", and improve efficiency to the extreme: deeply understand the impact of the national carbon emission reduction target on the cement industry chain during the "14th Five-Year Plan", and actively carry out end-to-end carbon footprint assessment and emission reduction cost curve assessment; Combine digital operations with low-carbon transformation, using artificial intelligence and machine learning to reduce volatility and improve energy efficiency in the production process, and reduce energy consumption and carbon emissions while continuously improving operational efficiency. For example, a European cement producer achieved fuel savings of 6% by creating a self-learning model of the kiln heat curve to optimize the shape and intensity of the kiln flame. The leading cement companies of the future can outperform their competitors through "low-carbon + digital" operations.

Pay attention to the medium - and long-term impact of low-carbon trends on the ecology of the cement industry, and explore possible new opportunities for green growth: keep track of new materials, new processes and new emission reduction technologies and other fields, carry out pilot projects under the premise of conditions, and obtain the advantage of the first mover in the development of the industry. For the possible "green premium" of emerging green products in the industrial chain, by developing corresponding "low carbon and zero carbon product lines", we will win reputation from environmentally conscious customers. In the future, the ecology of the cement industry may be reshaped by the trend of carbon neutrality, and the way to turn crisis into opportunity is to lay out innovative technologies in advance.