Potential Impacts of Climate Change on Cement Industry

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Potential Impacts of Climate Change on Cement
Industry PCA MTC Steering Committee, May 2008
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Climate Change Impact

• Among other things, we have to face the fact that
  whether we agree that a crisis of rapid climate
  change exists, the political drive is pushing
  this to reality and regulation is eminent.
• We have to be prepared!
• What do we need to Know?
• What is coming - requirements
• What are our emissions
• What are our options, specific to our operations
  and location
• How much will it cost
• Which is the best application
• How easy is implementation

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But first, where is it coming from? Sources of
CO2 Emissions
Agricultural byproducts
Transportation Fuels
Industrial Processes
1
20.6
19.2
Fossil fuel retrieval, processing/distribution
8.4
29.5
12.9
19.2
Residential, Commercial, Other
1
Land Use/Biomass Combustion
Power Stations
Waste Disposal
4
What about my house? Sources of CO2 Emissions
Waste
5
Heating/Cooling
18
Vehicles
51
Appliances
26
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What is coming Definitions and requirements
Definitions

• Greenhouse gases (GHG) Not Just CO2
• Carbon dioxide (CO2), Methane, Nitrous oxide
  (N2O, not NOx), hydrofluorocarbons,
  perfluorocarbons and Sulfur hexafluoride
• Carbon Credits Tons of carbon emissions
  granted to each facility, similar to a
  permitted emission limit except it decreases over
  time

Carbon Credits Example A Cement operation emits
2,000,000 tons of carbon Dioxide per year If the
law says they will reduce CO2 by 25 over time
Plant receives 1,500,000 carbon credits
- 2,000,000 tons CO2 per year X 75 1,500,000
carbon credits
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What is coming Definitions and requirements
Definitions

• Carbon credit allocation vs. auction
• Auction - govt. gets money, consumer pays

Industry (or speculators) buy CO2 credits at
auction
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What is coming Definitions and requirements
Definitions

• Carbon credit allocation vs. auction
• Allocation - Industry is given carbon credits to
  sell and reinvest

Industry invests on CO2 reduction technology
Industry sells CO2 credits on market
Industry is given CO2 credits
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What is coming Definitions and requirements
Definitions

• Cap and trade
• Maximum emissions (cap) set for facilities with
  reductions over time
• Carbon credits granted (or auctioned) to company
  to be sold as commodity (trade). Seller uses
  money to invest in CO2 reduction technology

Carbon Trade Example Brand X receives 1,500,000
carbon credits can reduce CO2 by 30. The Market
price is 30 per carbon credit when Brand X sells
1,500,000 carbon credits X 30 reduction
450,000 credits for sale 30 per credit X 450,000
x 3 years 40,500,000 40.5 Million to invest
in CO2 reduction technology
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What is coming Definitions and requirements
Definitions

• Leakage guarantees the export of business, an
  increase in global GHG emissions and a life
  threatening competitive disadvantage for US
  cement industry
• Leakage is a serious concern for the cement
  industry!
• If not properly legislated, leakage could give
  foreign companies a clear competitive advantage

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What is coming Definitions and requirements
Requirements - Legislation

• Currently there are over twelve proposed bills in
  Congress
• Most will be Cap and Trade type legislation,
  some with auctioning of carbon credits, some with
  allocation, some a combo
• Progressive GHG emission reductions from 2012 to
  2050
• Most will regulate 6 specific sectors of our
  economy
• Power Generation
• Industry/Manufacturing
• Transportation
• Oil gas
• Forestry
• Agriculture

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What is coming Definitions and requirements
Legislation
We are here
Law wants us here!
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What are your emissions ?

• Sources of GHGs to be Counted
• Direct Emissions
• Mobile combustion (heavy equipment, etc.),
  stationary combustion
• Non-combustion manufacturing, chemical processes,
  fugitive releases
• Indirect Emissions
• Energy purchased/consumed electricity, steam,
  heating/cooling
• Other indirect emissions
• Business travel, employee commute
• Product use

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What are our options ?

• More blended cements Type IP, slag blends,
  other additions
• Carbon neutral fuels, renewable fuels (bio mass,
  bio fuels)
• Energy efficiency measures Pyro-process and
  electrical efficiencies
• Carbon dioxide capture and storage (CCS)
  complex process to capture CO2 from fuel process
  or stack and put it underground
• Hybrid cement energy facilities utilization of
  waste heat
• Use of non-cement binders (e.g. geopolymers),
  with lower specific CO2 emissions
• Last 3 items are expensive, not practical right
  now short-term measures will have to be used
  while new technologies are being developed

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What are our options (contd.)?

• Blended cements
• Limestone, Slags, Fly Ash, Silica Fume and other
  additives
• Caution
• DOT / customer acceptance, Consistent product,
  Added metals, Color and quality variations

• Carbon dioxide capture and storage (CCS)
• Goodbye CO2, Site considerations based on
  capability to sequester CO2, Experience from
  enhanced oil recovery
• Caution
• Cot to capture, CO2 Hello again?, Who owns
  the rights?, Public acceptance, Regulations and
  regulatory authority?

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What are our options (contd.)?

• Carbon Neutral and Renewable Fuels Bio-Fuels
  are considered zero or low CO2 emissions since
  all of the carbon in bio-fuels came from the
  earths atmosphere
• Fuel crops, Bio mass, Wood wastes, Refuse derived
  fuels

• Caution
• High moisture or low BTU content, Consistency of
  fuels, Special handling - low bulk density,
  Hurdles for feeding and transport

• Energy efficiency measures
• Plant upgrades conversions, Grinding and
  pyro-processing improvements, Technology/software
  tools, Building and site energy measures
• Caution
• Expene, Discard good equipment? Timing,
  Limitations - equipment and product demand,
  Regulatory permit possible in reasonable time?

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Assembly Bill 32 (AB 32) - California Climate
Change Regulation

• Very Aggressive and Stand Alone
• California producers are vulnerable to a
  competitive disadvantage if implemented before
  other states are under similar regulation
• Preventing leakage difficult or impossible with
  international law
• Goals
• Reduce GHG emissions to 1990 levels by 2020 (25
  reduction)
• 80 reduction below 1990 levels by 2050

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Magnitude of the Challenge For California Current
Trend Versus AB32 Targets
1990 Emissions Baseline
173 MMton CO2 EQ Reduction
80 reduction, 340 MMT CO2 EQ
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California AB 32 - Sectors
Sectors Agriculture Forests Energy
(Electricity/Natural Gas) Water

• Sectors
• Transportation
• Land Use/VMT
• Vehicles
• Fuels
• High GWP Gases
• Recycling and Waste Management
• State Govt
• Green buildings
• State fleet

• Business/Industry
• Cement
• Semiconductor manufacturing
• Oil and Gas/Refining
• General Combustion

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AB 32 Timeline
Identification/ implementation of further
emission reduction strategies
Publish list of early actions
Adopt scoping plan
Adopt GHG reduction measures
Mandatory reporting 1990 Baseline
GHG reduction measures enforceable
Early action regulations enforceable
Adopt enforceable early action regulations
Reduce GHG emissions to 1990 levels
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CO2 Evaluation Cement and Concrete

• Both cement and concrete operations considered
• Energy use
• Fuel types and efficiencies
• Transportation and material use
• Product waste
• End of life consideration

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General Information Concrete and Cement in
California

• Cement operations
• 11 cement plants, cement 14 kilns in CA
• 3 in Northern CA, 8 in Southern CA
• Over 1,700 employees
• 11.3 MMT Clinker, 11.6 MMT Cement

• Concrete Operations
• Over 400 - 500 established concrete batch plants
  in CA
• Many more temporary batch plants
• 75 of cement distributed to concrete batch
  plants
• 25 distributed to other businesses

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Californias CO2 Reduction Strategy for Cement

• Cement
• Convert to clean alternative fuels
• Improve energy efficiency practices/technology in
  cement production
• Use blending cements

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CO2 Reduction Strategy for Concrete

• Concrete
• Reduce concrete waste
• Use less cement
• Universal GHG emission standard
• Blend SCM at batch plants

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How Will Climate Change Impact The Cement
Industry? Conclusion

• We have to be prepared Dont wait for law,
  start now!
• Get involved and provide input into regulations
  (PCA, etc.)
• Know your emissions Carbon Inventory, dont
  stop at the plant

• Know your options for each facility find the
  best fit
• Long range planning starts now

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Potential Impacts of Climate Change on Our
Industry PCA MTC Steering Committee, May 2008