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Managing the costs of CO abatement in the cement industry

Author

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  • Johan Rootzén
  • Filip Johnsson

Abstract

This article investigates how the costs associated with deep reductions in CO2 emissions from the cement industry will influence the costs across the entire value chain from cement production to the eventual end-use, in this case a residential building. The work is motivated by the substantial difference between the pricing of CO2 emissions and the costs of mitigation at the production sites of energy-intensive industries, such as cement manufacture. By examining how CO2 trading and investments in low-carbon kiln systems affect costs and prices further up the supply chain of cement our analysis provides new perspectives on the costs of industry abatement of CO2 and on the question of who could or should pay the price of such abatement. The analysis reveals that the cost impacts decrease substantially at each transformation stage, from limestone to final end-uses. The increase in total production costs for the residential building used as the case study in this work is limited to 1%, even in the cases where the cement price is assumed to be almost doubled.Policy relevanceWith the price of emission allowances under the EU Emissions Trading System (EU ETS) currently far below the levels required to unlock investments in low-CO2 production processes in carbon-intensive industry (i.e. petroleum refining, iron and steel production and cement manufacturing), this article seeks to pave the way for a discussion on complementary policy options. The results from this study, using the supply of cement and concrete to a residential building as a case study, suggest that because cement and concrete typically account for a limited proportion of the total cost of most construction and civil engineering projects, a policy scheme designed to allocate more of the costs of CO2 abatement to the end-users (of cement) would neither (significantly) alter the cost structure nor (dramatically) increase overall project costs.

Suggested Citation

  • Johan Rootzén & Filip Johnsson, 2017. "Managing the costs of CO abatement in the cement industry," Climate Policy, Taylor & Francis Journals, vol. 17(6), pages 781-800, August.
  • Handle: RePEc:taf:tcpoxx:v:17:y:2017:i:6:p:781-800
    DOI: 10.1080/14693062.2016.1191007
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    References listed on IDEAS

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    1. Tim Laing & Misato Sato & Michael Grubb & Claudia Comberti, 2013. "Assessing the effectiveness of the EU Emissions Trading System," GRI Working Papers 106, Grantham Research Institute on Climate Change and the Environment.
    2. Karsten Neuhoff & Andrzej Ancygier & Jean-Pierre Ponssard & Philippe Quirion & Nagore Sabio & Oliver Sartor & Misato Sato & Anne Schopp, 2015. "Modernization and Innovation in the Materials Sector: Lessons from Steel and Cement," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 5(28/29), pages 387-395.
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    Cited by:

    1. Ida Karlsson & Johan Rootzén & Alla Toktarova & Mikael Odenberger & Filip Johnsson & Lisa Göransson, 2020. "Roadmap for Decarbonization of the Building and Construction Industry—A Supply Chain Analysis Including Primary Production of Steel and Cement," Energies, MDPI, vol. 13(16), pages 1-40, August.
    2. Anna Hörbe Emanuelsson & Filip Johnsson, 2023. "The Cost to Consumers of Carbon Capture and Storage—A Product Value Chain Analysis," Energies, MDPI, vol. 16(20), pages 1-23, October.
    3. Åsa Löfgren & Lassi Ahlvik & Inge den Bijgaart & Jessica Coria & Jūratė Jaraitė & Filip Johnsson & Johan Rootzén, 2024. "Green industrial policy for climate action in the basic materials industry," Climatic Change, Springer, vol. 177(9), pages 1-12, September.
    4. Griffiths, Steve & Sovacool, Benjamin K. & Furszyfer Del Rio, Dylan D. & Foley, Aoife M. & Bazilian, Morgan D. & Kim, Jinsoo & Uratani, Joao M., 2023. "Decarbonizing the cement and concrete industry: A systematic review of socio-technical systems, technological innovations, and policy options," Renewable and Sustainable Energy Reviews, Elsevier, vol. 180(C).
    5. Ali, Muhammad Khurram & Nasir, Alishba & Abbasi, Kainat Jamil & Sajid, Muhammad, 2024. "A comparative multidimensional evaluation of parameters and alternatives for transformation of sustainable cement production in Pakistan," Socio-Economic Planning Sciences, Elsevier, vol. 93(C).

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