Canada's low-hanging fruit

In the run-up to the IEEE-IAS/PCA Cement Industry Technical Conference in Calgary, Canada, Adam Auer discusses the use of low-carbon fuels in the domestic cement industry to meet Canada’s federal and provincial climate change targets. By Adam Auer, Cement Association of Canada, Canada.

The substitution of traditional fossil fuels – mainly coal and petcoke – with lower carbon alternatives derived from the waste stream is a practical and much-practised technology in the global cement industry. Fuel substitution can represent a win-win for cement facilities aiming to reduce greenhouse gas (GHG) emissions while also lowering fuel costs.

According to the World Business Council on Sustainable Development (WBCSD) Cement Sustainability Initiative (CSI), the European average low-carbon fuel (LCF) substitution rate in 2014 was almost three times higher than in Canada (26 vs 9 per cent) and there are many examples of facilities achieving fossil fuel substitution rates in excess of 60 per cent, equivalent to a 50 per cent reduction in the carbon content of their fuel mix. 

Despite the country’s cement production base of modern facilities (all facilities use dry-process production technology with most also having preheater and/or precalciner towers) and deep commitment to best environmental practices, Canadian cement facilities fall significantly short of international best practice when it comes to fuel substitution. Over the last decade, Canadian facilities have typically averaged less than 10 per cent fuel substitution combined across the entire fleet, slightly behind the global average of companies reporting to the CSI Getting the Numbers Right (GNR) data inventory.

An issue of government policy

These relatively low substitution rates are not a reflection of a lack of interest or effort on the part of Canadian cement manufacturers, but rather of the barriers to LCF that exist in Canadian markets. While there are vital regional differences, the single-most important barrier to the adoption of low-carbon fuels has been, effectively, that government policies are maladapted to attracting the required investment capital to transition to significant volumes of LCF. Waste management policies in most jurisdictions across Canada are far less robust than those found in Europe for example. Similarly, municipalities have historically not been credited toward their diversion targets under provincial waste management systems for diverting waste for energy recovery. In the absence of strict waste management hierarchies and policies to support them, landfilling waste remains the most cost-effective disposal option for many streams of commercial, industrial and residential waste. This disincentivises investment in the collection and processing infrastructure needed to support a secure and sustainable supply of LCF materials.

Similarly, the permitting systems in place for traditional fuels typically do not formally recognise LCF. Facilities often must acquire permits through the much more complex waste management permit process, which was not designed to consider LCF as a distinct technology from incineration or waste-to-energy facilities.

Finally, LCF suffers from ‘social licence’ challenges in some communities (most acutely in Ontario and Alberta, where facilities are typically located close to residential centres). LCF is poorly understood and often conflated with incineration by some environmental and health advocacy groups who incorrectly believe LCF will lead to toxic emissions such as dioxins and furans or toxic bottom ash. While the industry has been working diligently and successfully with the government, community groups and other environmental and health experts to dispel myths and highlight the economic and environmental opportunities LCF represents, progress has been slow. LCF use in Canada has in most regions been stuck at small percentages and largely in the form of ‘pilot projects’.

Time for change?

There is reason to believe this is all about to change. After years of simmering on the back burner of the political agenda in Canada, climate change has emerged as a top priority in most provinces across the country and more recently for the federal government. As an Emission Intensive Trade Exposed (EITE) sector that is highly vulnerable to regulatory policies to reduce GHG emissions, but one eager to advance low-carbon solutions like LCF (as chief among a variety of manufacturing reduction opportunities), the cement sector has gone from a relatively-unknown industry in Canada to a litmus test for how to design good climate policy.

Carbon pricing is the workhorse of most climate change strategies in Canada. All but one cement facility in the country already operates under a carbon pricing system (tax or cap and trade) with the one remaining facility soon to be covered either by a provincial or federal pricing system. Chief among the industry’s priorities has been to work proactively with governments and environmental stakeholders to design effective pricing systems that also protect the competitiveness of the sector. Maintaining a level playing field with non-carbon priced competitors in the import and export markets (through, for example, free allocations) has been the primary consideration. However, these discussions have also provided an important opportunity to highlight the need to integrate carbon pricing with other complementary measures that remove barriers to low-carbon solutions.

Canada has a national GHG reduction target of 30 per cent below 2005 levels by 2030.
Best estimates suggest that despite the recent release of the Pan-Canadian Framework on Clean Growth and Climate Change, current policies could fall short of this target by some 44Mt. The Cement Association of Canada (CAC) estimates that a robust market for LCF could, over the medium term, reduce combustion emission intensity in the sector by up to 50 per cent and cut overall GHG emissions by up to 20 per cent, or 2-3Mta in direct  emissions reductions (with up to three times that amount in indirect reductions and avoided emissions). In other words, the direct emissions reductions potential of LCF in the cement sector alone could close Canada’s 2030 emissions gap by over two per cent while simultaneously improving the country’s manufacturing competitiveness and creating new jobs.

These numbers are compelling and are helping to awaken interest in LCF. As part of its engagement on carbon pricing, the CAC has been able to attract regulatory reform as well as financial support for transitioning to lower carbon fuels. In British Columbia, cement plants are benefiting from a five-year CAD27m (US$20.1m) fund to invest in facility-level LCF infrastructure and market development. Similarly, and following on the heels of a new regulatory framework for issuing LCF permits, Ontario has earmarked CAD40-60m in its Five-Year Climate Change Action Plan  to help coal-intensive sectors make the move to less carbon-intensive fuels. These investments, if sustained and broadened to other jurisdictions, could help ease the competitive impacts of transitioning to lower-carbon cement production and put the Canadian production base on a path toward best-in-class low-carbon fuel use. This would be a significant win for the sector and for Canada’s emerging leadership on climate change. 

This article was first published in International Cement Review in May 2017.