Leading from the front

Following last year’s IPCC report on climate change, there has never been a greater urgency to reduce greenhouse gas emissions across all sectors and geographies to limit global warming to 1.5˚C. Therefore, the built environment will need to fast-track to zero carbon. In India, the world’s second-biggest cement producer, three of the country’s major players – Dalmia Cement, Ambuja Cement and UltraTech Cement – are leading from the front. By Jennifer Gerholdt, We Mean Business.

By 2050 the world’s urban population is expected to increase to 9.7bn from 7.3bn today. Demand for cement is forecast to grow steadily, rising by a total of 12-23 per cent by 2050. Predictions are that Africa and India will see a tripling of demand over the next 35 years through urbanisation. Currently, the US and Europe account for only 13 per cent of global cement production while China accounts for 60 per cent (a figure that is likely to fall as the country’s construction boom ends).

However, growth in demand will be accompanied by increasing global pressure for business to cut emissions in line with the Paris Agreement goals since governments will not be able to meet their own targets without the support of business. As the second-largest industrial greenhouse gas emitter, responsible for seven per cent of global emissions, the cement sector is a critical part of the solution.

This presents a challenge to the cement industry to be ambitious in the way it tackles climate change, and invest rapidly in research and development if it is to innovate at the rate customers and regulation will require.

Stakeholder demand for corporate climate action

Currently 40 companies in India have made commitments to tackle their impact on climate change through the “We Mean Business Take Action” campaign, which includes setting science-based targets, committing to 100 per cent renewable electricity and doubling energy productivity. Public targets like these are a clear way for companies to demonstrate to customers, investors and stakeholders that they are working towards future-proof growth in the transition to zero-carbon economies.

Dalmia Cement has set the bar high, by committing to become a carbon-negative business by 2040. While it is recognised that the pathway to achieving this is not yet entirely clear, Dalmia’s commitment demonstrates to investors, regulators and customers that the company is embracing the opportunities of the zero-carbon transition.

Dalmia Cement and Ambuja Cement have committed to setting science-based targets with the Science-Based Targets Initiative (SBTI) to help them define how much and how quickly they need to reduce their greenhouse gas emissions, both in terms of direct operations and supply chains. Both companies are now in the process of setting their targets, which will then be assessed by a team of experts to confirm they are ambitious enough. Fellow Indian company UltraTech Cement, along with Dalmia, has signed up to double its energy productivity with the EP100 initiative, led by The Climate Group.

Through initiatives like the Climate Action 100+ and the Investor Agenda, investors are increasingly calling for action on climate change both by companies and governments. Under Climate Action 100+ more than 300 investors with over US$32trn in assets are engaging 100 heavily-emitting companies on improving governance, curbing emissions and strengthening climate-related financial disclosures.

Meanwhile, the Investor Agenda, launched at the UN climate talks in Poland in December 2018, called on governments to bring in various policies including “phasing out thermal coal power”, “putting a meaningful price on carbon” and “phasing out fossil fuel subsidies.” Germany has recently announced an end to coal burning by 2035-38 and while this is not quite ambitious enough, it is a signal that many other countries may follow suit and industry should be prepared.

Cities will influence demand patterns

Cities are starting to play a key role in driving change in the built environment. To date some 22 cities, from Cape Town to Tokyo, have committed to the World Green Building Council’s Net Zero Carbon Buildings Commitment, launched last year. This will require them to enact regulations and planning policies that ensure all new buildings within their jurisdiction are operating at net zero carbon from 2030, and all buildings, including existing ones, operate at net zero carbon by 2050. Some 12 companies as well as four states and regions have also signed up to this commitment. In India the Kochi Municipal Corporation (KMC) has partnered with World Resources Institute India (WRI India) to develop a roadmap and action plan for all buildings to achieve zero-carbon potential for Kochi city. 

Decarbonising cement

Energy Transitions Commission Reaching net-zero carbon emissions from heavy industry sectors, including cement, is technically and financially possible by mid-century, according to analysis from the Energy Transitions Commission. Emissions from the production of cement come mainly from the energy used for heating kilns and the chemical processes that convert limestone into calcium oxide. The key actions cement companies can take are: • Improve energy efficiency – 20 possible technologies (including retrofits) and measures together could deliver 10 per cent energy savings on the typical thermal cement production process (most with a two-year payback period). • Change the fuel for heat – The heat needed to produce clinker makes up 35 per cent of emissions from cement production. This can be reduced in the short term by switching from coal to gas. Longer term cement companies can explore increasing the use of waste or biomass as a fuel (which requires only a modest retrofit to existing kilns), replacing fossil fuels with hydrogen (which requires redesign of the kiln) and switching to electricity as the heat source.

The race to innovate

Innovation will play a critical role in enabling cement companies to meet their bold climate targets and this will inevitably disrupt the sector. Recent research by the Energy Transitions Commission shows that reaching zero-carbon emissions in the ‘harder-to-abate’ industrial sectors, including cement, can be achieved by mid-century. New research published in October 2018 reveals that the sector can reduce its emissions by 80 per cent by 2050 with existing technology alone.

Reducing process emissions from cement, by optimising clinker use, is one area where a number of cement companies are already innovating. Ambuja Cement, Dalmia Cement and UltraTech Cement are using low-grade limestone, along with fly ash and slag in their blended cements. This is an effective way to both recycle industrial waste and reduce the companies’ carbon footprint. Blended cements now account for nearly 80 per cent of Dalmia Cement’s product portfolio and over 90 per cent of Ambuja’s.

Ambuja’s other innovations include the launch of its autoclaved aerated concrete (AAC) blocks in 2018 as an alternative to conventional bricks. The better insulation properties of the AAC blocks reduce the need for energy to power either air conditioning or heating. In addition, Ambuja is working to reduce water use through modular curing, instant mix proportion and rainwater harvesting services. These not only help protect India’s water security but also indirectly reduce emissions that would have been used to lift and pump water.

Thanks to these efforts, these companies are seeing significant results. Dalmia Cement has optimised its clinker factor from 81 to 63 per cent and reduced carbon emissions by more than a third from 1990 levels. UltraTech Cement and Ambuja have also made strong progress. By last year Ambuja had lowered specific carbon emissions by over 31 per cent (compared to 1990) and is aiming to cut its carbon by one third by 2020 and by 40 per cent by 2030.

Powered on by their drive to find innovative emission reduction solutions, companies are developing expert partnerships. Dalmia Cement has partnered with the École polytechnique fédérale de Lausanne in Switzerland and IIT Delhi to develop new ways to produce high-blend cements, even in locations where slag is not available.

Ambuja Cements has founded Ambuja Knowledge Centres, working with architects, engineers and construction professionals to foster product innovation and sustainable construction across the industry, helping both Ambuja and its customers to reduce their carbon footprint.

Recently UltraTech has filed four patents for products that require less natural resources such as fossil fuels and limestone as compared to conventional products. These products will eventually help to save water and use waste from other industries, resulting in a lower environmental footprint.

Government policies and company action will drive demand for low-carbon cements

Following the IPCC report, national governments recognise that they need to step up their own ambition on climate change. India is already a leader in renewable energy and electrical vehicles. At the end of June 2018, renewable energy capacity in India accounted for over 20 per cent of the total mix and the country is aiming for at least 15 per cent of its road vehicles to be electric in five years.

What we are seeing globally is a series of ‘Ambition Loops’ that demonstrate how corporate ambition on climate drives greater policy ambition and vice versa. In 2014 India set a bold target to develop 100GW of solar capacity by 2022. In support of that goal, the state of Karnataka set its own target to develop 2GW of additional solar generation by 2021. However, certain charges on solar generation meant that solar power prices varied widely, making it less competitive and less attractive to businesses than electricity made from fossil fuels.

The Green Power Market Development Group, a coalition of Indian and international companies working to purchase renewable electricity, asked regulators to provide clarity on the timeline of charge exemptions for solar projects in Karnataka. In response, the Karnataka Electricity Regulatory Commission created a clear 10-year timeline for charge exemptions. With this clarity and confidence about future price levels, corporate solar purchases grew quickly in Karnataka, jumping from 0MW of additional solar capacity to over 1000MW in the following four years. This made Karnataka the state with the most open-access solar energy projects in India.

Systems transformation starts with incremental shifts

While individual company actions on climate will not be sufficient to meet the Paris Agreement goals, systemic transformation starts with incremental shifts. By demonstrating their ambition and vision in embracing the zero-carbon transition, these Indian companies are future-proofing their businesses and reaping the rewards of greater innovation, investor confidence, profitability and competitiveness.

As disruption in other parts of the built environment system increases – for example through more zero-carbon building policies, increased investor demand for environmental impact disclosure and greater demand for low-carbon cement – these are the companies that will be best positioned to capitalise on the business opportunity sustainability offers and play their part in creating a zero-carbon future, faster.

This article was first published in International Cement Review in March 2019.