The Polish cement industry has achieved a remarkable transformation over the last decade, as multimillion euro investments have boosted production and dramatically improved its environmental performance. The sector now consists of 14 modern cement plants. Domestic cement production reached 18.9Mt in 2018 and 18.7Mt in 2019, making Poland the third-largest cement producer in the EU with 10 per cent of the region’s cement output.
However, the forthcoming phase of the EU Emissions Trading Scheme (2021-30) threatens to impose high costs on its industry and in a worst case scenario result in the displacement of capacity to producers outside of the EU. Here the Polish Cement Association presents its case for a level playing field.
During the 1995-2017 period the Polish cement sector invested PLN9.7bn (US$2.5bn) to replace old processing lines, upgrading warehouses, improving environmental protection, increasing process efficiency and introducing new systems to manage company value. By eliminating obsolete wet-process technology, the sector replaced 50 per cent of its manufacturing capacity and modernised 40 per cent.
Approximately 99 per cent of cement sales are made in the domestic market while exports are mainly delivered to nearby EU countries. However, Belarus and Russia introduced restrictions to eliminate Polish exports. In terms of imports into Poland, volumes have significantly increased between 2013-19. In 2017, around 24 per cent of imports originated in Belarus.
Revenue generated
The Polish cement industry earned government revenues of PLN1.88bn in 2017. From this total, PLN1.272bn went to central government, PLN403m was earned by the social security subsector, PLN195m went to local government and environmental protection, while water management received funds of PLN7m.
The regions where the cement industry generated the highest value-added products were as follows: Krapkowice (PLN349m), Opatoweic (PLN311m), Warsaw (PLN252m), Chelm (PLN180m), Pajeczno (PLN674m) and Znin (PLN162m).
The environment
According to the Polish Cement Association (PCA), the Polish cement industry has undertaken several initiatives to improve its environmental performance. As a result, by 2017 particulate matter emissions dropped significantly by 99.9 per cent from levels in 1975. CO2 emissions were 30 per cent lower in 2019 than the levels in 1990.
Solutions that have enabled zero-waste operations include reusing dust captured during cement manufacture to produce other commercial products. In addition, the Polish cement industry uses approximately 5Mt of secondary raw materials such as fly ash and blastfurnace slag. The increasing use of anthropogenic materials instead of primary raw materials has greatly contributed to the circular economy.
Heat consumption has been reduced from 5700kJ/kg to 3600kJ/kg and thermal consumption for firing has fallen by 25 per cent in the last 30 years. Furthermore, 70 per cent of the cement industry's fuel comes from alternative fuel (AF) sources. The industry consumes 1.7Mt of 2.6Mt of the country's refuse-derived fuels.
The EU Emissions Trading Scheme (EU ETS) is impacting cement production in Poland as the industry is obliged to purchase and surrender allowances for the CO2 emitted in the production process. The cost of emission allowances has increased five-fold between 2018-20 from EUR5 to EUR25, with a peak of EUR27.56 in April 2019. The costs relating only to the purchase of missing EU-ETS allowances for 2018 were EUR71.5m in the Polish cement sector. At a CO2 price of EUR28/t, each tonne of clinker (except for free allowances) will increase production costs by an average of EUR23/t of clinker in Poland between 2012-30, according to the PCA.
At risk is approximately 27Mt of clinker production in the EU after 2021 and this may rise to 40Mt from 2030. By 2025, around 30 per cent of the clinker production potential in the EU could have been closed due to a lack of competitiveness, says the PCA. If the clinker production is moved outside of the EU, the cement carbon footprint per tonne of cement imported into the EU is expected to rise by 15 per cent by 2021.
In addition, the cement industry is also indirectly affected by the cost of purchasing emission allowances by electricity generators, which are passed on to final consumers in the price of electricity. Currently, the cement sector cannot apply for compensation for rising electricity costs caused by the prices of CO2 emission allowances in the EU ETS.
Over the past two years, the cost of electricity in Poland has increased by more than 40 per cent. The energy price has reached a record PLN300/MWh while the cost of electricity accounts for 30-35 per cent of cement production costs, claims the PCA.
Solutions
Poland's cement sector like many in the EU is demanding access to competitive energy with compensation for the cement sector between 2021-30 and compensation for the indirect costs from the EU ETS scheme.
The PCA advises that competitive market conditions can be retained by climate policies aimed at protecting the movement of clinker production outside of the EU, maintaining the highest benchmark value for clinker, introducing the carbon tax based on the consumption of goods and support for the transition from the EU ETS to the carbon tax.
The circular economy needs to be supported with a ban on landfilling of waste that can be recycled, educating the public of cement’s role in the circular economy, improving waste sorting and segregation, promoting cooperation between sectors of waste to optimise this waste as raw materials to promote recycling of construction and demolition waste and introducing R&D programmes to develop waste utilisation technologies.
Finally, the PCA supports the expansion and development of low-carbon cements. Procedures could be introduced to ensure public procurement takes into account carbon emissions throughout the product lifecycle. Implementation of a reliable transport lifecycle, investment in research for new concrete-related solutions and the introduction of a global methodology for calculating emissions from concrete, which takes into account absorption (recarbonisation), can help secure the cement industry’s future in Poland, according to the PCA.
