On 16 October, CEMBUREAU hosted a panel on the key issues the industry faces with decarbonisation. Prominent industry leaders came together to discuss the decarbonisation agenda, focussing on the Net-Zero Industry Act and the reasons why carbon capture, utilisation and storage projects (CCUS) may be stuck pre-final investment decision (FID) in a "permitting purgatory". The design of the Clean Industrial Deal, allowing for diversified solutions, is the first step in a process that must be simplified.
Cooperation and collaboration
Ken McKnight, CEMBUREAU's president, aptly opened proceedings and made two key points: permitting of CCS projects is too "cumbersome", while implementation of the EU's Carbon Border Adjustment Mechanism (CBAM) will be critical to the industry's success in decarbonisation.
"We signed up on the basis that it [CBAM] will be watertight. If it’s not, we are open to cheating and fraud. Our industry will be compromised." Mr McKnight finished his introduction by underlining that the industry is ready to move forward with such projects, but finance is not readily available. Funds from the Innovation Fund must be "ringfenced" for the cement industry and made available to be invested into CCS projects. Green procurement is required to create lead markets, but the industry requires regulations to get this done.
Krzysztof Bolesta, secretary of state for the Polish Ministry of Climate and Environment, maintained that securing a return on investment is the most critical challenge to fast tracking funding for decarbonisation projects. Mr Bolesta, who spoke at Cemtech Europe at the start of the month in Warsaw, is a keen advocate for the EU’s Green Deal Industrial Plan, emphasising in the past the importance of the cooperation of the whole value-chain in achieving decarbonisation goals. Mr Bolesta argued that if companies cannot make the case for a return on investment, no project will be able to move beyond the feasibility stage. It is up to the European Commission, to create these conditions for success.
Similarly, Manon Dufour, executive director at E3G, affirmed that the industry has moved on from roadmaps and that the focus is now on building a business case for decarbonisation investment. Aris Tsikouras, director decarbonisation strategy of TITAN Cement group further affirmed the importance of building a "bankable business case" for CCS projects to succeed. Mr Tsikouras also reinforced the message that CBAM must be "watertight", otherwise producers are met with a need for huge investment without any confirmation of payback. CCUS projects will remain pre-FID until the risk can be mitigated.
Permitting Purgatory
Rachael Moore, the managing director at CarbStrat, stressed the risk of what she termed a "Permitting Purgatory", where CCS projects are stranded at the pre-FID stage due to the absence of basic legislations. For Ms Moore the industry has two clear choices: decarbonise or leave as the price of emissions allowances will be unaffordable. Ms Moore concluded that if you want to keep the cement industry in Europe the whole value-chain and regulatory bodies must co-operate to create a package that allows industry to remain viable.
For Ms Moore, difficulty lies in decarbonisation being a "cross-border task", with transport of CO2 requiring stringent regulations to function: "I would plea to the commission and regulators […] regulations need to be clear so we can focus on the goal and not how we can get there."
Mr Tsikouras reflected that the industry’s decarbonisation targets are a fantastic push, but the question of consequences if this goal is not met still looms. Ms Moore's "permitting purgatory" goes some way to expose such difficulties: industrial decarbonisation is not just a question of funding and building CCS but also putting in place complex infrastructure, such as pipelines, loading facilities and temporary buffer storage. She made the point that permitting is not yet fit for purpose: "Regulators need the expertise and manpower to review these permits in a timely manner. Currently, they often lack both."