By Jan Theulen, director CCUS business development & partnership, Heidelberg Materials AG, Germany.
The cement industry has come a long way in reducing its carbon intensity, and it is still using many levers to further decarbonise. New pozzolanic materials, calcined clay and refined research into cement and concrete recipes is further reducing the clinker. And remarkably, the best process-engineers figure out how to produce constant performing clinker while further increasing alternative fuel substitution and its biogenic content.
Yet, to get to net-zero for all its production, the deployment of carbon capture utilisation and storage (CCUS) is indispensable. Let’s dive into the main cost- and revenue-drivers of CCS, which actually has a faster deployment potential than CCU.
Cost elements of CCS
Now that several FEED studies have been finalised and the first full-scale CC-plant is in commissioning phase, the real capital costs are becoming transparent. It shows that apart from the capture unit itself, considerable processing and infrastructure costs are coming along.
The opex of CC-units is dominated by the energy-costs, either for heat (amine-capture) or rather for electricity (oxyfuel and cryogenic). We need to recognise that energy prices are 2-3x higher than our ‘’near neighbour’ direct competitors (north Africa, Türkiye, etc), and represent about one third of variable costs. This will increase massively with decarbonisation.
The transport and storage cost of a CCS-value-chain is the one with the largest variation of all components. Depending on the nearest storing option, the transport costs can either be very limited (a short pipeline from source-to-sink is the best option), or can be as high as the capital costs and opex of the capture together! Especially when a part of the value-chain has to be covered by train or ship, the transport costs go rapidly up, as liquefaction is mandatory and costly terminals are required. The national government and the EU has a large role to play here, to orchestrate an efficient pipeline infrastructure that allows for the majority of the emitters to get a direct pipeline connection from source-to-sink.
Secondly, the EU and its member states need to develop local solutions for CO2-storage and its acceptance even if onshore aiming at lowering costs and complexity of the value-chain.
Revenue streams of CCS
After two decades of hard work, Europe has a fairly-well functioning ETS system that in combination with CBAM drives decarbonisation. We welcome the announcement of the Decarbonisation Bank, and the ETS revenues can serve as a core funding element for this. The cement industry alone is forecast to pay EUR100bn ETS revenues over the next 10 years, so large parts of that should be redirected back to cement ETS facilities for their decarbonisation.
The funding support (both on capex as well as on opex) is required until the demand side is capable and willing to pay for the carbon neutrality of cement. Although Heidelberg Materials has had an excellent response on its first entrance to the market with evoZero, we need further accelerated demand creation for green concrete and cement via ‘Lead Markets’ – we support a CO2 label and the sector is actively developing one for cement. In addition, we need mandatory sustainable procurement requirements as over 50 per cent of concrete is procured either directly or indirectly by the government.
EU and its competitiveness
Without these enablers for CCUS, Europe’s cement industry won't decarbonise in time. It is noteworthy that Heidelberg Materials’ other leading CCUS projects are outside the EU – in Norway, UK, Canada, and the USA.
However, if we build further on the Decarbonisation Bank and the measures as described before we can maintain a healthy, viable, and decarbonised European cement sector!