Displaying items by tag: Government
US: Buzzi Unicem USA has challenged penalties worth US$62,500 and denied that it failed in its duty to protect an employee who died after falling into the Mississippi River while working on a barge at the Natchez terminal in Mississippi in February 2023. The Occupational Safety and Health Administration (OSHA) cited multiple alleged safety violations by the Buzzi subsidiary in a report published in mid-August 2023.
Buzzi Unicem USA said “The company strongly contends that it did not violate the regulations set forth in the citations regarding personal floatation devices and guardrails, and therefore timely filed notice with OSHA that it is contesting the alleged violations contained in these citations (as well as certain aspects of the other citations).” It continued “The company objects to any characterisation by OSHA that the citations are a final determination that the company violated any OSHA regulation or caused the death of our valued employee.”
Indonesia: The government’s Directorate General of Chemical, Pharmaceutical and Textile Industries has written to industry associations, directing them to ensure that comprehensive emissions monitoring is carried out at all of their members’ plants. The Antara news agency has reported that the city of Jakarta is experiencing pollution levels at over eight times World Health Organisation (WHO) guideline levels. The Ministry of Environment and Forestry collected data from cement plants belonging to Indocement Tunggal Prakarsa, Jui Shin Indonesia and Solusi Bangun Indonesia, and found that they had not exceeded emissions thresholds.
Indonesia’s cement industry is primarily reliant on coal. The country is committed to a transition to 67% renewable energy by 2050. It is in the process of a 35GW national power capacity expansion, of which 20GW (57%) consists of coal-fired power plants.
New emissions taxes hit Hungary’s cement industry
23 August 2023The Hungarian government recently enacted Emergency Decree 320/2023, taxing all CO2 emissions from the country’s 40 or so largest industrial enterprises. The government used emergency powers to set up a new taxation scheme, which undercuts existing free allowances under the EU emissions trading scheme (ETS). The scheme additionally penalises the trade in ETS credits. Cement producers announced that the new regulations will make it impossible for them to keep operating.1
With regard to Hungary’s six active cement plants, the scheme comprises:
1 – A Euro20/t tax on CO2 emissions, effective retroactively from 1 January 2023, payable by any large enterprise that uses EU Emissions Trading Scheme (ETS) free allowances to cover the majority of its CO2 emissions. Plants that decrease their production, or that carry on non-CO2-emitting activities at over 10% of their operations, will pay a higher rate of Euro40/t of CO2.
2 – A 10% transaction fee for the sale of free allocations under the EU ETS, payable to the Hungarian Climate Protection Authority.
Less than three years ahead of full implementation of the EU carbon border adjustment mechanism (CBAM), the Hungarian government has seemingly moved unilaterally against cement production – this in a country surrounded by seven other cement-producing countries. Multiple foreign cement producers connected to the major market of Budapest by rail, river and road will be watching developments with interest. These include CRH, which, besides two smaller plants inside Hungary, operates the 800,000t/yr Cementáreň Turňa nad Bodvou plant, immediately over the border in Slovakia.
This comes at a time when the domestic cement industry is facing historically high costs and low demand, with a 30% year-on-year decline in construction activity in July 2023, following double-digit inflation throughout 2022 and the first half of 2023.
Catastrophising may be a common symptom of environmental regulation in industry associations, but one can understand on this occasion. The Hungarian cement and lime industry association, CeMBeton, backed its members’ gloomy announcement about their future with an estimate for extra annual taxes of ‘several billion forints’ (1bn forint = US$2.84m), in a statement following the decree. Assuming annual CO2 emissions of 565kg/t across its 5.4Mt/yr cement capacity, the sector might expect to pay US$61m/yr in CO2 rates alone.2, 3 According to analyst ClearBlue, the government will raise additional tax revenues worth US$278m/yr across all of the 40 aforementioned heavy emitters in Hungary.4
It may seem surprising that CeMBeton did not even draw up a projected tax bill during consultations over the new tax scheme – but, in fact, no such consultations took place. In its most recent statement, the association said “We do not know the government’s intentions.” Outside of official releases, Hungary’s cement producers have not always been so reserved about the government’s perceived aim.
Global Cement reported in April 2023 that the Hungarian government was allegedly interfering in the cement sector to make producers sell up – as per accusations by an anonymous industry executive.5 There is arguably a course of action on the government’s part which, more or less, appears consistent with this aim:
October 2020 – The Hungarian Competition Authority (GVH) starts competition supervision proceedings against CRH, Duna-Dráva Cement and Lafarge Cement Magyarország.
July 2021 – Emergency Decree 2021/404 imposes a 90% tax on producers’ ‘excess’ profits, based on threshold cement sales revenues of Euro56/t. Additionally, producers must report their exports.
September 2021 – GVH finds insufficient evidence to support the initiation of competition supervisory proceedings in the cement industry.
January 2023 – (Retroactive) entry into force of CO2 emissions tax.
May 2023 – The government of Hungary reportedly initiates negotiations to acquire Duna Dráva Cement and Holcim Magyarország, according to the Hungarian builders’ association, National Professional Association of Construction Contractors (ÉVOSZ). Duna Dráva Cement owners Heidelberg Materials and Schwenk Zement state that they have entered into no such negotiations, while Holcim declines to comment.
July 2023 – The Act on Hungarian Architecture lets the government dictate producers' volumes and prices and require them to supply cement to National Building Materials Stores (a proposed state-owned construction materials retail monopoly).6 Additionally, the government gains a right of first refusal over the divestment of any asset by the cement industry’s foreign owners.
20 July 2023 – The government enacts Emergency Decree 320/2023. ETS transaction fees enter into force.
The government can now expect a legal challenge to its latest move. CeMBeton’s first ally may be the font of all emissions legislation – the EU itself. Within the EU ETS framework, tax rates are down to member states to determine. However, the introduction of a transaction fee may constitute an illegal restriction to free allowances, OPIS News has reported. The association has also indicated its readiness to mount a constitutional challenge, specifically with regard to the legislative retrofit involved in the CO2 emissions tax. The Fundamental Law of Hungary does not generally permit legislation to apply retroactively, though how courts will balance this consideration against the rights of the government is untested.
The government amended the constitution to provide for new emergency powers, and subsequently adopted them in May 2022, in response to the ‘state of danger’ created by Russia’s war in Ukraine – though its actions on the international stage suggest careful neutrality, if not ambivalence. At home, the war has brought a consolidation of the government’s control over various areas of life, including the economy, according to Human Rights Watch.7
Climate protestors around the world might be glad to see governments wield emergency powers against their own heavy industries. In Hungary, however, the wider sustainability goals are not yet clear with regard to a policy that seems, at least partly, politically motivated.
References
1. CeMBeton, Sajtónyilatkozat, 21 August 2023, https://www.cembeton.hu/hirlevel/2023-08-21/202308-mozgalmas-osz-ele-nezunk/116/sajtonyilatkozat/668
2. Heidelberg Materials, ‘Energy and climate protection,’ 2022, https://www.heidelbergmaterials.com/en/energy-and-climate-protection
3. Global Cement, Global Cement Directory 2023, https://www.globalcement.com/directory
4. OPIS News, ‘Hungary's New Carbon Tax Unlikely to Set EU Precedent, Say Analysts,’ 16 August 2023
5. Global Cement, 'Update on Hungary,' April 2023, https://www.globalcement.com/news/item/15572-update-on-hungary-april-2023#:~:text=Heidelberg%20Materials'%20subsidiary%20Duna%2DDr%C3%A1va,the%20country's%20active%20national%20capacity.
6. Daily News Hungary, ‘Hungarian government’s new nationalising plan could violate EU law,’ 27 February 2023, https://dailynewshungary.com/hungarian-govts-new-nationalizing-plan-could-violate-eu-law/
7. Human Rights Watch, ‘Hungary’s New 'State of Danger',’ 8 June 2022, https://www.hrw.org/news/2022/06/08/hungarys-new-state-danger
New Zealand: Fletcher Building says that its subsidiary Golden Bay cement is waiting to embark on a US$119 – 178m course of capital expenditure (CAPEX) investment. However, the group said that it will first require ‘clarity from the government’ on any upcoming changes to industrial CO2 emissions allocations or border adjustments.
CEO Ross Taylor said “Until we get certainty there, we really can’t pull the cord.” He added “There’s a good pipeline of existing stuff which will really start maturing in two or three years, but there’s another really sizeable pipeline beyond that.”
Fletcher Building invested a total of US$182m across its businesses during the 2023 financial year, which ended in June 2023. The Bay of Plenty Times newspaper has reported that the investments are part of the group’s growth strategy for the four-year period up to the end of the 2027 financial year. Planned areas for investments include adding value to the group’s wood products by developing its alternative fuel (AF) capacity. The growth strategy has a budget of US$474m.
Pakistan: Pakistani cement producers have achieved 100% coverage of their cement despatches under the country’s track and trace scheme. Pakistan Today News has reported that the scheme collects despatch data for automatic submission to the Federal Board of Revenue. It uses licensed technology from US-based Authentix.
EU enacts carbon border adjustment mechanism regulation
18 August 2023Europe: The EU has enacted the implementing regulation for the carbon border adjustment mechanism (CBAM) under its emissions trading scheme (ETS). Under the CBAM, importers of cement to the EU will eventually pay taxes for its embedded CO2 emissions, equivalent to those levied against EU-based producers. Importers must begin to collect emissions data from 1 October 2023, and submit a report for the fourth quarter of 2023 to EU authorities by 31 January 2024. No financial adjustment will yet be payable during the transition period to full CBAM implementation from the start of 2026.
The Asset newspaper has reported that dedicated IT tools and training materials for importers affected by the CBAM are currently in development, according to the European Commission.
US: The Occupational Safety and Health Administration (OSHA) of the US Department of Labor has found that Buzzi Unicem USA failed in its duty to implement safe practices, after a 50-year-old employee died at work in February 2023. The victim was working on a Mississippi River barge belonging to Buzzi Unicem USA subsidiary River Cement Sales when he fell overboard, leading to his death. OSHA concluded that Buzzi Unicem USA had committed multiple serious safety violations. Those connected to the tragedy in February 2023 included failures to ensure that workers wore personal floatation devices and to install guardrails. The administration said that the failures ‘cost a worker his life.’ Safety inspectors proposed a fine of US$62,500 for the breaches.
US: Heidelberg Materials North America has reached an agreement with the administration of Santa Clara County to decommission its quarry in the county, near Cupertino. Silicon Valley News has reported that the quarry historically supplied limestone for cement production at Permanente cement plant, which came offline in April 2020. The county administration says that the deal signals that it has achieved its aim to ensure final closure of the Permanente plant.
Heidelberg Materials North America spokesperson Jeff Sieg said that the company is ‘pleased to formalise our agreement not to restart the kiln at our Permanente cement plant.’ He continued "We remain focused on working collaboratively with the community and other stakeholders on the development of a long-term strategy for the property, so that it can continue to provide value in the future.”
Taiheiyo Cement Philippines to more than double capacity of San Fernando cement plant
17 August 2023Philippines: Taiheiyo Cement Philippines plans to install a second production line at its 0.8Mt/yr San Fernando cement plant in Cebu. The Philippines Department of Trade and industry says that the new line will more than double the plant’s capacity to 3Mt/yr. It will also entail an upgrade to reduce its total energy-related CO2 emissions by 10%. The Philippine Daily Enquirer newspaper has reported that the producer will additionally build a 700,000t/yr terminal at Calaca in Batangas. The facility will cost US$68.4m. Altogether, the company expects its growth plans to generate 2000 new jobs in the Philippines. The Philippines government has committed 6% of gross domestic product (GDP) to infrastructure investments annually.
Taiheiyo Cement Philippines previously indicated in August 2022 that the San Fernando cement plant might eventually expand to a capacity of 5Mt/yr. At that time, it expected to commission the new Line 2 in May 2024.
Special trade representative to the Philippine Trade and Investment Centre in Tokyo, Dita Angara-Mathay, said "The company's latest announcement materialises its plans to expand to Luzon from its long-time base in the Visayan region."
Death at cement plant in Kinta District
17 August 2023Malaysia: Police reported the death of a man at a cement plant in Kinta District on 16 August 2023. The 26-year-old contractor had been cleaning hardened cement from a silo through its manhole, when he fell in and was submerged by cement. Medical staff pronounced him dead after his arrival at hospital. Perak State Occupational Safety and Health Department has issued a stop-work notice to the contractor.
Cement plants in Kinta District include Aalborg Portland Malaysia’s Aalborg Perak plant, Malayan Cement’s Kanthan plant and Tasek Cement’s Tasek cement plant.