It has been said that supply creates its own demand, and if you were to build a cement plant in the middle of nowhere, as sometimes happens, then the locals would start to use more cement. On the other hand, demand creates its own supply, in the capitalist system at least. Profit-seekers will always provide a good or service if a profit can be made.
But what if demand were to cease? What happens when there is no demand for a good or service? Let me give you an example. Early in the morning, walking near the Pyramids in Giza, I was approached by a gentleman who was riding a camel and leading another. He asked me if I wanted a ride on his lovely camel, “Only ten dollars,” he said. I replied that I wasn’t interested. He modified his offer: “Okay mister, five dollars.” I came to the point: “I am not interested to ride on your camel even if it was free. In fact,” I went on, “I would not ride your camel even if you paid me ten dollars.” There was obviously no profit in this deal for him. He got the message and went away like a good capitalist, riding on his camel, looking for another gullible tourist and better margins. There was no demand for his service, from me, anyway, at any price. If all tourists had the same response, he would soon be out of business, since camels are hungry beasts and costly to maintain properly, and he would have to find some other line of work.
There’s a well-reviewed film, and book, called ‘Children of men,’ depicting a world which suddenly became infertile two decades previously. After that time, midwives, baby food manufacturers, baby-carriage makers, kindergarten owners and eventually teachers would all have become progressively obsolete, as children, teenagers and students all grew up into the adult world without being replaced. As depicted in the film, it was a nightmare world. Just such a situation, of births dwindling towards a rate where the population plummets, has been reported in China.1 In fact, China’s population is set to fall by 400million by 2100.2 Arguably a similar situation, where the Black Death reduced Europe’s population by a third, led to revolution.3
What would happen if demand for cement worldwide were to dwindle and cease? Could we be looking at a world without concrete, a world without concrete trucks, concrete specifiers, architects and civil engineers using concrete, and a world with progressively fewer concrete buildings, bridges and other structures? To anyone who says that it will never happen, I say, look at asbestos, look at horse-drawn carriages, look at lamp-lighters, coal fired power stations and FGD gypsum, tobacco consumption, mangles, sexist jokes, landlines, plastic bags, cash, diesel cars, modems, fax machines, film cameras, telephone directories and even watches. All of these things have either gone, been legislated out of existence or are (again, arguably) on their way out.
In the same way, in a carbon-constrained world, CO2-intensive Ordinary Portland Cement could yet become a thing of the past. Our own forecast is for the clinker factor to reduce from 70% now to a global average of 50% in 2050. However, in a world where there is an accelerating awareness of environmental degradation and now nightly reminders of some of the catastrophic effects of global warming, there is the possibility that the cement industry will be obliged to become net-CO2-zero itself by 2050 or even earlier. What if global carbon taxes of Euro/$200/t of CO2 mean that concrete producers use as little OPC as possible, down to an equivalent of perhaps 50kg per tonne of concrete (compared to 250kg now), just using it as an activator for lower-CO2 cementitious materials like fly ash and slag. That would look like an 80% drop in demand from today’s levels... and we are already in a global clinker over-supply situation!
This ‘Demand Crisis’ in the cement industry might well happen, but one of the main uncertainties is the timescale over which it might occur. The longer the process, the more time the cement industry will have to adapt to its new role as a provider of zero-CO2 cementitious solutions.
This is not all bad news. The equipment that will be required to make the new cementitious binders will require equipment modifications that will keep the engineering companies busy for years. The whole green revolution will need to be financed, keeping the bankers, insurers, lawyers and other experts in fees. The cement companies should be able to pass on higher costs to customers, for their new-and-improved eco-friendly cement and concrete products. Who knows, the new binders might even cost less to produce, improving profit margins at the same time as saving the planet. See? Every cloud has a silver lining!
1 https://www.theguardian.com/world/2020/jan/17/chinas-birthrate-falls-to-lowest-level-despite-push-for-more-babies
2 https://www.weforum.org/agenda/2018/02/these-will-be-the-worlds-most-populated-countries-by-2100/
3 https://www.bbvaopenmind.com/en/humanities/sociology/the-black-death-turning-point-and-end-of-the-middle-ages/
