Displaying items by tag: EU

Europe: The Environmental Coalition on Standards (ECOS) has welcomed the EU’s new Empowering Consumers Directive. Under the directive, EU member states must enact laws preventing companies from labelling their products with climate claims based on offsetting. ECOS called the law a ‘significant measure against greenwashing.’ It called on the EU to further ensure that products neither rely on carbon credits, nor on contributions to sustainability projects, in calculating their impacts.

ECOS programme manager Elisa Martellucci said “The EU has taken aim at greenwashing. Climate neutrality claims based only on carbon offsetting are ambiguous and misleading for consumers because they are not linked to concrete efforts to combat the climate crisis. Instead, they rely on flawed carbon accounting practices that ‘write off’ greenhouse gas emissions. The amazing carbon emissions vanishing act is many companies’ dream – but emissions do not magically disappear. Policymakers have taken a strong stance against this deceptive practice.”

Europe: Norway-based Capsol Technologies says that it has signed contracts for two new feasibility studies for carbon capture installations at ‘large cement plants’ in the EU. If successful, the plants will proceed to the installation of Capsol Technologies’ CapsolEoP carbon capture systems. Nordic Daily News has reported that the technology reduces the energy consumption of carbon capture by 50%, and lowers its costs by 25%, according to the supplier.

The new contracts bring Capsol Technologies’ number of cement industry carbon capture contracts to four, and its total contracts to nine, with a potential CO₂ capture capacity of 10Mt/yr.

CEO Jan Kielland said "We are pleased that our solution is gaining attention, as demonstrated by an increasing number of incoming requests for sales engineering and engineering studies, and look forward to being a major contributor in the path to net zero for cement.”

Europe: The EU has awarded a Euro49.9m grant under its Alternative Fuel Infrastructure Facility (AFIF) to Taiwan Cement subsidiary Atlante. The cement group said that Atlante will use the funds to building a fast and ultra-fast electric vehicle charging network in Europe.

The 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

Europe: 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.

Spain: Switzerland-based Synhelion and Cemex España plan to build a new clinker plant near Madrid. The plant will use Synhelion’s synthetic fuel to produce clinker from clay and crushed sand at 1200°C. The fuel consists of a gas produced from green hydrogen and captured CO₂, using solar heat. La Tribune de Genève Online News has reported that Synhelion’s thermochemical reactor further helps to capture CO₂ emissions from clinker production. A study by the Swiss Federal Institute of Technology Lausanne indicated that this can halve the cost of carbon capture at cement plants, to below Euro85/t.

Australia: Alternative cement and concrete producers have welcomed a new Australian civil engineering standard that allows builders to use reduced-CO₂ geopolymer concrete in infrastructure projects. Wagners, which produces Earth Friendly Concrete (EFC), said that the revision has removed on if its key barriers to wider market acceptance. EFC replaces 100% of cement with supplementary cementitious materials, including ground granulated blast furnace slag (GGBFS) and pulverised fly ash, by virtue of its binder technology. Wagners previously supplied EFC for the London Power Tunnels project in the UK, based on local technical approval-based building codes. The producer now expects a new standard like the Australian one to follow in the EU.

Greece: The IFESTOS carbon capture project at Titan Group's Kamari cement plant was among eight CO₂ emissions-reducing projects chosen for funding following the latest EU Innovation Fund call for projects. IFESTOS consists of a planned 1.9Mt/yr carbon capture installation at the Kamari plant. Titan Group says that it has concluded necessary memoranda of understanding (MoUs) with suppliers. The IFESTOS project will receive a share of a funding pot worth a total Euro3.6bn.

Chair Marcel Cobuz said "We are truly excited that the European Commission has chosen to support our large-scale, highly innovative project. IFESTOS is a cornerstone of our accelerated decarbonisation roadmap to net-zero. In line with EU climate policy, together with our technology partners, we are pioneering an innovative carbon capture project, the largest in Europe, with a highly positive impact. The group has strong capabilities and is committed to executing this project fast over the next few years, decarbonising production and offering green growth opportunities to our customers in Europe. We embrace the opportunity to widely share our knowledge and expertise and promote green cements as modern materials for infrastructure and housing.”

Germany: The EU Innovation Fund has granted funding to the GeZero carbon capture project at Heidelberg Materials' Geseke cement plant in North Rhine-Westphalia. The project consists of a 700,000t/yr carbon capture system and an oxyfuel kiln upgrade. A captive solar power plant will provide energy for the new systems. CO₂ storage partner Wintershall Dea will receive purified liquefied CO₂ from the capture system via its Wilhelmshaven distribution hub for storage under the North Sea.

Heidelberg Materials Germany general manager Christian Knell said “This project sets an important milestone for the cement industry and for effective carbon management in Germany. We are now counting on the tailwind of Germany’s future Carbon Management Strategy and the regulatory framework to come.”

CEO Dominik von Achten added “With GeZero, we will once again show how Heidelberg Materials’ pioneering spirit is paving the way for the decarbonisation of our industry. We will be the first to realise a full CCS chain for the capture, transport and permanent storage of all CO₂ emissions from an inland location in Germany. I appreciate the support of the EU Innovation Fund, which expresses both an important recognition and the required backing from the political side.”

Spain: Cementos Tudela Veguín plans to spend more than Euro62.5m on sustainability-enhancing upgrades to its three cement plants in Asturias and one in León. The plans consist of upgrades to fuelling systems that will enable the plants to use biofuels and hydrogen, as well as efficiency upgrades. The La Nueva España newspaper has reported that the producer is seeking to secure European Union (EU) funding for the project. The region of Asturias is eligible for Euro263m-worth of regional decarbonisation funding under the EU's Strategic Project for Economic Recovery and Transformation.

A planned second phase of upgrades will consist of the installation of carbon capture systems at the plants. They emitted 1.67Mt CO₂ in 2022. 1.12Mt (67%) arose from the decarbonisation of limestone and 0.55Mt (33%) came from the combustion of fuel.