Displaying items by tag: European Union

Belgium: The European cement association Cembureau says that the European Union’s (EU) upcoming ‘Fit for 55’ emissions legislation must provide an enabling regulatory framework for the cement industry’s carbon neutrality roadmap. Key issues of concern to the association are the prevention of carbon leakage, the retention of free allocation and a carbon border adjustment mechanism (CBAM) until 2030 and the need for a ‘coherent package’ to boost the uptake of low-carbon technologies. It said that the industry supports the European Green Deal and the major challenge of delivering deep emissions cuts by 2030.

Chief executive officer Koen Coppenholle said “Whilst we welcome that the CBAM will seek to bridge the widening gap in carbon costs between EU and non-EU countries, the proposed phase-out of free allocation and the absence of export rebates would cause significant risks to investments.” He added “The decision not to include indirect emissions at this stage is also regrettable.”

Europe: The European cement producers’ association Cembureau says that a possible reduction of European Union (EU) Emissions Trading Scheme (ETS) free allowances would endanger cement producers’ investment decisions and projects. It says that this in turn might produce competition distortions with third parties. The EU is planning to implement a carbon border adjustment mechanism (CBAM) but the association is concerned that its ‘Fit for 55’ 55% CO₂ emissions reduction target for 2030 may have negative implications for the cement industry. However, the association said that it supported the concept of a CBAM.

Cembureau has called for a transition period until 2030 whereby free allocation under the EU ETS will continue fully alongside the introduction of the CBAM. It added that this is compatible with World Trade Organisation rules and avoids any form of ‘double protection’ provided the free allocation is taken into account when calculating the levy paid by any third-party importers. It further stated that the CBAM must cover both direct and indirect emissions. It has also continued to press the legislators to provide for a CO2 charge exemption for EU exporters to third countries, if the country in question is not covered by an equivalent carbon pricing mechanism. The association asked the EU to consider implementing secondary legislation before any CBAM enters force, and to ensure consistency of ‘Fit for 55’ legislative initiatives, applied across a sufficient breadth of sectors to preclude market distortions.

Little trickles of detail about the European Union’s (EU) proposed carbon border adjustment mechanism (CBAM) started to emerge last week. The key bit of information that Bloomberg managed to squeeze out of their source was that a transition period with a simplified system is being considered from 2023 and then a full version could turn up in 2026. Cement importers, and those in selected other heavy industries, would be required to buy electronic emission certificates at prices corresponding to those in the EU emissions trading scheme (ETS). Other titbits include: that the prices will be set on a weekly basis based on the average carbon permit price within the EU that week; a default value will be devised for importers who can’t back up their emissions data; and imports from a country with its own carbon pricing scheme will be entitled to a discount. The plans are due to be made public in mid-July 2021. Debate is then expected to follow before approval will be required from the European Parliament and member states.

The detail isn’t out there yet but the CBAM is set to collide with trade agreement territory. For example, how the draft agreement tackles issues such as exports from Europe and whether importers should be compensated for not receiving a free allocation of carbon credits could be seen to offer competitive advantage to one party or another. Climate policy will clash with trade policy once or if the CBAM makes in into law. At this point countries that import cement into the EU may start trying to negotiate or complaining to the World Trade Organisation. One previous example of climate policy bashing into trade agreements is when the EU tried and failed to apply the ETS to aviation in the early 2010s. The experience from this incident is expected to inform the European Commission’s approach on the CBAM.

Outside the EU, new carbon pricing schemes have been popping up all over the place and various cement associations are creating or refining their own carbon neutral plans. Last week in North America, for example, the Cement Association of Canada said it was working with the government on launching a roadmap by the end of 2021. In the US, the Portland Cement Association (PCA) has also been hard at work to publish its own roadmap by the end of 2021. Meanwhile, over in the oil sector there were a couple of victories for activist shareholders in May 2021 with Shell, Exxon Mobil and Chevron all being forced to make changes to their climate change polices by courts and activist investors. This makes one wonder how long it will be before the same thing happens to cement companies.

All this increases the pressure between trading agreements and climate legislation. One of the questions that has popped up at Global Cement’s webinar series has been whether attendees thought that a global carbon pricing and/or trading scheme might be a realistic position or not (the majority said ‘yes’ within 20 years). Yet the EU CBAM, all these sustainability plans and continued pressure by investor activist don’t happen in isolation. They occur in an interconnected world.

So it was both non-surprising and eye-popping to discover recently that a private carbon exchange is being prepared in Singapore for a launch by the end of 2021. Climate Impact X (CIX) is being backed by DBS Bank, Singapore Exchange, Standard Chartered and the Singapore-government owned investment company Temasek. As for which companies would actually voluntarily enter into a scheme that would actively reduce profits, the answer lies above. Any organisation looking to trade between carbon pricing jurisdictions might well have an economic incentive to find a truly international scheme that was reputable. Or, perhaps, a publicly owned company dealing in carbon-intensive products might be bullied into one by its activist investors. The focus on such an exchange being reputable is essential here, given the potentially large amounts of money that could be involved and the mixed views on existing carbon offsetting schemes. CIX says it will use satellite monitoring, machine learning and blockchain technology to ensure the integrity of its carbon credits and this is certainly thinking in the right direction. Until it arrives though, we wait to see the detail on the EU CBAM.

EU: The Concrete Initiative (TCI) has announced its official partnership with European Green Deal-driven sustainable construction initiative New European Bauhaus (NEB). The partnership’s first undertaking will be to draft a concrete sector manifesto around the NEB objectives of beauty, sustainability and affordability.

The TCI said, “We look forward to working together with the construction value chain and citizens living in the built environment to rethink the way we live and connect people through beautiful, green, innovative and inclusive design.”

EU: The European Commission is reportedly planning to introduce its carbon border adjustment mechanism (CBAM) for cement imports from 2023. Reporting by Bloomberg has revealed that a ‘simplified’ system could be used in a transition period from 2023 with the full mechanism due to start in 2026. Under the new system, cement importers would have to buy certificates at a price linked to the European Union (EU) emissions trading system (ETS). Details on the CBAM and wider environmental plans are due to be made public in mid-July 2021. However, full legal acceptance of the scheme will require approval by the European Parliament and member states.

In a previous response to a report on the CBAM in February 2021, Koen Coppenholle, the head of the European Cement Association (Cembureau), said that a CBAM was a useful tool to address the imports of products not subject to similar carbon constraints in the European Union. He added, “The Environment Committee’s report highlights some key points in this respect, notably that a CBAM should result in EU and non-EU suppliers competing on the same CO2 costs basis; that the scope of CBAM should be wide to avoid market distortions, and that both direct and indirect emissions should be included.”

In May 2021 the EU ETS reached a price of Euro50/t following a significant rise from late 2020 onwards.

Poland: The Polish Cement Association (SPC) has forecast a 2% year-on-year drop in cement sales to 18.5Mt in 2021. President Krzysztof Kieres attributed the fall to growing imports and reduced construction due to a cold start to the year. He predicts that sales will rise again, by 4% to 19.3Mt, in 2022.

The SPC has warned that the industry faces large costs in meeting the European Green Deal’s required 40% CO₂ emissions reduction by 2030 and achieving carbon neutrality by 2050. In particular, the local industry noted that the rising European Union (EU) CO₂ price has caused a direct increase in electricity prices. It has called on the government and the EU to compensate it for this rise.

Imports of cement also present a key challenge. In 2020, imports of Belarusian cement increased by 80% to 440,000t and imports of Ukrainian cement increased by 50% to 32,000t. The association expressed strong support for the European Carbon Border Adjustment Mechanism (CBAM) as a means of protecting the industry against imports both from neighbouring countries outside the EU and via polluting shipping from cement exporters further afield such as Turkey.

Europe: The European Union (EU) Emissions Trading Scheme (ETS) has reached a price of Euro50/t. Data from Refinitiv and reporting by Reuters shows that on 4 May 2021 it hit Euro50.05/t, its highest level since the scheme started in 2005. Prior to late 2020 the carbon market price remained below Euro30/t. The fourth phase of the EU ETS started in January 2021.

Oman: Raysut Cement has been granted the CE and NF markings by France-based AFNOR Certification for some of the cement products manufactured at its Salalah plant. The cement producer has been advised that it is now able to export its CEM I 42.5R CE PM CP2 NF and CEM II/B-LL 32.5N CE products to the European Union. It follows the plant upgrading its quality management to meet the CE and NF requirements. The producer has also passed certifications for CE002:2020 or NF002:2019, NFP 15-317:2006 and NFP 15-318:2006, allowing it to export cement to islands in the Indian Ocean. Raysut Cement was advised by Switzerland-based Quadra Trading on how to comply with the quality requirements of the international standards.

Spain: Mexico-based Cemex subsidiary Cemex España has announced plans to resume activity at its Lloseta cement plant in Majorca at a limited production level. The UltimaHora newspaper has reported that the company will employ the staff who stayed on for maintenance purposes from the plant’s January 2019 closure. After suspending activity at the plant the company had until mid-April 2021 to inform the local government of its plans for the site.

Cemex is in the process of establishing a green hydrogen plant at Lloseta with a Euro10m EU grant. It said, "We do not rule out that in the future the cement plant may adapt and become an industrial benchmark in the use of green hydrogen for the production of cement with a low carbon footprint."

Europe: Members of the European Parliament (MEP) have adopted a resolution supporting a European Union (EU) carbon border adjustment mechanism (CBAM). If enacted by the EU then a carbon tax could be levied on certain goods imported from outside the EU that don’t meet local decarbonisation standards. MEPs stressed that it should be World Trade Organisation compatible and not be misused as a tool to enhance protectionism.

The new mechanism is intended to be part of a broader EU industrial strategy and cover all imports of products and commodities covered by the EU emissions trading scheme (ETS). MEPs add that already by 2023, and following an impact assessment, it should cover the power sector and energy-intensive industrial sectors like cement, steel, aluminium, oil refinery, paper, glass, chemicals and fertilisers, which continue to receive substantial free allocations, and still represent 94% of EU industrial emissions.

“The CBAM is a great opportunity to reconcile climate, industry, employment, resilience, sovereignty and relocation issues. We must stop being naïve and impose the same carbon price on products, whether they are produced in or outside the EU, to ensure the most polluting sectors also take part in fighting climate change and innovate towards zero carbon. This is our best chance of remaining below the 1.5°C warming limit, whilst also pushing our trading partners to be equally ambitious in order to enter the EU market,” said EU Parliament rapporteur Yannick Jadot.

The European Commission is expected to present a legislative proposal on a CBAM in the second quarter of 2021 as part of the European Green Deal as well as a proposal on how to include the revenue generated to finance part of the EU budget.