With a continuously growing population, urbanization and the rising advancement of developing countries, the construction industry is thereby expanding. As part of this, the prediction is that the global cement demand will grow between 12 and 23 percent by 2050 (compared to 2014) and steel might increase between 15 up to 40 percent by 2050. Hence, the harder-to-abate activities that are energy-intensive and to date mostly relying on fossil fuel inputs are set to increase further.
So far, the harder-to-abate sectors1 are facing several difficulties to become more environmentally friendly, as renewables are not yet price-competitive towards fossil fuels, especially in developing countries. Additionally, emission reduction in this industry cannot be purely achieved by replacing fossil fuels with renewable power. Instead, this industry requires new production methods.
Consequently, the harder-to-abate industries are lagging behind other industries in their net-zero plans. Nonetheless, accounting for nearly a third of the global GHG-emissions, the harder-to-abate sectors are crucial in meeting the targets from the Paris Agreement.
Already in 2019, the World Economic Forum and the Energy Transitions Commission launched the Mission Possible to achieve net-zero carbon emissions by mid-century for the harder-to-abate sectors. As part of this, the companies SSAB, LKAB and Vattenfall jointly work together under the project name Hybrit to develop fossil-free steel.
The coalition reached its target and developed the world’s first fossil-free steel and delivered it to its customers in August 2021. Hence, SSAB is taking the lead in decarbonizing the steel industry and by joining the Race to Zero, the company sends another message to the outside world. It has set clear deadlines by committing to a well-below 2°C near-term target for 2032 and aiming to reach net-zero by 2045.
Holcim, which produces cement and special binding agents and aggregates (gravel, sand, and crushed stone) committed itself also to a science-based target. The company set a well-below 2°C near-term target for 2030, a 1.5°C long-term target and aims to reach net-zero by 2050. Besides other initiatives, the company aims to reach its targets by developing green cement and concrete as well as running pilots to decarbonize the way building materials are made.
Another best practice example within the cement industry is HeidelbergCement, which aims to build the world’s first carbon-neutral cement plant in Sweden. The plant will capture 1.8 million tonnes of carbon dioxide annually from 2030 onward as well as use biobased fuels in the cement production. Furthermore, HeidelbergCement’s subsidiary Hanson UK has produced cement with a net-zero fuel mix, by using hydrogen technology. Overall, the company set well-below 2°C near-term target for 2030 and is committed to net-zero by 2050 (at latest).
A key milestone was reached during this year’s COP26, where the harder-to-abate sectors decided instead of slowing the transition towards ‘well below’ 2°C, to lead the change. As a result, the First Movers Coalition was launched, which include companies like Aker ASA, Dalmia Bharat, Holcim, Vattenfall and Yara International. The First Movers Coalition “brings the collective purchasing power of global companies to drive market demand for low-carbon technology 50% of the emission reductions needed to reach net-zero by 2050 rely on technology not ready for market” (WEF, 2021).
Nonetheless, not all harder-to-abate companies have a clear vision yet on how to transition towards reaching net-zero. Therefore, Finch & Beak advises the harder-to-abate companies to follow essential steps:
Before shaking up the business, it is substantial to understand a company’s environmental status quo. Firstly, a company should conduct a life-cycle assessment (LCA) to identify and understand its impacts coming from business activities and products. During an LCA, it is relevant to explore various impact categories to understand and evaluate environmental hotspots, such as climate change, toxicity, or acidification. Going further, companies are advised to measure and manage their benefits and externalities (costs) to society and environment by using Impact Measurement & Valuation.
Secondly, after identifying the main impact sources, clear and measurable targets can be set on the different impact categories. For climate change, GHG-emissions targets are ideally set according to the science-based targets. As part of this, companies need to have their GHG-emission screening across Scopes 1, 2 and 3 in place. If this is not the case, companies need to first conduct a full GHG-inventory based in the GHG-Protocol.
Thirdly, after defining carbon emission reduction targets, companies are to start reducing emissions according to their carbon reduction roadmap and, of course, communicate their performance to be transparent about progress on targets.
There are three main steps companies can take to speed up their transition towards carbon neutrality:
Reduce direct (Scope 1) emissions by replacing the use of fossil fuels with low-carbon alternatives and indirect emissions (Scope 2) by purchasing energy from renewable sources. The decarbonization of the harder-to-abate industries includes using hydrogen. For the steel and cement industry it is substantial to reduce the process emissions that are released during the conversion from raw materials into intermediate or end-products. For steel making, the process emissions can be reduced by for instance using hydrogen instead of coking coal or using biomass as an energy source for heat production. For the cement industry, the emissions can be reduced by using carbon capture and use/storage techniques.
2. Energy efficiency improvement:
Using better insulations and waste heat has the benefit to rely on fewer energy inputs. According to the Energy Transitions Commission, when applying best available technologies for steel making, such as scrap purification or increasing the use of fuel injection in the Basic Oygen Steelmaking, the energy consumption can be reduced by 15 to 20 percent. For cement, the decrease of clinker-to-cement ratio and other initiatives can improve the energy efficiency by 10 to 20 percent.
3. Material circularity:
Improve material efficiency by cutting emissions through Circular Economy principles (Reduce – Reuse – Remanufacture – Recycle). Circular economy extends the lifetime of products, while at the same time ensures that value is maintained when a product reaches its end through e.g., recycling.
Already around 83 percent of steel is globally recycled yet increasing the recycling rate from 85 to 95 percent would cut the need for virgin steel by two thirds. Consequently, Scope 1 and 3 emissions will be decreased. Circular options within the cement industry are limited. One option is to recover and reuse the share of cement that remains un-hydrated within concrete or reduce waste reduction of materials in the construction sector. The latter reduces Scope 3 emissions.
Finch & Beak’s Impact Measurement & Valuation approach is designed specifically for companies that are looking for innovative ways to identify, measure, monetize and manage benefits and externalities (costs) of its company to society and environment. Moreover, with Impact Measurement & Valuation, companies can calculate their eco-profile, identify hotspots, thus gain relevant knowledge to set net-zero ambitions, and develop a tangible and specific action plan to reduce negative impacts and leverage business opportunities.
Are you ready to discover the benefits of Impact Measurement & Valuation within your organization? Please contact Jan van der Kaaij, Managing Partner, at email@example.com or +31 6 28 02 18 80 to leverage your business opportunities from Impact Measurement & Valuation.
1 Sectors such as aluminium, cement, chemicals, steel, aviation, trucking and shipping are referred to as ‘hard to abate’ as decarbonizing the sector is perceived to be difficult as well as not cost-effective (Johnson, O., Mete, G., Sanchez, F., Shawoo, Z. and Telebian, S. (2021): Toward Climate-Neutral Heavy Industry: An Analysis of Industry Transition Roadmaps.)