When we talk about environmental regulations stifling the cement industry in the EU and the US, carbon leakage is often at the heart of the argument. Cement demand does not simply go away if the product cannot be produced cost-effectively under these restrictions. Demand remains and manufacturers move, so that production takes place in countries where such regulation is not an issue. This costs the domestic industry jobs and it does nothing to improve the global emissions scenario: the problem has not been solved, it has simply been moved. More often than not, when pointing the carbon leakage finger, we’re pointing in China’s direction. As the biggest cement producer in the world, it’s a natural ‘go to’ example. But recently, China has been asserting emissions regulations of its own.
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For a number of years, China has been focussed on reducing the amount of outdated cement manufacturing facilities and replacing them with more efficient, more environmentally friendly alternatives. In the government’s most recent five year plan, which takes the country through to 2015, China has resolved to tackle air pollution, including a binding agreement to reduce CO2 emissions by 17%. One part of this is a pledge to monitor PM2.5 – i.e. particulate matter under 2.5 µm – where previously the government was only monitoring PM10. Monitoring of PM2.5 has been championed by environmentalists, media personalities and the general public, and public pressure has clearly had the desired effect. By the end of last year, 56 cities in China were already set up to monitor PM2.5, the equivalent of 169 sets of monitoring equipment, and over the next four years a further 1500 monitoring sites will be set up, monitoring four municipalities, 27 provincial capitals and the key regions of East China’s Yangtze River Delta, South China’s Pearl River Delta and the Beijing-Tianjin-Hebei area. The PM2.5 limit is set at 75 µm per cubic metre, but Vice Minister of the Ministry of Environmental Protection, Wu Xiaoqing, admits that this standard is going to be tough to meet, even going so far as to suggest that two thirds of China’s cities will struggle to comply. In January, Beijing was shrouded beneath a thick veil of smog measuring as much as 516 µm of PM10 per cubic metre. Measurements over 150 µm per cubic meter are considered hazardous to health and so residents with respiratory complaints were encouraged to stay indoors. Last month, Shanghai issued its first PM2.5 air quality warning when monitoring equipment measured PM2.5 at 230 µm per cubic metre, three times the allowance under the new regulations. As the saying goes, step one is admitting that there is a problem. Now to step two.
One way that China is planning to tackle its air pollution problem is a cap on coal. Yes, the world’s biggest coal producer and consumer has decided to limit its intake and output in a bid to curb carbon emissions. Figures show that China produced about 3.5 billion t of coal in 2011 and used about 3.48 billion t, and the National Energy Administration has announced that coal production and demand will be restricted to approximately 3.9 billion tpa by 2015. All this while targeting economic growth of 7.5% per annum. Details of how the coal will be divided are not yet clear, but that in itself could be interesting – by province presumably, but what about by industry? The target is impressive, though not actually binding, but the intent is clearly to motivate research into substitute fuels. If fossil fuels were taken out of the picture altogether, would the cement industry cope with the alternatives? I like to think so, but I’m not sure we’re quite there yet.
In any case, though emissions regulation in China still lags behind much of the developed world, this is evidence of a renewed emphasis on air quality standards that could ultimately produce more of a level playing field on which the industry can combine its efforts to develop environmentally sound solutions. The sectoral approach that the WBCSD CSI has so long endorsed is still the industry’s best bet going forward.