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A Competitive and Efficient Lime Industry – Part four

World Cement,

Challenges and risks

The lime industry has a long history in Europe and wants to continue to play its role, providing a unique material to industry, agriculture and consumers whilst taking care of reducing our environmental footprint in terms of emissions.

Yet this has to be done whilst remaining competitive as a European industry. Transport costs may be high but imports to regions near ports or waterway can be cost effective if production costs in Europe rise much faster than other regions.

Capital expenditure costs and competitiveness

Wide scale implementation of several measures could be inhibited by high investment costs, leading to long payback periods.

Carbon cost and competitiveness

The EU lime industry is at the beginning of the value chain, supplying to various other industrial sectors. Unilateral European carbon costs would, therefore, have two impacts:

  • The EU industrial client sectors could relocate their production site, reducing EU demand for lime products. To prevent this, the EU lime industry needs a stable EU industrial platform to prosper.
  • The share of the EU demand for lime that is produced in the EU could decrease:
      • Due to the high carbon intensity of lime production processes, carbon pricing directly causes higher costs for lime production, e.g., an increase in carbon prices equivalent to €1/tonne of CO2 translates into a lime production average cost increase by €1.1/tonne of quicklime.
      • This high sensitivity to energy and carbon prices has a large impact on competitiveness. Combined cost of an EU unilateral carbon price of €5/tonne CO2 on top of the existing differences in energy prices, could exceed transport costs of import for some European kilns. When carbon costs increase even more, it is more economically viable to import lime from over further distances. Non-EU production costs are already lower than EU production costs, and adding a unilateral EU carbon price increases the difference.

    In 2011, exports (~500 000 t; ~2% of production) and imports (~300 000 t; ~1% of production) of lime products in the EU are more or less balanced (Eurostat, 2013).

    Despite the fact that transporting lime is costly, it is apparent that in the absence of free allocation of allowances – and with current differences in energy prices, some neighbouring countries have energy and transport cost that are low enough that they could pose a threat to EU producers.

    Costs associated with abatement measures

    Several abatement solutions are available and, although, some currently have technical limitations or are not feasible as yet, future innovations and technological progress might remediate some of these limitations over the following decades.

    Even if theoretically possible, the wide scale implementation of some measures is currently inhibited by high investment costs.

    However, in the future, innovation, increasing energy-cost and CO2 prices, and investment support schemes might make these measures more financially attractive.

    The numbers in the table below provide some guidance as to the investment costs associated with the uptake of the measures.

    This is an extract from the report 'A Competitive and Efficient Lime Industry' published by the European Lime Association.

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