Fuelling Change
Published by Alfie Lloyd-Perks,
Editorial Assistant
World Cement,
Earlier this year, The Guardian newspaper reported on a study by consultants at KPMG and Kearney, highlighting a troubling trend: global fossil fuel use has reached record levels. For those in the cement industry, this underscores the urgent need to address the sector’s substantial carbon footprint.
Whilst it is disappointing, it is hardly surprising to see this statistic. Oil prices have stabilised and gas prices have dropped rapidly. Coal producers are keeping prices only just above the marginal cost of extraction, and higher sulfur pet coke is at an all-time low. At the same time, this has coincided with European carbon prices also being very low, and whilst this has a stabilising effect on end users’ costs and ultimately inflation, it continues to drive down the use of alternative fuels (AFs) and potentially push carbon capture technology advancement further down the agenda.
Heavy industry plant managers have fuel costs as their number one KPI after health and safety, and until this is replaced with CO2 cost, new fuels, and new technology will continue to be a lip service exercise from governments to boardrooms. Alternative cleaner fuels do not cost more than traditional fuels, but they do need investment to be handled and fed differently. This investment, along with carbon capture technology, should be better supported by governments globally so that plant managers are incentivised to replace traditional fuels more rapidly. Businesses cannot afford to do this alone, and neither should it be tackled only in European countries.
WKE has observed significant interest from developing nations in increasing their usage of AFs. However, this interest is often contingent upon these fuels being 20 – 40% cheaper than low-grade high sulfur pet coke. The economic constraints faced by these countries make it challenging to adopt AFs unless they are markedly more affordable. This highlights a broader issue: the need for a shift in the business dialogue. Currently, discussions focus primarily on the immediate costs of AFs rather than the long-term environmental and economic benefits. Until the cost implications of not using AFs start to be addressed – such as the environmental degradation and potential future regulatory penalties – it is more than likely that reports highlighting ‘peak emissions’ will continue to be seen. The true cost of continuing to rely on fossil fuels must be recognised and factored into business and policy decisions if meaningful progress is to be made.
The Powering Past Coal Alliance, launched in November 2017 at COP23, stresses that the Paris Agreement requires coal phase-out by 2030 for countries in the Organisation for Economic Co-operation and Development. Increasing coal usage figures suggest that this is another target which will be missed.
The importance of AFs in the cement industry
As the cement industry grapples with its significant environmental impact, the adoption of AFs is becoming increasingly critical. The industry’s traditional reliance on fossil fuels has contributed to its carbon footprint, necessitating a shift towards more sustainable energy sources. AFs, such as biomass, waste-derived fuels, and other renewable sources, offer a promising solution to reduce dependency on fossil fuels. These AFs not only help in mitigating climate change but also promote the use of waste materials, thus contributing to a circular economy. An increasing emphasis on AFs and carbon capture will deliver enhanced results for the whole industry.
One of the primary challenges in adopting AFs is the initial investment required for infrastructure modifications. Cement plants need to adapt their existing setups to handle, store, and efficiently use these new types of fuel. This often involves significant capital expenditure on new storage facilities, feeding systems, and combustion technologies that can process AFs effectively. Integrating these fuels into existing production processes can be complex and requires careful planning and execution. However, the long-term benefits, both environmental and economic, make this investment worthwhile. Reduced emissions and improved energy efficiency can lead to cost savings and compliance with increasingly stringent environmental regulations.
Another significant barrier is the cost competitiveness of AFs. While these fuels do not inherently cost more than traditional fossil fuels, current market dynamics and a lack of governmental incentives make them less attractive. The fluctuating prices of fossil fuels, coupled with subsidies and tax breaks for traditional energy sources, often skew the cost-benefit analysis against AFs. For instance, while there is considerable interest from developing nations to use AFs, the economic feasibility hinges on these fuels being substantially cheaper than traditional fossil fuels. Without financial support or incentives, the transition to greener energy sources remains challenging. Perhaps the new tax on carbon intensive goods, due to come in January 2027, will make a positive impact.
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Read the article online at: https://www.worldcement.com/special-reports/24122024/fuelling-change/
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