Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
At a recent Columbia Business School meeting focused on decarburizing, Maher Al-Haffar, chief financial officer of Cemex, one of the world’s largest cement companies, sent a message to his peers. “I think it’s actually value creation in our industry.”
Many of the sectors agree that decarbonisation of one of the world’s most ubiquitous commodities, cement, is possible and even potentially profitable. The question is who pays for the transition and which strategies should be prioritized.
Cement is responsible for at least 8% of the world’s carbon emissions annually. It is also one of the world’s decay-resistant industries where decarbonization requires physical infrastructure and supply chain changes, or the adoption of new technologies and energy sources.
Clinkers, the main binder in cement, produce about 90% of their production emissions. This is because its production involves heating the limestone to over 1,400c, which consumes a large amount of energy. However, 60% of the clinker’s emissions come from chemical reactions that are essential for its production. Firing of limestone reacts with coal to produce coal and carbon dioxide.
There are incentives for decarbonisation of cement. The EU has led the way in an emissions trading system that limits carbon emissions, allocated value for emissions reductions, currently at around 80 euros per tonne. Like other heavy industries such as steel, cement receives substantial free allowances, damping the impact of prices. If these free allocations are phased out, the European cement industry will have important incentives to reduce emissions quickly.
Test it yourself
This is the latest in a series of monthly business school-style educational case studies dedicated to the responsible business dilemma. Read text and articles from FT and elsewhere, and consider the questions raised after being suggested and linked within the piece.
The series forms part of a broad collection of FT’s “Instant Education Case Study” that explores business challenges.
About the Author: Gernot Wagner is a climate economist at the Columbia Business School
The most effective way to reduce cement emissions by up to 40% is to replace some of the clinker with low-carbon materials such as fly ash and slag, known as “complete cement materials” (SCM). Unlike many industrial decarbonization measures, using SCM also reduces costs and helps to gain extensive support from the cement industry in this way.
However, SCM substitution with fly ash also faces the paradoxical challenge of electrification. Fly ash and slag are by-products of the coal and steel industries. As the world abolishes coal-fired power plants and steel frame production, the supply of these materials will decrease, forcing cement producers to find other ways to source SCM, such as digging fly ash from landfills and ash ponds.
Carbon Capture, Utilization and Storage (CCUS) technology offers another opportunity to mitigate the carbon footprint of existing plants. However, CCUS technology is currently expensive, and adding CCUs in addition to traditional production inevitably adds the cost of cement production.
The fact that, in addition to the costs of CCUS technology, cement emissions will be reduced, but not eliminated by improving energy efficiency, switching to alternative fuels, or SCM replacements, has encouraged some of the industry to fundamentally rethink their manufacturing processes.
Two major and competing ways are emerging. It focuses on replacing limestone as a primary input. The other uses electrochemistry to replace traditional cement-based models.
California-based startup Brimstone replaces limestone with naturally rich, non-carbonate silicates. Ensuring an early investment from Breakthrough Energy, Bill Gates’s responsible for, the company bypassed limestone firing, reducing 60% of the carbon emissions associated with the process.
Critically, the technology produces low-carbon alternatives to products that are familiar to the industry. It is cement made from rocks. However, Brimstone’s method solves the limestone problem, but relies on high temperature ki, which is responsible for the other 40% of cement emissions.
To provide a solution for both limestone discharge and ki heat, the Massachusetts-based sublime system (including Swiss cement giant Holsim) uses electricity instead of heat to promote the chemical reaction that extracts calcium from the rock. However, the process does not produce industry-standard Portland cement.
In a commercialized race, both companies are necks and necks. Both are building their first plants. Brimstone, Reno, Nevada, will begin pilot operations in the second half of 2025. The Holyoke, Massachusetts sublime is scheduled to operate in 2026.
However, expanding these technologies requires time, cash and potentially regulatory changes. Cement quality standards are usually based on the recipe used, not the performance of the cement.
Sublime cement may be indistinguishable from regular Portland cement for most applications, but it is not possible to label it that way now, as it uses electrochemistry rather than ki. This places sublime on the disadvantage of brimstones that do not require this distinction.
Replacing more than 3,000 traditional cement kilns that can be operated worldwide does not happen overnight. This means that with tanned cement, the industry must pursue a mix of answers to problems. From familiar strategies such as clinker substitutions to innovative new processes like Brimstone and Sublime.
This leaves incumbents facing the classic innovator dilemma behind when and how to embrace new ways of production, but the old ways will remain profitable.
Questions for discussion
Read more
Consider these questions:
•What role can material efficiency play in reducing concrete consumption?
•What are the risks and opportunities for innovative startups like Brimstone and Sublime Systems?
•How should incumbents respond to these innovators?
•Is it reliable to assert that decarbonization is a “value creation” for shareholders?
•How can policy makers drive industry innovation? Should the government implement low carbon production methods? If so, how – by using broad pricing like the EU emissions trading system, or by using it directly through regulatory interventions?
