The EU’s Net Zero Industry Act & the need for a full project value chain approach – EURACTIV.com

The European cement industry was one of the first sectors to present a 2050 Carbon Neutrality Roadmap following the publication of the Green Deal by the European Commission in December 2019. The CEMBUREAU roadmap sets out the decarbonisation levers across the five stages of the cement and concrete value chain (clinker-cement-concrete-construction-carbonation). 

Koen Coppenholle is the CEO at CEMBUREAU.

The cement industry’s decarbonisation journey runs through the circular use of waste to replace fossil fuels (52% of the sector’s fuel needs are currently met through waste streams), as well as ongoing efforts to reduce the clinker to cement ratio. Further downstream, the industry capitalises on the CO2 benefits of concrete recycling and the storage of CO2 in construction materials, including through natural carbonation.

In our roadmap, Carbon Capture, Utilisation and Storage (CCUS) features as the key technology to decarbonise the cement sector, as two-thirds of the sector’s CO2 emissions come from the calcination process of limestone. CCUS represents 42% of the sector’s emission reduction efforts by 2050.

With the framework of the EU Emission Trading Scheme (ETS) and Carbon Border Adjustment Mechanism (CBAM) now in place, CEMBUREAU is focusing on executing the roadmap and overcoming practical obstacles to decarbonisation investments. Cement companies are engaging in ground-breaking innovation projects across 200 cement plants in the European Union. From a regulatory perspective, the debate has now shifted to identifying the key facilitating regulatory provisions that need to accompany the decarbonisation process. Given the 30-35 years investment cycles typical for the cement industry, investment decisions for achieving the 2050 targets are made today. Companies making these significant investments need a regulatory framework that allows for clear and predictable planning, foresees robust and adequate funding, smoothens the necessary permitting processes and creates the appropriate incentives to transform the workforce, and take it along on the path to decarbonisation. 

In this context, CEMBUREAU has welcomed the Commission’s “Green Deal Industrial Plan for the Net Zero Age” and its four supporting pillars, including a predictable and simplified regulatory environment, access to funding, enhancing skills and open trade for resilient supply chains. The proposal for a Net Zero Industry Act (NZIA), released by the Commission in mid-March, executes the first pillar. It explicitly recognizes that energy intensive industries, including the cement sector, need access to carbon capture and storage technologies in order to remain competitive and reach their decarbonisation goals. 

In the past years, the cement industry has emphasized the importance of developing the EU’s CO2 infrastructure (pipelines and storage sites) to support carbon capture investments in cement plants. In this respect, it is encouraging that the NZIA Proposal acknowledges this need by referring to the lack of infrastructure as “the single largest bottleneck for CO2 capture investments to materialize” and identifying the need to develop a forward-looking supply of permanent geological storage sites. Similarly, the objective set in Article 16 of the NZIA Proposal for an annual injection capacity of at least 50 million tonnes of CO2 by 2030 in storage sites in the EU is most welcomed. The same goes for the transparency requirements requested from Member States in terms of carbon capture projects in progress, the corresponding needs for injection and storage capacities as well as CO2 storage projects in progress and national support measures that could be adopted for capture and storage projects.

The NZIA Proposal aims to ensure adequate manufacturing capacity for the strategic net-zero technologies listed in Annex I. The roll-out of CO2 reduction technologies undoubtedly depends on the availability of manufacturing capacity. However, by solely targeting technology manufacturers, the NZIA Proposal fails to address the entire value chain of breakthrough technology projects. 

While the NZIA Proposal is a key milestone, we strongly plead for its alignment and reinforcement with the other pillars of the Green Industrial Plan in three critical areas:

First, the access to funding for decarbonisation projects needs to be made more transparent, coordinated and streamlined. Such projects are holistic by nature requiring breakthrough technologies such as carbon capture, renewable energy feed and necessary infrastructure (pipelines and storage sites) for success. When companies elaborate the financial plan for these projects and assess the return on investment, they are confronted with multiple funding instruments at European and national level. These cover different stages of the project value chain and often apply different scope – CAPEX only or partially including OPEX –, intensity levels, eligible cost determination and application and processing timelines. Creating a “one-stop-shop” for funding applications is worth considering, as well as the need for frontloading of ETS innovation funding and a robust design of the European Sovereignty Fund with coordination among other funding initiatives.

Second, a coordinated approach to permitting in dialogue with Member States should extend beyond renewable energy or the proposed NZIA and cover the full chain of decarbonisation projects. The characterisation of permitting as “overriding public interest” in both RED III and the proposed NZIA should speed up renewable asset development, including on-site industrial plants. However, this should not result in lower priority being given to the elimination of permitting barriers in other stages of the project value chain. The request for a one stop-shop approach, single permits, simplified appeal proceedings and shorter assessment and approval times is valid for all stages of a project. Therefore, it should apply throughout the value chain and not be limited to the manufacturing industry.   

Third, it is essential to ensure that our workforce is an integral part of our industry’s transformation. This entails identifying the skills required, designing and implementing training programs, and upskilling and reskilling our current workforce, with a strong emphasis on diversity. It is also vital to position the cement industry as an attractive employer for future workers. The concept of Net Zero Academies in the proposed NZIA should be embedded in the larger Industry 5.0 initiative.

In conclusion, CEMBUREAU welcomes the proposed NZIA but insists that the items addressed in the proposal are coordinated with and complemented by actions in the other pillars of the Green Deal Industrial Plan.  Only through a coordinated, transparent, and consistent approach, and close cooperation with Member States, can decarbonisation projects thrive and deploy their full potential.

CEMBUREAU is committed to contributing to the debate and collaborating towards a sustainable future.

For further information please refer to CEMBUREAU statement on the Net Zero Industry Act.