The cement industry is facing increasingly stringent greenhouse gas emissions targets for 2050, with the goal of achieving net-zero emissions. However, most of the industry's emissions result from the unavoidable chemical process of calcination, making it particularly challenging to reach these targets. To do so, collaboration with policymakers, financial institutions, and end users in the built environment is necessary. Improving energy efficiency, focusing on kilns, adopting advanced analytics, technological innovation, and exploring alternative building materials beyond cement and concrete are some of the strategies that can be used to achieve this goal.
Industry Characteristics
- Cement acts as the binder between aggregates (fine and coarse rocks) in the formation of concrete. While cement makes up only a small percentage of the mix (approximately 12 percent by volume), it is almost exclusively responsible for the resulting CO2 emissions. Source: McKinsey
- In the cement-manufacturing process, raw materials are heated to high temperatures in a kiln in a fuel-intensive process known as pyroprocessing. This results in clinker, small lumps of stony residue that are ground to a powder and combined with other ingredients to produce cement. Source: McKinsey
- Company-driven improvements have led to improved equipment reliability, energy efficiency, and the increased the use of alternative fuels. In fact, alternative fuels, such as industrial byproducts that otherwise would end up in landfills, now represent more than 15 percent of total cement plant energy consumption in the U.S. Source: Portland Cement Association (PCA)
- Overall, global demand for cement in 2050 is broadly flat compared to today. Source: IEA
Sustainability Impact
- The cement industry alone is responsible for about a quarter of all industry CO2 emissions, and it also generates the most CO2 emissions per dollar of revenue. About two-thirds of those total emissions result from calcination, the chemical reaction that occurs when raw materials such as limestone are exposed to high temperatures. Source: McKinsey
- Sustainability ultimately may be the catalyst that pushes the industry to seek growth via new business models, partnerships, and construction approaches. Cement-based concrete will remain the global construction material of choice, but “sustainable construction” value chains are likely to emerge on the regional and local levels, necessitating a reorientation of many corporate portfolios. Source: McKinsey
- The cement industry generates about 7 per cent of the world’s greenhouse gas emissions. While manufacturers have reduced emissions in recent decades, the industry must accelerate these efforts considerably if it is to meet its goal of achieving carbon-neutral concrete by 2050. Source: IFC
- Three heavy industries – chemicals, steel and cement – account for nearly 60% of all industrial energy consumption and around 70% of CO2 emissions from the industry sector. Production is highly concentrated in emerging markets and developing economies, which account for 70‐90% of the combined output of these commodities. Source: IEA
Sustainability Investments to watch
- Given its performance characteristics and the broad availability of limestone, cement (and therefore concrete) is likely to remain the construction material of choice globally. At a local level, however, it could lose share to more sustainable alternative materials, such as cross-laminated timber (CLT). Other shifts, including increased building-information modeling (BIM) and modular construction, could further reduce cement consumption, effectively shrinking demand, despite an overall increase in construction activity. Growth and decarbonization therefore represent significant, interrelated challenges. Source: McKinsey
- Companies have several options to decarbonize cement. McKinsey’s analysis show that CO2 emissions could be reduced by 75 percent by 2050. However, only a small portion (around 20 percent) will come from operational advances, while the remainder will need to come from technological innovation and new growth horizons. Source: McKinsey
- Decarbonizing the cement industry requires two strategic challenges to be addressed. First, companies will need to identify the best paths toward decarbonization through operational advances and technological innovation as well as new growth horizons. Second, they will need to develop a portfolio for a new growth horizon that leverages opportunities across the “sustainable construction” value chain. Source: McKinsey
- CCUS and hydrogen play an increasingly important role in reducing CO2 emissions, especially in heavy industries such as steel, cement and chemicals. Source: IEA
