Deep decarbonization of the industries is key to the efforts being done worldwide to limit the global temperature increase in this century to 2 degrees Celsius above preindustrial levels, while pursuing the means to limit the increase to 1.5 degrees. Why?
Global Warming has a devastating impact on the people and planet. More frequent and intense heat waves, droughts, storms, and floods are associated to the impeding changes in temperatures, leading to communities suffering, going into new poverty levels, and a rise in mortality. If we’re unable to reduce our emissions, scientists believe that climate change could lead to an increase in fatalities around the globe every year, and force 100 million people into poverty by 2030.
What is decarbonization?
Carbon dioxide (CO2) is a greenhouse gas formed by the combustion of carbon and by the respiration of living organisms. CO2 emissions stem from the burning of fossil fuels (coal, natural gas, and oil), solid waste, trees, and other biological materials, as well as a result from certain chemical reaction, like the manufacturing of cement.
Carbon dioxide is removed from the atmosphere (or “sequestered”) when it is absorbed by plants as part of the biological carbon cycle. As rapid CO2 production combines with impending climate change, rapid urbanization and deforestation, nature´s ability to do this job by itself has slowed down. It is now time for industry leading companies to act and guide the efforts or decarbonization to guarantee a better future for the coming generations.
Decarbonization is the term used for removal or reduction of carbon dioxide output of a country’s economy. This is usually done by decreasing the amount of CO2 emitted across the active industries within that economy. To achieve deep decarbonization, we must rethink the way energy is produced and consumed, ergo calling for a switch towards low carbon energy sources and renewable energy.
The term has gathered even more prominence since the launch of the 2015 Paris Agreement, were nearly 200 nations committed to holding this century’s average temperature to well below 2°C and to pursue “efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.”
A report published by the United National Environment Programme (UNEP) identified these six industries as the most carbon-intensive sectors:
- Forest & land use
- Building & Cities
According to Neal Ellliott, Senior Director at Research American Council for an Energy-Efficient Economy, “decarbonizing industry will demand a mix of policies and technologies, ranging from tax incentives and carbon pricing to electrification, low-carbon fuels and carbon capture and use”.
Why is it so necessary?
When COVID-19 hit the world by storm during the beginning of 2020, some hopeful reports indicated that due to the economic halt worldwide, and a massive pause in the way people consumed resources pre-pandemic, the greenhouse gas emissions started seeing a notable decrease. Fossil CO2 emissions –cement, coal, oil, and gas – peaked at 36.64 gigatons of CO2 in 2019, followed by an extraordinary drop of 1.98 gigatons of CO2 (5.6%) in 2020 due to the pandemic.
Sadly, fast-forward to late 2021, and numbers show that concentrations of the major greenhouse gases – CO₂, CH₄ and N₂O – continued to increase later in 2020 and the first half of 2021. Based on preliminary estimates industry and residential sectors were already at the same level or higher than in the same period in 2019.
As the issue becomes stronger for many industries responsible of most of the carbon emissions, the construction sector is doing its part to keep the numbers in check. Cement producers face a challenge like no other, and the moment to act has come upon us. For example, CEMEX, the largest concrete producer in the Western world, has taken upon the challenge to decrease their environmental impact by imposing aggressive climate action targets that look to reduce the company´s CO2 emissions in its concrete business by 35% by 2030, and reach its net-zero ambition by 2050.
This is no easy feat but at CEMEX Ventures, we like to look at a challenge in the face and say “Let´s do it!”. Together we are working to fight one of the biggest threats the sector has endured in the recent years, and we are confident that the work we are doing will garner benefits that will benefit CEMEX, our clients, and the industry.
What does deep decarbonization mean?
Deep decarbonization is what´s needed to not let the global 2°C target slip through our fingers. The Climate Action Tracker released on May 2021 demonstrates that with the current policies enforced in major countries, the Earth´s temperature could see a 2.9°C increase by 2100.
According to the European Commission Joint Research Centre, when it comes to deep decarbonization in the cement industry, the development and implementation of carbon capture and storage technologies are unavoidable.
In a recent report where they play out different scenarios for decarbonizing industries, carbon capture technologies are seen as the most important technology to reduce process emissions, as well as emissions from industrial heat when those are still present. By 2050, in several scenarios over 90% of cement plants incorporate carbon capture with up to 120Mt CO2 captured.
CEMEX is going the extra mile with the deep decarbonization mission of their operation, as concrete plays a fundamental role in the transformation that the built ecosystem requires to mitigate climate change. The company is advancing in the progress of cutting-edge research and developing technologies and construction solutions that contribute to the mitigation of CO2 emissions, enhance energy efficiency of buildings, improve the resiliency of structures, intensifies long-lasting structures and the maximizes resources by circulating products, components, and materials in use at the highest possible levels always.
Why is so important to decarbonize industries?
Most of the industries´ greenhouse gas emissions, 90 percent to be exact, consists of carbon dioxide. Of those, almost half of industry’s CO2 emissions result from the manufacture of the four industrial commodities—ammonia, cement, ethylene, and steel. To achieve decarbonization in these sectors, companies must reimagine the production of their processes with potentially costly rebuilds or retrofits.
The Environmental Defense Fund states that decarbonizing heavy industry is difficult because its direct emissions are the byproducts of chemical reactions or related to processes that require very high heat or fossil fuels. On top of that, industrial products must often meet precise quality criteria to comply with safety regulations. Therefore, lowering the carbon content in the manufacturing of cement and steel (for example) could potentially impact the quality of the material outputs.
Hence, if the characteristics of carbon-intensive industrial products change, the specifications associated with building codes and standards may need to change as well, especially if changes imply a modification of the physical properties of common building materials.
Although a challenge given the complexity of the process, high costs, and the requirements to not alter the final product´s qualities, decarbonizing industries is key to lowering the CO2 levels from the environment and guarantee that by 2100, the world´s temperature does not skyrocket to inhumane levels.
Decarbonization in construction industry
The construction industry needs to face decarbonization as a serious matter, especially the players in the cement manufacturing industry. As Figure 1 indicates, this process takes up to ¾ on the entire emissions that come from the construction process, making it the bullseye of the sector when trying to identify the areas that must undergo change sooner rather than later.
While it’s unclear how the climate debate will unfold, reaching the 2050 goals will be very challenging for the cement industry, as most of its CO2 emissions result from the cement manufacturing and the unavoidable chemical process known as calcination.
Unlike other industries that may be further along in the process, the development of new technologies to decarbonize cement might not be scalable for years. Nonetheless, the industry could reduce its 2017-level emissions by more than three-quarters by 2050.
As leading efforts go, CEMEX managed to reduce its net CO2 emissions per ton of cement by 23% in 2020 when compared to its 1990 levels, avoiding the generation of 7.5 million tons of CO2 in 2020 alone, equivalent to the emissions produced by 1.9 million vehicles driven in a year. This puts us in a favorable position when it comes achieving our 2050 goals. How did we do it?
- Carbon Capture, Use and Storage (CCUS): CEMEX actively participates in various R&D collaborative efforts with different sectors to develop technologies to capture, utilize and/or store carbon, as well as other carbon reduction technologies. It is essential that CO2 separation and capture technologies become widely available to achieve the sectorial reduction ambitions.
- New types of clinker and substitutes with a lower carbon footprint: attention has increased in the development of new types of clinker, the main ingredient in the cement fabrication process, with lower carbon footprint and/or greater reactivity. CEMEX successfully modified the raw meal composition of its clinkers to obtain higher reactivities and allow for higher degrees of clinker substitutes in their cement with 20-30% lower emissions than the traditional kind.
- Renewable Energy: Employing renewable energy sources in operations complements and enhances existing efforts to reduce carbon emissions. As a result of CEMEX´s strategy to transition to clean energy sources, around 29% of our cement operations’ power supply came from renewable sources in 2020. Leading these efforts in the sector allowed us to establish an ambitious 2030 goal: 40% of our projected consumption coming from renewable sources.
- Alternative to fossil fuels: A key component in reducing emissions from combustion processes is the use of alternative fuels from waste to replace fossil fuels, such as coal and petroleum coke. Likewise, co-processing waste is a more efficient waste management solution than landfilling and incineration, making the cement industry a net consumer of waste and taking front & center stage of a Circular Economy approach.
- Natural carbon sinks: Natural carbon sinks are considered highly beneficial in reducing the total concentration of CO2 in the atmosphere. CEMEX’s nature reserve, El Carmen (a 140,000 hectares wildlife reserve located on the U.S.-Mexican border), stores around 11 million metric tons of biologically sequestered CO2. In addition, 23.5 million tons of CO2 are currently stored within the vegetation of all 300 quarries around the world.
What can we expect from leading companies, startups, and entrepreneurs in the sector to further enhance decarbonization efforts in the industry?
Projects for a better future
The UK based startup is the developer of one of the most promising and advanced carbon capture technologies in the market to date. After working with them since 2020, in August 2021 we announced the addition of Carbon Clean into our investment portfolio, putting us one step closer to achieving CEMEX´s climate action goals. Carbon Clean developed a novel technology (CycloneCC), which can efficiently and cost-efficiently capture CO2 from industrial processes. The goal of this breakthrough scalable modular technology is to provide carbon capture at a 10 times smaller installation footprint and 6 times shorter build time, adding up to 50% savings in capital expenditures associated with carbon capture. Additionally, the technology would target operating expenditures as low as US$30 per metric ton of CO2 at an industrial scale.
Our Swiss portfolio company, who recently announced they are going public in the NYSE through a PIPE agreement, developed a transformative, long-duration energy storage solution
to deliver reliable and sustainable electricity. Energy Vault is inspired by pumped hydro plants that rely on the power of gravity to store and discharge energy, combined with their own material science and software innovations that replaces water with custom-made composite blocks, made with locally sourced soil or waste material, which are then lifted and lowered to store and release energy on-demand.
This proprietary system is orchestrated by Energy Vault’s AI-enabled software platform that incorporates advanced computer control and machine vision. The result is a resilient supply of power and storage capacity with a system designed to have greater operational flexibility for short and long duration storage, high round-trip-efficiency, lower capital and operating expenses, and an overall higher asset efficiency than competitors given the lack of degradation in the storage medium over time.
The winning startup from Construction Startup Competition 2019 developed a technology that processes unrecyclable plastic waste into artificial gravel that avoids the use of natural quarry aggregates and boulders in the production of light concrete with a low CO2 footprint. Originated in Argentina, Arqlite opened a new market and transitioned into the United States market by opening a large-scale facility in Santa Ana, California.
The light aggregates produced by Arqlite, part of our investment portfolio since 2020, represent a great advance in sustainable construction, multiplying thermal and acoustic insulation by ten times when compared to mineral aggregates, while offering better construction quality and greater energy conservation.
Wallex, the Spanish Joint Venture created between CEMEX Ventures and Grupo Avintia, is an offsite, sustainable, and high-quality industrialized construction system that knows no limits on innovation and architectural design and allows for the reduction of delivery times and professionalization of the workforce. It also integrates the entire supply chain into the process, from design to assembly on site.
The Wallex System adopts the experience and knowledge of design and engineering with the application in the factory of advanced technology, the automation and industrialization of processes, as well as the use of innovative materials in the construction sector.
Carbon Upcycling Technologies
The Canada based startup Carbon Upcycling Technologies developed a technology to improve the processing of residue and by-products of industrial processes, capturing CO2 emissions to produce nanomaterials with greater reactivity and a lower carbon footprint.
CEMEX currently uses 3 million tons of industrial residue each year, but plenty gets discarded due to its low reactivity. The agreement with Carbon Upcycling will help CEMEX double its current use of industrial residue to consume annually 6 million tons by 2030, thereby reducing its carbon footprint significantly.
How is CEMEX Ventures helping to decarbonize the industry?
As the eyes of the CEMEX on the outside, it´s our duty to be on top of the latest trends in the construction industry. Decarbonization, more than a trend, is also part of our responsibility.
“Innovating goes far beyond than introducing new methods and processes into the mix. We believe that it´s all about identifying the industry´s pain points and finding ways to solve them by using new technologies and alternative ways to approach them” expressed Gonzalo Galindo, Head of CEMEX Ventures.
“We understand that we operate in an industry that is responsible for a significant percentage of the carbon emissions we put into the atmosphere, and that the construction industry is very fragmented when it comes to collaboration. Combining these two important pain points, we´ve been able to identify startups like the ones mentioned above, who are working on solutions that help the industry mitigate its carbon footprint. More so, we are working with them and other partners from across the entire construction value chain to really foster change, not just in the area that affects CEMEX, but every other player as well” he added.
Each year, we discover more and more entrepreneurs who are also taking on the decarbonization route for the industry. For this, we added “sustainability” as a subdivision in our Top 50 Contech Startups of 2020 to highlight those startups who have very promising projects that tackle this issue. Likewise, in Construction Startup Competition 2021, we directed one of our categories to the “carbon footprint mitigation” to keep evaluating solutions that will help achieve the mid-century goals.
By partnering and investing in startups who are developing innovative technologies that can help decarbonize the industry, not only in the cement production but also in the materials delivery and construction process, we make true to our claim “Fostering the construction revolution”. It a tough road ahead, but we are confident we are on track to making positive change for the cement, concrete, and construction sectors.