Cement is the second most consumed material in the world after water, with no scalable substitutes today. More than 50% is made in China. Manufacturing cement creates two sources of CO₂ emissions, about 40% comes from the burning of fossil fuels to heat kilns at 1300-1450°C, and about 60% is released during the thermal decomposition of limestone into carbon dioxide and lime, an essential element of clinker which is the main ingredient of cement (about 70%).
With 6% of all man-made emissions, cement is the second largest emitting manufacturing sector after steel. Societal needs and urbanization are expected to increase cement demand by 45% by 2050. Aligning with the Net-Zero by 2050 pathway by IEA, however, requires limiting the increase to today’s levels.
Without implementing transformative technologies, the cement sector can already cut emissions today with efficiency and circularity levers such as reducing clinker-to-cement ratio and using waste from other industries as alternative fuels. Deploying CCUS technology is the only known pathway to bringing sectoral emissions near zero. Today, its adoption could lead to a 50-85% production cost increase. The technology is expected to reach commercial stage by 2030.
Besides investments in carbon capture on production assets, investments of at least $185 billion are needed to develop the CO₂ transport and storage infrastructure to handle 1,370 MTPA of CO₂ (the most significant need after blue hydrogen in the IEA Net Zero by 2050 Scenario), as well as the low-emission power and hydrogen production infrastructure. Due to the high cost of carbon capture, low-emission cement is expected to reach the market with a green premium above 50%, which would lead to a 1-3% increase in housing prices. Demand signals for low-emission cement from the cement buyers are critical to incentivize investments. This will require strengthening cement buyers’ confidence in their ability to pass the premium to end consumers.
International cooperation and more robust policy measures such as carbon pricing, carbon border adjustment mechanisms, circularity or product specification standards can help create a differentiated and economically viable market for first movers into the low-emission cement industry. The industry will require $500 billion to implement carbon capture technologies by 2050, i.e. $16 billion per year on top of business-as-usual investments. Access to green bonds through adequate taxonomy and ample public financing support will be instrumental to improving the business case.
We emphasize five priorities for the sector:
1. Implement efficiency levers to maximize emission reduction in existing processes and foster concrete recycling.
2. Boost the number of carbon capture projects to accelerate the learning curve, drive costs down and bring forward the technology’s commercial readiness.
3. Develop the CO₂ transport and storage infrastructure required to enable low-emission cement production.
4. Multiply demand signals for low-emission cement to incentivize producers and investors to direct capital towards low-emission assets.
5. Develop policies to support the four priorities above and strengthen the business case for low-emission cement production