A frontier of cement and steel

Cement and steel production are not only carbon intensive, but also key materials for the development of poorer countries. Focusing on the frequent flyers distracts from bigger questions in the fight against warming, writes Mallen Baker.

To the delight of some and the irritation of others, Al Gore has been given the joint honour of the Nobel Peace Prize, alongside the Intergovernmental Panel on Climate Change. Both have had a huge part to play in raising awareness. Awareness, however, is the easy part.

The US treasury secretary Henry Paulson recently met with a group of CEOs that have come together over support for a mandatory programme to reduce greenhouse-gas emissions. The companies, part of a coalition of 27 major companies including General Electric and General Motors, have been arguing for a pollution-trading programme. The Bush administration, of course, is opposed to mandatory measures to reduce greenhouse-gas emissions. But even the Bush camp is seeing movement.

The corporate lobbying does not end there. GE's Jeffrey Immelt and Duke Energy's Jim Rogers were amongst the CEOs that attended a separate session at the White House with Bush's top environmental advisor James Connaughton reportedly covering a wide-ranging discussion. It is just another reflection of a factor we have seen before – the business community is now ahead of many policy makers when it comes to seeing the need for action.

In a number of areas, the environmental campaigners got there first. But increasingly, the campaigns are distracted by highly visual symbols (such as the airlines), or by anti-corporate sentiment.

So, shortly after eco-warriors camped outside the UK lead airport Heathrow to protest against the growth in flying, CEOs of the cement industry – a sector which produced more than 5% of the world's man-made climate-change emissions, and more than the aviation industry – quietly convened to review what they could do.

Cement is a key material, with soaring demand across the world and therefore increasingly a huge challenge to the achievement of a sustainable world economy. The material is inherently carbon intensive. Its manufacture depends upon high temperature kilns, and also contains chemical processes which lead to the release of carbon dioxide (CO2).

Cement factories globally are expected to produce almost 5 billion tonnes of carbon dioxide every year by 2050.

There is no easy win here. Demand for cement is used for the roads, schools, sewers and other infrastructure much needed by developing countries in particular. Likewise, the carbon intensity is inherent to the process – spectacular cuts are hard to envisage. But public awareness of the sector is very low. The majority of people are probably not even aware that cement production produces CO2.

Cement companies are beginning to take steps to do what they can. Some, for instance, burn waste products alongside coal, whilst others have tried to make plant more energy efficient. The companies that came together, who have formed the Cement Sustainability Initiative, are working to standardise such techniques and to share best practice.

Big obstacles remain. China has become the largest single source of cement-related emissions with the rapid growth of the sector there. No Chinese cement companies have accepted invitations to join the initiative. That said, neither have the US equivalents, and the somewhat newer plant in China is generally more efficient than the older US versions.

The other sector that remains particularly intensive is the steel industry, which also accounts for around 5% to 6% of global man-made greenhouse-gas emissions, just slightly ahead of cement.

Steel is necessarily produced through furnaces, either a primary blast furnace method or the electric arc furnace. Modern plants are certainly more energy efficient than the old steel mills that until relatively recently were still in operation, but it remains inherently a polluting process. As with cement, the material output shows no sign of being less important to future development.

Industries where there are few apparent opportunities to make energy-efficiency improvements are a challenge for public policy making. So, for instance, the European companies covered by the EU Emissions Trading Scheme (EU-ETS) see their future operation constrained by the policy. The early years of the EU-ETS have had little impact, since emission permits were over-allocated. In future, the allocation will be stricter. Companies say that without the ability to make their processes more efficient, this will simply mean that the sector's growth will be artificially constrained, and this will encourage a surge of imports from countries where such constraints are not a factor. This will produce neither sensible business outcomes, nor will it do anything to address what is a global environmental problem. Indeed, it would be likely to make them worse.

Ultimately, companies say that public policy should be designed to ensure all companies follow existing best practice. The best global gains would be attained by upgrading plants in Russia – not by using policy devices that might actually encourage imports from Russia instead.

At the same time, they recognise that innovation is needed to make the next step jump. The International Iron and Steel Institute is pursuing the Ultra Low Carbon Steel product, which has the ambitious target of developing a solution that will reduce the process emissions by 50%.

All of this is about leadership: companies that see the writing on the wall, and engage governments to sharpen up their response; industry sectors that, relatively out of sight of the campaigners, understand their shared ownership of the problem and have focused on initiating now the innovation that will be needed tomorrow.

What it is not about, however, is easy wins producing easy solutions. While the campaigners focus on invoking guilt in the frequent flyers, nobody can argue that the steel and the concrete that is so integral a part of building infrastructure in countries that need to escape poverty can be dealt with in such an easy fashion.


First published in the Business Respect email newsletter,

Mallen Baker is development director of Business in the Community, and editor of the email CSR newsletter Business Respect

Homepage photo by zerega