Important news update was revealed at the recent COP29 meeting in Baku. After 10 years of negotiation, the agreement on Article 6.2 of the Paris Agreement was signed. This news is very important as it holds the possibility of establishing a global carbon price. The parties agreed on standards for a centralized carbon market under the United Nations Organization – UN.
This initiative paves the way for the emergence of national carbon markets and provides a uniform mechanism for the creation of a global carbon market, regulated by the UN, where countries can buy and sell emission reductions across borders.
Cement companies around the world, not just in Europe, will have to pay for their carbon emissions. Once operating within a carbon trading system, cement producers may need to buy carbon permits or credits to cover their emissions. This should create an economic incentive for companies to reduce emissions, whether by improving production efficiency, adopting carbon capture and storage (CCS) technologies or switching to low-carbon fuels.
A global carbon market would also solve the problem of carbon leakage for European Union producers, who fear that the Carbon Border Adjustment Mechanism (CBAM) is not airtight and that, in practice, cement and clinkers from higher CO2-emitting nations could permeate the system and undermine the domestic cement base.
Regional cement conferences, which have been held around the world in recent months, have discussed issues that have opened the opportunity to compare the sentiment in the cement industry across a wide range of markets. One of the most striking differences is the level of attention given to decarbonization.
In Europe, the ninth version of the VDZ International Congress in November focused intensely on net-zero cement production, reflecting the concerns of cement producers, who are now watching the clock tick down to 2034 and the complete elimination of free carbon allowances for the EU cement industry under the EU Emissions Trading Scheme, which will be replaced entirely by CBAM.
It is vital for cement industry companies to assess how much they should and can take advantage of decarbonization technologies in the remainder of this decade, including utilizing carbon capture, which can be quite complex and expensive, to operate profitably within the future carbon tax regime.
At the Türkçimento event in Turkey, decarbonization was also discussed, as the country and the cement industry are looking to align with EU standards and norms. The government is finalizing the legal framework to establish its own countrywide carbon emissions trading system, which will align with the CBAM.
With this initiative, the Turkish government recognizes the benefits of incentivizing its own large emitters to decarbonize, as well as ensuring that carbon taxes are paid in Turkey through its own emissions trading system, rather than potentially to European governments through import taxes via the CBAM.
In Tunisia, which hosted the annual AUCBM conference last week, decarbonization is a topic that is starting to be included in discussions between the government, producers and equipment suppliers, but it is not a priority for cement companies in this region. Across the MENA region, cement producers are focusing primarily on the operation of cement plants, improving efficiency and profitability.
Reality leads us to understand that a viable commercial argument is needed, as in Europe with the carbon price, otherwise no cement producer will be able to justify the adoption of expensive decarbonization technologies, especially carbon capture. Carbon is in everyone’s interest; therefore, its reduction must take place everywhere.
The global carbon market offers a viable strategy to reduce greenhouse gas emissions and combat climate change. Although it presents challenges such as the need for greater regulation and transparency, its success depends on continued innovation and international collaboration. Only with a collective effort will we be able to see if it really is the solution we need.
Source: cemnet.com
