Transcript Presentation to WCI Co-Chairs 2.56 Mb

Cement Association of Canada
and the
Western Climate Initiative
WCI Co-Chairs
Seattle, WA
December 10, 2008
Cement Association of Canada
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The Cement Association of Canada (CAC) is the voice of Canada’s
cement industry.
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Membership comprises eight companies with clinker and cement
manufacturing facilities, granulating and grinding facilities, and
distribution terminals from Atlantic Canada to the Pacific coast.
•
98% of Canadian cement production (16.7 million tonnes in 2006)
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Western Climate Initiative - Overview
• Canadian Cement Representation:
 85% of Canadian cement manufacturing
 14 of 17 Canadian facilities fall under
WCI Partners’ jurisdiction
 BC – 3 plants, QC – 4 plants, ON – 7
plants
 Other (non-WCI) plants are in Alberta
(2) and Nova Scotia (1)
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We Share Common Goals
• The Canadian cement industry supports the need to
address global climate change in a manner which:
1. Protects the environment:
– Including timely actions to reduce greenhouse gas
emissions from current fossil fuels combustion
2. Maintains a strong, vibrant, and competitive economy:
– Managing costs and ensuring Canada’s industry is fairly
treated in comparison to competitors in our domestic and
export markets.
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CAC Participation in WCI
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March 2008: Submission in response to the Initial Draft Design Recommendations.
May 2008: Participated in Stakeholder Consultations SLC, Utah.
June 2008: Submitted response to Draft Design Recommendations.
July 2008: Participated in Final stakeholder consultations in San Diego.
August 2008: Submitted additional comments on the Draft Final Design
Recommendations.
October 2008 - participated in stakeholder teleconference on design
recommendations.
October 2008 – Coordination of WCI Canadian Partners Cement Caucus at QCI
meeting in Quebec City (October 21 & 22).
Ongoing:
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Engagement with Ontario, BC, Quebec, and Manitoba officials on WCI-related issues.
Participation in California AB-32 teleconferences on design of State climate plan and
participation in WCI.
Coordination of Canadian cement sector positions with those of the US industry, via
Portland Cement Association.
Communication and consultation with member companies.
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Cement Industry Emission Reduction
Opportunities
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Canada’s cement industry supports the has a
comprehensive globally developed, strategy to
deliver climate change objectives and remain
competitive, through:
1.
Continuous improvements in energy
efficiency
2.
Increasing the use of alternative and
renewable energies
3.
Increasing the use of Supplementary
Cementing Materials (SCMs)
4.
Increasing Research and Development on
Innovative Manufacturing Processes and
Products
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Canada’s Cement Sector Faces Distinct Challenges
• Emphasis on reducing environmental footprint coincides with other
market place challenges:
– Highly carbon intensive (per unit gross output) compared to other industrial
sectors;
– Energy costs are already 40% of overall operating costs;
– Emergence of offshore competitors – cement is a highly homogenous,
substitutable product.
– Planned expansions at several US facilities – our main export market
– Slow down in US economy – our important export market.
– Policy barriers limit access to alternative energy sources.
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If we don’t get the climate policy framework right, cement production will
merely locate offshore, without benefit to the global environment.
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Our Concerns are Substantiated by GHG Leaders
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California: AB 32 – Air Resources Board Interim Report
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Gov of Australia: Green Paper (Ch. 9 – Treatment of Energy-Intensive / TradeExposed Sectors)
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Leakage has been a key consideration in cement sector strategy.
“If GHG requirements were applied to California cement manufacturing facilities only, their
costs would rise relative to imports, and imports could displace California productivity …
resulting in a net worldwide increase in GHG emissions.”
“Compared to the rest of the economy…cement stands out as extremely emissions-intensive
and trade exposed.”
To reduce the risk of production and carbon leakage to less regulated jurisdictions, Australia
is proposing that, initially, gratis allowances be issued to the cement manufacturing industry
at sufficient levels to cover 90% of the sector’s baseline emissions.
EU Environment Commission: Allocation Issues for Post 2012 EU ETS
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Considering how to safe guard competitiveness of energy-intensive and trade exposed
industries, against rivals based in less regulated areas.
Primary aluminum, hot rolled steel, and clinker are named as the industries that would be
strongly affected by such competition.
These sectors “would therefore be amongst those likely to benefit from partial to totally free
allocations."
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CAC Response to WCI Scoping Issues
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Irreducible chemical process emissions should not be included in the scope
of the cap and trade system.
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61% of cement GHG emissions are irreducible, chemically necessary emissions from raw
materials (CaCO3+heat = CaO + CO2) and occur wherever cement is manufactured.
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Including process emissions puts the competitiveness of the sector at risk and does nothing
to reduce global GHG emissions – they will simply be transferred to other jurisdictions.
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Process emissions should be ‘scoped in’ only when all competing jurisdictions also regulate
their cement sectors, or when proven and cost effective technologies are available to the
industry.
Assigning a zero reduction target, and issuing gratis allowances for all
process emissions would be an acceptable means of achieving the same
objective.
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CAC Response to WCI Allocation Issues
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CAC urges the WCI Partners to develop a ‘uniform approach’ to all
allocation issues respecting the cement sector:
 Baseline and Cap determined on the basis of a uniform cement GHG
performance standard across all cement facilities within WCI.
 Uniform approach to auction requirements for cement sector.
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Cement manufacturers must receive sufficient allowances, free of charge, to
cover all irreducible calcination process emissions, in all WCI jurisdictions.
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Combustion emission targets must be established by considering the
competitive position of the industry versus non-WCI producers (on-shore
and off-shore).
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WCI partners must develop a process for engaging the cement sector on
these critical issues.
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Kg CO2 / tonne of cement
Illustration of Uniform Approach
In excess:
reduce or
buy
2005 Baseline
Regional Cement
Reductions
Phase 1 Target
Surplus:
sell / bank
Facility A
Facility B
Facility C
…
…
Cement Facilities Across WCI Jurisdictions
Facility Z
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CAC Response to WCI Reporting Issues
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Support for using the Climate Registry (Appendix E4) ’plant specific’ clinker
methodology as the basis for estimating and reporting cement sector GHG
emissions.
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Highly consistent with existing industry reporting standards (WBCSD Cement CO2 Protocol).
Consistent and harmonized approach to reporting requirements is neccessary
across:
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Cement sector in all WCI jurisdictions.
WCI Canadian Partners and Government of Canada.
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Reporting and verification costs must be minimized.
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Data compilation and reporting out by WCI must occur in a timely manner.
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Next Steps?
• CAC is interested in better understanding:
– WCI process that will be used to set Partner budgets in the first phase
(2012-2015) of the program;
– WCI process that will guide decisions on facility caps;
– CAC encourages WCI partners to engage the cement sector as one, in
an effective and efficient process.
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