Cement Net Exclusive: Yan Haochun: Building a Dream of Blue Sky and Exploring the Green Footprint of Cement Industry under the Background of Carbon Market

2024-11-01 16:10:56

At the meeting, Yan Haochun brought the theme report "Dream of Blue Sky: Exploring the Green Footprint of Cement Industry in the Context of Carbon Market". She pointed out that the cement industry faced the risk of rising costs in the context of the carbon market.

As an important source of global carbon emissions, the

cement industry shoulders the heavy responsibility of emission reduction. Under the severe challenge of climate change, its transformation is not only an environmental responsibility, but also a historical mission. We must act quickly to adopt innovative technologies and optimize production processes in order to achieve a green transformation and contribute to the future of the planet.

On October 24, the "2024 China Cement Double Carbon Conference and the 12th Energy Conservation and Environmental Protection Technology Exchange Conference" was held in Wuhu, Anhui Province. Gao Dengbang, President of China Cement Association, Zhu Shengli, General Manager of Anhui Conch Group Co., Ltd., Lv Zhijian, President of Xinjiang Building Material Industry Association, Ma Weiping, Chairman of OCC, Jiang Dehong, Vice President and Chief Engineer of Tianshan Material Co., Ltd., Li Jian, Associate Researcher of China Academy of Environmental Sciences, and Fan Yueming, Professor of South China University of Technology. Hubei Century Xinfeng "

is responsible for formulating the quota allocation plan." And issue annual carbon emission quotas to key emission units.

Key emission units shall account and report the carbon emission data of the previous year annually, and shall accept the data verification organized by the competent government departments. Key emission units shall submit quotas not less than their actual emissions for compliance before the deadline for compliance.

The national carbon emission trading market provides flexible choices for key emission units to fulfill their carbon reduction responsibilities through quota trading.

In order to ensure the effective operation of the national carbon emission trading market, the Ministry of Ecology and Environment has organized and established information systems such as the national carbon market management platform, the national carbon emission registration system and the national carbon emission trading system.

In the past year, policies have been released intensively, and the construction of the national carbon market has been accelerated

. The national carbon emission trading market covers the cement, steel and electrolytic aluminum industries

. The cement industry will be included in the control scope of the national carbon market. This means that its annual greenhouse gas emissions reach 2. This measure aims to promote the cement industry to strengthen carbon emissions management and promote green and low-carbon transformation.

Compliance requirements: The cement industry will face compliance requirements after being included in the national carbon market. Specifically, as the first management and control year of the cement industry in 2024, enterprises need to complete the first performance by the end of 2025. This will prompt cement companies to strengthen the monitoring, reporting and verification of carbon emission data to ensure compliance.

Quota allocation method: In the initial implementation stage (2024-2026), the carbon emission quota of the cement industry will be allocated free of charge by the performance evaluation method (intensity method). This method carries out performance management according to the carbon emission intensity of unit output, and the enterprises with low carbon emission intensity can obtain income through quota surplus, while the enterprises with high carbon emission intensity have to bear the cost of carbon emission. This allocation is designed to encourage companies to improve energy efficiency and reduce carbon intensity.

Deepening and improvement: Starting from 2027, the cement industry will enter the stage of deepening and improvement. At this stage, the system of policies and regulations will be more perfect, and the accuracy and completeness of carbon emission data will be strengthened in an all-round way. At the same time, the quota allocation method will gradually shift from the performance evaluation method to the benchmark method, and establish a gradual and moderate tightening mechanism with clear expectations, openness and transparency. The incorporation of the

cement industry into the national carbon market has made the effective management of carbon emission data an urgent and realistic demand

the first half of the year, The cement industry presents the operation characteristics of "continuous decline in demand, low price fluctuation and continuous loss of the industry". Cement market demand continued to decline in depth, with production at its lowest level in the same period since 2011, but the decline in the second quarter was narrower than that in the first quarter. Changes

in

policies and regulations Uncertainty of policy changes: The policies and regulations of the carbon market are in the process of continuous improvement and adjustment, and enterprises need to pay attention to and adapt to the changes in policies in a timely manner. For example, the allocation method of carbon emission quotas and the rules of carbon trading may change, and enterprises need to adjust their production and operation strategies in time according to the changes of policies. Improvement of

regulatory requirements: After being incorporated into the carbon market, cement enterprises will face more stringent supervision, and need to monitor, report, verify and perform carbon emissions in accordance with relevant requirements. This puts forward higher requirements for the internal management and compliance management of enterprises, and enterprises need to establish corresponding management systems and systems to ensure compliance with regulatory requirements.

International trade implications: As global concerns about carbon emissions increase, exports of cement products may be affected by policies such as the European Union's Carbon Border Adjustment Mechanism (CBAM), which may pose additional challenges for export-oriented cement companies.

CBAM aims to reduce "carbon leakage" and "carbon dumping" in order to achieve a relatively fair trade of uniform carbon costs within and outside the EU. The products covered by CBAM include steel, cement, aluminum, electricity, hydrogen and other energy-intensive and high-emission first-class industries, and the imposition of carbon tax will hit the profits of export-oriented enterprises. Under the background of the

carbon market, the cement industry is facing the risk of

rising costs. The cost of quota clearance: cement production is a high carbon emission industry. With the promotion of the carbon market, enterprises need to purchase carbon emission rights for the part exceeding their own carbon emission quotas, which will increase the operating costs of enterprises. For example, if the carbon price is 100 yuan/ton, and a cement enterprise's annual carbon emissions exceed the quota by 100000 tons, then the enterprise needs to spend an additional 10 million yuan per year to buy carbon quotas. Cost of

technology upgrading and transformation: In order to reduce carbon emissions, enterprises need to upgrade and transform production equipment and processes, such as adopting new energy-saving equipment and improving production processes. These technological upgrades and transformations require a large amount of capital investment, and the return on investment cycle may be long. For example, the construction of waste heat power generation systems and carbon capture, utilization and storage (CCUS) projects require huge financial support. Cost of

energy transformation: Cement enterprises may need to increase the use of clean energy, such as purchasing green electricity, but the current cost of green electricity is relatively high, which will also increase the energy cost of enterprises. It is

difficult to reduce carbon in

the existing technology. The existing technology has limited

carbon reduction space and large emissions of carbonate decomposition and fuel combustion. In the cement production process, carbonate decomposition and fuel combustion will produce a large amount of carbon dioxide emissions. Emission reduction by

conventional technical means is difficult: under the current technical level, it is difficult to achieve substantial carbon emission reduction by conventional technical means. The need for

innovative technologies is urgent: stronger innovative technologies are needed to break through the existing bottleneck of carbon reduction.

Technical transformation means and carbon reduction path Technical transformation means

China's cement industry mainly uses technical transformation means to reduce carbon by reducing unit energy consumption and improving production efficiency. Carbon

reduction path: The carbon reduction path mainly reduces indirect emissions and energy emissions in cement production.Relatively limited

emission reduction potential: As the technological transformation means are mainly aimed at indirect emissions and energy emissions, its emission reduction potential is relatively limited.

CCUS technology and feedstock/fuel alternative

CCUS technology: As a carbon neutral technology, CCUS technology has high emission reduction potential, but in the short term, the emission reduction cost of CCUS technology is high.

Raw material/fuel substitution: In the carbon reduction schemes of mainstream cement enterprises, raw material/fuel substitution is still the key breakthrough target in the short and medium term. Shortage

of

R & D funds and talents and insufficient capital investment: some cement enterprises may be difficult to invest enough funds for technology R & D due to insufficient capital strength. The reserve of

professionals is small: the cement industry has a relatively small reserve of professionals in the field of low-carbon technology. Difficulties in

attracting and cultivating talents: Enterprises also face certain difficulties in attracting and cultivating relevant talents.

The carbon market has put forward higher requirements

for the data management of cement industry enterprises. The accuracy of data monitoring and accounting: the carbon market has very strict requirements for the monitoring and accounting of carbon emission data of enterprises, which requires enterprises to establish a sound data monitoring system and accurate accounting methods. The production process of cement enterprises is complex, involving a variety of energy consumption and emissions, accurate monitoring and accounting of carbon emissions data has a certain degree of technical difficulty, a slight deviation may lead to enterprises facing regulatory penalties or in a disadvantageous position in carbon trading. Transparency and credibility of

data management: The carbon market requires the carbon emission data of enterprises to have high transparency and credibility, and requires enterprises to establish a sound data management system to ensure the authenticity, integrity and traceability of data. This is a big challenge for some cement enterprises with relatively low management level. The impact of carbon price fluctuations on cost accounting and financing decisions in the

carbon market environment is a new topic

for cement enterprises.

1. If the carbon price rises suddenly, enterprises may face unexpected cost increases. For example, the carbon price was originally expected to be 50 yuan per ton, and companies set aside a certain amount of money in their financial planning to buy carbon quotas. However, if the carbon price rises to 80 yuan per ton, companies may need to spend a lot of extra money, which will adversely affect their cash flow and profits.

2. This may lead to deviations in the formulation of product prices, investment decisions and production plans. Uncertainty

of return on

investment 1. If the carbon price continues to rise, the benefits of these projects may increase, thus improving the return on investment of enterprises. However, if the carbon price falls, the benefits of the project may be reduced, and may even lead to investment losses.

2. However, if the carbon price falls, the revenue from the sale of carbon allowances will be reduced, the payback period of the project may be prolonged, and the expected return on investment may not even be achieved.

Coping Strategies and Practice

The overall strategy framework

that cement enterprises need to adopt in the face of carbon market management and control The case of system

and mechanism construction-digital transformation and intelligent upgrading

system and mechanism construction Example-Carbon Management Digital Platform Effect Display

Fulfillment

Fulfillment Application-Data Management 0 HTML0" UNK2 6 In order to further standardize the reporting and verification of GHG emissions accounting of enterprises in the cement and aluminum smelting industries, and consolidate and improve the quality of data, according to the Provisional Regulations on the Management of Carbon Emissions Trading, the report and verification of GHG emissions accounting of enterprises in the cement and aluminum smelting industries are carried out. The Ministry of Ecology and Environment has formulated the Accounting and Reporting Guidelines for Greenhouse Gas Emissions of Enterprises for Cement Industry (CETS — AG — 02.01 — V01 — 2024) and the Technical Guidelines for Greenhouse Gas Emissions Verification of Enterprises for Cement Industry (CETS — VG — 02.0 HTML0 UNK2 7. The release of the "two guidelines" marks that the cement industry has been included in the national carbon emission rights exchange. The market has made positive progress, which provides guidance and basis for accurate accounting and verification of carbon emissions of cement production enterprises. 0 HTML 0 UNK2 8 Accounting and verification should be consistent with the boundary of quota allocation accounting, and follow the principle of "grasping the big and relaxing the small". Only accounting for cement of main production facilities

Carbon Asset Management 2: Using Carbon Finance to Broaden Financing Channels

and Save Energy

improves the security of the data collected at the source by using the iterative structure and pruning algorithm technology." A simplified algorithm structure is adopted to solve the problem that the traditional encryption algorithm consumes too much computing and storage resources when running, and the security and high efficiency are achieved at the same time, so that reliable security guarantee is provided for resource-limited equipment.

Improve the transparency and reliability of data in key links: through the research on the standardized data management method of carbon monitoring, ensure the untouchability and transparency of data, realize the credible collection and storage of carbon emission monitoring data, and improve the security and credibility of data in the whole process of collection, calculation, storage, application and transaction of carbon monitoring.

Research objective: All collected data, applied calculation methodology, output results and corresponding vouchers in the carbon monitoring process are managed in a standardized way to ensure the authenticity and traceability of the data. Case of

Energy Saving and Consumption Reduction-Technical Scheme

of Carbon Online Monitoring Pilot Project Advantages: Compared with the ordinary Portland cement clinker, the limestone consumption is less, the burning temperature is low (1250 ~ 1350 ℃), the energy consumption of clinker burning and the limestone consumption can be reduced, and the CO2 emission can be reduced by about 200 kg/TCL.

Constraints: It is necessary to focus on the research and development of low-carbon clinker cement that can replace ordinary Portland cement; it is necessary to break through the key technical difficulties of low-carbon cement and study the key technology for its stable production in large precalciner kilns; at present, low-carbon clinker is mainly for specific needs, not for large-scale application, with small demand and high cost; It is necessary to establish product standards and technical specifications for the application of low-carbon cement that are compatible with the characteristics of low-carbon clinker, cultivate and establish an orderly market system, and enhance the market acceptance of low-carbon clinker products. Domestic R & D institutions such as China Building Materials Research Institute Co., Ltd., affiliated to

China Building Materials Group, have also carried out a lot of research work on this new clinker system, established the performance control technology of low-heat Portland cement, and developed the special low-heat Portland cement for Sichuan-Xizang Railway construction. The research and development of low-carbon cement has been recognized at home and abroad, and is widely used in buildings all over the world. Case of

Energy Saving and Consumption Reduction – Technological Transformation to Improve Energy Efficiency

In terms of technology research and development, the Company has continuously improved the cement waste heat power generation technology. The fourth-generation cement waste heat power generation technology developed by the Company has high performance, high integration and high intelligence, and is in the leading position in the industry and the Group.

Emission reduction projects

Emission Reduction Project Case-End Carbon Sequestration (Carbon Capture)

China National Building Material Group has always been in the forefront of the industry, and has built the largest scale in the field of oxy-fuel combustion coupled carbon capture technology in the global cement industry, the first set in Shandong Province, and the first carbon capture and utilization project in the cement sector of China National Building Material Group. The world's first demonstration project of carbon dioxide capture and purification in glass furnaces has been completed.

< IMG SRC = "https://img7.ccement.com/news/2411/richtext/img/3a5lfohn0g71731054376677. At the same time, China National Building Material Group and China Forestry Group signed a framework agreement." It is planned to purchase 10 million tons of forestry carbon sink emission reduction from China's certified voluntary emission reduction projects and other mechanisms of China Forestry Group and its affiliated companies by 2030.

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Correlation

On November 21, the Western Construction (002302) issued a prospectus for issuing stocks to specific targets in 2021. The company plans to introduce Conch Cement as a strategic investor through this issue, and Conch Cement will subscribe for 183 million shares, accounting for 12.48% of the total equity after the issue, becoming the second largest shareholder. The purpose of this issue is to optimize the capital structure, supplement liquidity and repay bank loans, which is expected to bring the company an annual increase of 8.85 billion yuan in operating income and a total profit of 708 million yuan, up 38.71% and 78.23% respectively from 2023.