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Kyoto Protocol – Implications for Concrete

David Gray1, Warren South

2 and Petar Misic

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INTRODUCTION

The Kyoto Protocol challenges existing industries to curb their emission of gases which contribute to the “greenhouse” effect. For the cement industry this poses a particular challenge. The calcination of limestone to produce cement releases carbon dioxide in the process. Basic chemistry dictates that for every tonne of cement clinker produced approximately one tonne of carbon dioxide will be liberated to the atmosphere. Through the use of supplementary cementitious materials this burden can be reduced per unit of cement output. This strategy is gaining wide acceptance throughout the world’s cement industry. This is only one area, however, which the concrete industry is exposed to additional costs aimed at reducing the greenhouse burden. Any process requiring the use of fuel will attract a possible “tax”. The winning and delivery of aggregate – even the delivery of concrete to site requires the use of fuel. Electricity generation using coal or natural gas will also liberate greenhouse gases. All these charges will have an effect on the costs associated with concrete. This paper examines the challenges the Kyoto Protocol presents to the cement industry. It considers first the range of technical responses available to the industry and second the policy and advocacy options.

1 Chief Executive, Cement and Concrete Association of New Zealand 2 Technical Manager, Golden Bay Cement 3 Process Engineer for Climate Change and Energy , Golden Bay Cement

New Zealand’s Commitment to Climate Change

New Zealand, a small South Pacific nation, emits approximately 0.2% of the total global greenhouse gases emitted by the “developed” (non-Annex I) countries. Although only a very minor contributor, New Zealand has become a world leader in advocating the need to reduce greenhouse gas emissions as a means to address the issue of global warming. New Zealand was an active participant in developing the United Nations Framework Convention on Climate Change (UNFCCC). The result was an international voluntary agreement to reduce CO2 emissions to 1990 levels by the year 2000. In order to deliver on this commitment, New Zealand implemented a number of initiatives in 1994, which included “Voluntary Agreements” (VA’s) with industry aimed at improving energy efficiency and reducing CO2 emissions.

The New Zealand cement industry was a leading industry in implementing the requirements of a Voluntary Agreement. This helped the industry gain a reputation for honesty and integrity in its reporting and commitment to the process. It was quickly recognised that nations would not meet the agreed CO2 emission reductions by the year 2000. As a result, work began on developing a formal, internationally recognized framework to reduce greenhouse gas emissions. In December 1997, the Kyoto Protocol was adopted. The Kyoto Protocol sets out reduction targets for signatory, non-Annex I (developed), nations to adopt in the “first commitment” period (2008 to 2012). Annex I nations do not have reduction targets in the first commitment period. The Protocol covers six greenhouse gases that are reported as CO2 equivalent tonnes using a series of Global Warming Potentials (see figure 1).

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Figure 1. The six greenhouse gases covered by the

Kyoto Protocol and their respective Global Warming Potentials

The Kyoto Protocol establishes market mechanisms that allow nations to trade “carbon” to ensure that they are able to meet their greenhouse gas emissions reduction targets for the first commitment period. The Protocol was designed to allow for subsequent commitment periods with more stringent targets and to allow for the transition of nations from Annex I status to non-Annex I as they develop. The Kyoto Protocol target for New Zealand is to stabilize emissions at 1990 levels, on average, through the first commitment period (2008 to 2012). New Zealand signed the Kyoto Protocol in May 1998 and has committed to ratification by the end of 2002. The Protocol will come into force when 55 countries that are responsible for 55% of the developed nations 1990 CO2 emissions ratify. Government statistics and modelling indicate that New Zealand’s greenhouse gas emissions will be 14% to 20% (50 to 75 MT CO2 equivalent) over 1990 levels during the first commitment period if no corrective actions are taken. The areas where significant emissions increases are expected are thermal electricity generation and transport sectors (50 MT CO2 equivalent). There is a level of uncertainty regarding the increase in emissions from the agricultural sector (0 to 25 MT CO2 equivalent). This doest not include the potential “carbon credits” that New Zealand will have from

forests planted since 1990. The estimated carbon credits from forests available to New

Zealand for the first commitment period is in the order of 110 MT CO2 equivalent. These carbon credits can be used to offset any difference between New Zealand’s actual emissions in the first commitment period compared to target. Government has implemented a number of non-market based mechanisms to reduce greenhouse gas emissions recently. However, modeling suggests that the further emission requirements will required for New Zealand to meet it’s target. The Government is planning to introduce a series of market-based mechanisms to achieve these additional emissions reductions. New Zealand’s Unique Greenhouse Gas Profile Figure 2: New Zealand Greenhouse Gas profile [1]

New Zealand has a unique greenhouse gas profile compared with other non-Annex I (developed) nations (see Figure 2). The high proportion of methane and nitrous oxide is due to the scale of the agricultural sector and the large percentage of electricity that is generated using renewable energy (hydro). The high proportion of agricultural based emissions combined with the scale of the economy, expanding forestry industry and a growing population are additional complexities that must be considered when developing policy aimed at reducing greenhouse gas emissions. Figure 3 graphically demonstrates the current greenhouse gas emission contributions by sector.

Greenhouse Gas Global Warming

Potential

CO2 1

CH4 21

N2O 310

HFC’s 140-11,700

PFC’s 6,500-9,200

SF6 23,900

New Zealand Greenhouse Gas Profile1999 Inventory Data, New Zealand's Third National Communication

CO2

40%

CH4

44%

N2O

16%

HFCs,

PFC's, SF6

0%

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New Zealand Greenhouse Gas Emissions by Source1999 emission Data, New Zealand's Third National Communication

Energy Industries

9%

Manufacturing

8%

Industrial Processes

4%

Waste Industry

4%

Fugitive

2%

Other Sectors

4%Transport

16%

Agriculture

53%

Figure 3. Sector contribution to greenhouse gas emissions [2]

. World Cement Industry response

“There is no question that , in the near future, the price of cement will also more nearly reflect the environmental costs associated with its production and use. Because cement, like coal, is a relatively environmentally unfriendly commodity, the incremental cost will be substantial.” [3] The cement industry produced approximately 1.6 billion tonnes of cement in the year 2000. It directly employs 850,000 workers worldwide with annual revenues estimated at $US 97 billion [4] . The industry is therefore large and significant. It also is aware of the need to move toward a sustainable base to ensure continuing viability in the future. This is underlined by the formation of the Cement Sustainability Initiative within the World Business Council for Sustainable Development [5] . In the first five year program ratified in July 2002, the ten major world cement companies have developed a plan :

To prepare for a more sustainable future by making more efficient use of natural

resources and energy and engage with local issues in emerging markets

To meet the expectations of stakeholders and maintain their “license to operate” in

communities across the world through greater transparency of operations, effective engagement with society, and initiating actions which lead to sustained positive change.

To individually understand and build new market opportunities through process innovations which achieve greater resource/energy efficiency and long-term cost savings; product and service innovations to reduce environmental impacts; and work with other industries on novel uses of by-product and waste materials in cement production.

In order to achieve progress on the above, the companies identified six key areas in which they can contribute to a more sustainable society. Of particular interest and opportunity for inorganic polymers are the areas of climate protection, raw materials and emissions reduction. Clearly, the cement industry has developed a response to the perception of inadequate environmental stewardship. In the area of product, this has usually meant the addition of supplementary materials such as blast furnace slag and fly ash to clinker and gypsum. Tailoring addition rates to required performance, such as specified durability, produces a “win-win” for consumer and manufacturer – a concrete fit for purpose and a diluted emissions profile.

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Material substitution is given as a major strategy in cutting CO2 emissions. In “Building a Sustainable World” [6] , Lafarge underlines its’ commitment to the use of substitute materials for producing cement. Specifically, the production of blast furnace slag is estimated to account for 10% of world cement production (at up to 70% substitution levels), and flyash production accounts for 30% of world cement production ( usually at up to 30% substitution. For the year 2000, 8.2% of the total materials used to produce cement within Lafarge were mineral substitutes.

The New Zealand Cement Industries and Climate Change

Two competitors form the New Zealand cement manufacturing industry.

Golden Bay Cement – Manufacturing plant is situated at Portland, near Whangarei in the North Island

Milburn New Zealand – Manufacturing plant is situated at Westport in the South Island

The two manufacturing sites have a combined production capacity of approximately 1.1 million tones of cement per annum. The two companies supply the majority of the domestic market and

export a significant quantity into the Pacific region. The cement industry acknowledges its responsibility to investigate ways to reduce energy use and greenhouse gas emissions to a minimum. The cement industry has been involved and implementing initiatives to address climate change issues since the early 1990’s. In May 1995, the cement industry was one of the first sectors to sign a Voluntary Agreement (VA) with the Government to reduce specific CO2 emissions. The target set in the VA was a 12% reduction in CO2 emissions per tonne of cement from 1990 to 2000. The cement industry achieved a 10% reduction in CO2 emissions per tonne of cement compared with the base year equivalent (see figure 4). Thermal energy consumption was reduced by 10% and electricity consumption per tonne of cement was reduced by 14%.

Figure 4. New Zealand Cement Industry CO2 emissions trends [7]During the cement manufacturing process, direct CO2 emissions arise from two main sources - calcination of the raw calcareous feed and from the combustion of fuel. Approximately 60% of the CO2 emissions arise from the calcination reaction (see figure 5) and 40% from the combustion.

Based on New Zealand Cement Industry data, approximately 880 kg of CO2 is emitted per tonne of cement manufactured. The indirect emissions associated with the generation of electricity off site are not included.

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The indirect emissions associated with electricity generation (in New Zealand) are below 5% of the total CO2 emissions from the manufacture of cement. 5 CaCO3 + 2 SiO2 (3CaO,SiO2)(2CaO,SiO2) + 5 CO2

(Solid) (Solid) (Solid) (Gaseous) (1.0 kg) (0.56 kg CaO) (0.44 kg) Figure 5. Basic chemical reaction to form clinker, significant component of cement. The New Zealand Cement Industry emitted 945,000 tonnes of CO2 in 2000. [8]

Technical Response

Cement manufactures in New Zealand have developed three key strategies to reduce CO2 emissions from the cement manufacturing process.

Improve plant operating efficiency – reduce energy demand

Greater use of alternative fuels

Reduce the clinker content of cement by substitution with cementitious minerals

These strategies are consistent with those developed by other international cement producers.

Improving Plant Efficiency The manufacture of cement involves three broad steps. Preparation of raw materials – This involves mixing the raw materials and grinding the mixture into a fine powder/slurry (raw meal) Burning of the raw meal to produce clinker – 100% of the thermal energy, approximately 50% of the electrical energy and 100% of the direct CO2 emissions are attributed to this operation Finish grinding of the clinker with additives to produce cement Direct CO2 emission reductions only arise form improving the thermal efficiency of the clinker manufacturing process. Cement industry is capital intensive. The typical life cycle of significant plant items is in the order of 20 years plus. To remain competitive, cement producers therefore need to continuously identify cost reduction opportunities, which do not involve significant capital investment.

Typically energy costs are approximately 30-40% of production costs. Due to the significant capital and operating cost involved, cement manufactures have always been focused on energy efficiency. The scope for increasing energy efficiency further is limited, new technology uptakes will be undertaken where appropriate.

Alternative Fuels The combustion of thermal fuel is responsible for approximately 40% of CO2 emitted during the manufacture of cement. The quantity of CO2 emitted from the combustion process depends on plant configuration, operating efficiency and the carbon content of the fuel. Internationally, alternative fuel substitution has been driven by the need to reduce thermal energy cost per tonne of product. The environmental benefits are now also recognized as an important outcome. New plants are designed to incorporate alternative fuel feed systems. The alternative fuel options available are regionally driven. The major influences are.

Local population size and density. e.g. the local population produces sufficient quantities of “waste” that could be used as a potential fuel source.

Availability of industrial waste that can be used as a fuel source.

Local and national legislative framework. e.g. Resource Management Act in New Zealand.

Community concerns and expectations. An objective of cement manufacturers is to reduce the energy cost per tonne of product by alternative fuel substitution. This limits the range of alternative fuel options available to fuels that are not attractive to other industries. Alternative fuel substitution in the New Zealand Cement Industry is in its infancy. Any potential CO2 emission reductions from alternative fuel substitution will depend on the fuel type and substitution levels achieved.

Reducing clinker content

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Of all the options, this has the greatest potential to give real reductions in greenhouse gas emissions. It can be seen that this strategy is a favoured option by world cement companies and this is also true of the New Zealand context. The reduction of clinker content is achieved through the use of supplementary materials such as limestone, slag or flyash. These materials are either blended or interground to give binders with specified performance. The choice of supplementary materials will largely be driven by the range of materials available to the manufacturer. It will, as all commercial decisions, also be taken with due reference to the economic and strategic positions of the company. Obviously, cement can only be produced which will comply with relevant codes and Standards. As can be seen form later discussion, the current New Zealand suite of cement Standards allows for some latitude in the composition of cement. However, this is not a broad as that of Europe, or even recent American standards. It is suggested that a review of local cement and concrete Standards be undertaken to facilitate any changes required by this strategy. The review process will be transparent enough to allow input from all relevany parties. However, from an industry standpoint, this will have to be achieved with refernce to competing systems and compliance with government climate policy.

Concrete Industry Implications “….we must advance, step-by-step, from the resource-wasteful, pollution-producing system of production…..toward a more ‘metabolic’ system that eliminates waste and pollution by making sure that the output and by-product of each industry becomes an input for the next” [9]

For the purposes of looking at the environmental impact of the concrete industry as a whole, it is useful to look at the contribution of each of its component parts: Cement: As has been seen, the manufacture of Portland cement requires the liberation of gases identified as contributing to the greenhouse effect. For this reason, the industry must examine ways of

minimising the use of Portland cement without putting in peril the future demand for concrete. There seems to be no other products whose performance can match that of the blended Portland cements for setting and durability. Although the use of supplementary cementitious materials is growing, most of the high-volume replacement cements have ended up in low value applications such as land-fill or the stabilisation of roads. The drawbacks to using these high volume materials in construction projects are usually given in terms of increased construction and cycle times, but technology has developed solutions to achieving a lower water-cementitous ratio with the use of superplasticiser. [10] Aggregates With an annual worldwide production of around 13 billion tonnes, concrete consumes between 10 and 11 billion tonnes of aggregate per year. Not only does the mining of these aggregates present great ecological challenges, the further processing into various size fractions consumes a large amount of energy. In this case, the recycling of aggregates is seen as a solution to addressing an adverse environmental problem. Resource productivity could be greatly improved through the recovery of coarse aggregates from demolition and fine aggregates from mining by-products. Additional environmental benefits could be derived from the fact that these waste sources are more proximate to where they are utilised, giving lower transport requirements from hard rock resources increasingly distant. Water It is estimated that the world concrete industry uses 3 billion tonnes of fresh water. This figure can only be considered indicative as there are large volumes of water used for concrete curing and as wash-water. There is no doubt increasing use of recycled water as mix water but specifiers show a reluctance to allow its use – many still specify the use of water from municipal, potable supplies. There is evidence that world’s fresh water supply is dwindling - remembering that only 3 percent of the earth’s water is fresh water. Falling water tables and increasing pollution from urban and industrial sources also contribute to a lessening of the resource.

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The concrete industry has also been challenged to reduce its’ use of water [11]. In addition to the estimated 100 litres/m

3 of wash water used in

concrete trucks, there are also savings to be made with mix water. Addressing issues such as aggregate grading, the use of admixtures and superplasticisers will lead to lower water/cementitious ratios in practice. Mix water complying with relevant standards such as ASTM C 94, can relatively easily be gained from wash-water ponds. Curing water requirements can also be addressed through the judicious use of curing membranes and textile composites. Admixtures

The thoughtful and intelligent use of admixtures, both mineral and chemical, can also see improvement in the resource productivity of concrete. Opportunity for the reuse of industrial byproducts is the most obvious environmental gain that can be achieved. Chemical admixture production can also impose environmental burdens which must be explored as part of the overall evaluation.

Barriers to change in the Cement and Concrete Industry

In order that industry will adopt an environmentally sustainable solution, the case must be made that the proposal will not dimish economic return. However, it is possible to achieve the targets set in the Kyoto Protocol and maintain profitability, as long as changes to practices can be accommodated and implemented by the cement and concrete industry.

“ Competitive market forces will drive positive environmental changes because we have the knowledge right now to make concrete formulations based on high-pozzolan content cements that are cleaner, greener, more durable and longer lasting. Not only do such formulations currently exist, they have been tested, proven and advanced over several years in technical papers by researchers in concrete technology” [12]

The construction industry has demonstrated problems with accepting innovation and change. Indeed, there can appear to be a conservatism which would argue against change. However, we should accept that the objective of the innovation

process is to improve the built environment through better products or processes. There are a number of factors, identified by Hewlett [13]

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which work against the acceptance of innovative products:

The product is harder to sell

Indifference to the benefits of change

Ignorance

Attachment to old ideas

Fear of remedial costs

Risk and assumed liability

Lack of confidence Over time, there have been relatively few “fundamental” innovations in concrete construction. Portland cement, the inclusion of reinforcement, and the provision of ready mixed supply could be considered radical steps forward. Modifications to these, such as the inclusion of supplementary materials to improve durability, can only be considered variations on the basic fundamentals. Hewlett ascribes this to the “permanency associated with buildings and constructions”. Other materials, such as steel and plastics, have gained acceptance because they fulfilled a real need and delivered quantifiable benefits. When compared with other industries such as the pharmaceutical or electronics industry, the construction industry does not appear to require as great a need for understanding of the basic science. This could be ascribed to the education of designers and engineers which place emphasis on compliance to codes and Standards to ensure the safety and durability of a structure. It is therefore, important, that sound and rigorous procedures are in place dealing with the compilation of building regulations. Further along the process, quality management systems will ensure the delivery of compliant solutions. A development of recent years, which can be seen as an opportunity for “fast-tracking” innovation in the building and construction spheres, is that of performance based specification. This concept is rapidly supplanting the prescriptive based methods used in the past. The idea is to examine the required outcome of the element (e.g. a 100 year design life) in the service environment. Indicative measures of accelerated testing may be given. Basically, the material supplier can then make a case for acceptance of a material based on testing on the

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basis of the specified outcome. Innovative materials can be brought forward as a solution, and gain acceptance through citation. This approach should be both methodical and thoroughly peer reviewed. Too rapid change can be as detrimental as too slow. If we are to learn from history, in a paper by Beeby [14] , one can see examples giving rise to a conservatism among designers and engineers. He cites the case of the UK construction industry in the 1950 and 1960s rising to the challenges of rapid infrastructure expansion through the building of high-rise flats and motorway expansion. Indeed, “it was a time of great enthusiasm for new methods and materials and an exciting feeling of moving into a new scientific era”. This allowed for new and innovative materials to be used. We now know there were quite a few technical problems unforseen with the methods and materials employed through this time. Building collapse, corrosion through excessive use of calcium chloride and alkali-silica reaction all lead to a poor perception of the construction industry and “are a significant cause of the caution which clients and the industry now show towards innovation”. Unfortunately, many of these particular issues could have been avoided by a more rigorous qualification procedure. But there are lessons arising out of the experience which are of particular relevance to the extensive acceptance of inorganic polymers as a construction medium. Beeby lists the learnings as:

Innovation is accompanied by risk. Our education and training as engineers does not appear to enable us to identify all the problems arising from our innovations where these lie outside the current technology

Large innovations are accompanied by large risks while successive small innovations are accompanied by smaller risks which can be handled without major consequence

A consequence of failure is often an over-reaction against the particular technology which may set-back its development for decades

Durability will eventually become a factor in favour of the use of concrete over other building mediums. The concept of life cycle costing is a big winner for concrete. It has been calculated that the cost of concrete accounts for usually no more that 4% of the total project cost. Of this, the cost of cement is about one-half. If the project can be made more longer-lasting by doubling the cement cost ( through higher content or increased placing charges ), quality and durability can be assured by a 2% project cost increase. To consider an example, take a project costing $10 million with a design life of 30 years. If the life of the structure can be extended a further 10 years, then a saving of $3.33 million can be realised on the construction cost. In this example, the costs associated with the use of cement were increased by $200,000, but through using a more durable solution a seventeen-fold return could be generated.

National and International Codes and Standards

In any discussion concerning the development of cement, it is useful to see how the codes and standards are developing world- wide. The move to performance based specification has allowed a wider range of constituents in cements.

New Zealand NZS 3122: Specification for Portland and Blended cements NZS 3123: Specification for Portland Pozzolan cement (Type PP cement) NZS 3125: Specification for Portland-Limestone Filler Cement These Standards cover the composition and performance of cements in the marketplace. Compliance to Standard is a requirement of the concrete standard, the most common arena in which the Standards are used. In terms of composition, the following are allowed: NZS 3122:1995 Portland cement is allowed up to 5% substitution of limestone, granulated blast furnace slag, flyash, pozzolan or combinations of these materials. These are referred to as “mineral additions”. This cement can still be called Type GP – general purpose cement.

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A blended cement contains more than a 5% substitution of either flyash or granulated blast furnace slag. This cement is referred to as Type GB – general purpose blended cement. Granulated blast furnace slag should be tested according to and comply with AS 3582.2 Flyash should be tested according to and comply with As 3583.1. Limestone for Type GP has a minimum CaCO3 content of 80%. Limestone for Type GB is covered by NZS 3125 (see below). Pozzolan for Type GB is covered by NZS 3123(see below). NZS 3123:1974 (amended 4 September 1995) A Portland –Pozzolan cement allows for the substitution of between 10 and 35% of the portland cement with one of the following pozzolans: POZZOLAN CLASS N. Natural materials such as diatomaceous earths, opaline cherts and shales, tuffs and pumicites. POZZOLAN CLASS C. Materials in Class N which have been calcined, also some clays and shales of the montmorillionite and kaolinite types. POZZOLAN CLASS F. Artificial materials such as flyash from certain coal-burning power stations. NOTE: Natural amorphous silicas can be considered for compliance with CLASS F or AS 3583.3 silica fume. NZS 3125:1991 A Portland-limestone cement may contain up to 15% mineral limestone. The limestone however, must meet more stringent criteria than those in NZS 3122, namely:

Calcium Carbonate (CaCO3) = minimum 75% Clay – maximum MBA value = 12 g/kg Organic Matter = maximum 0.2%

European Standards At the end of the year 2000, European standard EN 197-1:2000 Cement – Part 1: Composition, specifications and conformity criteria for common cements was finally published after the work on preparation was first commisssioned by the EEC in 1969.. This Standard covers cements intended

for use in “ preparation of concrete, mortar grout and other mixes for construction and for the manufacture of construction products”. It brings together experience with up to 70 cements in “traditional” and “well-tried” applications, looking at the performance of common cements, based on the hydration of calcium silicates. This data was used to derive the specifications for 27 distinct cements and their constituents. The following table gives the range of compositions possible within the Standard:

Figure 6: Compositional requirements in EN 197-1 [15]

In addition to the wide range of cements available under this Standard, there are strict specification requirements for constituent materials. This Standard recognises the need to decrease the clinker content of available cements while delivering a reasonable performance. It also assures the user that there has been sufficient peer review in the process to ensure that specification conforming to this Standard is sound.

American Experience After a long period of not allowing alternate constituents in cement, a revision of ASTM C

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1157-00a Standard Performance Specification for Hydraulic Cement [16]. This Standard is complimentary to that outlined in ASTM C 150, Specification for Portland Cement. It differs from the latter in that a wider range of constituents and introduces the concept of performance – right through to the cement type designations:

Type GU- Hydraulic cement for general construction. Use when one or more of the special types are not required Type HE – High Early-Strength Type MS – Moderate Sulfate Resistance Type HS – High Sulphate Resistance Type MH – Moderate heat of Hydration Type LH – Low Heat of Hydration Option R – Low Reactivity with Alkali-Reactive Aggregate

In the scope of the Standard, it clearly states that the specification is for performance requirements – “There are no restrictions on the composition of the cement or its constituents”. Clearly, the developments of concrete technologists have now been recognised and brought into the mainstream of codes and compliance.

Policy and Advocacy Response

The above discussion focuses on the range of technical options available to the cement industry to improve its greenhouse gas performance. It is important to understand, however, that the industry has not focused on the technical options to the exclusion of all else. To the contrary, the industry has played a lead role in shaping and informing the climate change policy debate in NZ. In 1999 the Labour Government came to power with a mandate to ratify the Protocol. It entered into an extensive consultation process whereby it sought to win industry support for a rigorous and ideological approach to climate change policy. A key feature of that approach was the introduction of a carbon tax well before the commencement of the first commitment period. It then proposed to expose NZ industry to the full international cost of carbon at the start of the first commitment period. The cement industry, directly through the Cement and Concrete Association, and indirectly through participation in the Greenhouse Policy Coalition, was able to dissuade the Government against this costly course of action. Authoritative economic modelling was commissioned to

demonstrate the vulnerability of the NZ economy to the imposition of a carbon charge. Significantly, this work showed that in general, NZ export products compete against products from developing economies. Imposition of a carbon charge on the NZ economy (but not on the developing economies) would therefore have a relatively large impact on NZ export competitiveness. By contrast, the study showed that export products from the EU, North American and Japanese economies compete largely against products from each other. The imposition of a carbon charge on these economies is therefore relatively neutral in terms of their export competitiveness. In the case of the cement industry the same modelling was able to demonstrate the vulnerability of locally manufactured products to imports. The total production of the NZ cement industry is miniscule compared to most international plants. Accordingly, the normal economies of scale are not available to the NZ industry and it must look elsewhere in the value chain for competitive advantage. The modelling demonstrated that any additional costs imposed on the local industry simply risked the local market being captured by more competitive product imported from non–Kyoto economies. The Government then recognised that from the perspective of atmospheric CO2 concentrations this outcome - known as “carbon leakage” in the Kyoto vernacular – achieved nothing. Total CO2 emissions remained the same but perfectly viable NZ jobs were transferred to non-Kyoto economies. Following further extensive consultation Government published its preferred policy package. This package took on board, to some extent, the issues of international competitiveness and carbon leakage. It no longer sought to achieve an abrupt change in emissions behaviour through exposing NZ industry to the international cost of carbon prior to 2008. Rather it sought to shield NZ producers from the full effects of the Kyoto regime while they transitioned to world’s best practice emission intensity during the course of the first commitment period. This much softer policy approach offers firms the opportunity to enter into what will be known as a “Negotiated Greenhouse Agreement” (NGA). This instrument, essentially the initiative of the

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GPC, has yet to be fully defined but its generic terms and conditions were under active discussion as this paper was written. NGA’s will have three key features. To be eligible, firms must first demonstrate their international competitiveness would be at risk if they were to bear a carbon charge with effect from 2008. Informal advice from parties close to the NGA discussions suggests a relatively broad definition of competitiveness at risk may be achievable. Having satisfied the first condition, firms will then be expected to agree a pathway to world’s best emission practice. This may well involve a commitment to implement some of technical response measures discussed in the earlier part of this paper. Conceivably, it could also involve commitments to capital expenditure timelines and emission intensity milestones. What constitutes world’s best emission intensity practice in the context of NZ’s cement plants is open to interpretation. It is fair to say this question will occupy the officials and industry representatives for some time to come. Finally, having met conditions one and two, firms will be relieved of all or part of their liability to pay the carbon tax. While Government has made no final decisions on these measures it is apparent that the industry’s advocacy has materially influenced the final policy mix. At the end of the day individual firms will have to negotiate the terms and conditions of their own NGA. That this facility is available to them at all is a tribute to the collective influence of the cement industry and the other energy intensive industries that comprise the GPC.

Conclusion Ratification of the Kyoto Protocol will bring profound changes to the way we live. If we are to achieve a lasting legacy of environmental improvement then an equitable approach to the mechanisms of achieving the required changes needs to be undertaken. New Zealand has chosen to ratify the Protocol and, in so doing must enact government policy to these undertakings. The cement industry, conscious of its vulnerability, has sought to influence the mix of domestic policies

Government will employ to meet its Kyoto obligations. One policy option under close consideration offers NZ cement companies some protection from offshore competition while they transit to world’s best emission intensity practice. The cement industry, through the strictures of chemistry, is a sizable emitter of CO2. In the past 10 years, much progress has been made in reducing emissions. Further plans are being implemented to continue this reduction, involving changes to fuels, fuel use and cement composition. Global warming as the name implies, is an international challenge. In other industrialised societies, the cement industry has also responded with similar strategies. All aimed at a reduction in CO2 emission, changes to national Standards regimes has permitted a wide range of supplementary materials to be added to reduce per unit emissions which will, in many cases, improve the performance of cement. These changes to cement composition have been made only after a robust examination of field performance. In this way, the construction industry, can be assured that the adjustments needed can be achieved without compromising technical integrity. The natural conservatism of specifiers and engineers has ensured the design and construction of durable structures. However, this should not stifle innovation in materials and methods. In considering the environmental burden of the concrete industry, there can be improvements made with the application of considered and measured technology. Although cement is largely discussed in this paper, a holistic approach to the environmental burden of all the inputs should be undertaken. The final outcome will see a sustainable concrete industry enjoy a continued prominence in the modern world.

References [1] New Zealand Climate Change Programme, 2001, Kyoto Protocol – Ensuring Our Future, Ministry for the Environment [2] New Zealand Climate Change Programme, 2002, National Communication 2001 – New Zealand’s Third National Communication under

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the Framework Convention on Climate Change,

Ministry for the Environment [3] Horton, R., Factor Ten Emission Reductions: The Key to Sustainable Development and Economic Prosperity for the Cement and Concrete Industry, Proceedings of the Third CANMET/ACI International Symposium on Sustainable Development of Cement and Concrete, Malhotra ed. San Francisco, USA , 2001 [4] Building a Sustainable World, A First Report on our Economic, Social and Environmental Performance 2001, Lafarge, France, 2002 [5] Sustainable Cement, The Newsletter of the WBCSD Cement Sustainability Initiative, Issue 3, July 2002, World Business Council for Sustainable Development, Geneva, Switzerland. [6] Building a Sustainable World, ibid [7] CIEMA, 2001, 2001 Annual Report [8] CIEMA, 2001, 2001 Annual Report [9] Toffler, A., The Third Wave, Wiliam Collins Sons & Co. Ltd., London, 1980. [10]Mehta, P.K., Growth with Sustainability – A Great Challenge Confronting the Concrete Industry, Proceedings of the Third CANMET/ACI International Symposium on Sustainable Development of Cement and Concrete, Malhotra ed. San Francisco, USA , 2001 [11] Mehta, P.K., ibid. [12]Horton, R., ibid. [13] Hewlett, P.C., Interfacing Innovation with Best Practice, Proceedings of the International Conference “Creating with Concrete” Dundee, 1999, Dhir and Jones eds., Dundee, Thomas Telford, London, 1999 [14] Beeby, A.W., Radical Change or Incremental Improvement, Proceedings of the International Conference “Creating with Concrete” Dundee, 1999, Dhir and Jones eds., Dundee, Thomas Telford, London, 1999 [15] BS EN 197-1:2000 Cement Part 1: Composition, specifications and conformity criteria for common cements, B.S.I., 2000

[16] ASTM C 1157-00a, Standard Performance Specification for Hydraulic Cement, American Society for Testing and Materials, Volume 04.01, 2001