UK cement firms in CO2 pricing fears

UK cement firms in CO2 pricing fears
Published: 18 November 2008

Proposed EU rules aimed at ensuring cement firms pay for carbon dioxide emissions could kill the industry in the UK, warns the British Cement Association.

The BCA says EU plans to make cement firms buy carbon emission allowances will price the UK’s £755m industry out of the market and will lead to more than 6000 job losses.

Research by the Boston Consulting Group confirms the BCA’s fears - it says the UK’s industry would be at risk of offshoring, as it would become cheaper to import cement.

Under the EU proposals, cement firms would be required to buy carbon dioxide emission allowances from 2013 – allowances are currently priced at about UK£19.5/t but would be expected to rise to UK£32/t in five years.

Boston Consulting says a price of more than UK£28/t for
CO2 allowances would threaten the entire UK industry. It adds that the global cement industry has enough capacity to supply the UK market, which needs free CO2 allowances to compete.

The BCA strongly opposes the plans and is in discussions with the Government about measures to reduce advantages gained by non-EU cement firms.

Dwight Demorais, BCA acting communications director and special advisor to Lafarge, said: "The UK cement industry has already reduced CO2 by more than 30 per cent since 1990 - about 3Mt.

"We have to reduce emissions by a further 20 per cent. But we will not be able to compete against non-EU countries if we are made to pay for that carbon dioxide which is produced, it is unfair competition." He added: "This creates uncertainty."

Cement manufacturers are increasingly feeling the effects of the downturn. Cemex, Castle Cement and Lafarge have all cut production and jobs in the past few months.

Cemex announced plans to shut its Barrington plant in south Cambridgeshire, leaving 87 people facing redundancy.

Castle Cement - which meets 25 per cent of UK cement demand - mothballed a plant in August with the loss of 35 jobs.

In September, Lafarge closed a kiln and two cement mills at its Westbury works in Wiltshire. Half of the 130-strong team had to leave the site. Consultation on redeploying them is ongoing.