Cement cos cut costs, earn carbon credits with fly ash

Cement cos cut costs, earn carbon credits with fly ash
Published: 27 June 2007

With Indian cement companies blending fly ash with clinker to bring down production costs, now they  stand to earn carbon credits and money by raising the blending ratio, – that is using more fly ash for every unit of cement produced.

Shree Cement, which has two plants in Rajasthan with a combined capacity of 6 million tonne per annum, has been issued 3,50,000 carbon credits for a period up to December 2006. At current market prices, the company hopes to make around Rs 25 crore. Shree Cement expects to earn 90,000 credits per year till 2012 for its three other projects in the pipeline.

There are over 30 similar projects by different companies in the country, which have received approval at the national level and are awaiting nod from the international authority.

“There is a huge opportunity in this field. Big money can be made if one approaches it in an innovative way,” says Prashant Bangur, a senior executive at Shree Cement, who has been the steering carbon initiative at the company.

Under the Kyoto Protocol, businesses in EU and Japan are bound to reduce their greenhouse gas emission levels by at least 5% from their 1990 level. In the event of not being able to do so, they are allowed to buy carbon credits from developing countries, where the cost of reducing emission is much less compared to developed world. A carbon credit is equivalent of a tonne of carbon dioxide emission reduction.

A cement maker can use one tonne of clinker to produce 1.05 tonne of ordinary cement or 1.35 tonne of cement blended with fly ash or 1.8 tonne of slag-blended cement. Slag, a waste generated at steel plant, and fly ash are considered environmentally hazardous.

Of late, there has been an increasing trend towards blended cement to keep the cost low and raise overall production level so as to meet growing domestic demand. At present, over 70% of cement produced in India is blended.

If a company, which uses 25% of fly ash in the cement, decides to raise it to 35%, it can save up to 8-9% on fuel and 5% on power. Fuel is mainly consumed in turning limestone deposits into clinker.

Less fuel consumption means less carbon dioxide emission per tonne of cement produced. The company can claim carbon credits for the amount of reduction in emission. Carbon credits may mean easy money. But Mr Bangur also has a word of caution for those involved in the project. “One must not exceed the established blending ratio to ensure that cement quality remains unaffected. Some manufacturers are also exploring the option of using alternate fuels. But one must seriously examine the impact of the fuel on the quality of cement.”

Till recently, fly ash was given free to cement makers. Manufacturers only had to bear the transportation cost. But the rise in demand from cement makers has prompted power companies to start auctioning fly ash. “It’s a strange phenomenon here. Instead of paying for the pollutants, which is the worldwide phenomenon, power companies have started charging those who help in its disposal,” says Jaypee Associates COO Rahul Kumar.