Implications of EU's call to ban climate-neutral offsetting

The EU institutions finalised a new law on 19 September 2023 to enact a sweeping ban to combat erroneous claims of sustainability. Companies will be prevented from 'greenwashing', a term used to describe the practice of making misleading claims about a product's climate friendliness. Gilles Dufrasane, policy lead at Carbon Market Watch, says: "The EU is sending a powerful signal to the voluntary carbon market: the era of offsetting is over."

What does this mean for the cement sector? For the heavy industry sector verification of CO₂ emissions is now well established and regulated. Carbon offsetting is seen in initiatives such as tree planting around cement plants and in the rehabilitation of old quarries, biogas generation and renewable energy projects.
 
Carbon offsetting
Aggregate Industries (Holcim group) points out that “the process of carbon offsetting emissions involves procuring carbon credits and then retiring the credits on behalf of the organisation.” Carbon credits only gain credibility if it is additional and that the carbon reduction is real and permanent, verified to provide assurance on the quality and credibility of the credits and traceable with transparency and proof of the offset amount.

The lifetime of a product made of cement or concrete could also be considered as a carbon offset when it is acting as a carbon sink. However, “Cement carbonation happens at an extremely slow rate: an average of one or two millimetres per year,” says Darshil Shah, Cambridge University materials scientist. 

The alternative raw materials used in cement production can also be considered as carbon offsets. Ecocem, like many cement producers, for example, use ground granulated blastfurnace slag (GGBS), a byproduct from the steel industry. This saves the company an estimated 12Mta of CO₂ emissions by producing an alternative to ordinary Portland cement. 

Carbon offsetting is an important tool for the cement sector to step towards being a carbon-neutral industry. While the cement sector is well regulated in this area, the value of carbon offsetting is likely to be valued less than where cement plants can afford the full carbon capture technology to decarbonise. But carbon offsetting is still going to be a valuable lever in reducing the CO₂ emissions from cement plants. It will be for the industry to be open and transparent in how it is approaching carbon offsetting.

EU tightening rules
The EU’s goal to outlaw greenwashing is part of a wider effort to overhaul the bloc’s economy to reach net zero in 2050. The European Commission is also attempting to complete the final elements of its Green Deal climate law before EU-wide elections to be held in June 2024.