The portfolio of low carbon cements: Peter Hoddinott, Independent Consultant (UK)

So if everyone's ready now, we'll we'll start our next session. And to kick us off, I'm very pleased to have Peter Hod knot with us. many of you will have heard Peter speak before, but if not Peter spent his early years in the gold mines of Southern Africa before joining the cement industry in 1988 at Blue Circle Industries. He relocated to the Philippines as CEO in 1999, after which he oversaw the integration of Blue Circle and Lafarge before becoming regional president for Lafarge in Latin America. He went on to be appointed executive vice president of performance and then CEO of Lafarge Africa before leaving the group in 2016.

He's also held the role of President of EM bureau and today as an independent consultant advises companies on decarbonization and new plant projects. He's gonna talk to us today about the portfolio of low carbon cements, and he's gonna frame it inside the discussion that we started this morning. the, the EU ETS Cbam and all these good things. So I'm very pleased to welcome Peter. Alright, very Much. Thank you very much, Tom. That's great intro. I'm sorry, this is the graveyard shift immediately after lunch. So I'm hoping I can wake you up. As Tom said, we are gonna look at a particular corner of the decarbonization story of our industry. So there's nothing here on carbon capture and storage.

It is all about our materials and how we decarbonize them and what we can do with the technology available today and emerging to really make a big difference with our, with our industry. You heard this morning, very interestingly from McKinsey, from Fabian, he was saying that the, the cost per ton to decarbonize with the use of scms or supplementary cementitious materials is orders of magnitude below the cost per ton to decarbonize with carbon capture and storage. And it's in that spectrum, in that vision. I want to ask you to join with me on this journey through the other binders that we can imagine. So, October the first, it's only a few days behind us.

Finally, the asteroid was seen in the heavens bowling towards the planet. Here it is. It's called the Carbon Border Adjustment Mechanism. It's part of the emissions trading scheme of the eu. And in its sites, in its cross hairs, it's got the European cement sector as well as steel, aluminum fertilizers, et cetera. That is a game changer, ladies and gentlemen. You'll see there how the free allowances, which are currently given out in Europe are reduced from 2026 down to zero in 2034. It means in a different world, it means effectively in 2034, this industry in Europe is gonna see a carbon tax. And that's important for Europe.

It's important for Turkey as well to Tokyo currently exports around three and a half million tons a year into the European Union. If you multiply that by say a hundred Euros a ton, it's 1 billion euros of tax that the Turkey cement industry will pay to Brussels in 2034, unless that last speaker brings in an an ETS for Turkey. So this is really, really game changing and I promise you all the boards of the European cement sector are focused on this. It's right at the top of their agenda. Why? Well, very simple. Let's look at some economics. I'm sorry, it's a lot of numbers.

but here you've got what happens in 2023, you get 693 allowances, kilos of allowances for every ton of clinker that you produce in Europe. And in Europe it's around eight 11 kilos of CO2 per ton of clinker. It means that the industry has got to buy about 118 kilos of CO2 for every ton of clinker produced. If you look at what that means in cost per ton of CEM one, it's about nine euros a ton, okay? That's quite big, but it's a, it's not very significant. It doesn't move the needle. You've seen that nothing really happens so far apart from people preparing a bit. So, but nine euros still significant cash cost of, of CEM one, say 65 or 70 euros EBITDA margin 30%.

So that's why you get a hundred euro a ton cement in much of Europe. Let's roll forward to 2034. Now we've got a carbon tax free allocations a fat zero, the amount of CO2 per ton of clinker. Yeah, that will have come down more alternative fuels, et cetera, et cetera. Now you're looking at seven 60, but the EUAs almost certainly are gonna go up to, I put here 140 euros, but who knows? The cost per ton of Sam one for CO2 is 97 euros. In that sum, very simple mathematics, it multiplies by 10. The cost of CO2, everything changes. The cash cost jumps from 65 or 70 euros to 150 euros.

If you keep your EBITDA margins at 30%, we are gonna be having prices in Europe of over 200 euros, a ton, I promise you that is creating an umbrella of value under which all the various decarbonization levers can really get going. That's what's changing the game in Europe. So here I'm very, very busy slides, sorry about that, but this is what's happening in the uk. This is happening now. So it's not theoretical about prices. Asem 1 52 0.5, our typical price in 2019, southeast of England, 77 pounds a ton XX depot today as we speak. It's 145 pounds. It's already jumped by a factor of two. It's incredible. And look what's happening also with G-G-B-F-S in 2019.

It was 60 euros as opposed to a price for cement at about 77. Today it's 130. It means people are going crazy to try and get hold of low carbon cement materials. So much so that in the UK they're importing GBFS from Japan, six to 700,000 tons a year despite the high freight costs. Ladies and gentlemen, it's starting. This is just the start. And at these sort of prices, lots of things happen. So you've all seen this, this sort of basic graph. What what, what are the, the five forces from Porter's world? Now, first of all, we've been hearing this morning about the sociopolitical stuff, the regulatory pressure.

We know all about that you've got now the customers and you'll see a bit later on, they are saying, we've got to decarbonize in order to produce construction projects that clients want. So they're pulling the whole process forward. You've got the capital market, say cement, forget it. It's got such a high CO2 content per euro of turnover. We don't want to have cement. It's a very dangerous area, lots of capital coming. They've derated all the stocks in, in cement. And that's really created this, this perturbance in the boards of the cement companies. And then you've got industry says, Woohoo, you know, what are we gonna do?

And you saw this morning, we're gonna make net zero commitments in 2050. Don't worry guys, we're gonna do it. It's not a problem. We're gonna do all the normal levers and at the end we're gonna add 36 or 40% of CCS, you know, be calm. So that's all happening right now. But you know, society, society doesn't believe in 2050. It believes in 2023. It wants things to happen now. So you've seen this stuff about the regulatory pressure, it's happening like mushrooms all over the world. Tom asked the question, are you gonna see some equalization of the schemes? Well, let's see.

But the cbam means that you're gonna have people who are currently importing into the EU wanting to have something very, very similar everybody to what is happening in Europe. So prepare yourself in Turkey and then you look at customers. I mean, what are customers doing in 2019? It was, oh yeah, it'd be lovely to decarbonize our concrete. This is this is a guy Debolt from head of sustainability at lafarge. Wholesome as was then I would love to see more demand from customers for sustainable materials, but frankly there's limited sensitivity for carbon emissions in the construction of the building. In other words, we wanna decarbonize, we don't wanna pay for it.

Roll that forward only two years. And this is a screenshot from a an RFQ in the UK for Pinewood Studios. And what they're asking for here, they're asking for concrete and they're specifying maximum levels of scope one, two and three CO2 per cubic meter. So less than 135 kilos of CO2 equivalent per cubic meter of concrete scopes, one, two, and three. Ladies and gentlemen, there's only one way to do that today. And that is with a CEM 3 50, 50 or 60% slag 'cause a 1 35 kilos of CO2. If you've got three 20 kilos of cement per cubic meter, it means that your binder scope one only has gotta be at four 20. And we all know today cements are mostly around 600 to seven 50. It's a changing world.

So I mentioned the industry reacts. Sure, here's the GCCA roadmap standard thing. You've got efficiency, concrete production savings in cements and binders. That's what we're gonna be talking about. They're saying it's 9% of the solution to 2050. And of course the main solution they're saying is CCS. Everybody knows this is really, really expensive. 120 to 150 euros per ton to capture compressed transport and inject underground. But that's what the roadmap says. I will now expose what I think, I think the savings and cement and binders and the carbon capture and storage around the wrong way personally.

I think we'll find new binders, new materials you'll see some soon, which will invert that whole story at much, much lower cost. So if I was going to design from scratch my perfect low carbon binder, what would I want in 2030 where it's gotta be safe and easy to use? Obvious, it's gotta have low scopes one and two, ideally below a hundred kg of CO2 per Q meter of concrete. And that's the starting point because 2030, it's only seven years away. We need to go further than that, but at least that's where we want to be. It should be industrially proven.

So a technology readiness level of between eight and nine, it's got to meet today's standards or ones which are just emerging both for the product, for the cement or the binder and the application, which is the concrete. The binder cost per CIC meter of concrete should be less than that, which you have with SEM one, including CO2. So that 215 euros in 2034, it's gotta be less than that. And really we want it to be applicable all over the planet and scalable. So that's ideal desirable. So we want to have zero scope one, one, and two for the future. So visibility for the future, we want to use the existing logistics for cement and concrete. So it's exactly the same.

We want low CapEx much lower than than cement at $200 a ton per year of capacity. And you want to have a low opex. That's what we'd really like, right? Because then you've got these high prices and then you've got a low cost solution that's nirvana. So what we're gonna talk about, it's not a comprehensive treaties on the available cements and binders that that exist today. It's much more a focus on the low carbon mass market. And there I'm looking at being able to take out at least a hundred million tons of CO2 by 2035. We need A-T-R-L-A technology readiness level of at least six everybody so that we can get there quickly. And we need four concrete decarbonization as a longer term objective.

And there, okay, CCS has got its role, I think. So let's start off with a baseline. And here lots of figures everybody, but we've got 2.85 billion tons of anthropogenic CO2 from our industry. That's what we gotta tell our children we are doing today. My children don't love me for this at all. 60% from process, 40% from most kiln fuels mass market solution. Sam one, if you do the sums with 811 kilos per ton of clinker and a 91% clinker in your average CEM one, you end up with a, with a C 25 concrete at around two 30 kilos of CO2 to about a quarter of ton for every cubic meter.

And then if you go down the EN 1 9 7 route to em twos limestone cement, 20% limestone and limestones say at five kilos, a ton of CO2 you down at one 90. Let's go a bit further and use PFA or puzzle LAMB with a EM two BV or a EM two bm. You do the same sums, you get a bit lower, 155 to 170. Remember I said we need to get below a hundred even with, even with a 50 50 blend with slag, which is a fantastic product, you're 125. So we're not there ladies and gentlemen. And as somebody said this morning, you can only, you can only take so much slag in the world, it can only sort of dilute around 10% of the cement. So it's interesting, it's a start.

But as we saw, most of the, most of the slag is, is already used. It's relatively small volumes. 250 million tons a year is mostly in the wrong parts of the world to to date for Europe, it's in Japan, you know, it's in Brazil. There's a big lump of it here in Turkey. Very interesting. Maybe a quality issue or two. But nevertheless, it would be wonderful to see more slag. But the fact is that electric arc furnaces coming in are increasingly going to squeeze the amount of slag that's available. So it's a lovely product, but it doesn't do the trick. PFA very nice as well. But you can only substitute 25 to 30%.

But look what's happening to the coal power, coal fired power plants in Europe in 2030. It's like when I was 20, I eventually lost my acne. It's exactly the same with with coal fired power stations in Europe. They're disappearing. So what to do while you can go to stockpiles and lagoons of PFA, it's true. And there are big, there are big supplies available. Not great tech by the way, to convert it into a good cement feed. And then you can import it from elsewhere in the world. There's quite a big annual supply of PFA. It's about 700 million tons. So it's a possible solution, but only 25% substitution.

And you saw in terms of the CO2 per cubic meter of concrete, you're a long way from where you want to be. So hallelujah, along comes kaine Clay. It's a great, great solution. Karen Scrivener has done an incredible job. I mean, she's changed the world by bringing this to the industry. it's now in the standards in the product standard EN 1 97. You can make asem two cm, which is also called nail C3 50. It's got 50% clinker and it's got 20% limestone and 30% calcine clay. Beautiful solution. I'm not sure it's applicable everywhere.

'cause if you look for tic clay in much of northern Europe or northern hemisphere right down low in the southern hemisphere, you really don't find a lot of high lytic clay in the equator regions. It's a different story, but it's very good. And look, you do the sums, you end up with 147 kilos, a cubic meter of concrete it. So there's a big improvement everybody. And if you've got calcine clay, you should really go for it. Then there's Pola. This is a, this is an SCM, which has been produced by nature. the billions and billions and billions and tons of lava and pola, which are produced by volcanoes have already put their CO2 into the planet.

But you'll know that if you take natural positive land and you grind it up, once you get beyond about maybe 20, 25%, the water demand in the product goes right through the roof. And you have, you really have a limit. What you can do with N Poland. There's a technology out there which addresses that water demand problem. It's called a vibrating ball mill. It vibrates particles of lan with with porcelain media. These very high impacts in the mill. Cause the surface of the puzzle land to amor size to to turn into glass effectively. And that means your water demand goes right down. It's a very nice technology. It's patented, it's in the product standards and it's in the application standards.

Very interesting. And here, if you use this, you're allowed to use 55% substitution in the standards today. You get down to nearly a hundred kilos, a cubic meter of concrete. It's, it's getting there. And then you've got the alkaline activated binders, which most of you probably know as of geo geopolymer. Now, geo geopolymer I mean, they're not new tech. It's more than a hundred years old, 130 years old. You use a soluble base alkaline like sodium silicon use an illuminate rate rich material like G-G-B-F-S or fly ash. And then you get very, very low scope one CO2 emissions. So you end up with a reaction, a very good high strength, early high strength material. Lots of examples.

There's Wagner in in Australia, Hoffman Green in Europe, Zon em 10 oh em free, you name it. There's a great big sort of alphabet soup of of new geo polymers, but they're expensive. You'll see in the next slide. And, but you've gotta rely on G-G-B-F-S and fly ash, which you've just seen are in reducing supply. And so far they're not in en N 1 97 or EN 2 0 6, they're, they're coming. You, you see various e TPMS in France. You've got a PAS in uk. These are sort of halfway houses to the standards, but there's still some way to go. But newsflash, a few months ago, Australia put in a new similar engineering standard, which allows the use of geopolymer. Ladies and gentlemen, it's just starting.

This is Wagner in in Australia. This is the start of, I think a bigger movement with these chemical related binders. Very low carbon footprint, 45 to 65 kilos per C meter of concrete. Hallelujah. We are, we are there. So what is wrong with geopolymer today? So here's a concrete mix. at the top it's a C 40 52.5 and A-G-G-B-F-S 50 50 blend, 180 5 kilos of each. there are the prices you put in some superplasticizer about 1.5 kilos per cubit meter. You put in aggregate, you end up with 87 euros per cubic meter a cost. You add on your your delivery. And if you're trying to get a, a decent MD of 25 euros, you deliver the material to a job site for 123 euros.

That's what it costs in Europe more or less today. Now let's do the same sum with geopolymer, no SEM one zero G-G-B-F-S 3 33 kilos. So you need a lot of G-G-B-F-S, the alkaline activator, the chemistry I talked about, actually, you need quite a lot. 40 kilos is quite expensive. About a thousand euros a ton. So it's 40 euros in an aggregate as before the overall cost, instead of 87 euros, it's 120 euros. And then you add on top of that your delivery, it's 155 euros per CIC meter. And it's not in the standards in Europe yet. It's being used in non-structural aprons and temporary works. But that delta in cost is still a big break on geo polymers.

So that brings me to a very boring mineral limestone, which you all know, I mean, what the hell? But limestone is extremely interesting as part of the future solution for decarbonizing our construction on the planet. Very widely available worldwide. You already have limestone used in cements, even in the US they've just discovered limestone cements. But in eu, 30% of cements are limestone. Cements very low. CO2 EN 1 97 limits you to around 35%. So a bit better than others, but it's a very low reactivity. And the course, the problem is at a water cement ratio of 0.5, 0.55. The strength of this binder in concrete goes right down. I'll show you in a second or two.

And then you've got issues on freeze thaw and chloride migration and so on. But everybody knows in the technical world that that problem can be solved by reducing the water cement ratio. You take it down from 0.55 down to 0.3, and suddenly you get a concrete that is performing at more or less the same level as AEM one. And you know, that's, that's pretty interesting, right? You maximize your limestone, you minimize use of G-G-B-F-S and flash, and you minimize the remaining clinker. So let's look at what the numbers look like from the lab. And across here we've got a 52.5 CEM one. The three colors of blue are two day, seven day, and 28 day strengths.

And you see 52.5 are you end up at, with a, a water cement ratio of 0.5 at about 75 megapascals. As soon as you then move to higher limestone cements with the same water cement ratio, boom. Down comes the strengths. And if you go to a ascend two bl boom even more, and here's one with 50% limestone, look how low the performance is purely because of the water cement ratio. So let's turn it around. Let's do something different. Let's use the same material, but with a water cement ratio of 0.4 or 0.3 and look magically the results bounce back. So problem solve, we've got this very, very low carbon material. You can put it in at 50% and you end up with the same same product result.

What, what's not to like, what's not to like? Well, of course the problem is at 0.3 water cement ratio. This material is like a brick boop. It doesn't flow at all. It slump is zero. You can't pump it. It's, it's a real issue. You could certainly use it in many exposure classes. That's some something around 64% of exposure classes. You can use it. But you've got an issue today with workability and also with standards. So what what to do? So you, you're gonna hear a second or two from from Connor. he and his family own eco, so there's a bit of a plug here. I'm sorry about that, everybody. But you'll get much bigger plug from Connor. But this is an example of how you can resolve the problem.

Their, their binder solution is 50% limestone, 20% clinker 30% G-G-B-F-S-P-F-A, calcine Clay n Polan. That's the simple constituents. And in order to deal with the workability, you've gotta put in more admix mixtures, something around twice as much as normal, very approximately. If you do that, and they'll go through the formulation in a second or two, you end up with slumps, which are completely normal for concrete, on site, very good flow times, and you get C forties, C fifties actually no problem with very good early strengths. Look ladies and gentlemen, that at least to me is a very exciting potential solution or one of the solutions to our decarbonization puzzle.

If you can get 50% of the binders worldwide, which has got a very, very low carbon footprint to be working like this, okay, we use a bit more chemistry, but the result is extremely, extremely interesting. Look, you end up at around 60 kilos per cubic meter of concrete. This is real breakthrough stuff really. So what, what's to do? Well, of course it's not in en N 1 97, it's not in en N 2 0 6, the CE mark for that material i I showed there is coming very soon, next year. And currently you've got the European technical assessment. You've got French, E-E-P-T-M and everybody is lobbying for performance standards. And performance standards is really where the game hits the road.

So today we live by a set of rules which are principally prescriptive for our business. In, in the product standards, the application standards. Thou shalt use this much cement, this much aggregate, et cetera in your concrete. It's very, very, very prescriptive. And that's for good reasons because of long-term problems or liability and, and structural integrity of of buildings. But boy, we're in a complete and utter straight jacket performance standards. Look at the thing completely differently. It's already happened in aggregates.

They say if you can achieve a certain level of performance, minimum level of performance provide you get there, then this material is okay to use and that performance is multifunctional. It got different issues like chloride attack, long-term durability, et cetera, et cetera. The move to performance standards is one of the ways in which we unlock the beauty of that technology I've just described. And which brings us to a much lower carbon world. And it's happening everybody.

Australia, I mentioned 2023 this year, they've got a new civil engineering standard in the USA in September, just last month, sublime systems got an A-S-T-M-C 1 57, which is a performance designation for its ultra low carbon cements based on strength development, durability, low shrinkage and cracking. In May, 2023, A STM announced that they were going to be moving much more towards performance-based concrete and concrete aggregates. It's called CO nine and it's happening as we speak. And in Brazil, these are some examples. In Brazil, it's already eight years.

There's been a performance standards there where in Brazil you've just got to get to a certain level of strength activity index more than 75%. And you can use other materials like manganese, slag, copper, slag, nickel, slag, high early strength, ladies and gentlemen, happening. You know, that is really underlying our world, even in the, in, even in the European Union with with sen. The EN 1 90 75 happened in brake speed to bring in lc three 50. And this is the next step. So I'm now gonna talk a little bit about other binders because I'm sure you're saying, well, what about C-A-C-C-S-A-C-C-H-C? There's a real, real alphabet soup there from the, the car rank in diagram for those techies here.

I'm not technical by the way. there's a lot of opportunities within these very novel cements, some of which have been around for a very long time. like Simon Fondue, which is a cement, a calcium illuminate cement, if any of you have ever used it, it's won the material. It's like magic dust. It makes a concrete at very high strength within minutes. Very interesting. But anyway, those other cements are all available. And I'll leave this to you to read tonight in bed before you go to sleep, about the wonderful world of all these different types of binders like C-A-C-C-S-C, et cetera. And some of them are really very interesting.

Most of them are outside the, the standards and norms, but they've got their own place. And, you know, some interesting new stuff like Forterra where you, you re carbonate CO2 you produce aite, which is a form of calcium carbonate. And then as it's cures, you turn into aragonite with lots of spines on it. This creates a natural cement like coral reefs. There's lots of stuff happening in this space. Ladies and gentlemen. Most of this is not mass market like the other ones, but nevertheless, very interesting.

At the end, please don't get me wrong, I believe we will use more and more of these new materials, but at the end, very likely we're gonna still have a need for clinker as the main activator for sticking together, construction all over the planet. We'll still need it. Maybe we don't need 3 billion tons a year in the future as we bring in these other technologies. Maybe it'll go down to a billion or 800. I do not know. But we'll still need to decarbonize clinker if we want to get the full route to zero net carbon for our industry. And so we have to find the ways of using CCS using low, low carbon afs, hydrogen electrification, all these things.

They all have an important place in the full panorama of solutions to get to zero carbon. But nevertheless, I believe this, this overall model has the potential to do, to really move us fast between now and 2050. And actually to beat what we've been looking at, you know, this thing of sticking in 2040 onwards, all that CCSI think we can do better than that as a human race. And you know what, that's just us looking through the looking glass today as we speak.

This whole area is so attractive that 215 Euros, a ton of cement is a magnet for innovation and things are happening all over the planet with people coming up with new and weird and wonderful solutions to this whole problem of sticking together stones to make liquid stone, which is concrete. So in a garage somewhere maybe near you, there's something going on, coming up with a brand new binder, which will blow us all outta the water. So conclusion, growing momentum for the statutory carbon pricing, we ideally need something below a hundred kilos per cubic meter by 2030. we need some mass market blends. You know, the slag and ash great, but they don't really get there.

There's new market candidates, calcine clays, mechanically activated s scms like Pola limestone cements very exciting and really can get us down to around 60. Very, very exciting. And then lots of other stuff happening here. But everybody please a full court press from you all with wherever jurisdiction you are in to move to performance standards. Don't worry about your current res, your current asset base. This is the solution for decarbonizing our great industry. Thank you very much. Thank you.