How one of the world’s most energy-intensive industries plans to survive

As a CEO in an industry that contributes about 5% of all global greenhouse gas emissions, you might view the future with trepidation. Cement manufacturers are increasingly under scrutiny. To make matters worse, the chemistry of cement-making results in as much carbon-dioxide as the energy used to make it.

\Recently, I had the privilege to join FL Smidth, a leading supplier of machinery and engineering expertise to the cement industry, as it celebrated 125 years of service with its customers. Held in Copenhagen, Cairo, Mumbai, Bali and Miami, five meetings focused not on the past, but on future scenarios. High on the list of drivers were energy, environment and urbanization - challenges that affect many industries.

The volatile and rising costs of electricity, gas and coal have pressured the industry to seek nontraditional fuels ranging from used tires, telephone poles and roofing shingles to municipal waste. The alternative fuel content in cement production in some countries is passing 50%, with individual plants approaching 100%. However, the bulk of the industry still uses conventional fuels with high greenhouse gas potential [the fuels don’t contain greenhouse gas, the products of combustion certainly do].

Environmental concern is over the release of greenhouse gases through both process energy and process chemistry. In locations where these emissions are regulated under the Kyoto Treaty, this is more than a theoretical concern, and it’s increasingly likely to be a worldwide issue.

At a local level, cement works are most often sited far from cities, either to be close to raw materials, or, for environmental concerns, to be distant from population centers. But urbanization is accelerating. For the first time in history, more than half of the world’s population lives in cities, a percentage that continues to increase.

So, how can an industry like cement strategically react to these trends? The obvious first step is to put a rigorous corporate energy management process in place such as we have discussed in previous columns. This is a given to reduce the effects of greenhouse gas and costs from current energy use.

California Portland Cement, among others in the industry, has put such a plan in place. In a few short years, it’s gaining substantial cost savings and emissions reductions, and was recognized as an Energy Star Industrial Partner of the Year. Proliferated across the entire industry, programs like this could result in a 1% reduction of global greenhouse gas emissions.

Thinking beyond energy efficiency to fuel choices, it seems obvious that increased urbanization means more concentration of municipal waste, a fuel with a high calorific value and very low greenhouse gas potential. Companies such as FL Smidth are designing equipment that can operate on this fuel. In this future scenario, the cement works becomes the “thermal landfill” for the urban area. The combination of energy efficiency and a broadly renewable fuel could reduce the climate change of the process energy to nearly zero. It will also generate an additional revenue stream for the cement works.

Building the integration to another level, why not gather the waste heat from the works and sell it back to the city for the urban district energy system that will be increasingly common in the future? A cement plant in Alborg, Denmark, is a municipal heat source today. Greenhouse gases from the natural gas or heating oil that would be used for urban heating, or electricity for cooling, are avoided.

Last, but not least, cement is subject to many technical changes that make it an even better material for developing energy-efficient buildings and infrastructure. It’s a further short step to conceive of the industry advising cities on design and construction approaches to reduce the energy and greenhouse gas footprints of the neighboring city.

Add these together, and rather than something to be hidden away on the other side of the hill, we see the potential for not only reducing the substantial climate impact of cement manufacture, but also a pathway to gaining new revenue streams and becoming an integrated asset for the neighboring cities.

Clearly, these visions of the future won’t happen overnight. Management willing to embrace these possibilities will be the innovators of the future as they make major decisions about technology and location of new or refurbished plants. I’m delighted to say that on this recent trip, I met senior managers willing to see a future with new and exciting energy possibilities.

Next month, we’ll look at ways that management can incorporate new energy thinking into major strategic decisions.

Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at garforthp@cs.com.