European Commission lets low-carbon cements down with proposed ETS benchmark reforms

The EU’s ETS must look to the future of the cement industry

The European cement industry emits a staggering 104 megatonnes of carbon dioxide each year – equal to the annual CO2 emissions of Belgium.

Portland clinker – cement’s key binding ingredient – accounts for over 90% of those emissions. But there are alternative binders that are safe, scalable, cost-effective, and – above all – climate-friendly. Unfortunately, the current EU Emissions Trading Scheme (ETS) is blocking their market uptake.

The scheme grants the industry an agreed volume of emissions for free, in the name of protecting and keeping companies’ operations in Europe versus in countries where no carbon costs are imposed. These free allowances are based on benchmark values that focus on the emissions of the best-in-class industrial installations per sector.

Unfortunately, for the cement sector, the benchmark is based on the production of traditional, carbon-intensive clinker instead of low-carbon counterparts. Using the most polluting installations as a yardstick means that the current benchmark rewards complacency. The industry is shielded from the real cost of emitting CO2 and is not motivated to change production methods or explore alternatives to Portland clinker.

The share of the traditional Portland clinker in European cement sits well above the global average, without any sign of improvement. With so many low-carbon cement solutions readily available, there is no time to waste. This idea is not new. It has already been acknowledged by regulators. Earlier this year, the European Commission pointed out in a concept paper for the expert group overseeing benchmark revisions that today’s clinker benchmark provides “fewer incentives to substitute clinker in cement [in comparison to other types of benchmarks]”. The industry must be incentivised to decarbonise – and the ETS should be one of the tools to make that happen.

The ETS benchmark revision is a window of opportunity – we shouldn’t waste it

The different benchmarks for products covered by the ETS are defined by the Free Allocation Regulation (FAR). These are currently being revised for the years 2026-2030, offering a unique window of opportunity to include alternative low-carbon binders within the scope – if policymakers fix the longstanding issue with the clinker benchmark.

A wide range of options to address this issue exist, including moving to a cement-based benchmark (as it is for the EU’s Carbon Border Adjustment Mechanism), which would motivate industry actors to produce cement with much lower levels of traditional clinker. Alternatively, widening the definition of clinker in the benchmark, as well as including supplementary-cementitious materials, would incentivise the full spectrum of low-carbon solutions.

However, despite there being ample solutions at hand, the European Commission’s proposal is business as usual with only nominal changes at best. This not only ignores the wishes of co-legislators for technology-neutral free allocations when concluding the updated ETS Directive earlier this year, but it also jeopardises the urgently needed decarbonisation of the European cement industry.

The EU’s new free allowances will be granted until 2030 – marking a precious decade for climate action as wasted waiting to get incentives right for deep emission cuts. Cuts are needed now, and the cement industry has the technology needed to make them – but political will is needed to ensure they can reach the market.

Representing leading innovators in the global cement, concrete, and construction value chain, the Alliance for Low-Carbon Cement and Concrete (ALCCC) wants to see the rapidly growing number of safe, scalable and cost-effective low-carbon cement solutions made the norm. It is time for legislators to get serious about levelling the playing field for low-carbon cement solutions and set the cement industry on a path to climate neutrality.