Concrete policies
to underpin the
cement transition

Prepared by Climate Bonds Initiative.

Contents

Table 1. Key policies to decarbonise the entire EU cement value chain1

1. Summary 3

UPSTREAM

MIDSTREAMDOWNSTREAM

2. Introduction 5

Low-carbon energy
and infrastructure

Low-carbon
production processes

Increase demand for
low-carbon cement &concrete and enhance its
circularity

Accelerate renewableenergy deployment

Establish carbon contracts fordifference

Implement green
public procurement

Ensure strategic and
1.5°C-aligned CCS
infrastructure for the
cement industry

Mandate credible transition plansat the entity-level

Improve waste
management and circular
economy requirements

Strengthen carbon pricing with areformed framework against therisk of carbon leakage

Scale up off-takeagreements

Guide green investment throughstandards and sector-specificcriteria and taxonomies

Establish a “green window”
for zero/near-zero carbon
cement

Methodology 6
3. The importance of thecement sector 7
Global cement emissions 7
The EU cement industry 8
Understanding cement
sector emissions 9
Transition pathways for cement 9
The urgency of investing in
low-carbon cement 13
Sustainable Finance Markets area critical financing tool 13
4. Policy levers for the European
cement sector 15
Policy recommendations 16
Upstream policies 16
Midstream policies 18
Downstream policies 23
5. Conclusions 26
6. Annex: the cement making
process 27
Endnotes 28

List of acronyms
CBAM Carbon border adjustment mechanism

KPI key performance indicator

CCfD Carbon Contracts for Difference

LEILAC Low Emissions Intensity Lime
And Cement

CCS Carbon capture and storage
CCU carbon capture and usage
CEF Connecting Europe Facility
CEMBUREAU European Cement Association
CLT Cross-laminated timber
CO2 carbon dioxide
DNSH Do No Significant Harm
EOR enhanced oil recovery
ETS Emissions Trading System
EU European Union
GCCA Global Cement and Concrete Association
GPP green public procurement
GSS Green, Social and Sustainability
IEA International Energy Agency
IIGCC Institutional Investors Groupon Climate Change

MSW Municipal Solid Waste
NGEU Next Generation EU
PCIs Projects of Common Interest
PSF Platform on Sustainable Finance
RED Renewable Energy Directive
RRF Recovery and Resiliency Facility
SLB Sustainability-linked bond
TEG Technical Expert GroupTEN-E Trans-European Networks for Energy
TSC technical screening criteria
UNFCCC United Nations Framework Convention
on Climate Change
UNIDO United Nations Industrial
Development Organisation
UoP Use of Proceeds
WB World BankIMF International Monetary Fund
IPCC Intergovernmental Panelon Climate Change

Concrete policies to underpin the cement transition Climate Bonds Initiative2

1.Summary
The cement sector is the second-largest
industrial emitter globally and it accounts
for around 4% of the EU’s CO2 emissions.
The cement industry contributes significantly to
CO2 emissions. It is the second-largest industrial
emitter, accounting for approximately 7% of global
CO2 emissions, and demand for cement is predicted
to increase.2 Cement is a critical input for many
activities, including buildings and infrastructure,and is a key material in the net-zero transition.

30% of EU cement kilns are estimated toreach end of life and need reinvestment
by 2030.3
This decade offers a perfect opportunity to invest in
the cement net-zero transition in Europe. Cement
assets’ lifetimes reach up to 60 years and theinvestment choices that cement companies makenow will create long-lasting path dependencies,
well beyond 2050. By investing in technologies thatare consistent with a net-zero scenario they can
avoid stranded assets and high economic losses.4
Given the size and emissions of the cement sector,
its transition is essential for the EU to meet its 2050
climate neutrality target. Policymakers should act
immediately to guide industry and investors onto
a climate-aligned pathway for cement and support
informed investment decisions consistent with a
net-zero cement investment approach.

The investments needed by 2030 to alignwith a Paris-aligned transition pathway
are estimated to be relatively low.
The investments needed for the EU cement sector
to meet 2030 targets represent around 20% of
annual maintenance CAPEX.5 At the individual
plant level, the additional investment needs
are not very large. For example, an estimated
EUR246m of additional investment is required tobuild a 3 Mt-capacity cement plant with carbon
capture in Germany. This would meet around 10%of the country’s annual average production.6
At the system level, however, there are challenges
in rapidly scaling up these investments across ahuge number of locations. The need to achieve
deep emissions reductions by 2030 means thatscale and speed are critical.
The capital spending needed to transition the
global cement industry could reach USD70bn
annually between 2030 and 2040.7 The global
cement industry will need to invest USD16bn
annually on top of business-as-usual investments
to transition to net zero.8

Around USD3.7bn sustainability-linked bonds(SLBs) have been issued in the cement sector
in 2020-2023 (as of February). The cement
sector represented less than 2% of SLBs issued
so far. Despite the growth of these financial
instruments, their potential is not being fully
exploited in this sector. Emerging standards andsector-specific criteria, such as those developed by
Climate Bonds Initiative, can support the growth ofthese instruments in hard-to-abate sectors suchas cement.9

Policy support is crucial to thedecarbonisation of hard-to-abate
industries such as cement.
Technologies and solutions are available today
which can kickstart the cement sector transition
while emerging ones can complete the picture.
These nascent technologies can be supported by
Carbon Contracts for Difference. These improvetheir investment potential and long-term offtakecertainty. Off-take agreements can also lower therisk of producing low-carbon cement.10
Strong policy instruments are needed tosupport the EU cement industry transition to
net zero. These policies apply to different partsof the cement industry value chain: upstream,
midstream, and downstream, see Table 1.

Strong demand signals will provide
confidence for companies to invest in thetransition to green cement production.
Public procurement can drive the market for green
cement. The EU has set green public procurement(GPP) criteria, but these are only voluntary.
Introducing mandatory criteria in line with theGreen Deal would enable preferential spending tobe embedded in governmental budgets. Aligning
GPP standards with the EU Taxonomy will ensure
consistency of green public investment.

Meanwhile, cement imports to the EU-27
quadrupled between 2016 and 2021, from lessthan 2% of total cement production to morethan 10%.12 The Carbon Border Adjustment
Mechanism (CBAM) will address this, and freeallowances could be phased out for sectors
covered by the CBAM by at least 2030.

CCS will play a significant role in the
cement sector transition, but it needs
to meet specific criteria to be a credible
decarbonisation option.
Carbon capture and storage (CCS) will play animportant role in reducing CO2 emissions from thecement industry, notably the emissions that occur
as a result of the chemical reaction needed to makecement, irrespective of the energy source. Around
60% of the direct emissions in the production
process do not result from fuel combustion, butfrom chemical reactions in the clinker calcination
process.13 CCS in cement should address theseemissions that cannot otherwise be abated,rather than prolong fossil fuel combustion.
Europe takes the lead on CCUS initiatives in the
cement sector. 56% of cement industry planned
CCUS projects are in Europe.14 Policymakers
can ensure the strategic application of CCS andfavour priority sectors to ensure it is reserved for
sectors with limited decarbonisation options and foremissions that cannot be prevented, such as in the
cement industry. CCS technologies will need to use
low-carbon electricity and meet technical criteria forthe transport of CO2 and underground permanentgeological storage of CO2 in the EU Taxonomy.15

The cement industry has not been subject
to the full price of carbon pollution under
the EU-ETS; improving price signals under
the EU-ETS would support the investmentcase for decarbonisation.
The EU Emissions Trading System (ETS) is one of
the main EU policies to address climate change
and reduce emissions. It works on the cap-andtrade principle; within this cap, companies buy
or receive allowances that they can trade witheach other.11 Free emission allowances cover up
to 100% of cement industry emissions under the
ETS, due to carbon leakage concerns – the risk ofrelocation to avoid pricing with the EU cement
production becoming uncompetitive with lowercost, higher-emissions imports.

Concrete policies to underpin the cement transition Climate Bonds Initiative

32.Introduction
Cement is a crucial input for manyindustries, including construction andinfrastructure, and inevitably part of alow-carbon future. However, it is currently
very high carbon and will need significant
technological and financial investment to playits role in achieving a zero-carbon future. The
cement sector is at an early yet critical stage
in the transition to net zero. While progressis accelerating, the carbon intensity of global
cement production has only slightly
decreased in recent decades, and it issignificantly behind where it needs to be on a
Paris-aligned pathway.16
The 2015 United Nations Framework Convention
on Climate Change (UNFCCC) Paris Agreement
is a testament to the global determination tolimit increasing global temperatures to 1.5°C.
To achieve this limit, all sectors of the economy
must decarbonise rapidly, reducing emissions by
nearly half by 2030 and to net zero by 2050.
However, only a few economic activities
currently operate at or near zero emissions.
Most sectors require substantial financing,clear guidance, and a framework ofsupportive policies to transition to net zero.
Decarbonisation pathways are less obvious forhard-to-abate sectors such as cement, steel,and chemicals. Greater attention is now being
given to these hard-to-abate sectors, anddetailed decarbonisation plans and pathways
are available or are being published, showingthat feasible low/zero-emission solutions are
possible within a reasonable timeframe. The
European Union (EU) has led the way withthe ambitious Green Deal strategy and the Fit
for 55 Policy Package. The challenge is not
only in developing the technology but also inovercoming financial and political barriers. The
suite of EU policies and legislation supporting
the net-zero transition must be coherent,
mutually reinforcing, and rapid enough to meetclimate targets.

The decarbonisation pathways used in thispaper follow both the EU’s climate targets (2050
climate neutrality and 2030 55% emission
reduction target), Intergovernmental Panel on
Climate Change (IPCC) guidance and the 2021
International Energy Agency (IEA) Net Zero
Roadmap. The 2022 IPCC Working Group III report,
forewarned that without immediate and deep
emissions reductions across all sectors, limiting
global warming to 1.5°C is beyond reach.18
Investing in the transition of hard-to-abate
sectors presents a unique opportunity for the
EU to continue to lead on the climate agenda
by supporting the development of innovativetechnologies and scaling up renewable energy.
Failure to seize this opportunity and continue
business as usual will risk missing vital climate
targets and expose the EU to higher physicalclimate risks. It would also lock in billions ofeuros of stranded assets and a disorderly andchaotic transition, exposing the real and financial
economies to transition risks and possible
financial crises.
Climate Bonds Initiative (Climate Bonds)
has embarked on an ambitious transition
programme to provide the industrial
pathways, sustainable finance standards,
policies, and investment guidance required
to deliver credible transition in the hardto-abate sectors. The financial markets must
implement the results of this work to support
the decarbonisation of the cement sector. This
paper is part of a series focused on the policies
and regulations needed in the EU to facilitate
the flow of finance necessary for the transition;
see Climate Bonds’ “Accelerating the Fossil Gas
Transition to Net Zero” and “A Green Future for
Steel”.19 These policies are complemented by the
Climate Bonds sustainable finance criteria for the
cement sector published in 2022.20

This paper aims to support the EU in
defining the necessary policy frameworkfor financing the transition. While primarily
focused on the EU context, many of the policy
tools and recommendations apply globally.
This is particularly relevant as most European
cement producers operate on a global level.
European cement companies own about 60% of
the cement and lime production capacity in the
United States, and they have large manufacturing
facilities across the world.17

Concrete policies to underpin the cement transition Climate Bonds Initiative

This paper aims to address thefollowing critical questions:
How can the EU facilitate a green
future for cement through policy andsustainable finance frameworks?
How can the EU utilise its policy levers
to facilitate and catalyse a green future
for cement?
Section 3 summarises the size, emissions
contribution, sustainable financeinstruments, technologies, and challenges tothe transition of the European cement sector.
Section 4 examines how policymakers
can ensure the credibility of this transition,
drawing on existing EU policy and strategies
and recommending how these can help todeliver a credible transition.

Methodology
This policy paper aims to support the EU in defining
the necessary policy framework for financing thetransition to net zero in the cement sector. It isbased on an analysis of existing EU policies and aliterature review of cement transition policies. It
is supported by an assessment of the European
cement sector, including a summary of thetechnologies and solutions that can deliver deep
emission reduction.
EU policies relevant to the sectoral transition
were identified and analysed against the Climate
Bonds Credible Transition Principles and thedecarbonisation pathways set out by the IEA andother international organisations to assess theirsufficiency in facilitating the sector’s transition.21
Particular attention was paid to the Fit for 55
policy package, which aims to deliver rapid
decarbonisation in the next decade, including theEuropean Emissions Trading System and Carbon
Border Adjustment Mechanism. A literature
review informs the policy suggestions.
Several policy recommendations anddecarbonisation pathways for the cement sector
have been identified by public and private sector
stakeholders including IEA, EU institutions,International Monetary Fund (IMF), World Bank
(WB), United Nations Industrial Development
Organisation (UNIDO), CEMBUREAU, Global
Cement and Concrete Association, NewClimate
Institute, Agora Energiewende, and the work of
the EU Platform on Sustainable Finance.

43. The importance of the cement sector
The cement sector is a major contributor tocarbon dioxide (CO2) emissions. The steel
and cement industries are the largest global
industrial emitters, accounting for around 8% and
7% of global CO2 emissions respectively, and demand
for these products is expected to rise, see Figure 1.22
Concrete, a mixture of cement, water, and aggregates(both coarse and fine), is the second most-usedsubstance in the world after water, see Box 1. If global
cement manufacturing were a country, it would be
the third-largest emitter on the planet, only after China
and the United States of America.23 Cement also
releases the most emissions per dollar of revenue,around 6.9 kg of CO2/USD, much higher than ironand steel, oil and gas, and chemicals, respectively
1.4, 0.8 and 0.3 kg of CO2/USD, see Figure 2.24 The
cement industry is also responsible for around 4%of the EU’s total CO2 emissions.25
Cement is also integrated into the supply
chain of many industries, including
construction and infrastructure. The
decarbonisation of cement production processes
is critical to these sectors’ transition and achieving
their emission reduction targets. Cement is a key
material to reaching the EU climate neutrality
objective as it is a crucial component of
installations providing renewable energy, such as
wind turbines and hydroelectric dams.26

The EU cement
industry
The EU is the world’s third-largest cement
manufacturer. In 2020, the EU-27 accounted for 4%(171.5 Mt) of world cement production, after China andIndia at 57.2% and 7.0%, respectively, see Figure 3.27
In the EU, the sector directly employs
approximately 38,000 people, with millions more
employed in the construction industry.28

Box 1. Cement vs concrete

Figure 1. Industry sector share of global CO2 emissions, 2017
8%
6%
4%
2%
0%
Iron & steel

CementOil & gas

Chemicals

MiningOther
industy

Figure 2. Emissions per dollar of revenue in selected sectors (kg of CO2/USD)
6
4
Kg of CO2/USD

Global cement
emissions

20
CementIron & steel

Oil & gas

MiningChemicals

Figure 3. Share of global cement production in selected countries
and regions, 2020
60%

40%

20%

0%
China

India

EU-27

USA

Japan

Figure 4. Total cement production in China, India and the EU
in 2001, 2010 and 2019 (mt)Even though the terms “cement” and“concrete” are often used interchangeably,
they are two different materials. Cement isa fine powder substance key ingredient in
concrete production. Concrete is a mixtureof cement, water, and aggregates, that makeup between 60% and 75% of such a mixture.30
Concrete has been used for a long time;
historic examples include the Colosseum.31

3000

More than 25 different types of common typesof cement exist today and can be grouped
into five categories and three strength classes
which describe its reactivity.32

500

2500

China

2000

India

1500

EU

Mt

1000

0
2001

Concrete policies to underpin the cement transition Climate Bonds Initiative

2010

2019

5

Total cement production in the EU fell
substantially in the last two decades,from 225.6 Mt in 2001 to 182.1 Mt in 2019 (19%decrease), while global cement production
grew over this period, particularly in China andIndia. The global cement industry is driven by
constantly increasing demand, especially for theconstruction of housing and infrastructure. The
total cement production in China grew from 661
Mt in 2001 to 2300 Mt in 2019, while, over thesame years, India witnessed growth from 102.9
Mt to 320 Mt, see Figure 4.29

Given that over 80% of emissions are related to
the kiln and preheater/precalcinator as above,these processes are the focus of this paper.
Similarly, in the EU, about 90% of emissions arelinked to the current production process and canbroadly be separated into two categories:33• Non-combustion emissions (calcination
process): around 60% of the direct emissions in
the production process do not result from fuelcombustion, but from chemical reactions in theclinker calcination process – when limestone
is calcinated in the kiln.34 In other words, thesecannot be reduced by substituting fuels. This isvery different to other industrial processes where
the bulk of process emissions relate to fuel use.

Table 2. Main EU cementproducing countries71
Country

Cementproduction in2019 (Mt)

Share ofEU-27
production (%)

Germany

34.2

19.8%

Italy

19.2

11.1%

Poland

18.5

10.7%

France16.5

9.5%• Fuel combustion emissions: most of theremaining CO2 emissions (about 30%) areproduced by fuel combustion to make clinker,
which is the main constituent of cement andis produced in a kiln at around temperaturesof 1450°C. The high temperatures are achievedby burning fossil fuels (predominantly coal),biomass or alternative fossil and mixed wastes.

Transition pathways
for cement

Understanding
cement sector
emissions

While the transition of the cement sector
is, undoubtedly, a huge challenge, the goodnews is that there are technologies andsolutions available today which can kickstart
the transition while emerging ones can complete
the picture. There are costs associated with eachtechnology, but costs with continuing business as
usual will result in increased investment risk andstranded asset risk.

The cement making process consists of several
steps (see Annex for more information), as
detailed in Figure 5. For the purposes of reducing
emissions, the most important steps are in the
red box below.

Several studies and pathways for cement
decarbonisation have been modelled based on
expert knowledge of the production process
as described above. Each of these pathways isbased on different scenarios and assumptionsand varies depending on the regional focus. The
pathways differ but provide a useful indicationof the potential to reduce GHG emissions
and the role of low-carbon technologies. Thissection analyses the pathways to transitioning
the European cement sector by 2050. Particularattention is paid to the studies carried out by IEA,
EU, Agora Energiewende, NewClimate Institute,
Material Economics, Global Cement and Concrete
Association (GCCA) and the European Cement
Association (CEMBUREAU).
As mentioned above, approximately 60%of the total CO2 emissions of the cement
making process come from chemical
reactions, while most of the remaining CO2 is
produced by fuel combustion. Key levers for
decarbonisation can therefore be divided into
these two groups. Moreover, reducing the use of
cement through material substitution represents
another lever to help achieve the sector’s netzero transition. Indeed, in some applications,cross-laminated timber (CLT) can substitutecement, steel and other carbon-intensive
materials traditionally used in construction.
Barriers such as the lack of standardisation need
to be addressed. CLT currently has a low market
share of less than 0.1% of homes in this sector,
and there is the potential for this to increase to
20-60%.35 The global CLT market could reacha compounded annual growth rate of 13.2%
between 2021-2026, reaching a global market sizeof USD2.7bn, and USD1.5bn in the EU.36

Figure 5. Cement making process
Raw materials energy, and resources

Clinker and cement manufacturing

QuarryCrusher

Transport Raw mill

Energy,mega-joule/ton

40

5

40

100

CO2 emissions,kilogram/ton

3

1

7

17

CoolerCement mill

Logistics

Total

3150

160

285

115

3895

479
319
Calcination
Fossil fuelprocess combustion

28

49

22

925

Kiln and preheater/
precalcinator

Source: https://www.mckinsey.com/industries/chemicals/our-insights/laying-the-foundation-for-zero-carbon-cement#cement

Concrete policies to underpin the cement transition Climate Bonds Initiative6

Non-combustion levers
Improving clinker-to-cement ratio
As noted, making clinker accounts for over 80%
of cement production emissions. Reducing theamount of clinker that goes into cement even bya few percent can have a big impact.
In 2017, Europe’s clinker-to-cement ratio was
77%. This indicates that alternative materials,
such as granulated slag from blast furnaces andfly ash from coal-fired power plants, replacedaround 20% of the clinker on average. The
cement industry is aware that the phase-out offossil fuels would limit the availability of fly ash(now 10% of total replacements) and reduce slag
usage (now 33% of total substitutes). However,other materials, such as natural pozzolans,
limestone, and burned oil shale, already accountfor 21% of total substitutions, and non-traditional
alternatives like calcined clay and silica are being
evaluated. More studies are being conducted to
examine these alternatives and how they may beutilised in the future.37 CEMBUREAU is targeting
to move from an average of 77% to 74% clinker
in cement by 2030 and to move to 65% by 2050.38
The NewClimate Institute envisages an averageclinker-to-cement ratio of 60% in the EU cement
sector by 2050.39

Implementing carbon capture & storage
technologies (CCS)CCS is the process of capturing, transporting,and storing CO2 to prevent its release into theatmosphere, see Box 2. CCS will play a role
in reducing CO2 emissions from the cement
industry, notably the around 60% of emissions
associated with limestone calcination forwhich there is no other foreseeable mitigation
technology in conventional production
processes.
This means that compared to other hard-toabate sectors such as steel, cement production is
likely to rely on CCS to a greater extent becauseof difficulties in avoiding process emissions – see
Climate Bonds Initiative’s policy paper, “A Green
Future for Steel”, for comparison.40
The IEA estimates that CCS in the cement
industry will need to significantly increase by
the end of this decade, for the world to be on
track to achieve the net-zero transition by 2050.41
CEMBUREAU estimates that, by 2050, the useof carbon capture technologies will reduce
European cement CO2 emissions by 42%.42
While commercial CCS technologies applicationsin the cement industry are mostly in the earlystages of development, they are expected to cometo a commercial scale in the coming years.43
Europe has taken the lead in carbon capture
investment in the cement sector. A total of 56%
of planned global cement capacity with carbon
capture is in Europe. In particular, European
companies, LafargeHolcim and Heidelberg

Box 2. CCS and CCUS technologies
Once captured, carbon storage can be stored
in closed systems (geological storage under
the ground) or re-used in other applications.72
For this document, CCS refers specifically toclosed systems since these have the largest
storage life spans.73
The use of captured carbon (CCU) remains
a controversial area. This is mainly because
if the CO2 is used to create, for example, afuel, it will be immediately released into
the atmosphere when the fuel is burned.
Additional restrictions are included in Climate
Bonds criteria around CCU, particularly forthe end product, which is only consideredas transitional when the CO2 is used forthe manufacture of durable products (e.g.,

Cement are responsible for 73% of global carbon
capture projects in the sector.44 EU-specificpolicy recommendations on carbon capture are
addressed in the policy section, see 5.3.
A diverse variety of carbon capture methods, withvarying degrees of technological readiness, arebeing evaluated internationally to lower costs.
These include:• LEILAC (Low Emissions Intensity Lime And
Cement) started in 2016 to pilot a breakthroughtechnology to cut emissions while maintaining
competitiveness.45 It successfully piloted
direct separation at the HeidelbergCement
plant, which captures non-combustion CO2emissions. The second phase (LEILAC2) started
in 2020, with funding from Horizon 2020 and theindustry. It is aimed at becoming operationalby 2023 and implementing large-scaledemonstrations by 2025. This facility also plans
to demonstrate the use of less carbon-intensive
heat sources for calcination, such as electricity.
• The CLEANKER project is aimed at designing,
constructing, and operating a demonstration
system that will capture the CO2 from a portionof the flue gas of a cement plant in Italy
operated by Buzzi Unicem.46• Norcem, the leading Norwegian supplierof cement is conducting research into
carbon capture applications for cement
manufacturing. Its project at the plant in
Brewik is currently on track and aims tobecome operational by 2024.47

Maximising the use of alternative binders
Alternative binders could reduce emissions
from cement manufacture, particularly fromprocess emissions and sometimes thermalenergy requirements.48 They are currently invarious phases of development and rely on raw
materials or mixtures that differ from those used
to make concrete.49

Concrete policies to underpin the cement transition Climate Bonds Initiative

construction materials stored in buildings
or recyclable products, e.g., PET) and notfor enhanced oil recovery (EOR) and the
production of other forms of fossil energy
sources. This is particularly relevant, as morethan 70% of the CO2 captured today is used to
extract more oil through EOR.74
Climate Bonds Initiative’s sector criteria
are technology-agnostic, so long as
the technology can deliver the promisedemissions reductions. Criteria also tend not
to include in scope early-stage technology
or Research and Development initiatives. As
such, the transport and storage of CO2 must be
demonstrated for it to be certified.

There are several types of these alternatives withthe potential to save CO2 by lowering the quantityof limestone in the formulation and requiring lessenergy.50 However, because types of cement havevaried different characteristics, they can only beutilised for specific applications.51 CEMBUREAU hastargeted a 2% reduction in process CO2 emissions by
2030 and 5% by 2050. According to the association,these represent conservative estimates, as they
consider potential limits in the application of someof these cement alternatives and the time needed
for market acceptance and the development ofstandards and sector-specific criteria.52
Several alternative binding materials arecommercially available, although their usage
has been confined to niche applications.
Recent research by Solidia Technologies
on an alternative binding material with thepotential for very low emissions – carbonationof calcium silicates – resulted in the launch ofa first commercial venture in 2019.53 Continued
innovation might lead to the development andadvancement of new opportunities for using
various alternative binding materials.54

Fuel combustion levers
Maximising energy efficiency
Clinker manufacturing is an energy-intensive
process requiring raw materials to be heated to1450°C and accounting for 35-40% of the cement
industry’s CO2 emissions.55
European cement kilns are already efficient,
as around 90% of European plants already
rely on efficient dry thermal processes.56
Therefore, the thermal efficiency of only
certain European kilns can still be improved byconverting preheater and other kiln types topre-calciner kilns and by recovering heat from thecooler to provide up to 20% of the cement plant’s
electricity demand.57 CEMBUREAU is targeting a
4% improvement in thermal efficiency by 2030.58

7

In 2017, electrical energy accounted for 13%
of overall energy consumption and 6% of total
CO2 emissions from cement manufacturing.
Changes to the preheater design on the kilns
and enhanced grinding can increase electricalefficiency. Even though today’s electricalenergy consumption levels are relatively low,
they are expected to quadruple by 2050 after
implementing carbon capture technologies.59

Substituting fossil fuels withalternative fuels
Fuel emissions account for 35-40% of total
CO2 emissions from cement production.
Reducing emissions from fuel use requires theuse of alternative fuels. European and global
cement use two main alternative fuels: waste andbiomass.
In 2017, alternative fuels accounted for 46% of
overall kiln fuel demands in Europe, of whichbiomass accounted for 16%.
If the resources are locally accessible, the cement
industry states that there are no technologicalbarriers to increasing the usage of alternative
fuels to more than 90%. Several plants havereached that level due to favourable policies (e.g.,
policies discouraging landfill disposal), as well as
public and investment support. Examples include
Schwenk Cement’s Allmendingen, in Germany,and LafargeHolcim’s Retznei, in Austria, both ofwhich utilise up to 100% alternative fuels and
12% alternative raw materials.60
Co-processing plays an important role inwaste management in local communities andmunicipalities, particularly for those materials thatare not recyclable, using waste as a fuel provides animportant disposal technique and simultaneously
reduces emissions from landfill methane.
CEMBUREAU targets to reach 60% alternative
fuels containing 30% biomass in 2030 and 90%
alternative fuels with 50% biomass by 2050.61
The NewClimate Institute envisages an average
substitution rate of 70% by 2040, with 50%
biomass and 20% waste.62
While incinerating various waste streams
for energy poses high GHG emissions andenvironmental impacts, it is a potential
way for cement production to decarbonise its
fuel-related emissions, provided that specificadditional requirements are met. Considering thewaste hierarchy, the waste management sector
must move towards better reuse and recycling
schemes, waste prevention and – across the
economy – better product design. However,
the reality is that large quantities of waste arestill produced globally. Burning this waste inwaste incineration plants carries risks. However,burning this waste in cement plants has distinct
characteristics which can minimise or evencompletely remove the pollution and humanhealth risks carried by burning Municipal Solid
Waste (MSW) in incineration facilities.63

This is especially relevant when considering theneed to halve emissions by 2030 to reach theParis Agreement goals and the fact that only a
few alternatives exist today for fuel switching.
Climate Bonds acknowledges that burning
alternative fuels and raw materials does notamount to zero emissions. Climate Bonds
requires that all emissions released from wasteburning are included in meeting the thresholds
within the Low Carbon Cement Criteria.
Waste-derived fuels can be considered in linewith Climate Bonds Criteria only when all wasteof recycling potential has been removed before
burning in line with the waste hierarchy, following
the Climate Bonds Waste Management Criteria.64
Moreover, MSW must remain a transition fuel andis considered as such only until 2035.65 Finally,
continuous monitoring of non-GHG pollutants
must be demonstrated to align with Climate
Bonds Criteria by industry best-practice guidance
and publicly disclosed.

Adopting electrification and solar
thermal energy
Electrification is a key part of thedecarbonisation of all parts of industry.
Electrification of industrial processes can minimise
fuel demand and lower CO2 scope 1 emissions(and scope 2 if using low-carbon electricity).
While the opportunity is great, the challenge
is a big one – it is exceedingly challenging toreach the high kiln temperatures needed using
electricity instead of fossil fuels. Electrificationis therefore not on the immediate investment
horizon, but further research will be needed todetermine how an electric cement manufacturing
process may operate.66
The CemZero project, which aims to electrify
cement production in Sweden, completed afeasibility study in 2019 that demonstrated
electrified cement production is technicallyfeasible and probably cost-competitive withalternative ways to significantly reduce emissions.
Studies on constructing a pilot plant are ongoingfor the activity.67 Other projects are also being
developed, including innovation towards
developing fully solar-driven cement plants.68

Using green hydrogen as analternative fuelIn a decarbonised future, hydrogen is one of thecandidate gases that could be utilised to replaceor partially replace coal and fossil gas. There
are several varieties of hydrogen, such as blue,
pink, grey, and green, that have been classified
based on the environmental credentials of thevarious manufacturing methods, Climate Bonds’“Accelerating the Fossil Gas Transition to Net
Zero” expands on this.69 In particular, greenhydrogen has the potential to be utilised as a
combustion fuel in a cement kiln without theCO2 emissions associated with conventional
fuels and biomass.

Concrete policies to underpin the cement transition Climate Bonds Initiative

The availability of green hydrogen at the volumes
required by the cement industry will depend on
the availability of sufficient amounts of renewableenergy (to produce green hydrogen), specialised
transport and storage infrastructure, as well as therequired changes to cement assets. Hydrogen has
not been tested in the cement-making process.
The usage of hydrogen may have an impact on
the physical components of the kiln system, suchas fuel mass fluxes, temperature profiles, heattransfer, and plant safety. Feasibility studies arebeing conducted to determine the viability ofusing hydrogen in a cement kiln system.70

The urgency ofinvesting in lowcarbon cement
The transition of the cement sector is criticalto meeting the EU pledge to reach climate
neutrality by mid-century. This will require hugeinvestment to develop and roll out low-carbon
cement-making technologies for an overall
transformation of the global cement sector.
To understand the policy levers available, it iscritical to understand a few important aspects of
cement and investment. The cement industry iscapital intensive, with the cost of establishing acement production plant equalling around three
years’ turnover.75 Kilns are a significant long-term
investment for cement companies. It is difficult for
manufacturers to adjust to changes in demand or
to comply with new energy- or emission-related
legislation. The cement manufacturing process isalso very energy intensive.76
Lifetimes of cement assets reach up to 60
years meaning that both the reinvestment andlocation choices that cement companies will makeduring the coming years will create long-lasting
path dependencies. Considering the 2050 EU
climate neutrality target, this means that all major
investments must be focused on technologies
that can operate in a net-zero scenario to avoid
stranded assets, the premature shutdown ofexisting plants, and high economic losses.77
The capital spending needed to transition the
global cement industry could reach USD70bn
annually between 2030 and 2040 – doubling fromcurrent levels. These estimates include the costs
to build new low-carbon production capacity
and renovate existing plants with innovativetechnologies, such as CCUS.78 The global cement
industry will need to invest USD16bn annuallyon top of business-as-usual investments totransition to net zero.79 However, on average, theinvestments needed for the EU cement sector
to reach 2030 targets represent around 20% of
annual maintenance CAPEX.80 Policymakers must,
therefore, guide industry and investors onto a
climate-aligned pathway for cement and support
informed investment decisions consistent with a
net-zero cement investment approach.
8

The good news is that 30% of EU cementkilns are estimated to reach their end of lifeand need reinvestment by 2030.82 This meansthat the next few years are a critical point for
the industry – as a third of the industry receives
significant investment, it is critical that this isgreen – and retrofitting is as green as possible tolock in substantial emissions reduction into thelonger term.

Sustainable FinanceMarkets are a criticalfinancing tool
Sustainable finance instruments facilitate
investment in Paris-aligned projects andhave shown significant growth. Climate
Bonds databases captured USD863.4bn ofgreen, social and sustainability (GSS) bonds,
sustainability linked bonds (SLBs), and transition
bonds in 2022.83
Global transition finance, including bonds andloans, could contribute up to USD1tn annually, or
30% of the estimated USD3tn per year required
to meet net-zero emissions over the next 30
years.84 Transition finance instruments broaden
the sustainable finance market, enabling
participation by high-emitting sectors such as
cement. These could outgrow the green bondmarket by the mid-2020s.85
Given their forward-looking key performanceindicators (KPIs), SLBs are inherently transition
focused. SLBs represent an opportunity forentities to link their net-zero targets with accessto sustainable finance. However, many earlyexamples of SLBs and transition bonds haveraised concerns about greenwashing in themarket because the targets were not material or
ambitious, and in some cases had been achievedor almost achieved before the instrument had
been priced.86 There are other concerns about therelevance and reliability of targets which are set
by the issuing entity and are therefore difficult toTable 3. Examples of SLB issuers in the cement sector
IssuerCountry

KPI Goal

KPI
Deadline

Global estimated carbon
intensity target on a
Paris-aligned pathway91

GCC SAB de CV

Mexico576 kg CO2/ton
cem. material

12/31/2030

360–370 kg CO2/ ton of
cement by 2030

Holcim US
Finance Sarl &Cie SCS

Luxembourg

475 kg CO2/ton
cem. material

12/31/2030

360–370 kg CO2/ ton of
cement by 2030

UltraTech
Cement Ltd

India

557kg CO2/ton
cem. material

3/31/2030

360–370 kg CO2/ ton of
cement by 2030

Votoratim
cimentos

Brazil548kg CO2/ton
cem. material

12/31/2025

360–370 kg CO2/ ton of
cement by 2030

Holcim Helvetia
Finance AG

Switzerland

520 kg CO2/ton
cem. material

12/31/2025

360–370 kg CO2/ ton of
cement by 2030

benchmark against peers or wider goals such as
the Paris Agreement targets. While the market has
seen impressive growth, it has often been difficult
to assess the impact and ambition of each bond.
Despite the growth of financial instruments like
SLBs, their potential has not been fully exploitedin hard-to-abate sectors. Around USD3.7bn
sustainability-linked bonds have been issued in
the cement sector in 2020-2023 (as of February),see Figure 6. The cement sector represented
less than 2% of SLBs issued so far.87 The top 10
cement producers, responsible for 40% of global
production, do raise funding on the global bondmarkets.88 There is, therefore, potential for thegrowth of sustainable finance instruments fromthe sector.
Such potential is not being exploited, in part,due to the lack of standards and particularly
sector-specific criteria. Standards are now
emerging, including the criteria developed by
Climate Bonds (for the role of standards andtaxonomies, see section 5.2) to allow investors toverify the Paris alignment of SLBs more easily.

The Investor Decarbonisation Initiative has urged
cement businesses to establish science-based
objectives, while the Institutional Investors Groupon Climate Change (IIGCC) outlined investor
expectations for net-zero emission targets in the
cement industry in 2019. The World Economic
Forum First Movers Coalition was announced at
COP26. Its members are committed to investing
in innovative clean technologies contributing
to reaching the Paris Agreement’s goals andharnessing the purchasing power of companies
to decarbonise hard-to-abate sectors.89 Cement
and concrete sectors were included in the First
Movers Coalition at COP27. Members of thisinitiative commit to at least 10% of their annual
cement and concrete procurement meeting or
exceeding the First Movers Coalition definition fornear-zero emissions by 2030.90

Figure 6. SLBs issuances by selected sectors 2020-23
16000
2023 (as of Feb)
12000

2022
2021

8000

2020

4000

USD

Substantial retrofits before the assets
reach the end of their life are not always
technologically or economically feasible
meaning that it is critical that those assets
reaching their end of life are the highest priority
for low carbon. However, as noted above, theinvestments needed by 2030 to align with a
Paris-aligned transition pathway are estimated tobe relatively low. At the individual plant level, theadditional investment needs are not large. For
example, an estimated EUR246m of additional
investment is required to build a 3 Mt-capacity
cement plant with carbon capture in Germany.
This would meet around 10% of the country’s
annual average production.81 At the system level,
there are challenges in rapidly scaling up theseinvestments across a huge number of locations.
The need to achieve deep emissions reductions
by 2030 means that scale and speed are critical.

0
CementConcrete policies to underpin the cement transition Climate Bonds Initiative

Chemicals

Oil & gas

Steel

9

4. Policy levers for the European cement sector
In December 2019, the EU Commission
presented the European Green Deal,a roadmap for making the EU’s economy
sustainable and the first climate-neutral
continent by 2050. The EU Green Deal aims totransition the region to a clean economy while
fighting climate change and social inequalities,
and it includes a description of investment needs
and financing tools.92
The European Climate Law, a central elementof the EU Green Deal, sets a binding targetof achieving climate neutrality by 2050. Thisrequires current GHG emissions to drop
substantially in the next decades. As anintermediate step towards climate neutrality, theEU has raised its 2030 climate ambition to cut
emissions by at least 55% by 2030.93 The policy
proposals to achieve these goals are known
as the Fit for 55 package.
To support the Fit for 55 package and economic
recovery from COVID-19, the EU has earmarked
EUR1.8tn in the 2021-2027 budget, including the
Next Generation EU (NGEU) recovery package.
The Recovery and Resiliency Facility (RRF),
the most important part of the NGEU, makes
EUR672.5bn of loans and grants available to
EU Member States. At least 37% and 20% ofinvestments must be allocated to the green
and digital transitions, respectively.94 The RRF
represents a unique opportunity for the EU
to rapidly advance its transition to a climateneutral economy in line with the objectivesof the Paris Agreement. European industry,including hard-to-abate sectors, can takeadvantage of this opportunity to finance thedecarbonisation of their production processes
through innovative technologies.
The decarbonisation of hard-to-abate
industries will need significant policy
support. The cement sector’s transition to
net zero needs to start in this decade. Several
economic, technical, regulatory, and social
barriers to achieving net zero in the cement
industry can be identified, see right.95
Strong policy instruments and supply chain
coordination are needed to support the cement
industry’s transition to net zero and overcome
these barriers. The EU can support the transitionof hard-to-abate sectors such as cement, througha strong and tailored policy framework. These
policies apply to different parts of the cement
industry value chain: upstream (low-carbon
energy and CO2 infrastructure), midstream (lowcarbon production processes), and downstream(increasing demand for low-carbon cement andenhancing its circularity).

Economicbarriers

Higher production costs and lack of sufficient incentives for low-carbon
cement production (e.g., lack of effective carbon pricing)
Lack of/uncertain demand for low-carbon cement and uncertain/
no price differentials
Limited size of markets for low-carbon technologies needed for the sector’stransition (e.g., CCS)

Regulatory
barriers

Lack of harmonised standards and sector-specific criteria
to guide green investment
Insufficient policies supporting innovation in breakthrough technologies
Uncertainties about changing regulations

Technical
barriers

Limited investment in innovative technologies compared to other sectors
Innovative technologies at early stages of development
Lack of CO2 transport and storage infrastructure

Socialbarriers

Lack of awareness of cement’s climate impact
Lack of societal acceptance for alternative materials substituting cement

Policy recommendations
UPSTREAMDOWNSTREAM

1. Accelerate renewable energy and related
infrastructure deployment. Renewable energy
will play a significant role in decarbonising thecement sector.

1. Implement GPP as a matter of urgency
and establish a timeline for mandatory criteriaaligned with the EU Green Deal.

2. Policymakers can ensure the strategic
application of CCS and establish robust
standards, preventing overreliance on thesetechnologies and prioritising sectors such as
the cement industry.

MIDSTREAM
1. Establish a Europe-wide market for
CCfDs to facilitate private sector developmentof breakthrough technologies, especiallyduring the incubator phase.
2. Mandate credible transition plans at theentity level, requiring granular and credible
plans to achieve Paris alignment.
3. Phase out ETS free allowances for
CBAM-covered sectors by 2030 at the latest,
more rapidly than planned. The CBAM will help
to mitigate carbon leakage concerns, removing
the need for free allowances.

Concrete policies to underpin the cement transition Climate Bonds Initiative

2. Improve waste management
and circular economy requirements.
Reliance on fossil fuels can be reduced in
the next years (up to 2035) by replacing themwith alternative fuels and waste, provided
additional requirements on carbon intensity
and other pollutants are met.
3. Scale up off-take agreements,
lowering the risk of investing in low-carbon
cement production processes. Publicauthorities can green their procurement
through off-take agreements.
4. Establish a green trade window– “zero tariffs on zero-carbon” products.
Green cement could be a candidate forsuch a green window, compensating for
CBAM’s trade curtailments.

10

Upstream policies
Accelerate
renewable energy
deployment
Abundant low-carbon
energy, especiallyrenewable electricity, will play an importantrole in the cement sector transition. CCS
technologies are energy intensive and will need
to use low-carbon electricity (100g CO2e/kWhdeclining lifecycle emissions threshold in the EU
Taxonomy), see section 4.4.
Energy costs have a significant impact on
hard-to-abate sectors. In particular, the cement
industry is one with the highest share of energy
costs in production costs – more than 12% in2017 – double that of the steel industry.96 As all
economic sectors will need to transition to a lowcarbon economy, the cement industry will not bealone in needing greater access to abundant andaffordable decarbonised energy. Accelerated
deployment of renewable energy sources, aswell as related infrastructure, is needed to meetsignificant growth in demand.
One of the biggest challenges facing the energy
transition is related to the fact that, in manycases, industrial energy demand is not locatedwhere renewable energy sources can be
deployed at scale. This will put pressure on thegrid infrastructure and must be addressed withlong-range electricity transmission solutions.
The regulatory framework needs to ensure thatthe cement industry has access to abundant andaffordable low-carbon energy.
The EU Renewable Energy Directive (RED) was
adopted in 2009 to deliver a minimum 20% shareof renewable energy sources in EU final energy
consumption by 2020. RED II was adopted in 2018
to deliver the EU objective of a minimum 32%
share of renewables in final energy consumption
by 2030. Meeting the more ambitious climate
targets included in the EU Green Deal andEuropean Climate Law requires significant
modifications to EU energy policy. Therefore, arevised RED II has been proposed, strengthening
RE targets to 40% by 2030.97
The revised RED II sets a new benchmark
of a 1.1% annual increase in renewables
use in industry, although this is not a binding
target.98 It also includes measures to simplify
administrative procedures and reducebottlenecks, for example by accelerating thepermitting process. The proposal seeks to enable
EU energy systems to become more flexible,
making it easier to integrate renewables into thegrid as efficiently as possible. The proposal also
supports the uptake of renewable hydrogen,where electrification is more difficult.

In September 2022, the European Parliament
adopted some amendments to theCommission’s proposal, including a binding
45% renewables target by 2030 and anincreased indicative target for renewables use in
the industrial sector to 1.9%.99
As the cement industry is highly energyintensive, the revised RED II will impact cementcompanies, particularly regarding electricity
and hydrogen use. Current investments will
determine the structure of the EU infrastructure
for the coming decades. Directing theseinvestments towards the infrastructurenecessary for the clean energy economy is an
important element of transition policymaking.
In November 2022, the European
Commission released a new temporary
emergency regulation to accelerate
the deployment of renewable energy
sources. This regulation is set to apply forone year and aims to cover the time needed
for the RED II revision’s entry into force. It
includes specific measures, such as immediate
simplification and accelerated permitting for
certain solar installations and the repowering of
renewable energy power plants. The regulation
also grants renewable power plants the statusof overriding public interest to eliminate
bottlenecks in new permitting procedures.100
The Green Deal Industrial Plan (GDIP) waspresented by the European Commission
on 1 February 2023.101 It aims to increase thecompetitiveness of the EU net zero-aligned
industry and accelerate its transition. Under
the plan, the EU Commission aims to simplify
support for renewable energy deployment byaccelerating permitting procedures, extending
deadlines to complete projects, and modernising
grid infrastructures.

Ensure strategic and
1.5°C-aligned CCS application
Carbon capture & storage technologies,
as noted, will play an important role in
reducing CO2 emissions from the cement
industry, notably those emitted during limestone
calcination. Importantly, carbon capture in cement
is not a way to prolong fossil fuel combustion thatcan be replaced. On the contrary, it should befocused on addressing the 60% of emissions thatcannot otherwise be abated.
In 2020, the European Commission adopted
a proposal revising the 2013 regulation
on Trans-European Networks for Energy(TEN-E) which specifically encompasses
CO2 transport and storage. The TEN-E
Regulation focuses on developing cross-borderinfrastructure in the continent to deliver EU
energy policy objectives, including the security ofsupply, energy efficiency and sustainable growth.
A significant part of the TEN-E Regulation is the
Projects of Common Interest (PCIs). The PCI list

Concrete policies to underpin the cement transition Climate Bonds Initiative

is updated every two years, and those projects
can receive EU financial support under theConnecting Europe Facility (CEF).102 In November
2021, the EU Commission published the 5th PCIs
list, including six CO2 network projects.103 Projects
included on the PCIs list benefit from someadvantages, including:• streamlined permit granting procedures;• improved, faster, and better streamlined
environmental assessment;• a single national competent authority
coordinating all permit granting;• a procedure allowing for the allocation of
investment costs;• eligibility for financial assistance under
the CEF.104
The new TEN-E Regulation entered into force inJune 2022 and eliminates support for new fossil
gas and oil projects, mandates sustainability
requirements for all PCI projects and aims toshorten the permit-granting procedure.105
The low-carbon cement industry will likely rely on
CO2 networks, and the revised TEN-E Regulation
will impact cement companies’ business.
Investment in these networks will determine
infrastructure availability for the coming decades.
Supportive policies, such as the accelerated
permitting of PCIs, can favour priority sectors
such as the cement industry, to ensure CCS
tackles emissions that cannot be prevented.
Policymakers can ensure the strategic
application of CCS and favour priority
sectors to ensure it is reserved for sectors
with limited decarbonisation options and foremissions that cannot be prevented. This is vitalto prevent overreliance on these technologies,
as CCS cannot remove all emissions and has alimited impact on Scope 2 & 3 emissions, which
account for a significant proportion of carbon
emissions from other sectors.
Policymakers can also establish robust
standards for CO2 infrastructure. They are
key to ensuring high emissions capture efficiency
rates, storage longevity, preventing CO2 leakage
at all stages of the process, and ensuring the
CCS process uses low-carbon energy. CCS
technologies will need to use low-carbon
electricity (100g CO2e/kWh declining lifecycle
emissions threshold in the EU Taxonomy) andmeet technical criteria on the transport of CO2
and underground permanent geological storageof CO2 in the EU Taxonomy to qualify as green.106

11Midstream policies

Figure 7. Carbon contracts for difference

Establish carbon
contracts
for difference

A contract for difference (CfD) is an agreement
between two parties whereby one agrees to pay
the other the difference between the value ofa commodity (its market price) and a specificvalue agreed upon by the two parties (thestrike price), see Figure 7.110 Hence when theagreed price is higher than the market price,
the first party is obliged to pay the difference
to the other one. In the case of a two-way CfD,
the second party would be required to pay
the difference in the reverse situation where
the strike price was lower than the market
price. Such contracts provide long-term pricestability to support the large-scale developmentof nascent technologies, especially moresustainable production processes. However,
CfDs can be extremely expensive for publicauthorities as a subsidy-type instrument.111
A CCfD represents a subsidy agreement
between a regulator and a company to financea decarbonisation project. The amount ofsuch subsidy depends on the difference
between the carbon price in a specific context(in the case of the EU, the average ETS price)and the strike price. The price agreed upon
between a regulator and a company equals
the carbon price necessary for the project
to be economically profitable. In this way, astable carbon price reduces investment risk inbreakthrough technologies needed to transition
European hard-to-abate sectors, such as the
cement sector.112

Carbon price

Agent
pays

Strike price
Govt. pays

EUR/tCO2

Carbon contracts fordifference (CCfDs) can
facilitate the private sector
development of breakthrough technologies,
especially during the incubator phase.107
As a result of the EU-ETS review agreed uponin December 2022, CCfDs will be implemented
at the EU level through the Innovation Fund toprovide support to decarbonisation projects
and provide certainty to investors.108 Such aprovision is in line with REPowerEU, a plan
presented in May 2022 by the EU Commission
to rapidly reduce dependence on Russian fossil
fuels and fast forward the green transition.109
As part of the plan, the EU Commission
announced that it aims to encourage hydrogen
adoption and electrification in industrial
sectors by implementing carbon contracts fordifference and dedicated REPowerEU windows
to support a full transition of existing hydrogenproduction in industrial processes from fossil
gas to renewables, as well as the transition tohydrogen-based production processes in new
industrial processes.

Time
Source: https://climatestrategies.org/wp-content/uploads/2021/03/Carbon-Contracts_CFMP-Policy-Brief-2020.pdf

CCfDs are awarded to emissions reduction
efforts. However, CCfDs should avoid
incentivising incremental change and, even if a
supported project can reduce cement production
emission intensity, it needs to be on a Parisaligned pathway. Technologies allowing for deep
emission reduction should be favoured to avoid
carbon lock-in.113
Similar schemes have been implemented
in some EU Member States. Germany plans
to implement pilot CCfDs to promote greenhydrogen in the steel and chemical sectors.114 In
2022, the German government published a callfor expression of interest in CCfDs, to support
innovative technologies contributing to thedecarbonisation of the hard-to-abate sectors,
including cement.115 Elements of the Dutch
Stimulation of Sustainable Energy Production
and Climate Transition (SDE++) could beincorporated into CCfDs, as the two sharecommonalities. The SDE++ is the newest versionof the SDE+, which has been in place since2013 to support renewable energy generation
projects (in 2021, a budget of EUR5bn wasavailable).116 The scope of the SDE+ was
extended in 2020 and the new SDE++ includes
other technologies – renewable heat, renewablegas, green hydrogen production and CCUS. Sucha scheme provides organisations with a subsidy
equal to the difference between the cost of thetechnology and the market price of the products
delivered. Projects compete in auctions to be
granted an SDE++ subsidy, which is awarded for
12-15 years.117
CEMBUREAU has outlined how investments in lowcarbon technologies will require innovative formsof funding, such as CCfDs, especially considering
the sector’s long-term investment cycles.118

Concrete policies to underpin the cement transition Climate Bonds Initiative

Mandate credible transition
plans at the entity-level
Several EU regulations are emerging
with provisions including a transition plan
outlining the strategy and plan that an entity
will pursue to achieve Paris alignment.
Transition plans are an increasingly important
tool in plotting out and strengthening thedecarbonisation efforts of corporates across all
sectors. Mandating the existence of transition
plans is one step towards making transition
plans a facilitator of a credible and ambitioustransition at the economic level.
However, the mere existence of a transition
plan will not achieve anything unless that planis robust and is being implemented.
Understanding the rigour and ambition oftransition plans is an emerging field. Climate
Bonds recommends that policymakers actively
consider how they can strengthen transition
plans’ quality if mandated.
To provide a structure and rigour aroundwhich transition plans can be analysed,
Climate Bonds published Transition Financefor Transforming Companies which sets out
Five Hallmarks that companies must adhere towhen setting out an entity-wide transition planfor investors.119 These embody the credibility,
clarity, and transparency necessary to createan active market, see Figure 8. This groundbreaking guidance is also the first step in thecertification of the whole entity transition which
will enable investors to preference investments
based on the quality of the entity-leveltransition strategy and execution plan.

12Figure 8. Five Hallmarks of a Credibly
Transitioning Company

55 package which will prevent overreliance on
pricing to enable the transition.

1. Paris-aligned targets

2. Robust Plans

5. External reporting• Select sector-specifictransition pathway alignedwith Paris Agreement goals• Set the strategy and plan todeliver on those KPIs

a. External reporting andindependent verificationon the KPIs and strategy todeliver(per Hallmarks 1 and 2)

The EU Emissions Trading System is theworld’s first and biggest internationalemission trading system. It represents one of themain EU policies to address climate change andthe cost-effective reduction of GHG emissions. The
ETS works on the cap-and-trade principle; within
this cap, companies buy or receive allowancesthat they can trade with each other.120 It currently
covers energy-intensive industries, fossil fuelpower generation and commercial aviation.121• Company-specific KPIs thatalign as early as possible
with that pathway• Science based, address
scope 1, 2 & 3 emissions
and address short, medium
and long term

3. Implementation action• Capital expenditure,operating expenditure• Prepare associatedfinancing plan detailed costestimates and expectedsources of funding

The ETS is designed to limit emissions, letting
the market set a price and enable the most costefficient methods of cutting carbon emissions.
However, this creates price uncertainty, particularly
given changes in reductions of allowances.122• Put in place necessary
governance frameworks toenact changeb. Annual reporting of
independently verified
progress in terms of action
taken and performanceagainst targets(per Hallmarks 3 and 4)

4. Internal reporting• Track performance• Re-evaluate and recalibrate
KPIs as needed• Other actions detailed in
the strategy

Strengthen carbon pricing todrive action
Carbon pricing is implemented to fix market
distortions and capture the external costs ofcarbon emissions by charging emitters, eitherwith a tax on emissions or a cap-and-tradesystem whereby sectors are allocated emissions
allowances. Part of carbon pricing’s value is its
technology neutrality, enabling the market tofind the most cost-effective solutions to carbonintensive activities.
Carbon pricing can improve the businesscase for green technologies and incentivise

efficiency gains by placing an economic value
on emissions. To do so, prices need to be highenough to have a material impact and not be
weakened by free emissions allowances.
However, while carbon pricing can improvethe economic case for green investments,
other policies are required to overcome inertia,
uncertainty, and demand issues. Carbon pricing
must be introduced alongside other measures
to ensure speed of transition, as markets are notsolely driven by price. Carbon pricing should
be seen as a supportive mechanism for otherregulations and subsidies, as seen in the Fit for

The EU carbon price, established via the ETS,
doubled in 2021 to EUR79.38 on 20 December andreached the EUR100/t CO2 milestone in February
2023.123 The ETS covers the CO2 emitted during
cement clinker production which surpassed 160
Mt in 2007 and has then been stable at under 120
Mt in the last decade. However, the EU cement
industry has not been subject to the full price ofcarbon pollution under the ETS due to concerns
about carbon leakage and EU cement production
becoming uncompetitive with lower-cost, higheremissions imports.124 Under the ETS, sectors suchas cement that are exposed to the risk of carbon
leakage are still eligible to receive free allocation of
up to 100%, see Figure 9.
In December 2022, EU institutions reached
an agreement on the ETS review which was
proposed by the Commission in 2021: emissions
in the ETS sectors must be cut by 62% by 2030,
compared to 2005 levels.125 More funds to support
the development of innovative technologies
will be made available: the Innovation Fund will
increase from 450 to 575 million allowances andthe Modernisation Fund will be increased by an
auctioning of an additional 2.5% of allowances.
Moreover, all national revenues collected fromauctioning ETS allowances will need to beallocated to climate-related activities.

Figure 9. EU-27 ETS emissions from cement clinker production and freely allocated allowances,
2005-2021 (kt CO2-eq)
160000Emissions CO2-eq (kt)120000Freely allocated allowances

40000

Concrete policies to underpin the cement transition Climate Bonds Initiative

21
20

20
20

19
20

18
20

17
20

16
20

15
20

14
20

13
20

12
20

11
20

10
20

09
20

08
20

07
20

20

20

06

0

05

CO2-eq (kt)

80000

13

As the EU Commission seeks to phase out freeallocations in this era of higher climate ambition,
the Carbon Border Adjustment Mechanism(CBAM) was proposed by the EU Commission in
2021. In December 2022, EU institutions reached
an agreement on the CBAM design: it will not only
cover the sectors envisioned in the Commission’s
proposal (iron and steel, cement, aluminium,
fertilisers, and electricity) but also hydrogen andother downstream products, as well as indirectemissions. Such changes make the ETS and the
CBAM more ambitious and bring some progressin levelling the playing field between EU and nonEU producers. The implementation of the CBAM
– parallel to the ETS free allowances phase-out
for CBAM-covered sectors – is only partiallymore ambitious than the initial Commission’s
proposal.126 The CBAM will start applying in 2026
(after a transitional period from October 2023)
and will be fully phased in from 2035, giving
little incentive for emitters to decarbonise theirproduction processes in the first years, as shownin Table 4.127 The governance of CBAM will also
be centralised, with the Commission in chargeof most of the tasks to ensure a coordinatedimplementation at the EU level. Moreover, by2025, the Commission will assess the risk ofcarbon leakage for goods produced in the EU
intended for export to non-EU countries and,if needed, present a proposal to address this.
Indeed, cement exported from the EU to regionswith lower or no environmental policies might bedisadvantaged as free allowances are reduced.
No compensations or refunds for exporting
goods covered by the CBAM to non-EU countries
are included in the legislation. Nevertheless, thepotentially negative impact on EU exports should
not be underestimated.
Even though both the ETS review and CBAM
introduction are being finalised, the upcoming
implementation will need to addresssome unanswered aspects, such as how themethodology for indirect emissions, solutions forexporting CBAM-covered goods outside the EU,
enlarging the scope to more products, and theuse of revenues.
The CBAM will impose a border tariff on highcarbon cement imports, enabling the impact ofan EU carbon price on EU cement production
while retaining protection from lower-cost
imports. The allocation of free allowances has
been effective in addressing the risk of leakage.
Still, it dampens the incentive to invest in greener
production in the EU and non-EU countries.128
Cement is a high-volume material with arelatively low selling price. As a result, its trade
is highly influenced by transportation costs.
Cement imports from non-EU countries havetraditionally been quite low, but there havebeen large shifts in the last few years. Cement

Figure 10. EU-27 cement imports in 2016-2021 (mt)
10
+307%
since
2016

8
6
4
2
Mt

Reinforce the ETS
with the CBAM

0
2016

2017

2018

Table 4. ETS free allowances
phase-out rate to
CBAM-covered sectors
Year

ETS free allowances
phase-out rate

2026

2.5%

2027

5%

2028

10%

2029

22.5%

2030

48.5%

2031

61%

2032

73.5%

2033

86%

2034

100%

imports to the EU-27 quadrupled between
2016 and 2021, from 2.4 Mt to 9.7 Mt, see Figure
10.129 They represented less than 2% of total
cement production within the EU-27 in 2016, but
this level jumped to more than 10% in 2020.130
This necessitates policymakers’ continued
attention to the regional implications of EU
policy changes, such as the ETS reform and the
CBAM introduction.
The CBAM will apply to cement products – among
others – imported into the EU and has significant
implications for the cement industry. The main
obligation lies with importers who need to declareand purchase CBAM certificates to cover the GHG
emissions associated with the production of
cement products. This sets a carbon price aimed
at imports of non-EU products equivalent to theone paid by EU producers for making the same
products. EU importers will be obliged to buy
certificates related to the carbon price they would
have paid if their imports had been produced
within the EU. However, should EU importers
demonstrate that they have already paid a carbon
price to produce those goods in a non-EU country,
this amount would be deducted.

Concrete policies to underpin the cement transition Climate Bonds Initiative

2019

2020

2021

To give private companies and non-EU countries
enough time to test this new system, the CBAM
will be implemented gradually and only for a few
sectors.131 Between 2026 and 2030, it is estimatedthat the cumulative impact of carbon pricing on
the EU cement industry could total EUR13bn.132
The CBAM creates a strong incentive
for producers to invest in low-carbon
technologies now. For the hard-to-abate
sectors, including cement, the path forward isclear: a full green transformation is required totransition to net zero. Those that invest now
to decrease emissions and plan to supply the
cement required with the shortest possible
environmental footprint will benefit from thiscompetitive advantage.
One challenge facing the CBAM is its compliancewith WTO and other international rules. In theview of the EU Commission, the CBAM design
is in line with such rules, especially because
EU importers will not have to buy certificates ifthey demonstrate that they have already paid
a carbon price to produce the imported goods
in a non-EU country. This incentivises global
action, as non-EU countries might implement
their carbon pricing schemes to capture
revenue. In 2021, Turkey’s chief negotiator at
the COP26 climate summit declared that the EU
CBAM was a factor in convincing Ankara to ratify
the Paris Agreement.133

Guide green investment
through standards and sectorspecific criteria
In 2016, the EU Commission accepted arecommendation by the EU High-level Expert
Group on Sustainable Finance to develop
an EU Sustainable Finance Taxonomy. Its
development has been supported by the workof the Technical Expert Group (TEG) and its
successor, the Platform on Sustainable Finance(PSF). The Taxonomy Regulation entered into
force in July 2020, with the first Delegated
Act covering climate change mitigation andadaptation activities since 2022. The EU
Taxonomy was developed as part of the wider EU
14

Sustainable Finance Strategy. Its primary use is tosupport the mandatory disclosure of sustainable
investments and assets by investors, banks, andcorporates in the EU.134
The Taxonomy will provide criteria for thecontribution of activities to six environmental
objectives, covering sustainable water use,
circular economy, pollution prevention andbiodiversity, climate mitigation, and adaptation.
The Commission is also considering extending
the scope of the Taxonomy to cover significantly
harmful and low-impact activities and social
issues. The work of the PSF will inform this.135
Agreeing on standardised criteria for highemitting activities is fundamental for investors
to understand what underpins a credible
transition and for policymakers to incentivise thetransition. Governments can draw from criteria
to design regulations or recommendations for
decarbonising a sector. The EU Taxonomy isparticularly relevant because it is likely to be
used for investments falling under its criteriathat will be eligible for inclusion in green bonds
Use of Proceeds (UoP) under the proposed EU
Green Bond Standard. As the EU Taxonomy
lays out long-term standards, it also encourages
investment in innovative technologies andtransition-friendly investments.136
The EU Taxonomy technical screening criteria(TSC) recognise the most climate-friendly
production processes, which also comply with
the Do No Significant Harm (DNSH) principle.
The TSC provide clarity over GHG emission levels
in cement production that are compatible witha 1.5°C-aligned production pathway (i.e., notcurrently near zero but aligned with a pathway).
They, therefore, provide the endpoint for
production, providing an objective for a transition
pathway. Climate Bonds developed criteria forseveral sectors – those related to cement haverecently been published – in its effort to design
guidance for both issuers and investors aroundthe globe on what credible transition activities in
the cement sector look like.137
The EU Taxonomy will be very relevant tothe cement industry. To meet the performancetargets, substantial improvement and investment
are required. This is because, out of the morethan 150 European cement plants, only 11%
operate below the Taxonomy Technical
Screening Criteria.138
Climate Bonds has also launched the first
UoP and entity transition finance criteria
for cement (as well as other sectors, such as
steel and basic chemicals), providing clear,credible, and specific guidance to both issuers
and investors on the types of activities andinvestments that are aligned with a 1.5°C
transition pathway.139 However, entity-level
instruments have fundamental differences from
UoP ones, such as their much broader scopecompared to the specific asset or activity scopeBox 3. EU Taxonomy
Technical Screening Criteria
for cement162
Activities with substantial contribution toclimate change mitigation in the cement
sector shall involve manufacturing one of
the following products:• grey cement clinker where the specific
GHG emissions are lower than 0,722 tCO2e
per tonne of grey cement clinker;• cement from grey clinker oralternative hydraulic binder, where
the specific GHG emissions from theclinker and cement or alternative binder
production are lower than 0,469 tCO2e
per tonne of cement or alternative
binder manufactured.
Where CO2 that would otherwise be emitted
from the manufacturing process is captured
for the purpose of underground storage, theCO2 is transported and stored underground.

of UoPs and their forward-looking nature.
The financial criteria are crucial to prevent
greenwashing and provide confidence to themarket that their investments are science-based.
Thematic issuance from sectors such as cement,
steel, and chemicals is expected to accelerate
rapidly once the required standards anddefinitions are in place.
140

Downstream policies
Implement green
public procurement
Public procurement
accounts for up to 40% of the
global demand for cement
and represents a high share of consumption
in key industries, such as construction andinfrastructure.141 It can be a huge incentive fordeveloping a green cement market favouringlow-carbon products, gradually increasing
demand at the EU level. It accounts for around
15% of the continent’s GDP and represents a highshare of European consumption in key cementrelated sectors.
Green public procurement (GPP) can
increase demand for decarbonised cement
goods and its whole value chain.142
The opportunity for GPP is huge andhistorically, public procurement has beena key lever to bring down emissions. For
example, the City of Vienna saved EUR44.4m
and over 100,000 tonnes of CO2 between 2004
and 2007 through its EcoBuy programme.143
The State of Berlin was able to reduce its
GHG emissions by 47% through GPP in 15
product categories.144

Concrete policies to underpin the cement transition Climate Bonds Initiative

GPP represents one of the 2023 EU Green
Deal Industrial Plan’s priorities, as the EU
Commission aims to define requirements fornet-zero products, using existing EU standards.
This would promote a more predictable anduniform demand for such products. Moreover,the EU Commission intends to promotereciprocity for access to public procurement
markets between EU and non-EU countries.
This could lead to the decarbonisation of public
procurement in non-EU countries, improving
competition and ambition, as well as increasing
demand for green products.
The challenge is in defining what should bebought. This is much simpler in a new technology
like a solar PV panel but more challenging fora product like cement given that low-carbon
cement is hardly distinguishable from high-carbon
cement. A business-as-usual strategy exposes
both companies and investors to several risks,and laggards are vulnerable to changes in climate
policy. Government procurement is likely toincrease demand for low-carbon cement.
Developing mandatory common criteria
within the EU will ensure all Member States’
green cement purchase is the same. This will
prevent uneven intra-EU competition which
could create a race to the bottom.145 In the EU,
GPP remains voluntary, meaning that eachpublic authority can decide whether to follow
the EU guidance. Still, it has the potential to drive
demand for sustainable goods and services. The
EU Commission and some Member States havedefined some general guidance through national
criteria on different sectors.146
In 2021, a coalition of governments andorganisations, led by the United Kingdom
and India, with current members including
Canada, Germany, Saudi Arabia, the United
Arab Emirates, and the United States, launched
the new Clean Energy Ministerial “Industrial
Deep Decarbonisation Initiative”. Coordinatedby the United Nations Industrial Development
Organisation, this initiative aims to create market
demand for low-carbon industrial materials,
especially steel and cement.147

Improve waste management
and circular economy
requirements
A circular economy aims to maintain the value of
products, materials, and resources by returningthem to the product cycle at the end of their use,
minimising waste generation.148
Fly ash from coal-fired power plants, blast-furnace
slag and by-products of fossil-based primary steel
manufacture can be used in cement production
as supplementary cementing materials, replacing
the clinker with more sustainable materials.149
However, with fossil fuels reduction and thenphase out, such materials will become rare,
especially in the EU.
15

After demolition, concrete can be 100%
recycled, even though new materials need tobe added to produce new concrete. This candecrease reliance on primary resources andreduce landfill waste. Recycled concrete isutilised as recycled aggregate in new concreteor other applications such as road building.
However, only around a third to two-thirds ofEurope’s construction and demolition waste isrecycled today.150
Recycling clinker and cement is much more
technically challenging.151 In June 2022, Holcim
announced the production of the world’s firstclinker made entirely of recycled minerals.152
According to the company, the 100% recycledmaterials used range from wood ash to wastefrom mineral processing.
The European cement industry uses a
considerable amount of waste and byproducts, about 36 Mt per year, to replenish
fuels and raw materials. In the EU, the industry
substitutes secondary resources such as nonrecyclable waste or biomass waste for 48% of its
fossil fuel thermal energy usage.153
In 2020, the EU Commission published a
Communication on a new Circular Economy Action
Plan, announcing a series of initiatives along theentire life cycle of products.154 The Circular Economy
Action Plan identifies cement as a priority thanks to
its untapped potential for circularity.
CEMBUREAU highlighted that to phase out
the usage of fossil fuels, the industry will needincreased access to non-recyclable and biomass
waste. Therefore, it advocated for policies
that encourage waste shipment within the EU,
discourage landfill disposal, and limit waste
exports beyond the bloc.155
While incinerating various waste streams forenergy poses a risk of high GHG emissions andenvironmental impacts, it is a potential way for
cement production to reduce its fuel-related
emissions, provided that specific additional
requirements are met. The waste management
sector must move towards better reuse andrecycling schemes, waste prevention and –across the economy – better product design.
Burning alternative fuels and raw materials is notzero emissions and requires that all emissions
released from waste burning are included inemissions calculations to comply with Climate
Bonds Criteria thresholds – see section 4.4.156

Scale up off-takeagreements to increase
low-carbon cement demand
Policy instruments can lower the risk of lowcarbon cement through off-take agreements.157
These represent a future purchase commitment
to buying a product, defining the specific termsof the contract several years in advance, therefore
providing long-term demand certainty. Theseadvance purchase commitments carry a risk
and public authorities can address it. Targeted
R&D initiatives can provide CAPEX funding forinnovative low-carbon technologies. Carbon
Contracts for Difference reduce the OPEX risk offirst movers, who have to deal with higher costs
and uncertain carbon pricing levels. As statedabove, public procurement is very relevant to thecement sector. Public authorities could green it
through off-take agreements, increasing certainty
on demand for future low-carbon cement while
reducing their GHG emissions.

Establish a green window –“zero tariffs on zero-carbon”
In addition to carbon pricing policies andmeasures against the risk of carbon leakage, abroad policy platform – a green trade window– would encourage the international flow ofgreen goods, services, and capital.161 Such agreen window could entail reducing tariffs onenvironmentally friendly goods and services
and products that are produced using green
processes. Green cement – as well as green steel– would be a perfect candidate for such a green
window: “zero tariffs on zero-carbon”. This
could compensate for CBAM’s trade curtailments
and stimulate green capital flows by reducing
restrictions on capital destined for green ortransition projects.

In other hard-to-abate sectors, such as steel,
off-take agreements have already beensigned. In May 2022, some companies, including
BMW Group, Electrolux, and Mercedes-Benz, prepurchased approximately 1.5 Mt of green steel
from H2 Green Steel. These off-take agreements
for about 1.5 Mt per year for 5-7 years represent
more than half of the anticipated first yearly
production capacity of 2.5 Mt.158 In particular,
BMW signed two agreements with Salgizzer
and H2GreenSteel that will supply over 40% of
the steel required by the company’s European
plants and save around 400,000 tonnes of CO2
emissions per year. BMW Group press plants inthe continent process more than half a million
tonnes of steel per year.159
In its Sustainability Financing Framework,
Autostrade per l’Italia Group, Italy’s leading tollroad infrastructure operator, highlighted thatit aims to reach its decarbonisation targets
using green construction materials for all
its infrastructural development projects.
This shows the increasing appetite that enduser companies have for abating concrete andcement emissions.160

Concrete policies to underpin the cement transition Climate Bonds Initiative16

5. Conclusions
While there remains some uncertainty about
the finer details of the Paris-aligned pathway to
cement, technologies and criteria are emerging
to provide market security in identifying Parisaligned investments.
By 2030, 30% of EU cement kilns are
expected to reach the end of their lifeand require reinvestment.163 This decade istherefore a pivotal moment in Europe’s netzero transformation. Failing to transition the
cement sector could threaten the EU pledge toreach climate neutrality by 2050.

There is an increasing realisation that theinvestment requirement presents a unique
opportunity for the European economy todevelop innovative technologies, achieve a rapidtransition of a key hard-to-abate sector andbecome a front-runner in the emerging net zeroaligned economy.
The speed and success of the cementtransition are now dependent on strong
policy support. Policymakers define theconditions for a net-zero cement industry
and play a significant role in choosing which
pathways are chosen.

Policies need to be consistent and unified
to boost demand for green cement, support
investment in the transformation of cementcompanies and assets, and enable the scaling of
new clean technologies.
As a result, the policy toolkit for this transition isbroad, encompassing economy-wide standards
and regulation, sector-specific support suchas contracts for difference and green public
procurement, and strategic legislation suchas carbon pricing, circular economy, and CO2
infrastructure.

6. Annex: the cement making process
Clinker, the main constituent of cement, isproduced in a kiln, which heats limestone withother materials such as clay to around 1450°C.164
This process is called calcination: the calcium
carbonate (limestone) is transformed into calciumoxide (lime), and it reacts with the other materials,
forming the clinker. The clinker is then cooled to atemperature between 100°C and 200°C. Grinding
the clinker and mixing it with gypsum and othermaterials to make a fine powder is the last step inthe cement making process.
The production of clinker can be divided into
different stages: quarrying raw materials,
crushing, raw meal grinding, preheating,precalcining, clinker production in therotary kiln, and cooling and storing (seeFigure 5 and Box 1).165
Cement plants are traditionally built near
naturally existing materials such as limestone,
which can be extracted from quarries. The raw
material is then transferred to crushers. Following
crushing, the raw materials are combined andprocessed to generate “raw meal”.

A preheater is made up of a series of cyclones
through which raw meal is passed by spinning
hot flue gases in the opposite direction of thematerial flow. Thermal energy (heat) is recoveredfrom hot flue gases in these cyclones, which has
the advantage of preheating the raw meal before
it enters the kiln, increasing process efficiency,
and using less fuel.
Calcination is the process by which limestone
is converted into lime. In current installations,some of the high-temperature reaction
occurs in a “precalciner”. The chemicaldegradation of limestone happens here,
yielding approximately 60% of the total
CO2 emissions of the cement making process.
The remaining CO2 is produced by fuelcombustion. Precalcined meal enters the kiln
at about 1000°C. Raw materials then need toachieve temperatures of up to 1450°C. The hotclinker is then cooled and ground into cement.
However, clinker can also be moved to othergrinding facilities by truck, train, or ship.

Concrete policies to underpin the cement transition Climate Bonds Initiative17

Endnotes
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2. https://www.pnas.org/doi/full/10.1073/pnas.1821673116
3. A-EW_208_Strategies-Climate-Neutral-Industry-EU_Study_WEB.pdf(agora-energiewende.de)
4. A-EW_208_Strategies-Climate-Neutral-Industry-EU_Study_WEB.pdf(agora-energiewende.de)5. https://www.spglobal.com/esg/insights/featured/special-editorial/
decarbonizing-cement-how-eu-cement-makers-are-reducingemissions-while-building-business-resilience
6. https://static.agora-energiewende.de/fileadmin/
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activity_en.htm?reference=5.12 https://ec.europa.eu/sustainablefinance-taxonomy/activities/activity_en.htm?reference=5.11
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reports/green-future-steel
20. The Cement Criteria lay out the requirements that Cement
production asset, projects must meet to be eligible for inclusion in a
Certified Climate Bond and for companies on a credible transition path
to issue transition labelled debt. The Criteria apply to manufacture andproduction of Cement and do not address other stages of the value
chain. The Criteria contain Mitigation Requirements, and Adaptation& Resilience Requirements. Bonds and loans linked to these eligible
assets and projects will be aligned with the Paris Agreement. https://www.climatebonds.net/standard/cement
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88. https://shareaction.org/reports/decarbonising-cement-the-roleof-institutional-investors
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Concrete policies to underpin the cement transition Climate Bonds Initiative

90. https://www.weforum.org/first-movers-coalition/sectors
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102. https://fsr.eui.eu/the-ten-e-regulation/
103. https://ec.europa.eu/commission/presscorner/detail/en/
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105. https://www.europarl.europa.eu/legislative-train/theme-aeuropean-green-deal/file-revision-of-the-ten-e-regulation-for-energyinfrastructure
106. https://ec.europa.eu/sustainable-finance-taxonomy/activities/
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107. https://climatestrategies.org/wp-content/uploads/2021/03/
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108. https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/
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134. https://www.climatebonds.net/2021/09/taxomaniainternational-overview

18135. https://ec.europa.eu/info/business-economy-euro/banking-andfinance/sustainable-finance/overview-sustainable-finance/platformsustainable-finance_en#activities
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137. https://www.climatebonds.net/standard/cement
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143. https://ec.europa.eu/environment/gpp/benefits_en.htm
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145. https://www.switchtogreen.eu/eu-green-public-procurement/
146. https://ec.europa.eu/environment/gpp/index_en.htm
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148. https://ec.europa.eu/eurostat/web/circulareconomy#:~:text=What%20is%20the%20circular%20
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151. https://newclimate.org/sites/default/files/2020/12/SGCCC-EUCement-paper-NewClimate_Nov2020.pdf
152. https://www.holcim.com/who-we-are/our-stories/recycledclinker
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154. https://eur-lex.europa.eu/legal-content/EN/
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156. https://www.climatebonds.net/files/files/Cement-CriteriaDocument-Final-241022.pdf
157. https://materialeconomics.com/publications/scaling-up-europe
158. https://hydrogen-central.com/h2-green-steel-sold-1-milliontonnes-green-steel-customers/

159. https://www.climateaction.org/news/bmw-group-significantlyincreases-use-of-low-carbon-steel-in-series-product160. https://www.autostrade.it/documents/10279/49049770/
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161. https://www.climatebonds.net/2021/09/carbon-pricing-climateaction-new-countdown-cop-policy-briefing
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Prepared by Climate Bonds Initiative.
Author: Fabio Passaro
Acknowledgements: Mark Alexander, Bridget Boulle,
Lily Burge, Helen Burmeister, Zhi Cao, Chris Moore, Anna Nilsson,
Vangelis Papakonstantinou, Juan Manuel Viver Gargallo, Kira West
Design: Godfrey Design, Joel Milstead© Published by Climate Bonds Initiative, March 2023 www.climatebonds.net
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or
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Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on
any information contained within this, or any other Climate Bonds Initiative public communication.

Concrete policies to underpin the cement transition Climate Bonds Initiative

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