The following speech was delivered at the CEMBUREAU Summit on 13 October 2020 by Jochen Flasbarth, German Federal Minister for the Environment, Nature Conservation and Nuclear Safety, on behalf of the German Presidency of the EU Council
Mr de Parisot,
Ladies and Gentlemen,
It gives me great pleasure to speak to you today, even though I must do so from Berlin, and not in Brussels, as originally planned.
An end to the coronavirus pandemic is not in sight. On the contrary, just now infections seem to be on the rise again. That leaves us all facing serious challenges, and makes it all the more important that Europe's capacity to act, economically and socially, remains secured.
The current situation highlights the importance of targeted, agile and effective state action. The state establishes framework conditions and must protect its economy and its citizens. In Germany we are doing so with regulations on short-time work and additional incentives for investment to make our industry and energy supply fit for the future.
The many talks I have had in Germany with the cement industry have made me well aware of the challenges it is facing.
For that reason I am particularly pleased that this exchange with the European cement and concrete industry is taking place. My thanks to Christian Knell and Dr Martin Schneider of the German association Verein Deutscher Zementwerke (vdz) for their warm invitation.
I would like reflect about our experiences in Germany, the climate goals we have set ourselves – including for our cement industry – and how we are working together on the major goal of greenhouse gas neutrality.
In spite of the coronavirus, today we need to cast our eyes beyond the pressing problems of the moment. Climate change is by far the more serious and longer-term challenge. I therefore firmly believe that in Europe and in Germany we must use the current crisis to accelerate our transition to a climate-neutral future, with the help of government economic recovery programmes and the absolute willingness to seize the opportunities of green innovation.
Resolute climate action, and that means gradual decarbonisation, is instrumental to maintaining Europe's cement industry. To succeed, we need technological advances, innovations, and novel approaches, particularly in emission-intensive industries. Accounting for nearly eight percent of global emissions, the cement industry is very much an emission-intensive sector.
The restructuring and transformation of entire branches of industry to low-emission or zero-emission production is a generational task which we must begin today. In view of the enormous challenge of reducing not only energy-related but also process-related emissions, states must support their industries. In Germany there is a broad consensus within the government in favour of assisting industrial enterprises in their decarbonisation efforts. This is what I would like to talk about today.
We want to achieve greenhouse gas neutrality in the EU and Germany by 2050 at the latest. For this we need greater energy efficiency and the increased expansion and flexible use of renewables in all sectors. These are essential for achieving our targets.
In Germany, we have set out clear milestones in our Climate Change Act. By 2030 we aim to cut our greenhouse gas emissions by at least 55 percent compared to 1990.
The Commission's European Green Deal is the right response to the climate crisis, as is the proposal to enhance the EU climate target to a reduction of at least 55 percent in greenhouse gas emissions. Under the German Council Presidency, we are now holding intensive dialogues with member states, so that we can reach agreement on a new reduction target for greenhouse gas emissions before the end of the year. This was decided by the heads of state and government in July.
But targets alone will not achieve European or national goals on climate change. We need effective measures as well.
Carbon pricing is a key instrument which encourages decarbonisation at all levels through financial incentives. I am delighted that the national emissions trading system will launch in Germany in January 2021, ensuring that we also put a price on those greenhouse gas emissions which are not covered by the EU ETS. This will remedy, at least at national level, the unfair situation that some sectors pay for their CO2 emissions while others do not. The EU Commission has now also proposed carbon pricing at EU level for emissions which, up to now, have been exempt from the EU emissions trading system.
For the cement industry, of course, the EU ETS is generally the main climate instrument. As long as the level of ambition of climate policy varies from country to country, sectors in which companies largely compete on international markets need to be protected from carbon leakage in the long term.
In the EU emissions trading system, this is currently achieved through free allocation of allowances and the electricity price compensation. In its impact assessment on raising the climate target, the European Commission has calculated that this approach will remain effective in the coming decade even if the target is raised to 55 percent.
Besides saving greenhouse gas emissions, we must also reduce our energy consumption, especially in energy-intensive industries. The European Commission has concluded that it is necessary and feasible to improve energy efficiency by up to 40 percent compared to the trend in primary energy consumption by 2030. The Commission also demonstrates that the renewables' share in final energy consumption can rise to as much as 40 percent by 2030.
The Commission's comprehensive impact assessment on raising the climate target shows that there is still reduction potential in industry overall and specifically in the cement sector which can, and must, be leveraged up to 2030. But it is important to me, especially in the context of industry, that we already set our sights on the transformation beyond 2030. We must do this now because we anticipate that many key technologies for comprehensive decarbonisation will be used extensively in or after 2030.
The cement industry in Germany has a key role to play in achieving greenhouse gas neutrality. Why is this so?
Your product, cement or concrete, is a vital construction material in all areas of society and is present in the lives of us all. Many people barely register cement in their daily lives. The central importance of cement and concrete has long been undisputed. In our buildings especially, cement is an indispensable partner.
However, the use of cement as a matter of course is at risk. The world is threatened by climate change. That presents serious challenges to an energy-intensive industry like cement. Today, cement production accounts for a disproportionately high share of greenhouse gas emissions. Emissions must be cut further.
I am therefore very pleased that you fully recognise and accept your responsibility. Today's event is testimony to that commitment.
Your proactive role and your ambitions as the European cement industry are also highlighted in the recently published Carbon Neutrality Roadmap, which aims to achieve greenhouse gas neutrality along the cement and concrete value chain by 2050.
In Germany, the Federal Ministry for the Environment has been focussing for several years on decarbonising industrial processes, in other words, designing them to be greenhouse gas-free. We spend a lot of money to achieve technical breakthroughs – our springboard innovations. The industrial decarbonisation funding programme supports this goal.
This funding programme is about state and industry taking important joint steps along the road to greenhouse gas neutrality. The programme is aimed at companies in primary industries, which have very energy-intensive processes and hence high process emissions.
Only if we succeed in giving energy-intensive industries the prospect of greenhouse gas neutrality in Germany and Europe will we be able to retain the value added they generate and achieve broader decarbonisation throughout the world.
Much of the world's industrial plant is manufactured in Europe. That means that our transformation also opens new markets for climate-friendly installations.
We have made over one billion euros available for the industrial decarbonisation funding programme. The national hydrogen strategy adopted under the latest economic recovery package enabled us to again increase funding for the programme. Through the programme we support investment costs for projects which make substantial progress towards greenhouse gas neutrality. Bridging technologies such as natural gas or sustainable CO2 recycling can also be supported.
The programme is implemented by the Competence Centre on climate change mitigation in energy intensive industries (KEI), that opened in Cottbus last year. Working together with the Federal Environment Agency (UBA), the KEI will act as a think tank to advance new pathways to decarbonisation, working in close cooperation with industry and science. The KEI will also offer various expert fora, including on construction materials, starting this fall.
Nevertheless, we have recognised that it is not enough for support to focus only on investment costs. Therefore, with our national hydrogen strategy, we have also adopted a pilot programme to support the additional operating costs arising from environmental protection measures. The Federal Environment Ministry will develop and implement this pilot programme on carbon contracts, entitled Klimaschutzverträge, following the approach of the Carbon Contracts for Differences (CCfD).
While the main goal here is to cushion the additional costs through the generation and use of green hydrogen, we have also deliberately opened up the pilot programme to the cement industry. From 2022, the pilot programme will support energy-intensive German industries with process-related emissions and - simply put – create investment security through a guaranteed carbon price.
Concrete will remain an important construction material in future, but the framework conditions will be different. Not only how we build, but also increased competition of use with other materials such as wood, could reduce the amount of cement and concrete in construction over the coming decades.
The basic principle for all we do is in a similar vein to the waste hierarchy: Avoidance of CO2 emissions has priority over reduction, reduction comes before carbon capture. We must not, simply for the sake of convenience, remain entrenched in our old ways of thinking. We must challenge long-standing structures, too. Fossil-based emissions from cement production processes must be avoided completely.
The biogenic content of certain substitute fuels such as sewage sludge or waste from the paper industry means that co-incineration of waste is now recognised as an important pillar of emissions reduction. The cement industry in Germany, for instance, draws nearly 70 percent of its energy from secondary fuels, thus significantly contributing to greenhouse gas reduction. The industry is steadily increasing its use of these fuels as a substitute for fossil fuels, in order to lower CO2 emissions and reduce resource consumption. This makes the cement industry a key partner of the waste management industry.
Co-incineration of waste, however, cannot be the sole approach to avoiding fuel-related emissions, because
- a large share of waste will continue to be fossil in origin for a long time to come,
- there is a limited supply of suitable waste with a high biogenic content,
- in the medium to long term, waste that can be recovered for energy could become scarcer throughout the EU,
- substitute fuels are likely to experience more competition for use in future due to growth in materials recovery,
- the processing costs for future recoverable wastes might also rise disproportionately.
In other words, we need alternatives to low-carbon process heat generation. These must be as efficient and sustainable as possible. For reasons of efficiency, wherever feasible, precedence should be given to the direct use of renewable electricity. The cement industry also needs to start thinking along these lines. One option might be to at least preheat the raw materials with electricity-based fuels.
It is also important to fully exploit efficiency potential, such as the systematic use of waste heat, as a supplementary contribution to the energy transition. This will reduce overall electricity demand and optimise the resource efficiency of the renewable energy infrastructure expansion.
Reducing the clinker factor in cement and the proportion of cement in concrete is a proven means of cutting resource-related CO2 emissions.
However, if we are seeking to optimise our reduction of CO2 emissions, we cannot, simply for the sake of convenience, rule out from the start options and ideas that look beyond traditional production routes. That means, for instance, developing alternative low-carbon binders and pressing forward on alternative manufacturing processes.
Carbon capture in the cement industry and its utilisation (CCU), for expample in the chemical industry can, in specific cases, be a useful tool for climate action during a transition phase.
For carbon will always be needed as a raw material source. That is why CCU could be an important pillar of a greenhouse gas neutral economy
In other words, if properly processed, CO2 from the cement industry is suitable as a raw material, but at the end of the day we need sustainable carbon sinks.
The recarbonisation of concrete is a possibility currently being discussed, but its potential has not yet been determined. Given the importance of sinks, we must not put all our eggs in one basket here either. Until a satisfactory solution has been found, we need to keep exploring in other directions as well.
With regard to the storage that may be necessary, we need new ideas that go beyond the more obvious solutions discussed so far. We need more sustainable solutions for real, long-term and safe carbon sinks, so that the risk to future generations is kept as low as possible. For that reason, CCS using gaseous, underground storage has no part to play in Germany at this time.
In future, a construction material's product-related CO2 footprint will not be the only focus. It is a factor that needs to be anchored much more firmly into a life cycle approach. By this I mean that it is not the product with the smallest carbon footprint that should ultimately take the lead, but the one which produces the least CO2 emissions over its entire lifetime.
Therefore, all players along the value chain (cement producers, concrete producers and processors, architects, planners, procurement officers, property developers, etc) need to cooperate more closely in order to find a good overall solution.
In light of this, I am delighted that you have included the topic of green construction on today's agenda. We recently took the decision to commission a new building for our ministry here in Berlin, and placed special focus on sustainability in the architectural competition.
The buildings sector in Europe, and in Germany too, despite stepping up our efforts with the Climate Action Programme 2030, is not yet on the right track for achieving the climate target.
For that reason, the importance of the buildings sector for the energy transition is being discussed more intensively at European level in the debate on the European Climate Law and on raising the level of ambition for 2030.
The recently published Climate Target Plan spells out the importance the European Commission attaches to the buildings sector. The operation of buildings alone accounts for around 40 percent of final energy consumption and 36 percent of greenhouse gas emissions in the 27 EU member states.
The low level of new build in Europe means that energy refurbishment of existing buildings is especially necessary for successful climate action.
By improving energy efficiency and making direct use of renewables we can achieve climate-neutral operation of the existing building stock. To harness this potential, climate action investments and the current rate and extent of building modernisation must be stepped up significantly. The European Commission wants to support the necessary "renovation wave" with new instruments, to be proposed by mid-2021.
Above all, an effective renovation wave offers opportunities: for climate action and environmental protection through emissions avoidance, for building users through improved comfort, for value added in the primarily region-based building sector. Above and beyond this, it is also an opportunity to increase demand for sustainable, resource-efficient construction materials.
Beyond the operational phase of buildings, the adverse impact on the environment caused by buildings and particularly building materials must be minimised throughout their lifetime. Alongside the accumulated energy expenditure, the impact on resource consumption has to be taken into account. If we can successfully strengthen the demand for sustainable construction materials as part of the renovation wave, we can also help bring about a transformation of the construction materials industry. Initial incentives for this were introduced in Germany as part of the Climate Action Programme 2030, and will be further developed as appropriate.
As we can see, there are major tasks ahead for the cement and construction materials industry on the road to climate neutrality. Let us tackle these together and create future prospects for the industry. Not every path we discuss will prove to be the right one for the long term. But doing nothing is not an option.
Even if the coronavirus pandemic is not by any means over, we still need to start preparing now for the technological transformation needed to make our economy climate-neutral and fit for the future.
You can count on my support for new ideas and sustainable solutions.
Thank you for your attention. I wish you all a very constructive day.