Climate Change Mitigation and the Clean Development

Climate Change Mitigation and the Clean Development

Climate Change Mitigation and the Clean Development

Mechanism in the South African Cement Industry.

Aletta M. Walker

A research project submitted to the Gordon Institute of Business Science,

University of Pretoria in partial fulfilment of the requirement for the degree of

Master of Business Administration.

November 2006

© U n i i v e r r s s i i t t y o f f P r r e t o r r i i a

Abstract

Global warming and climate change have been identified as strategic issues for

South Africa, which as a developing country is more vulnerable to climate change and have less capacity to deal with the impact.

This research investigates the contribution of the South African cement industry to greenhouse gas emission and how the Clean Development Mechanism can be used towards sustainable development and climate change mitigation measures.

A review of the South African cement industry was done through documentary research. The research was directed in consultation with a network of industry experts. Data from various sources was interpolated to quantify greenhouse gas contributions. The results from a qualitative analysis of the registered cement-sector Clean Development Mechanism project portfolio were used to identify opportunities for using the mechanism in climate change mitigation initiatives.

The cement industry contributes less than two percent of greenhouse gas emissions in South Africa. As this is not significant, greenhouse gas emission reduction projects and sustainable development are driven mostly by public concerns, corporate responsibility and rising cost of fossil fuels. Opportunities for Clean Development Mechanism projects lie in waste utilisation as alternative fuel and raw materials and in improved energy-efficiency by retrofitting appropriate technology. The main constraints are the lack of capacity to initiate and implement projects, restrictive legislation for project approval and transaction costs. ii

I declare that this research project is my own work. It is submitted in partial fulfilment of the requirements for the degree of Master of Business

Administration at the Gordon Institute of Business Science, University of

Pretoria. It has not been submitted before for any degree or examination in any other University.

Aletta M. Walker

13 November 2006

iii

Acknowledgements

I would like to thank the following people who made this report possible:

My family, friends and colleagues for their support and encouragement.

Colin Jones, Jeremy Gaylard, Barry Platt and Craig Waterson at Pretoria

Portland Cement for their assistance.

Roy Page-Shipp for his guidance and supervision of this report. iv

Glossary

AAUs

ACMP

AFR

Assigned Amount Units (Allowance based reduction)

The South African Association of Cementitious Material Producers

Alternative Fuels and Raw Materials

CER Certified Emission Reductions

CH

4

Methane

CO

2

COP Conferences of Parties

DEAT

DME

Department of Environmental Affairs and Tourism

Department of Minerals and Energy

DOE

DRE

DTI

DWAF

Designated Operational Entity

Destruction and Removal Efficiency

Department of Trade and Industry

Department of Water Affairs and Forestry

ECA

EIA

ERU

ETS

EUAs

GGBS

Environmental Conservation Act

Environmental Impact Assessment

Emission Reduction Units

Emission Trading System

European Union Allowances

Ground Granulated Blastfurnace Slag

HFC Hydrofluorocarbons

IETA International Emissions Trading Association v

IPCC

J

Intergovernmental Panel on Climate Change joule (SI unit of energy)

JI Joint Implementation kWh Kilowatt-hour mac

NO x

Mt

Minor additional constituents

Nitrogen oxides (NO / NO

2

)

Million metric tons

NEMA

OECD

PDD

PFC

PPC

SABS

SACPA

Perfluorocarbons

Pretoria Portland Cement

South African Bureau of Standards

South African Cement Producers Association

SF

6 smc

SPL t

UNEP

Supplementary main constituents

Spent Pot Lining ton (metric unit of mass, equal to 1000 kilograms)

United Nations Environment Programme

UNFCCC United Nations Framework Convention on Climate Change

UNIDO

WMO

United Nations Industrial Development Organisation

World Meteorological Organisation

National Environmental Management Act (1999)

Organisation for Economic Cooperation and Development

Project Design Document vi

TABLE OF CONTENTS

1.1 Introduction

1.2 The research problem

1.3 Motivation for research

3.1 Population

1

1

1

2

4

5

6

3.2 Sampling

3.3 Data collection and analysis

3.4 Research limitations

4.1 Introduction

4.2 The science of global climate change

4.3 The impact of global climate change

4.4 Greenhouse gases

6

6

8

9

9

9

12

13

4.5 The Kyoto Protocol and market mechanisms

4.6 The Clean Development Mechanism

4.7 The carbon market

4.8 Summary

14

17

19

23

5. The South African case: Greenhouse gas emission and CDM project activity 24

5.1 Introduction

5.2 Contribution to climate change

5.3 South African CDM activity

24

24

27

5.4 Analysis of South African CDM projects 28 vii

5.5 Discussion of results

5.6 Summary

6. South African cement industry

6.1 Introduction

6.2 Regulation of cement

6.3 Cement products

6.4 Cement production

6.5 Industry structure

6.6 Associated organisations

6.7 The cement manufacturing process

6.8 Cement GHG emissions

6.9 Analysis of South African cement industry GHG emissions

6.10 Discussion of results

6.11 Summary

7. Climate change mitigation and sustainable development

7.1 Introduction

7.2 The Cement Sustainability Initiative

51

51

7.3 The impetus for action 53

7.4 Reduction of CO

2

emissions through resource productivity 55

7.5 Energy and materials efficiency 55

7.6 Alternative fuels and raw materials

7.7 Alternative fuel and raw material initiatives

7.8 Summary

8. Clean Development Mechanism opportunities

8.1 Introduction

8.2 Potential benefits of CDM projects

64

64

56

60

63

64

49

50

51

41

42

43

45

31

32

33

36

28

30

31

31 viii

8.3 CDM project requirements and key success factors

8.4 CDM project activity

8.5 Cement sector CDM project analysis

8.6 Discussion of results

8.7 CDM opportunities

8.8 Constraints in using the CDM

8.9 Summary

9. Conclusion and recommendations

10. Further research recommendations

11. References

73

74

78

79

65

67

68

72

84

85 ix

1.

1.1

1.2

Research problem

Introduction

South Africa has one of the world's top 15 most energy intensive economies and is a significant emitter of greenhouse gases (GHGs) when measured by emissions intensity and emissions per capita. Its per capita carbon dioxide (CO

2

) emission rate is more than double the global average of four tons (Department of Environmental Affairs and

Tourism (DEAT), 2004).

The research problem

The global cement industry is responsible for approximately five to seven percent of CO

2

emission (Rosenbaum, 1998; Hoenig and

Schneider, 2002; Batelle, 2002).

This corresponds to approximately three percent of all greenhouse gas emissions (Figure 1). Almost half of the CO

2

emissions that are produced by the cement industry result from the calcination of limestone, the major raw material for cement manufacture, and the remainder results from the burning of fossil fuels in the energy-intensive clinker production process. The industry’s energy consumption is estimated to be two percent of global primary energy consumption. This makes the cement industry sector an important one to study (Price and Worrel, 2006).

The literature review focused on the contribution of various sectors towards GHG emissions in South Africa and the potential for Clean

Development Mechanism (CDM) projects with specific reference to the cement industry. The chemical and mining sectors are discussed in the literature, but the cement industry has not been not analysed. The literature review delivered only brief references with mostly outdated information on the South African cement industry and the potential for

1

climate change mitigation (Department of Minerals and Energy, 2003;

Goldblatt, Kagi, Leuchinger and Visser, 2002).

Figure 1. Greenhouse gas emissions from the global cement industry in

2000 (Humphreys and Mahasenan, 2002).

Global Greenhouse Gas

Emissions:

44 Gt CO

2

equivalent

Cement Industry Greenhouse Gas

Emissions:

1.4Gt CO

2 equivalent

Fossil Fuel, 23.9 Gt

Deforestation, 3.9 Gt

Other GHGs, 14.8 Gt

Process, 0.67 Gt

Transport, 0.0.7 Gt

Electricity, 0.07 Gt

Fossil Fuel, 0.58 Gt

1.3

Motivation for research

Recent studies have identified global climate change and GHG emissions as strategic issues for South Africa (Goldblatt et al., 2002).

The South African Association of Cementitious Material Producers

(ACMP) published an overview of the producers’ sustainability initiative in 2003. The ACMP reported that the industry is responsible for less than one percent of GHG emissions in South Africa. The cement producers have committed themselves to reduce GHG emissions, but the CDM is absent from published climate change mitigation strategies.

South Africa, as a Kyoto Protocol non-Annex I country, is not required to reduce its emission of GHGs during the first commitment period

(2008-2012), but it still faces the challenges of climate change and sustainable development. The CDM has the potential in South Africa to

2

mitigate the significant emissions of GHGs and at the same time support sustainable development goals. A large number of potential

CDM projects exist in the energy and industrial sectors in the country

(United Nations Industrial Development Organization (UNIDO), 2003;

Department of Environmental Affairs and Tourism (DEAT), 2004).

Although there is substantial potential for CDM projects, only four CDM projects with South Africa as the host country had been registered by

October 2006. This lack of participation is partly ascribed to the cumbersome process of securing approval for projects (Ellis, Winkler,

Corfee-Morlot and Gagnon-Lebrun, 2005; Executive Board, 2006;

Immink in Salgado, 2006).

There is a lack of case studies and literature on the South African cement industry and this research will add to the body of knowledge.

Information on the subject is scattered and this study will form a consolidated reference for future studies.

3

2.

Research questions

2.1

2.2

2.3

The aim of the proposed research was to review the current climate change mitigation initiatives taken by the South African cement industry. A documentary study was undertaken to identify specific opportunities for CDM projects as well as constraints that may limit project activity.

The following questions were addressed:

What is the contribution of the South African cement industry to greenhouse gas emissions and how has the industry responded to the climate change challenge?

Does the CDM offer opportunities for GHG emission reduction projects in the cement industry in South Africa?

What are the key constraints in using the CDM for climate change mitigation initiatives?

4

3.

Research Design

The research focused on three themes:

 Global climate change (chapter 4).

 A review of the cement industry in South Africa, with specific reference to its contribution to climate change and its mitigation response (chapters 5-7).

 CDM activity in the cement industry (chapter 8).

Figure 2: Research design

Chapter 4

Background:

 Global climate change

 Kyoto Protocol

 Market mechanisms

 CDM

Chapter 5

South Africa:

 Greenhouse gas emissions

 SA CDM project activity

Chapter 8

 Cement CDM analysis

 Opportunities

 Constraints

Chapter 6

South African cement industry

 Industry Review

 GHG emission analysis

Chapter 7

Response to climate change

 Sustainable Development projects

The scientific case study methodology of Yin (1994) was used. The case study strategy was used to review the South African cement industry, its contribution towards global warming and climate change mitigation measures. The second and third research questions were answered by analysing the global cement-sector CDM project portfolio and related literature and identifying opportunities and constraints in using this mechanism to mitigate climate change.

5

3.1

3.2

3.3

Population

Industry study:

The population of relevance consists of all cement producers in South

Africa.

CDM projects:

Registered CDM projects with South Africa as the host country and global cement-sector CDM projects in the CDM database managed by the Executive Board of the United Nations Framework Convention on

Climate Change.

Sampling

The review of the SA cement industry was based on all four primary cement producers with a brief reference to third-party blenders. The study excluded downstream cement distribution, concrete production, and concrete product industries.

The project design documents (PDDs) of five South African CDM projects and seventeen international cement-sector projects in the CDM

Executive Board database were analysed. These projects have been registered or were awaiting registration by October 2006.

Data collection and analysis

The main source of data for the industry review and the relevant CDM projects was published data already in the public domain. The sources of data are summarised below:

6

Data required Data Sources

Cement producer GHG emission Published data by Cement and Concrete levels:

Energy contribution

Non-energy contribution

Cement producer climate change mitigation measures/ sustainability initiatives

Institute and industry Associations.

Annual reports of PPC, Aveng, Lafarge and

Cimpor.

Literature on the energy sector in South

Africa.

Unstructured interviews with topic experts to “fill in gaps”.

CDM project information

CDM requirements

CDM constraints

CDM Executive Board database

CDM guidelines : national and international

CDM literature.

Documentary research was conducted to determine current cement industry GHG contributions and mitigation measures – the analysis was qualitative and quantitative. The data collection and analysis were based on secondary data, published in the literature.

Documentary research and qualitative analysis on registered CDM projects were conducted to determine the opportunities and constraints in using the CDM in the South African cement industry. The current portfolio of South African and cement-sector CDM projects was analysed by content and major themes were extracted and clustered. The analysis included existing literature on the CDM project portfolio.

The units of analysis were:

 Cement industry in South Africa

 CDM projects

7

3.4

Research limitations

 The research conducted for this study had, inter alia, the following limitations:

 Access: The cement producers in South Africa closely guard information of market share, production rates and sales figures. The review of the industry relied on secondary data already in the public domain and the author’s knowledge of the industry.

 The analysis of CDM projects was limited to project design documents of projects that are registered or awaiting registration.

 The quantitative analysis of GHG emissions used published data and best estimates where data was not available. Recent technology upgrades may not be reflected in capacity and efficiency figures.

 The literature study and the reporting of key issues may be biased brought about by the author’s perceptions of the industry.

8

4.

4.1

4.2

Global climate change

Introduction

The debates and literature on climate change and global warming mitigation have emerged since the mid 1980s (Olsen, 2005). This chapter reviews the science of global climate change and its likely impact, with a brief discussion on policy development, the Kyoto

Protocol with its market mechanisms, and specifically the Clean

Development Mechanism.

The science of global climate change

Global climate change (referred to as “global warming”) is possibly the greatest and most contentious environmental challenge facing the world this century (Shukla, Sivaraman and Yajnikc, 2004; Goldblatt et al.,

2002; Houghton, 2004).

There are a number of questions surrounding the global climate change debate: is the climate changing, how and why is this happening, what possible impact will it have, and what can be done about it? (Dessler and Parson, 2006). A school of “sceptical environmentalists” does not believe that global climate change is happening; a second school believes it is a real phenomenon but as a result of natural variation; and a third school believes the sustained and rapid rise in global temperatures is attributable to human activity (Economist, 2005).

The origin of the “greenhouse” concept dates back to 1827 when French physicist Joseph Fourier theorised that the earth’s atmosphere acts like a greenhouse - letting in the sun’s heat while slowing its release back into space. A number of the minor gases in the atmosphere such as water vapour and CO

2

contribute to this effect. These greenhouse gases

9

are transparent to the visible and “near” infra-red light emitted by the sun, but absorb the lower frequency “far” infra-red that is radiated back as heat from the earth’s surface. Without this phenomenon, the earth would be approximately 30°C colder than it is and life would barely be sustainable (Houghton, 2004).

Hansen, Ruedy, Sato and Lo (2006) reported that 2005 was the warmest year on record. Over the last century the global average surface temperature has increased by 0.6 ± 0.2°C. The temperatures in the lowest eight kilometres of the atmosphere have risen by about

0.1°C per decade during the last forty years. This increase in the earth’s temperature is measured using direct surface air temperatures, recession of glaciers, sea-level changes, shrinkage and thinning of sea ice, sub-surface ocean temperatures, satellite temperatures and paleoclimatic proxy data. “The multiple, independent data sources confirm beyond any reasonable doubt that the earth’s surface warmed during the twentieth century, with particularly rapid warming over the last few decades” (Dessler and Parson, 2006, p. 87).

In the late 1990s, Michael Mann published the first serious attempt to calculate the average global temperature over the last millennium

(Jones and Mann, 2004). Current global temperatures are higher than at any time during the past 1000 years, and the increase is exponential

(Figure 3). Assuming this exponential rise in temperature, a rise of between 1.4 and 5.8ºC is predicted by 2100 (Houghton, Ding, Griggs,

Noguer, Van der Linden, Dai, Maskell and Johnson, 2001).

Direct temperature measurements began in 1860, and temperatures prior to this are calculated using indirect or “proxy” records such as tree rings, ice cores, corals ocean sediments and boreholes. Although the accuracy of the proxy records is still debated by McIntyre and McKitrick

(2003), Mann’s study has been replicated many times using different statistical techniques or combinations of proxy records (Jones and

10

Mann, 2004). Despite the debates on the accuracy of the reconstructed temperatures prior to 1860, there is a growing consensus that climate change is occurring (Dessler and Parson, 2006).

Figure 3. Variations of the Earth's surface temperature for the past

1,000 years (Houghton et al., 2001, p.3)

Changes in the earth’s atmosphere, climate and biophysical system are measured using indicators for atmospheric concentration of gases, weather conditions, observed biological and physical changes as well as weather-related economic impacts. These changes can occur as a result of natural variability within the climate system or because of external factors, which may be natural or anthropogenic. Natural processes that may have contributed to climate variation are volcanic activity, changes in solar output and internal climate system variations

(Dessler and Parson, 2006).

11

4.3

The past century’s rise in global temperature is unlikely to be entirely natural in origin since it appears to have occurred more rapidly than previous natural temperature changes The Intergovernmental Panel on

Climate Change (IPCC) concluded that “the balance of evidence suggests a discernible human influence on global climate” (Houghton et

al., 2001, p.56).

The atmospheric concentration of CO

2

has increased by an estimated

31% since the Industrial Revolution began in 1750. Approximately 75% of the anthropogenic emission of CO

2 into the atmosphere during the past two decades is due to fossil fuel burning and deforestation. CO

2

is an inevitable by-product of burning fossil fuels such as coal, oil and natural gas. If the amount of CO

2

in the atmosphere were to rise to twice its pre-industrial level, the result would be a further increase in the global temperature of between 1°C and 3.5°C by 2100 .

The impact of global climate change

In the past decade, 2.5 billion people in developing countries have been affected by climate disasters (International Emissions Trading

Association, 2006b). Poor, developing countries are most vulnerable to climate change and also have the least capacity to deal with the impact.

During the twentieth century the global average sea level has risen by between 0.1 and 0.2 metres through thermal expansion of sea water and widespread loss of land ice. The rise in ocean temperature will result in the Antarctic and Greenland ice caps melting, causing increased flooding of coastal areas and unpredictable effects on the ocean currents (Houghton et al., 2001). A more extreme weather pattern with more droughts in some areas and more flooding in others will follow. The earth’s principal ecosystems and biodiversity will undergo major changes. These consequences of climate change will

12

4.4

require major adaptation to deal with adverse affects on the environment and economy .

Global warming theory is an inexact science, but confidence in the ability of models to project and detect future climate change has increased. The models on which the IPCC analysis is based have been under considerable dispute. Houghton (2004, p. 115) suggests that climate modelling is “the most effective tool we possess for the prediction of future climate change due to human activities…”. The obstacles to better climate modelling are daunting. Computations that include all the variables impacting the climate require super computers.

Furthermore, no consensus has been reached over the exact effects of the climatic variables, and as knowledge improves, the calculated effects and predictions change. While there is still uncertainty in the magnitude of future climate change, warming is projected to continue through this century under all models and all emission scenarios

(Dessler and Parson, 2006).

Greenhouse gases

The main gaseous constituents of the atmosphere are nitrogen (71%) and oxygen (21%). The remaining minor constituents – water vapour,

CO

2

(0.03%), methane (CH

4

), nitrogen oxides (NO x

), chlorofluorocarbons (CFCs) and ozone – are responsible for the naturally-occurring greenhouse effect. Man-made emissions account for less than four percent of all GHGs. Although this may not seem significant, this contribution is deemed to have been responsible for the

“enhanced greenhouse effect” (Houghton, 2004). The largest source of anthropogenic GHGs is CO

2 released by the burning of fossil fuels which account for approximately eighty percent of global human energy use.

13

4.5

In addition to CO

2

, human activity emits other greenhouse gases into the atmosphere: methane (CH

4

) and nitrogen oxide (NO x

), as well as complex hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF

6

). Although these are released in smaller quantities, they have a much larger global warming impact than CO

2

(Lee, 2004).

The Kyoto Protocol and market mechanisms

The Intergovernmental Panel on Climate Change (IPCC) was originally convened in 1988 by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP). In response to the threat of global warming, representatives of the Organisation for

Economic Cooperation and Development (OECD) countries agreed at the Earth Summit in Rio de Janeiro in 1992 that the threat posed by rising global temperatures was serious enough to command the reduction of GHG emissions to 1990 levels. This resulted in the United

Nations Framework Convention on Climate Change (UNFCCC).

The IPCC mandate was to review the scientific literature and present policy options to the UNFCCC. The IPCC and its three working groups dealing respectively with science, impacts and response strategies have been responsible for most of the continuing assessment of climate change. The IPPC published three full-scale assessments of climate change in 1990, 1995 and 2001. The UNFCCC set the agenda for action to stabilise atmospheric concentrations of GHGs at levels that will limit the pace and magnitude of climate change, in a time frame that will allow ecosystems to adapt naturally to climate change and sustainable development to prevent unpredictable economic and human consequences (Houghton, 2004; International Emissions Trading

Association, 2006b).

14

The Convention established the Conference of Parties (COP) as its supreme body to oversee progress towards achieving its objective. The

COP decided by 1995 that more than a voluntary approach towards

GHG reduction was required. In 1997, they met in Kyoto to establish a

Protocol and targets to stabilise the concentrations of GHGs in the atmosphere. The ratification of the resulting Kyoto Protocol was delayed after a dispute between the United States’ Bush administration and the

European Union at The Hague Summit in 2000. The main arguments were scientific uncertainty, the high costs of the mitigation action to the

US economy and the fact that the developing countries were not included in the agreement on emission reduction targets. Russia formally approved the treaty in October 2004, and the Kyoto Protocol came into force on 16 February 2005 (Dessler and Parson, 2006).

Although the legal status of the Protocol is secure, there still is a concern that it may not ensure an effective long-term response to climate change.

The IPCC concluded in its Third Assessment Report that the objective of the Climate Convention, namely the stabilisation of GHGs, was not only dependent on climate policy, but also on sustainable development strategies and socio-economic choices (Houghton et al., 2001).

The OECD countries, Russia and Eastern Europe, collectively know as

Annex I countries, are responsible for about 95% of fossil fuel burning and most of the current and past emissions of CO

2

. The Annex I countries committed themselves to reduce their emissions of a basket of six GHGs by at least five percent below 1990 levels over the first commitment period, which runs from 2008 to 2012, with demonstrable progress by 2005 (United Nations Framework Convention on Climate

Change, 1997; 2002).

15

There are several broad types of response to global climate change: mitigation (reduction of GHG emissions), adaptation to cope with the impacts of climate change and geo-engineering. The present policymaking is almost exclusively concerned with mitigation, as this is the response for which near-term decisions are required. Adaptation and geo-engineering are perceived to be issues that will require future decision making (Dessler and Parson, 2006).

There are several options available to Annex 1 countries to meet their

Kyoto commitments. These include domestic mitigation measures, trade of excess credits (“hot air”) from economies in transition, the development of carbon sinks and the trade of credits through market mechanisms (Lee, 2004).

It is believed that the lowest marginal costs of carbon mitigation lie in the developing world, where new capital investment in efficient technologies can reduce emissions more effectively than in developed countries (International Emissions Trading Association, 2006a). The location of GHG emission reductions is not important due to the uniform mixing of the GHGs in the atmosphere. The developed economies will provide assistance and finance for climate change mitigation projects in developing countries and will promote, facilitate and finance the transfer of technology.

A number of market-based mechanisms have been developed to assist investment in mitigation and to help developed countries meet their

GHG emissions (Future Energy Solutions and Energy Research Institute,

2002a; 2002b). The mechanisms that will give countries and organisations the flexibility to yield the greatest emission reductions at the lowest cost include:

16

4.6

 An emission trading system (ETS) was implemented to enable an international carbon market.

 The Joint implementation (JI) mechanism allows emission reduction projects between developed countries.

 The Clean Development Mechanism (CDM) was drafted as Article 12 of the Kyoto protocol and provides for joint projects between developed and developing (non-Annex I) countries. The CDM is the only Kyoto market mechanism in which the developing countries can participate. This mechanism is discussed in section 4.6.

 A fourth mechanism - the “Bubble” approach allows a voluntarily formed group of Annex I countries to jointly fulfil their commitments, provided that their total aggregate GHG emissions do not exceed their combined assigned amounts (Tietenberg, Grubb, Michaelowa, Swift and Zhang, 1999).

The flexible mechanisms can significantly lower long-term costs and provide economic incentives for the development and implementation of innovative responses towards climate change (Tietenberg et al., 1999).

Tradeable permits facilitate the employment of private capital for emission reduction projects. GHG reductions can also be achieved by a number of other mechanisms: road-pricing schemes (taxing vehicles), liberalising power generation to encourage more efficient and less polluting power stations, and the carbon taxing of fuels.

The Clean Development Mechanism

The CDM is based on market forces and attempts to balance economic fundamentals with environmental integrity and equity through a twofold objective:

17



Enabling Annex I countries to reduce GHG emissions cost-effectively and meet their quantified emission limitation and reduction commitments under Article 3 of the Kyoto Protocol.



Provision of financial benefits and transfer of clean-technology to assist developing countries in achieving their sustainable development goals by promoting environmentally friendly investments from the governments and businesses in developed countries (Kim, 2003; Lee, 2004).

The CDM allows an Annex I Party to implement a GHG reduction project in the territory or a non-Annex I Party. These projects are validated through a Designated Operational Entity (DOE) that reports to the CDM

Executive Board (EB). The EB was established in 2001 to determine the ground rules for the implementation of the CDM, to accredit DOEs tasked with validation and verification of project activities, and to report on all aspects of the CDM (United Nations Environment Programme,

2002; Silayan, 2005).

Countries that wish to participate in the CDM must designate a National

CDM authority. The Designated National Authority (DNA) should establish an enabling regulatory framework for the evaluation and approval of the projects. The DOE assesses and monitors the CDM project cycle: design, authorisation, validation and registration, monitoring, verification and certification, issuance and trading (Figure

4). Registered projects earn CERs or “carbon credits” that can be traded

(United Nations Framework Convention on Climate Change, 2002).

The project design document (PDD) describes the project activity, baseline methodology for the specific project category, duration of the project activity and crediting period, and the monitoring methodology.

It also includes the calculations for GHG reduction, environmental impacts and stakeholder comments (Lee, 2004).

18

Figure 4. The CDM project cycle (Adapted from Potvin, 2006)

DESIGN

VALIDATION /

REGISTRATION

MONITORING

VERIFICATION/

CERTIFICATION

ISSUANCE OF

CERs

Project Initiation Note

(PIN)

Registration

PDD using new methodology

Methodology approval by EB

Complete PDD

Forward documents to

EB

Obtain DNA approval

Prepare validation report

Submit PDD to DOE

Implement project

Submit monitoring report to DOE

Prepare verfication and

certification reports and submit to EB

Review certification report and issue CERs

PROJECT PARTICIPANT

DESIGNATED

OPERATIONAL ENTITY

(DOE)

CDM EXECUTIVE

BOARD (EB)

4.7

The carbon market

The “carbon market” was set up in 2005, i.e. three years before the start of the first commitment period in 2008. The carbon market is a diverse collection of transactions in fragmented market segments where quantities of GHG emission reductions are traded. The tradeable commodity is a CO

2

-equivalent allowance. Each carbon credit allowance authorises the emission of one metric ton of CO

2

-equivalent gas

(Tietenberg et al., 1999; Szabo, Hidalgo, Ciscar and Soria , 2006).

The carbon market has been analysed in several studies (Allen and

White, 2005; Derham, 2005; De Soto Blass, 2006). Carbon market transactions include various contract types and sets of buyers and sellers. The carbon market supply segments can be broadly classified as follows:

19



Project–based emission reductions are credited and traded through a project or activity. CDM projects generate certified emission reductions (CERs), whilst the JI mechanism emission reductions trade as emission reduction units (ERUs).



The allowance market or cap-and-trade system is based on Assigned

Amount Units (AAUs) under the Kyoto Protocol, or EUAs under the

European Union emission trading system (ETS) and is regulated at international, national and local levels (Lee, 2004; International

Emissions Trading Association, 2006a).

The carbon market demand consists of the following segments:

Immediate Compliance, pre-Kyoto Compliance (investment at the precompliance project stage based on expectation of CERs), voluntary and retail (Sustainable Development or Climate-neutral) (Lee, 2004).

CDM project activities result in environmental, social and developmental benefits as well as CERs. CERs are used as a financial trading instrument in the carbon economy that enables countries to buy and sell reductions of emissions of GHGs. The value of the carbon benefits is dependent on the number of CERs that flow from the project, the price at which the CERs are traded and the transaction costs involved in securing the CERs (Lee, 2004). The quantities of CERs depend on the

GHG displacement and the crediting period. Projects may either displace carbon-intensive fuels such as coal or capture methane and other GHGs with a high global warming potential.

CERs are obtained through GHG mitigation projects. The supply and demand, and resulting price estimates are based on the gap between the demand from the OECD countries’ Kyoto commitments and the potential for emission reduction (domestic or via trading) (Lee, 2004;

Olsen, 2005). Transaction costs consist of pre-development costs

(search, negotiation, validation and approval), implementation,

20

enforcement and trading or brokerage costs. The net financial gain will be the difference between the CER value and the transaction costs.

The various greenhouse gases have different potentials for global warming and therefore different CER values. For example, one metric ton of methane is equivalent to 21 metric tons of CO

2

. All GHG emission reductions are equated to a common unit of tons CO

2 equivalent

(tCO

2 e), according to their relative impact on the atmosphere (Derham,

2005).

Between 1996 and 2002 project-based transactions dominated the global GHG emission reduction trading - 97% of the total volume traded was CDM/JI-based. This trend has since reversed. The total projectbased CER market volume traded since 2001 has increased from approximately 13 million to 374 million tCO

2 e in 2005 (Table 1).

Table 1. Volumes transacted and corresponding values for allowancebased and project-based transactions (International Emissions Trading

Association, 2006a, p.13).

MtCO2

2004

MUS$ MtCO2

2005

MUS$

1st Q 2006

MtCO2 MUS$

Total Allowancebased transactions

Compliance

of which

CDM

JI other

Voluntary and Retail

16.3

329.3

8,281.5

209.3

6,641.5

107.1

543.6

368.3

2,665.3

79.1

906.1

97.0

9.1

1.0

485.0

54.2

4.4

346.2

17.8

4.4

2,544.3

82.4

38.6

75.6

3.3

0.2

886.9

19.3

-

2.9

5.6

6.1

43.0

0.1

0.6

Total Project based transactions

M= Million

110.0

549.2

374.4

2,708.3

79.2

906.7

21

Comparative studies on market prices for carbon transaction are difficult as there is no central clearing house for these transactions.

The price of AAUs and CERs as determined in the carbon market is highly speculative (Lee, 2004). The average closing spot price for allowance-based transactions (EUA in the European Union) has traded in a band from US$24 to US$30 after the price spiked at US$34.24 per tCO

2 e in July 2005. In May 2006 the EUA slid to a low of US$13.08 on the back of a reported surplus of 50 MtCO

2

in the European Union

(International Emissions Trading Association, 2006a).

There is no single price for CERs, as it is differentiated according to delivery risks, technology type and social development components.

The average price for CERs has risen from US$1.50 in 1998 to

US$11.40 in the first quarter in 2006 (Figure 5).

Figure 5: CER transaction volumes (million tCO2e) and prices US$ per tCO

2

(International Emissions Trading Association, 2006a).

400.0

350.0

300.0

250.0

200.0

150.0

100.0

50.0

-

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

-

Annual volume of project-based transactions

Average price

22

4.8

Summary

Global climate change has been attributed to anthropogenic activity and the rise in atmospheric CO

2

caused by burning fossil fuels. Although global warming is an inexact science, confidence in the ability of models to project and predict future climate change has increased. The projected impact of rising surface and ocean temperatures led to the adoption of the Kyoto Protocol which aims to stabilise the level of atmospheric greenhouse gases. A number of market-based mechanisms have been developed to achieve cost effective GHG emission reductions.

The CDM allows developing countries to participate in climate mitigation projects. The emission reduction credits are traded in the carbon market.

23

5.

5.1

The South African case: Greenhouse gas emissions and CDM project activity

Introduction

South Africa signed the UNCFFF in August 1997, ratified it in August

1997 and acceded to the Kyoto Protocol in June 2001 (Kim, 2003). As a non-Annex I country, it has not committed to reduce GHG emissions and is eligible to host CDM projects. The highly energy-intensive economy and high emissions-intensity offer an opportunity to make the economy more climate-friendly (Ellis, Corfee-Morlot and Winkler, 2004).

This chapter discusses South Africa’s contribution to climate change and its CDM activity as a host country.

5.2

Contribution to climate change

An analysis of South Africa’s major GHG emissions indicated that South

Africa contributed 1.2% to global GHG emissions and 41.9% of the GHG emissions in Africa, making it the highest GHG emitter on the continent

(Figure 6) (Goldblatt et al., 2002; De Wet, 2003). CO

2

contributed approximately 80% of the 430 million tons GHG emissions in 2004. The carbon intensity of 9.66 tons CO

2

per capita represents an increase of

26% over the 1990 level (Table 2). Indicators of South Africa’s GHG emission contribution in comparison with other countries are shown in

Appendix 1 (Energy Information Administration, 2006).

South Africa has built its economy on its competitive minerals and energy sectors with a heavy reliance on energy-intensive industries

(Initial National Communication, 2003). The economy is highly dependent on coal for energy. The comparatively low coal prices have contributed to the establishment of energy-intensive industries with

24

poor energy efficiencies, and to a lack of investment in carbon conservation measures.

Figure 6. Carbon Emissions in Africa (1999) (Energy Information

Administration, 2006).

19.4%

4.8%

9.9%

41.9%

South Africa

Egypt

Nigeria

Algeria

Libya

Other Africa

10.0%

14.1%

Table 2. CO

2

indicators for 2004 (Energy Information Administration,

2006).

Per capita CO

2

from fossil fuels (Tons CO

2

/capita)

Total CO

2 from fossil fuels (Million tons)

CO

2

from Petroleum (Million tons CO

2

)

CO

2

from Natural Gas (Million tons CO

2

)

CO

2

from Coal (Million tons CO

2

)

World

Total

4.2

27,044

10,850

5,602

10,592

South

Africa %

9.7

430

72.6

4.6

352.3

1.6

0.7

0.1

3.3

The high GHG emission intensity in South Africa is due to the reliance of its economy on fossil fuels. Energy-related CO

2

emissions (2004) in

South Africa were 430 million metric tons, of which coal contributed

82%, oil 17% and natural gas 1% (Energy Information Administration,

2006). The primary energy sector analysis is shown in Figure 7. The industrial and transport sectors also contribute significantly, given the bulky nature of key resource products and the distances involved in transporting products and people (Figure 8).

25

Figure 7. Primary energy sector in South Africa (United Nations

Industrial Development Organization, 2003).

Gas

1.5%

Nuclear

3.0%

Biomass

5.1%

Pet roleum

16.5%

Coal

73.9%

Figure 8. South Africa's greenhouse gas inventory by sector, 1994.

(Goldblatt et al., 2002).

No n-energy emmissio ns

A griculture

Waste

4%

9%

Industry

8%

Fugutive emissio ns

2%

Other energy

7%

Transpo rt

11%

Industrial Energy

14%

Energy Industries

45%

Future emission trends will be dependent on population and economic growth which drive energy use and technological trends. Energy intensity is likely to reduce in the longer term, driven primarily by a greater need for energy conservation because of scarcity and global

26

5.3

climate change. Energy prices will further increase in the future due to a supply-demand imbalance. South Africa is also maturing economically which may see a shift from a dependence on energy-intensive heavy manufacturing industries to light industry and services (McDonald and

Van Schoor, 2005).

South African CDM activity

South Africa is not yet a major player in the global carbon market.

Immink (in Salgado, 2006) at PricewaterhouseCoopers’ sustainability division believes that the main reason for limited CDM activity in South

Africa is that the process of securing approval for projects and environmental impact assessments is onerous, even before the CDM was introduced. Kim (2003) and Olsen (2005) were also of the opinion that the current institutional framework has a limited capacity to implement projects. Furthermore, CDM projects must not only reduce

GHG emissions, but must also meet domestic legal provisions and contribute towards national and sustainable development objectives such as the creation of employment and the alleviation of poverty

(Department of Environmental Affairs and Tourism, 2004; Brent,

Heuberger and Manzini, 2005).

The estimates of the size of the CDM market in South Africa vary considerably. The National Strategic Study by Goldblatt et al. (2002) estimates the range at 400–2600 MtCO2e or US$ 1–7 billion. Immink

(in Salgado, 2006) estimated South Africa’s potential for CERs as R5.8 billion over the next 10 years - this applied to six South African projects that were eligible for carbon credits by March 2006 (based on Є8 per ton of CERs and an exchange rate of ZAR10 to the Euro).

27

5.4

5.5

The Kuyasa Low-income Housing Energy Upgrade project was the first

South African CDM project registered by the EB on August 29, 2005

(Southsouthnorth, 2005). The South African Designated National

Authority has approved 24 projects from various project developers by

October 2006. These projects cover a wide range of aspects, including power generation, coal switching, bio-diesel, waste gas and energyefficiency projects (Designated National Authority, 2006).

Analysis of South African CDM projects

The project design documents of five registered (one awaiting registration) projects were used to identify the key characteristics of the

CDM projects (Table 3).

Discussion of results

The five South African registered CDM projects were all energy related: fuel switching (from coal to gas), energy efficiency, and recovery of waste or landfill gas for power generation. The project sizes range from small-scale to large and total emission reductions amount to 638,446 tons CO

2

equivalent. This equates to less than 1% of the total CERs issued to registered (or submitted for registration) projects by October

2006). The main sustainable development criteria included improved energy efficiency, alternative or renewable energy sources, improved air quality and work environment and the creation of employment.

28

Table 3. Summary of registered South African CDM projects (Executive Board, 2006).

Project

Ref

Title / Summary

Project

Activity

Status

Host Parties Other Parties

Activity

Category

(Sectoral

Scope)*

Methodology *

Reductions tons CO2e

/year

Crediting period

Sustainable Development Criteria

79

177

358

446

Kuyasa low-cost urban housing energy upgrade project,

Khayelitsha (Cape Town)

Lawley Fuel Switch Project- conversion from coal to (Sasol) natural gas for clay brick kilns at Lawley Brick Factory

Rosslyn Brewery Fuel-

Switching Project - coal to natural gas.

Registered

2005/08/27

Registered

2006/03/06

Registered

2006/09/29

PetroSA Biogas to Energy

Project - biogas from anaerobic digestion of waste process water for generation of electricity to be used onsite.

Registered

2006/09/29

South Africa,

City of Cape

Town

South Africa

Corobrik (Pty)

Ltd.

South Africa

South African

Breweries Ltd.

South Africa

MethCap SPV1

(Pty) Ltd n/a

Netherlands

Statkraft

Markets BV n/a n/a

1

4

4

1

AMS-I.C. ver. 5

AMS-II.C. ver. 5

AMS-II.E. ver. 5

AM0008

AM0008

AMS-I.D. ver. 9

545

Durban Landfill-gas-toelectricity project – Mariannhill and La Mercy Landfills: collection of landfill gas for production of electricity.

Submitted for registration

South Africa

Durban Solid

Waste (DSW), eThekwini municipality.

Netherlands

International

Bank for

Reconstruction and

Development

1 AM0010

* Key

Total

Sectoral Energy industries (renewable - / non-renewable sources)

Sectoral Energy Efficiency Improvement Projects: Type II. E. Energy Efficiency and Fuel Switching Measures for Buildings.

Type II Energy Efficiency Improvement Project project sponsor

Sectoral Manufacturing industries

6,580

01 Sep 05 - 31 Aug

12 (Renewable)

19,159

100,941

29,933

638,446

01 Jan 05 - 31 Dec

14 (Fixed)

01 Jun 07 - 31 May

14 (Renewable)

01 Aug 06 - 31 Jul

16 (Fixed)

481,833 1 July 2006 -

Improved end-use energy efficiency;

‘energy poverty’ alleviation; increased use of renewable energy; less pollution; environment and health benefits; employment creation for small–scale emerging contractors.

Improved working environment; reduction in air pollution; reduction in GHG emissions

(direct CO

2

, indirect methane); internal technology transfer.

Improved working environment; reduction in air pollution; health benefits; cleaner technology; lower electricity use; reduction in GHG emissions.

Adds independent power producer, adds to

SA's energy supply, energy diversification through renewable energy; energy efficiency; lower electricity; employment creation; social investment.

Generation and supply of electricity to grid; conversion of landfill methane;

GHG emissions.

reduction in

AM0008

Industrial fuel switching from coal and petroleum fuels to natural gas without extension of capacity and lifetime of the facility

AM0010: Landfill gas capture and electricity generation projects where landfill gas capture is not mandated by law

AMS-I.C. Thermal energy for the user

AMS-I.D

Grid connected renewable electricity generation

AMS-II.C Demand-side energy efficiency programmes for specific technologies

AMS-II.E Energy efficiency and fuel switching measures for buildings

29

5.6

Summary

South Africa has a highly energy-intensive economy, based on fossil fuels, and contributes 1.2% to global GHG emissions. Energy related

CO

2

emissions contribute approximately 80% (430 million tons in 2004) to greenhouse gas emissions in South Africa. Although it has not committed to reduce GHG emissions during the first commitment period, it has a particular responsibility as a developing economy to respond to the climate change challenge.

Participation in the CDM has been very limited, with only four projects registered with the Executive Board (October 2006). The registered projects are all energy-sector specific with a total annual GHG reduction potential of 640 thousand tons CO

2

-equivalent, equating to less than

1% of CERs issued to registered projects.

30

6.

6.1

South African cement industry

6.2

Introduction

The history of cement dates back to the mid-16th century, but actually began in 1824 when Joseph Aspdin patented “Portland” cement. This process is still the basis for more than 90% of the cement manufactured in the world (Batelle, 2002).

Cement is a homogenous product and a global commodity. There is very little product differentiation and products from different producers can generally be substituted for each other. The cement industry is an energy and capital intensive industry. The global cement industry produces 1.6 billion tons of cement annually. Annual South African production volume is 13-14 million tons. The industry is consolidating globally, but large, international firms still account for less than onethird of the worldwide market. Cement is a heavy, low value product and long distance transport is limited by high transportation costs

(Battelle, 2002; Sheath, 2005).

Regulation of cement

The cement industry had been regulated in South Africa since 1999 through Harmful Business Practices Act which will be replaced by the

Consumer Protection Act. The Consumer Protection Division of the

Department of Trade and Industry (DTI) is the regulator for cement at present, but will hand over the responsibility of the proposed regulation of cement to the South African Bureau of Standards (SABS) through a compulsory specification. This will remove the SABS Mark Scheme as a technical barrier to trade (Sheath, 2003; Cohen, 2006).

31

6.3

Cement products

Cement is manufacture to specifications of the European Norm standard, EN 197-1 for Common cements (SANS 50197-1) or EN 413 for masonry cement. The standard covers cement types based on composition and strength classes, with specifications for performance and conformity criteria (South African Bureau of Standards, 2000;

2004). The common cements are classified into five main types (Table

4). The full list of EN 197-1 common cements and their composition is given in Appendix 3.

Table 4. EN 197-1 Common cement types (South African Bureau of

Standards, 2004).

Type Description

I Portland cement

Composition *

95% clinker content

IIA Portland-composite cement Extender content of 5-20%

IIB Portland-composite cement Extender content of 20-35%

IV Pozzolanic cement ** Not manufactured in South Africa

Blend with up to 65% of several extender types.

* Calcium sulphate is excluded from the calculation of constituent mass.

** Type IV cement is not currently being manufactured in South Africa. Pozzolanic refers to siliceous and/or aluminous materials which in a finely divided form, when mixed with water have cementitious properties.

The main constituents that may be used in the manufacture of EN 197 common cements are specified by the standard. Portland cement clinker and some form of calcium sulphate (usually gypsum) are the basic constituents of all cement types. Ordinary Portland cement (OPC) contains a minimum of 95% clinker. Other supplementary main constituents (smc) (e.g. ground granulated blast furnace slag, fly ash and limestone) may be added to achieve specific product properties, to decrease the cost of production or to extend production capacity. In

32

6.4

addition to the main constituents, minor additional constituents (mac) may be added to a maximum of 5% (South African Bureau of

Standards, 2000; 2004).

Cement production

Cement consumption in Africa is still low in comparison with global figures – the continent consumed approximately 5% of global production at an average of 91kg per capita, while in South Africa the cement consumption was 202kg per capita in 2002 (Figure 9)

(Humphreys and Mahasenan, 2002).

Figure 9: Cement consumption by region (Humphreys and Mahasenan,

2002)

Former

USSR

3%

Europe

16%

Oceania

1%

Africa

5%

America

14%

Apparent Consumption kg per capita

Africa 91

America 271

Asia (excluding China) 173

China 458

Europe 416

Former USSR 136

Oceania 310

World Average 259

China

37%

Asia (excl.

China)

24%

There has been sustained growth in the South African cement market over the last five years. The cement sales trends for 2001 to 2006 are shown in Table 5. In 2005 there was a notable shift away from CEM IIA to CEM IIB products (Figure 10). This strategy reflects the move towards resource productivity and lowering of CO

2

emissions. The sales of fly ash and ground granulated blast furnace slag (GGBS) reflect direct sales to concrete producers. ‘Other’ sales are those of cementitious products that fall outside the definition of ‘ordinary and extended cements’ (Cement and Concrete Institute, 2006a).

33

Demand for cementitious products is expected to remain strong.

Cement production and consumption have a direct relationship with almost all economic activities and closely follow economic trends (Szabo

et al., 2006). The medium-term budget policy statement, released by the National Treasury in November 2005, highlighted that cement supply is “under pressure due to limited output capacity”. It stated:

“Cement production capacity is 14.2 million tons a year and cement demand is expected to increase to 17 million tons by 2010” (Gedye,

2005). Demand has now exceeded cement production capacity and all the South African cement producers have announced investment in capacity expansion. Most of the producers are importing clinker or cement to fill the shortfall.

34

Table 5. Cement sales trends 2001-2005 (Cement and Concrete

Institute, 2006a).

Region

Limpopo Province

Mpumalanga

Gauteng

Free State

KwaZulu-Natal

Eastern Cape

North-West Province

Northern Cape

Western Cap

Domestic Total

Lesotho

Botswana

Namibia

Swaziland

Regional Total

2001

793,375

592,216

2,878,111

377,508

1,192,871

470,223

615,908

156,113

963,006

8,039,331

170,740

498,195

290,265

166,656

1,125,856

2002

768,894

596,656

3,089,956

351,565

1,270,449

507,500

714,472

160,754

1,051,605

8,511,851

148,999

530,176

272,796

159,867

1,111,838

2003

770,469

626,461

3,209,474

388,718

1,440,235

731,008

695,760

156,854

1,086,487

9,105,466

126,094

539,239

254,251

138,120

1,057,704

2004

857,500

748,324

3,809,759

459,791

1,617,193

938,651

723,388

179,512

1,356,147

10,690,265

111,427

531,285

267,275

135,748

1,045,735

2005

939,965

874,027

4,318,569

508,177

1,854,289

867,683

786,353

163,793

1,621,969

11,934,825

108,913

458,541

286,958

186,022

1,040,434

% Growth

05 vs04

9.6%

16.8%

13.4%

10.5%

14.7%

-7.6%

8.7%

-8.8%

19.6%

11.6%

-2.3%

-13.7%

7.4%

37.0%

-0.5%

Total

9,165,187 9,623,689 10,163,170 11,736,000 12,975,259

10.6%

Sector

Mining

Concrete products

Readymix producers

Resellers

Civil Construction

Building

Blenders

Other

Total

221,988

1,513,676

1,036,998

4,564,945

444,611

715,514

450,041

217,414

9,165,187

232,785

1,621,599

1,190,036

4,776,806

409,222

665,579

508,294

219,367

252,490

1,664,447

1,274,538

5,067,927

428,944

648,150

606,380

220,294

241,840

1,968,461

1,547,340

5,889,771

366,949

704,425

780,609

236,605

269,580

2,073,049

1,890,301

6,443,772

539,427

693,396

833,251

232,486

9,623,688 10,163,170 11,736,000 12,975,262

11.5%

5.3%

22.2%

9.4%

47.0%

-1.6%

6.7%

-1.7%

10.6%

CEM I

CEM IIA

CEM IIB

CEM II/CEM V

Masonry MC 12,5

Slag

Fly-ash

Other

2,977,067

2,714,994

1,839,139

488,212

16,418

495,645

105,541

528,170

9,165,186

2,146,053

3,605,715

2,278,044

494,416

456

501,777

118,808

478,419

2,198,581

4,341,624

1,735,430

697,796

0

585,760

136,726

467,253

2,695,651

4,112,947

2,274,110

1,214,726

0

670,535

159,532

608,500

3,547,641

3,256,687

3,235,831

1,423,387

0

746,261

182,317

583,138

9,623,688 10,163,170 11,736,001 12,975,262

31.6%

-20.8%

42.3%

17.2%

11.3%

14.3%

-4.2%

10.6%

35

Figure 10. Cement sales by type 2001-2005 (Cement and Concrete

Institute, 2006a).

15,000,000

12,000,000

9,000,000

6,000,000

Other

Fly-ash

Slag

Masonry MC 12,5

CEM III/CEM V

CEM IIB

CEM IIA

CEM I

3,000,000

6.5

0

1999 2000 2001 2002 2003 2004 2005

Industry structure

Prior to 1996 the cement industry operated as an acknowledged cartel.

The South African Cement Producers Association (SACPA), consisting of

Alpha Cement, Blue Circle Cement and Pretoria Portland Cement, was dissolved in 1996 after price collusion was banned in South Africa.

From 1986 to 1996, when the cartel was dissolved, cement price adjustments were made under the supervision of the Competition Board

(De Wet, 2003).

The structure and capacity of the industry have remained relatively unchanged since the mid-1980s, though ownership has changed. The industry in South Africa has a concentration ratio of 100% - the clinker production base of approximately ten million tons of clinker is shared by four producers: Holcim South Africa (Pty) Ltd, Lafarge South Africa,

Natal Portland Cement (NPC) and Pretoria Portland Cement Company

Limited (PPC). Cement production is estimated at 12.5 to 14 million tons (Sheath, 2002, 2005; International Cement Review, 2003;

Department of Minerals and Energy, 2003). The clinker and cement

36

production facilities in South Africa are listed in Table 6 and the location of the facilities is shown in Appendix 4. The cement products that are available from each producer are listed in Appendix 5.

6.5.1

Holcim

Holcim South Africa is wholly owned by Altur Investments (Pty) Limited, in which 54.4% of the shareholding is held by Holcim Limited

(Switzerland) and 45.6% by Aveng (South Africa). Holcim Limited is one of the largest global players in the cement, readymix concrete and aggregate markets (Wood, 2005). Holcim SA also owns Slagment (Pty)

Limited (Aveng, 2005a). Holcim SA announced in August 2006 that they will be selling 85% of their share in the cement business to a Black

Economic Empowered consortium (Cockayne, 2006).

Holcim SA owns two clinker production facilities at Ulco, Delportshoop

(Northern Cape) and Dudfield, Lichtenburg (North West). Holcim SA has between 30% and 34% local cement market share, with a cement capacity of 4.1 million tons per annum (Aveng, 2005a).

The first Holcim cement factory was commissioned in Roodepoort in

1935. The four wet-process kilns were decommissioned in 1984 due to operational inefficiency. Roodepoort now operates as a cement milling and packing plant. This facility will be expanded to double its current annual production capacity of 650 000 tons and also to reduce energy requirements and particulate and gaseous emissions (Aveng, 2005b;

Wood, 2005).

37

Table 6: Overview of South African Production Facilities.

Holcim

NPC

Facility

Hercules

Slurry

Dwaalboom

Number of kilns

2

4

1

Key

HK 4

HK 5

SK 5

SK 6

SK 7

SK 8

DBK 1

DBK 2

Riebeeck 2

De Hoek

Port Elizabeth

Jupiter

Dudfield

Ulco

Lafarge Lichtenburg

Simuma

2

1

1

2

1

3

1

2

RK 2

DHK 5

DHK 6

PEK 1

JK3

DFK 2

DFK 3

UK 5

LK 4

LK 5

LK 6

LK7

NPC 1

NPC 2

Figures in italics are best estimates

Data compiled from various sources:

1

6

7

8

4

5

2

3

Environmental Business Strategies (EBS) (2006)

World Cement Directory (2002), Cembureau

Deutsche Bank Conference (September 2005)

PPC press release (1998) www.ppc.co.za

World Cement (2006), www.worldcement.com

Aveng Annual Report (2005)

Creamer Media's Mining Weekly (2006)www.miningweekly.co.za

Business Report (29 May 2006)

Kiln types

1 Stage Preheater

4 Stage Preheater

Long Dry

Long Dry

1 Stage Preheater

4 Stage Preheater

5 Stage Preheater

Not specified

1 Stage Preheater

4-Stage Preheater

4-Stage Preheater

Long Dry

1 Stage Preheater

2-Stage

Pre-calciner

4Preheater+Precalciner

4-stage Preheater

4-stage Preheater

4-stage Preheater

Not specified

Dry with preheater

Not specified

Date

Commissioned

1965

1974

1959

1960

1968

1976

1985

2008

1959

1968

1974

1980

1966

1971

1972

1977

1985

1969

1973

1982

2008

1983

2007

Capacity (t/a)

Total capacity per plant

Future

Capacity (t/a)

230,000

350,000

170,000

170,000

350,000

830,000

640,000

240,000

280,000

400,000

480,000

250,000

440,000

750,000

630,000

1,200,000

300,000

750,000

950,000

600,000

Total

580,000

1,520,000

640,000

-

520,000

880,000

250,000

440,000

1,380,000

1,200,000

2,000,000

-

600,000

-

10,010,000

1,000,000

800,000

450,000

2,250,000

1,2

1,2

1,2

2

7

2,9

8

2,3,4

1,5

2

1

1,2

1

1,2

2

2,6

38

6.5.2

Lafarge

Lafarge South Africa is part of one of the world’s biggest cement producers. The South African operations were previously owned by Blue

Circle. The cement production facility at Lichtenburg, North West

Province has a capacity of 2.4 million tons per year. Lafarge recently announced that it would expand the Lichtenburg facility by one million tons, completion being set for 2008.

The depots at Kaalfontein (Kempton Park), Pietersburg and Nelspruit have blending facilities. The Richards Bay depot in northern KwaZulu-

Natal has a clinker milling unit as well (Lafarge; 2006).

6.5.3

Natal Portland Cement

Natal Portland Cement (NPC) is owned by Cimentos de Portugal

(Cimpor). The three major ex-cartel companies sold their equal shares in NPC to Cimpor, in 2002. NPC owns a production facility at Simuma, inland from Port Shepstone, in southern KwaZulu-Natal and a milling facility in Durban. The capacity at Simuma will be increased by 60% with the addition of a second kiln. The new kiln, with improved fuel and power efficiencies will be commissioned by August 2007 and will

(Enslin, 2006).

6.5.4

Pretoria Portland Cement

Pretoria Portland Cement Company Limited (PPC) started operations on the Daspoort farm on the outskirts of Pretoria as 'De Eerste Cement

Fabrieken Beperkt' in 1892. At year-end 2005, PPC was a 71.6% owned subsidiary of Barloworld Limited (Pretoria Portland Cement, 2006a).

39

PPC owns seven clinker production facilities in South Africa:

Hercules currently has two kilns in operation. The limestone for the

Hercules operation is mined at the Beestekraal Quarry and railed approximately 80km to the factory.

The Slurry manufacturing plant is located in the North West Province in the Mafikeng Municipality. PPC Slurry was the second PPC cement factory to be established.

The De Hoek manufacturing plant is located in the Western Cape

Province near Piketberg. It was commissioned in 1921, and was previously owned by Cape Portland Cement (CPC). CPC was acquired by

PPC in the 1950s. The limestone for De Hoek is mined at the adjacent

Zoutkloof Quarry.

PPC Port Elizabeth was commissioned in 1928, with one kiln in operation. The limestone is mined at the PPC Grassridge quarry approximately 40km from the PE factory, and transported via rail to the factory.

The Riebeeck factory is located in the Western Cape Province near

Riebeeck West. It began operations in 1960 and produces clinker from two kilns. Limestone is mined at the Riebeeck quarry adjacent to the factory.

The Dwaalboom factory near Thabazimbi was commissioned in 1985 and immediately thereafter mothballed due to a market turndown. The factory commenced production in 1996. The raw materials are mined at the Dwaalboom quarry adjacent to the manufacturing plant. A new kiln line will be constructed at Dwaalboom at a cost of R1.36-billion; it is expected to be operational by April 2008 (Pretoria Portland Cement,

2006b).

40

The Jupiter factory was recommissioned for production in 2006 after being mothballed in 1997.

6.5.5

Secondary producers

Several secondary producers exist in the market. These are referred to as “blenders”, as they purchase cement (CEM I or CEM IIA products) which they blend with secondary materials such as fly-ash and slag. The blender sector produces an estimated 1.6 million tons of blended

6.6

cement (Rougemont in Theunissen, 2006). The blenders manufacture mostly CEM V products with a specified clinker content of 40-60%, and a clinker to cement ratio of 0.5. The current SABS Mark holders and their respective products are listed in Appendix 6.

Associated organisations

 The Association of Cementitious Material Producers (ACMP) was established in 2002 after SACPA was effectively split into two independent organisations, namely, the Cement and Concrete

Institute (C&CI) and the ACMP. The focus of the ACMP is primarily on industry related issues such as health and safety, environmental and technical innovation. The ACMP also lobbies, on issues of national interest, with government parastatals and with other stakeholders in the industry (Association of Cementitious Material Producers, 2006).

 The Cement and Concrete Institute (C&CI) is a concrete marketing organisation that provides information, technical, education, regulatory, research and marketing services to users and decision makers in the building and construction market in southern Africa

(Cement and Concrete Institute, 2006a).

 Ash Resources (Pty) Ltd is 75% owned by Lafarge SA and 25% by

Roshcon, a subsidiary of Eskom. Ash Resources owns and operates production plants adjacent to various Eskom power stations and

41

6.7

functions as an independent organisation. Ash Resources produces a refined ash product which is used (inter alia) as an extender in cement (Ash Resources; 2006).



Slagment (Pty) Ltd. was set up in the 1960s to purchase raw slag from Iscor and then refine the slag into what is known as ‘slagment’.

Three of the cement producers, Holcim, Lafarge and PPC held equal shares in Slagment. Holcim acquired the shares held by Lafarge and

PPC in 2004 (Competition Tribunal, 2004). Slagment is used mostly as an extender for cementitious products or as a backfill in the mining industry. Cimpor and PPC Saldanha also produce and sell a milled slag.

The cement manufacturing process

The cement manufacturing value chain starts with equipment suppliers and the extraction of raw materials, and extends through the manufacturing process to concrete production and applications in construction. There are a number of distinct production steps in cement manufacture: (Gardeik, 2002; Szabo et al. 2006).

 Mining and crushing of raw materials.

 The preparation, homogenisation and milling of raw meal – a blend of limestone and other materials containing silica, alumina and iron oxides. Cement manufacturing consumed 58% (11.3 Mt in 2004) of all primary carbonates (limestone and dolomite) mined in South Africa

(Agnello, 2005).

 The raw meal is then heated to a temperature of 1450 o

C in a rotary kiln where the materials react chemically to form clinker.

 The clinker is then cooled and milled with small quantities of gypsum and other additives, fillers and extenders to produce cement.

42

6.8

The cement manufacturing process is very energy intensive with energy typically accounting for 30-40% of production costs. Historically, fossil fuels such as coal, petroleum coke and a limited amount of natural gas and oil have been used to generate the high temperatures needed to produce cement (Taylor and Gibson, 2003). The grinding of raw materials and clinker is the major contributor to the consumption of electrical energy which typically amounts to 100 kilowatt-hour (KWh) per ton of cement produced (Szabo et al., 2006).

Cement GHG emissions

The main GHG of concern in the cement industry is CO

2

which consists of calcination CO

2

and fossil-fuel combustion products. The process CO

2 for clinker is formed by calcining limestone at temperatures of 900 to

1000°C. For every ton of calcium carbonate, approximately 440kg of

CO

2

is emitted. The calcium oxide content in clinker ranges from 64-

67%, therefore the CO

2

emission from clinker production equate to approximately 0.5 ton/ton clinker. The specific process CO

2

emission for cement production depends on the type of cement and the clinker content (Hendriks, Worrell, De Jager, Blok and Riemer, 2004).

Greenhouse gas emissions from burning fossil fuel depend on the type of fuel used (coal, fuel oil, natural gas or alternative fuels) and the production process efficiencies. Methane and NO x

exist as trace components in the exhaust gas from rotary kilns. Emissions of methane (CH

4

) from cement kilns are typically about 0.01% of kiln CO

2 emissions on a CO

2

-equivalent basis. NO x

emission concentrations of less than five mg/m

3 are also found, just above the detection limit of the measurement procedure. The other GHGs relevant to the Kyoto

Protocol (PFC, HFC and SF6) are negligible and not relevant in the cement framework. The efforts to reduce GHG emissions are therefore

43

directed at CO

2

(World Business Council for Sustainable Development,

2005b).

Many attempts have been made to quantify the global cement industry

CO

2

emissions. The fuel-derived CO

2

emissions can be estimated using the specific energy consumption for clinker production (technology dependent), the carbon content and calorific value of the fossil fuel and the clinker content in the final product. A methodology for calculating and reporting CO

2 emissions was developed for the Cement

Sustainability Initiative (See section 7.2) (World Business Council for

Sustainable Development, 2005b). Cement companies that have voluntary corporate CO

2

reporting systems, or that wish to participate in the CDM have to use the rules of the Protocol to calculate emission levels. CO

2

emission performance is measured relative to a past reference year, often to 1990 which is the “Kyoto base year”.

To calculate emission volume, the data is extrapolated by multiplying specific factors by annual production (Hoenig and Schneider, 2002). On average, the cement industry currently emits around 730 to 990 kilograms of CO

2

per ton of cement produced. The emissions per ton differ because of technology, process energy efficiencies, and varying product clinker content (Humphreys and Mahasenan, 2002)

Indirect emissions from the use of electrical power can be included in the calculations or attributed to the power generating industry. The emissions generated by the steel industry in the production of slag, and power plants in the production of fly-ash, are not considered indirect emissions of the cement industry.

44

6.9

Analysis of South African cement industry GHG emissions

The current GHGs emitted by the South African cement producers were calculated based on the methodology used by the World Business

Council for Sustainable Development (2005b):

1. Clinker production capacity was used assuming operation at full capacity as is currently the case (Table 6). The annual volume was estimated by multiplying the reported (or estimated) daily output by

300 days per annum, equivalent to 82% utilisation to allow for maintenance schedules and shutdowns.

2. Calcination CO

2

was calculated using the annual volume of clinker produced multiplied by a standard emission factor of 510 kg CO2/t clinker for calcination of raw materials. This is based on a typical calcium oxide content of 65% in clinker (World Business Council for

Sustainable Development, 2005b, p.45). No additional corrections were made for limestone composition or discarded dust.

3. Fossil-fuel CO

2

emissions were calculated using theoretical fuel consumption figures and the matching IPPC CO

2

emissions factor for coal (94.6 t CO

2

/GJ for coal) (Lee, 2004, p.60). The theoretical fuel consumption figures per kiln type, published by Grydgaard (1998) were used.

4. Emissions from transport and electricity generation are calculated using a factor of 9.2% of the total emissions (ACMP published ratio in Figure 11). The data analysis and calculations are shown in Table

7.

5. The contribution of the cement industry to GHG emissions was calculated as a percentage of total GHG emissions in South Africa.

The latest available estimate of 411.2 million tons CO

2

-equivalent was used (2003 figures by Energy Information Administration, 2006) and adjusted for a non-energy contribution of 21% (Figure 8).

6. The producer cement product grid in Appendix 5 was used to estimate the clinker factor, based on sales volume per product type and product composition specifications (Table 8).

45

Figure 11: Contributions to CO

2

emissions from clinker production

(average for all South African cement producers) (Association of

Cementitious Material Producers, 2003).

5.4

3.5

0.3

39.3

51.5

Calcination

Coal consumption

Electricity consumption for clinker production

Electricity consumption for finish (cement) milling

Hydrocarbon consumption

46

Table 7: Analysis of South African cement industry GHG emissions

Facility Key Kiln types

Typical

Specific Fuel consumption

MJ/kg

Capacity (t/a)

Heat requirement

(GJ)

Million t CO

2 from fossil fuel *

.

Hercules

Slurry

HK 4

HK 5

SK 5

SK 6

1 Stage Preheater

4 Stage Preheater

Long Dry

Long Dry

4.19 230,000

3.35 350,000

4.61 170,000

4.61 170,000

963.0

1,172

783

Dwaalboom

Riebeeck

SK 7

SK 8

1 Stage Preheater

4 Stage Preheater

DBK 1 5 Stage Preheater

RK 1

RK 2

Long Dry

1 Stage Preheater

4.19 350,000

3.35 830,000

3.01 640,000

4.61 240,000

4.19 280,000

783

1,465

2,780

1,929

1,105

De Hoek

DHK 5

DHK 6

PEK 1

4-Stage Preheater

4-Stage Preheater

Long Dry

3.35 400,000

3.35 480,000

4.61 250,000

Port Elizabeth

Jupiter

Dudfield

Ulco

Lichtenburg

JK3

DFK 2

DFK 3

UK 5

LK 4

1 Stage Preheater

2-Stage

Precalciner

4-Stage PH & calciner

4 Stage Preheater

4.61 440,000

3.77 750,000

3.00 630,000

3.00 1,200,000

3.35 300,000

LK 5

LK 6

NPC 1

4 Stage Preheater

4 Stage Preheater

Dry with Preheater

3.35 750,000

3.35 950,000

3.35 600,000

Simuma

Total

* IPPC standard emission factor for coal 94.6t CO2/GJ coal

10,010,000

1,172

1,340

1,608

1,151

2,027

2,826

1,890

3,600

1,005

2,512

3,182

2,010

35,305

(Million tons)

Total CO

2

from calcination of limestone (total capacity * 0.51 t CO

2

/t)

Total CO

2

from fossil fuel combustion

Total CO

2 from direct emissions

Total CO

Total CO

2

2

from indirect emissions (9.8% (ACMP, 2002)) from cement manufacturing

Total CO

2

in South Africa (Adjusted for 21% non-energy contribution)

Contribution of GHG emissions by the cement industry

5.11

3.34

8.44

0.91

9.35

544.30

0.091

0.111

0.074

0.074

0.139

0.263

0.183

0.105

0.111

0.127

0.152

0.109

0.192

0.267

0.179

0.341

0.095

0.238

0.301

0.190

3.340

%

54.6

35.7

9.7

1.7

47

Table 8. Calculation of clinker factor for the South African cement industry.

Cement type

CEM I

CEM I Adjustment *

CEM IIA

CEM IIB

CEM II/CEM V

Third party CEM V sales**

Clinker content

(range)

Lower

0.95

-

0.80

0.65

0.35

0.50

Upper

1.00

-

0.95

0.80

0.64

0.50

Sales (tons)

2001 2002 2003 2004 2005

2,977,067 2,146,053 2,198,581 2,695,651 3,547,641

-450,041 -508,294 -606,380 -780,609 -833,251

2,714,994 3,605,715 4,341,624 4,112,947 3,256,687

1,839,139 2,278,044 1,735,430 2,274,110 3,235,831

488,212

855,078

494,416 697,796 1,214,726 1,423,387

965,759 1,152,122 1,483,157 1,583,177

Clinker factor range *** Lower

Upper

0.76

0.87

0.73

0.86

0.73

0.85

0.70

0.83

*

CEM I adjusted for sales to third party blenders for further blending

**

The bulk of Third party blender sales are estimated to be CEM V products at a clner ratio of 0.5

***

Masonry MC 12,5 sales were excuded at it made no material difference to the calculations

0.70

0.83

48

6.10

Discussion of results

Using the methodology outlined in section 6.9 and the cement industry data in Table 6, the contribution to the South African GHG emissions was calculated to be 9.35 Mt CO

2

or 1.7%, higher than the ACMP figure of 1% reported in 2003. Sources of difference are:

 Kiln capacity is estimated where exact data is not available.

 Typical and not actual kiln heat requirement data was used.

 The use of standard IPPC emission factors also increases the uncertainty of the calculations.

 The market has grown by 42% since 2001, and the relative increased contribution can be real.

 Accurate total GHG emission figures for South Africa are not available.

The last country GHG audit for submission to the UNFCC was done in

1994 (Initial National Communication, 2003). The GHG estimate of

430 Mt was adjusted for the 21% non-energy contribution, using the

1994 country audit figures (Energy Information Administration, 2006)

 The cement-sector GHG emission equates to 668 kg of CO

2 per ton of cement produced, (9.35 Mt CO

2 at current production volume of 14 Mt cement, excluding the secondary blending operations).

The clinker to cement ratio was calculated within a range. The exact product clinker content of each product is not known, and specification limits were used. There has been an improvement in the ratio from 0.75 to 0.87 in 2001 to a ratio of 0.70 to 0.82 in 2005. On average, South

African cement products contain five percent less clinker with lower CO

2 emissions per ton of product.

49

6.11

Summary

The cement industry in South Africa is highly concentrated with four major producers. The industry includes third party blenders, industry associations and producers of slag and fly-ash. Cement is regulated through the DTI and SABS and has to comply with international standards.

The production capacity is estimated at 10 million tons of clinker or 13-

14 million tons of cement. The cement market has seen sustained growth over the last five years, with demand currently exceeding capacity.

The main GHG of concern is CO

2 which consists of calcination and fossilfuel combustion products. The contribution of the industry to GHG emissions in South Africa was calculated to be 1.7% or 9.4 million tons

CO

2-

equivalent. The current clinker to cement ratio is in the range of

0.70 to 0.83.

50

7.

7.1

7.2

Climate change mitigation and sustainable development

Introduction

The South African cement industry has formulated a sustainable development strategy. Sustainable development is defined as

“development which meets the needs of the present without compromising the ability of future generations to meet their own needs”

(Haegermann, 2002, p 506). In this chapter the cement sustainability initiative is discussed. The reasons why the South African cement industry should respond to the challenges of global climate change are considered. The measures that can be taken to respond to climate change are discussed.

The Cement Sustainability Initiative

The global cement leaders have recognised that future competitiveness depends on sound financial performance with a commitment to social responsibility, environmental stewardship, and economic prosperity.

These three dimensions are referred to as the “triple bottom line” of sustainable development (SD). This led to the Cement Sustainability

Initiative (CSI) to help the cement industry address the emerging needs of the marketplace and the challenges of sustainable development

(Gardeik, 2002).

The “Toward a Sustainable Cement Industry” report was published in

2002 before the ratification of the Kyoto Protocol and the finalisation of the CDM. Critical sustainability issues were identified: climate protection, the use of alternative fuels and raw materials, emission abatement and internal business processes. The report also identified a number of major environmental challenges facing the cement industry:

51



Impact of resource extraction (fossil fuel, limestone and other minerals) upon environmental quality, biodiversity, and landscape aesthetics.



Depletion of non-renewable or slowly renewable resources, specifically fossil fuels.



Emissions that can affect air quality and impact on global climate change (CO

2

, NO

X

and SO

2

, CO, volatile organic compounds (VOC), dioxins, metals, etc.) (Battelle, 2002).

After the first summit in Rio de Janeiro in 1992, an interim balance of the climate mitigation measures agreed to was drawn up in Agenda 21.

This agenda emphasised the critical importance of sustainable development to the economy (Gardeik, 2002; Haegermann, 2002). The

Cement Sustainability Initiative was presented at the World Summit on

Sustainable Development in Johannesburg in August 2002. An agenda for action was formulated to:



Achieve greater resource and energy efficiency and long-term cost savings through process innovations.



Develop innovative products and services to reduce environmental impacts by using by-product and waste materials as alternative fuel and raw materials in cement manufacturing.



Manage climate protection and emissions reduction through the establishment of carbon management programs with medium-term

CO

2

reduction targets and a long-term process and product innovation strategy (Battelle, 2002).

Lafarge, Holcim and Cimpor are members of the Working Group Cement with the WBCSD which commissioned the Batelle Report (ACMP, 2002).

Within the framework of a voluntary commitment, the South African cement producers have committed themselves to reduce total CO

2 emissions per ton of finished product to 1990 levels by 2010. The objectives of the sustainable development strategy is to achieve the targets set in Agenda 21 of the “Earth Summit” in Rio de Janeiro

52

7.3

(1992), the Johannesburg Declaration on Sustainable Development

(2002), the Kyoto Protocol, the Millennium Development Goals, South

Africa’s National Waste Management Strategy and the Polokwane

Declaration on Waste Management of 2001 (Environmental Business

Strategies, 2006). Strategic objectives include compliance to all legislated emission levels; the further reduction of emissions and improved resource productivity. The member companies of the ACMP undertook to publicly report on emissions and emission targets, starting in 2005. Progress is monitored by voluntary submission of emission data (Association of Cementitious Material Producers, 2003).

The impetus for action

Many national governments will adopt carbon management policies as precautionary measures against future cost of impacts and cost of adaptation. The cost estimate of damage from global warming for developing countries is estimated at five percent of GDP or more

(Houghton, 2004). In addition, the developing world faces greater challenges than the developed world, both in terms of the impacts of climate change and a lower capacity to respond to it (DEAT, 2004;

Winkler, 2004).

The cement industry contributes approximately 1.7% of GHG emissions in South Africa which can not be considered significant. The rationale for the South African cement industry to develop a strategic response to climate change is therefore driven by a number of other reasons:

53

 Public concerns about local-level social and environmental impact are growing as stakeholders are becoming more involved. This also drives a demand for products with smaller environmental footprints.

 Government policies and regulations on industrial emissions, operating practices, and health and safety are becoming increasingly stringent and are approaching that of European limits.

 Corporate governance also holds businesses accountable for their policies and practices with respect to human rights and environmental stewardship (Sonnenberg and Hamann, 2006) .

Electronic communication has encouraged demands for global accountability and transparency.

 Climate mitigation measures can significantly contribute towards sustainable development goals for example the creation of employment.

A number of measures that would reduce CO

2

emissions ought to be taken for reasons other than global climate change:

 The price of fossil fuel is continuously rising, and this affects manufacturing costs and economics of cement production substantially. This has already motivated the industry to explore alternatives to fossil fuels.

 The financial liabilities associated with a possible future carbon tax on the industry’s CO

2

emissions will be unsustainable (Humphreys and

Mahasenan, 2002). Energy-intensive industries will face increased manufacturing costs where CERs have to be bought or where a carbon tax is introduced. At €30/ton CO

2 the manufacturing costs for the cement industry will double and make production economically impossible (Gardeik, 2002).

54

7.4

7.5

Reduction of CO

2

emissions through resource productivity

The cement production process is inherently resource intensive. Cement is a low-value, high-volume material with a high material and energy throughput. The resource productivity is determined by the flow of energy, materials and waste. Efficient and effective use of resources can reduce GHG emissions directly and indirectly:

 Direct reduction through eco-efficient use of energy and material resources (section 7.5).

 Indirect reduction through ‘industrial ecology’ - by recovering and finding new ways to use waste and byproducts from other industries.

The use of wastes as fossil fuel substitutes or for clinker replacement is commonly referred to as Alternative Fuels and Raw Materials (AFR)

(

World Business Council for Sustainable Development, 2005a). AFR is discussed in section 7.6.

Energy and materials efficiency

The specific fuel energy requirement for clinker has decreased continuously over the past decades through a change in fuel mix and more energy-efficient equipment (Figure 12). Advances in process technology include a shift from long wet to long dry process kilns with an energy consumption of up to 5000 kJ/kg clinker, to the current multistage cyclone preheater and precalciner kilns with an energy consumption of 3000 kJ/kg. Improved burner design and the development of innovative grinding methods and improved process control have further improved energy efficiencies (Association of

Cementitious Material Producers, 2003; Gardeik, 2002).

55

Raw materials, coal and cement have been milled in ball mills for over a century. Balls mills with an energy consumption of over 25 kWh/t are being displaced by vertical roller mills with a higher capacity and lower energy requirement of less than 17 kWh/t (Stolber, 2002).

Figure 12: Trend in specific fuel energy consumption for clinker production (Gardeik, 2002).

9000

8000

7000

6000

5000

4000

3000

2000

1000

0

1950

Theoretical fuel energy requirement

1960

Drying

1970 1980 1990 2000

7.6

Alternative fuels and raw materials

In the 1970s, cement manufacturers and waste producers in the United

States and Europe began to investigate the possibility of using waste materials in cement kilns to solve two problems: the waste producers were seeking an alternative to landfill or incineration for the disposal of waste, while the cement industry needed to reduce its energy costs

(Environmental Business Strategies, 2006). The focus has been on mineral and energy recovery from waste and byproducts of other industries, which is known as “co-processing”.

56

Using by-products or waste as fuel reduces the amount of fossil fuel needed and lowers the associated environmental impacts. It also decreases the demands on local landfills and incinerators with their associated environmental impacts. Cement kilns can be used to recover energy from many non-hazardous and hazardous wastes and can become an important role player in waste management (World Business

Council for Sustainable Development, 2005a).

Co-processing of solid and liquid hazardous wastes in a cement kiln is proven technology. The high temperature an residence time in a cement kiln has a destruction and removal efficiency (DRE) of >99.99% for most hazardous waste materials (Gaylard, 1995). Kiln temperatures reach 2000°C in the flame of the main burner, 1450°C in the clinker and between 1000 to 1200°C in a precalciner. The residence time of combustion gases in the kiln at sufficiently high temperatures is typically more than five seconds compared to a gas residence time of only two seconds in a incinerator (Environmental Business Strategies,

2006; World Business Council for Sustainable Development, 2005a).

The combustion ash that is produced when burning coal and/or secondary materials in a cement kiln is incorporated into the clinker and then ultimately the final product.

7.6.1

Alternative Fuels

On a mass basis, fuel accounts for ten to sixteen percent of the material requirement of a cement kiln. In some countries, for example

Germany, AFR is a well-developed practice and up to 50% fossil fuel is replaced by alternative fuels (Humphreys and Mahasenan, 2002).

Alternative fuels are predominantly hydrocarbons which are, in the cement manufacturing process, almost entirely decomposed to CO

2

and water. The residue or ash that is formed from fuels is chemically bound

57

in the clinker (Taylor and Gibson, 2003). When alternative fuels are used as a substitute for fossil fuels it is considered to have a zero net effect on the climate (Figure 13). The CO

2

emissions from the combustion of alternative fuels are excluded in calculations of CO

2 emissions generated in the cement production process.

Figure 13. Reduction of CO

2

and other emissions by alternative fuel and resource use (Adapted from Humphreys and Mahasenan, 2006, p B-34)

CO

2

SO

2

NO x

Wastes

CO

2

SO

2

NO x

Fossil Fuels

CO

2

SO

2

NO x

Waste as

AFR

Fossil Fuels

Waste

Disposal

Plant

Cement

Plant

Waste used as AFR in Cement

Plant

Energy efficiency is measured using performance indicators such as specific heat consumption for clinker production (MJ per ton of clinker), alternative fossil fuel rate (alternative fuels as a percentage of thermal consumption) and biomass fuel rate (World Business Council for

Sustainable Development, 2005a).

7.6.2

Alternative raw materials

Clinker is manufactured from limestone as the primary raw material which is blended with other materials such as shale, clay, bauxite, iron ore or sand. One ton of clinker consumes approximately 1.5-1.6 tons of dry raw materials. Cement is produced by milling clinker with gypsum and other pozzolanic materials such as fly ash and blast furnace slag, or fillers such as limestone.

58

Materials previously classified as waste, such as blast furnace slag, flyash and silica fume can form valuable supplementary cementitious materials. These waste materials vary in availability and suitability.

Some of the waste materials are well accepted and have mature technologies, while others are not as well developed. The use of secondary raw materials to substitute clinker indirectly reduces the energy requirement and GHG emissions per ton of product, and benefits the efficient usage of primary raw materials (Glasser, 1996).

The use of alternative materials as major cement constituents is incorporated in the European Cement Standard EN 197-1:2000 (or

South African National Standard 50197-1). Cement can be produced by blending the finely milled components or by intergrinding. The addition of waste material as constituents has to be practicable and be economically viable.

AFR efficiencies can be measured by the AFR rate (consumption of AFR as a percentage of total raw materials) and the clinker/cement factor

(mass of clinker used per mass unit of cement) (World Business Council for Sustainable Development, 2005a). A clinker factor for the South

African industry was calculated in Table 8.

In South Africa the use of alternative materials as clinker substitutes is a well-developed practice (Cement and Concrete Institute, 2006b). The replacement of clinker by other main constituents in the cement will become more important in the future and is one of the best, technically proven approaches for reducing CO

2 emissions (Lindner, Ludwig, Möller and Wächtler, 2002). The following section gives a brief overview of secondary materials currently in use in the production of cement.

59

7.7

Slag

Slag is an environmentally hazardous by-product of steel production. In

Gauteng raw slag is available from Iscor’s Vanderbijlpark works, in

Kwazulu-Natal from Iscor’s Newcastle factory and in the Western Cape from its Saldanha plant. Approximately 85% of the slag is sold to

Slagment.

Slag is economically useful in close proximity from the sources. Slag can be blended with clinker and gypsum to make a Portland-slag cement with a slag content of between 35% and 65%. Slag is also used as an extender in concrete on construction sites. The addition of slag has a cost benefit, as clinker usually is the more expensive constituent.

Fly ash

The coal-based energy sector produces approximately 30 million tons of ash from coal-fired power stations and the production of liquid fuels and chemicals. The utilisation of the ash in concrete or as a pozzolanic cement extender has been the subject of study and research programmes (South African Coal Ash Association, 2006). Cement with fly-ash contents of up to 50% is manufactured in South Africa.

Calcium Sulphates

Synthetic or by-product calcium sulphates are used in place of natural gypsum.

Alternative fuel and raw material initiatives

South African Cement companies have started to substitute fossil fuels with alternative fuels to lower costs and reduce GHG emissions. Sources of alternative fuels in South Africa include used tyres, secondary liquid fuels (recycled solvents, oils and residues), non-recyclable packaging

60

wastes, petroleum coke, sewage sludge pellets and biomass such as paper waste, sawdust, wood chips and waste from bio-fuel production

(Environmental Business Strategies, 2006). Battelle (2002) estimated that the use of alternative fuels can potentially reduce CO

2

by 6% to

16%, with a 12% global average, by 2020. However, waste burning in

South Africa has met with mixed stakeholder reactions, due to concerns about the potential release of toxic chemicals (Groundwork, 2004).

Successful AFR programs require that there should be no adverse effects on equipment, environment or stakeholders. The secondary materials have to be chemically compatible with the process and final products. The projects have to meet with stringent emission legislation.

In addition, waste treatment using thermal processes requires an

Environmental Impact Study (EIA) that requires environmental authorisation in terms of the National Environmental Management Act

(1998), Air Quality Act (National Environment Management, 2004) and

Environmental Conservation Act (ECA) (1989). The waste producers should also be satisfied and participate in viable long-term contracts

(Batelle, 2002).

In South Africa, PPC and Holcim investigated the feasibility of using secondary materials as a fuel supplement. Feasibility and environmental impact studies were carried out at the PPC Jupiter factory in 1991.

However, PPC did not continue the use of secondary materials at the

Jupiter kiln due to temporary closure of the Jupiter kiln operation, resulting from low market demand (Gaylard, 1991). Holcim SA and PPC are conducting Environmental Impact Assessments (EIAs) for the future use of alternative renewable fuels and resources (Aveng, 2005b;

Environmental Business Strategies, 2006).

61

In 2002 Holcim (South Africa) launched Green Cement, a blended cement range that aimed to reduce CO

2

emissions per ton of cement from the 2002 level of 724kg of CO

2

per ton of cement to less than

650kg CO

2

per ton of cement by 2005 (Aveng, 2005a).

A brief discussion on specific initiatives that are currently under investigation or in progress follows:

 The disposal of Spent Pot Liner (SPL) in cement kilns started in 1997.

SPL is a hazardous waste material which originates as a by-product in the BHP-Billiton aluminium smelting process. The effective disposal of

SPL is the largest environmental concern of the aluminium industry as the only options for SPL disposal are storage, expensive chemical treatment and incineration. Carbonaceous SPL is suitable as a secondary fuel and refractory SPL as a secondary source raw material

(Mansfield, 2001). PPC currently co-processes SPL as a secondary material in many of its kilns (Environmental Business Strategies,

2006).

 Holcim South Africa, in a joint venture with Enviroserv Waste

Management recently conducted an EIA for the proposed establishment of a Waste Blending Platform at the Roodepoort plant.

 Approximately 30% of 115 000 tons of tyres that are scrapped per annum in South Africa are re-used. One of the most successful alternatives to landfill is the co-processing of tyres in a cement kiln.

Tyres can substitute up to 40% of the total fuel input in modern precalciner kilns that are fitted with gasifying equipment. The tyres burn to give a residue that is mainly iron, thus also replacing some of the iron-containing raw materials (Meyer, 2006). Possible sustainability benefits include the creation of employment, opportunities for empowerment and the removal of waste streams from areas close to vulnerable communities.

62

7.8

 Coal discards - Because of the high ash content there is some difficulty in burning the discards unless improved combustion technology is utilised.

Summary

Although the cement industry has a large carbon and environmental footprint, it contributes value to society by providing a key product used in developing infrastructure and by offering a solution to the disposal of waste materials. The cement sustainability initiatives in South Africa include the move towards more energy-efficient technology and the introduction of alternative fuel and raw materials in the cement manufacturing process. The use of industrial waste materials such as slag and fly-ash in cement is already an established practice. The

Cement Sustainability Initiative aims to further reduce GHG emissions and improve resource productivity.

The contribution to GHG emissions in South Africa by the cement industry is not significant, but public concerns, government policies and regulations, and good corporate governance demand an appropriate response. The focus on rising fossil-fuel costs also demands that alternative technologies and energy sources are pursued.

63

8.

8.1

8.2

Clean Development Mechanism opportunities

Introduction

The CDM was defined at the Conference of Parties in Kyoto in 1997, but the modalities and procedures for implementation of the CDM was only agreed to at the Marrakech accords four years later (Lee, 2004). The introduction of a carbon trading system has important implications for the cement industry which manufactures products with a high CO

2 emission intensity and relatively low value. This chapter reviews the debates and key issues concerning the CDM. The opportunities for CDM projects in South Africa are explored through an analysis of global cement-sector CDM project activity.

Potential benefits of CDM projects

Apart from the GHG emission reductions CDM projects have the following potential benefits:

 Direct financial gain through carbon finance can significantly improve the financial viability of projects.

The Prototype Carbon Fund reports that CDM funding can improve the internal rate of return for projects by as much as five percent (International Emissions Trading

Association, 2006b).

 Additional foreign direct investment arising from project funding.

 Contribution towards sustainable development e.g. the creation of employment and alleviation of poverty.

 Improved public and shareholder perceptions of environmental integrity.

 Technology transfer, human capacity and institutional building.

 Improved air quality.

(Future Energy Solutions and Energy Research Institute, 2002a;

Goldblatt et al., 2002)

64

8.3

CDM project requirements and key success factors

To participate in the CDM, all the parties must meet the following basic requirements: Voluntary participation, establishment of a National CDM

Authority and ratification of the Kyoto Protocol (Lee, 2004). In addition, inventories have to be submitted annually via national communications.

Critical criteria that must be met include:



Additionality



Sustainable development.

The Kyoto Protocol requires that CDM projects must result in real, measurable and long-term reduction in GHG emission that would occur in addition to any that would occur in the absence of the project activity. GHG emission reduction is measured against baseline emissions and projected reductions are determined and monitored through approved methodologies. The methodologies may be preapproved or newly developed and approved by Executive Board prior to the finalisation of the PDD.

The additionality test for a project is based on at least one of the following considerations (Potvin, 2006):



Where an economically attractive alternative exists;



Where financial, technological, labour and other barriers exist;



Absence of regulation;



Not a business-as-usual scenario and where the CDM component is a decision factor (i.e.: project risk is high/profits low, etc.)

An important objective of the CDM is to contribute to sustainable development in the host countries. The sustainable development should however not be seen as a requirement of the CDM, but a main driver for participation in the CDM (Lee, 2004; Shukla et al., 2004). No common guideline for sustainable development criteria exists, thus each host

65

country has to define its own criteria, indicators and assessment processes. The criteria which are based on social, economic and environmental benefits should also be national development criteria

(Brent et al., 2005). Recommended sustainable development indicators at various levels of influence are listed in Table 9.

Table 9. Sustainable development indicators for South Africa.

Dimensions Global

Environmental development

Economic development

Social development

 GHG emissions

 Biodiversity

 GDP

 GDP/capita

 Human Development Index

National

 Air resources

 Water resources

 Mined abiotic resources

 Land resources

 Macroeconomic efficiency

 Microeconomic efficiency

 Sustainable technology transfer

 Government investment

 Improved social services

 Social equity and poverty alleviation

 Capacity development

 Stakeholder participation

(Compiled from Huq and Heuberger in Brent et al., 2005)

Successful CDM projects have low transaction costs and low risk. These transaction costs arise from the protocol processes which may include intermediaries and the establishment of national structures. Transaction costs and risks should be kept low by establishing robust methodologies, aligning projects with sustainable development goals, building capacity in developing countries where it does not exist adequately, and by institutionalising national responses (Shukla et al.,

2004).

66

8.4

An important success factor is secure delivery guarantees. Successful project participants establish sustainable deals by developing mutually beneficial relationships around project development, access to technology and finance, and project management (International

Emissions Trading Association, 2006b).

CDM project activity

The portfolio of CDM projects in the pipeline has grown rapidly to more than a 1,200 (Executive Board, 2006). By October 2006, 379 projects were registered and a further 59 were submitted for registration

(Appendix 7). The projects were submitted by 37 countries with an expected 90.7 million annual CERs. Almost 50% of the projects are renewable electricity projects and account for approximately 18% of expected credits. A large proportion of projects involve electricity generation from natural gas. Projects that reduce GHGs with high global warming potential account for over 60% of credits.

Current trends of the CDM portfolio show an uneven geographical distribution with a clustering of projects in a few larger developing countries, with China accounting for 29% and India for 18% of the expected credits (Figure 14). Brazil and Korea remain significant contributors of CERs. Although a number of projects in Africa are in the

UNFCCC PDD pipeline, it still only presents less than ten percent of project-based volumes (Silayan, 2005; Ellis and Karousakis, 2006).

67

Figure 14. Host countries with large shares of estimated GHG emission reductions (Ellis and Karousakis, 2006).

8.5

India, 18%

C hina , 29%

Brazil , 11%

Korea , 6%

Mexico , 5%

South Africa ,

5%

Nigeria , 2%

Argentina ,

2%

Vietnam , 2%

C hile , 2%

Other, 18%

Cement sector CDM project analysis

Cement-sector CDM projects have increased from only five registered projects in 2004 to twelve by October 2006 (a further five projects have been submitted for registration) (Ellis et al., 2004; Executive Board,

2006). The project design documents of seventeen cement-sector projects - registered or awaiting review/registration by 29 October 2006

- were analysed to determine the most common factors and methodologies (Appendix 7). The host countries, methodologies, sector activity, GHG emission reductions and sustainable development criteria are summarised in Table 10 and Table 11.

68

Table 10: Summary of registered cement-sector CDM projects (Executive Board, 2006)

Title

Tétouan Wind Farm Project for

Lafarge Cement Plant

“Optimal Utilization of Clinker” project at Shree Cement Limited (SCL),

Beawar, Rajasthan

Replacement of Fossil Fuel by Palm

Kernel Shell Biomass in the production of Portland Cement

Waste Heat Recovery Power Project at

JK Cement Works (Unit of JK Cement

Limited), Nimbahera, Chittorgarh,

Rajasthan

Partial replacement of fossil fuel by biomass as an alternative fuel, for

Pyro-Processing in cement plant of

Shree Cements Limited at Beawar in

Project Activity

Status

23-Sep-05

Host

Parties

Reductions tons of CO2e

/year

Notes SD criteria

Morocco 28,651 Implementation of a 10.2 MW wind farm to supply 50% of the new cement plant electricity demand by a renewable source of energy = wind energy.

Reduce GHGs emissions emitted otherwise by the grid connected thermal power plants, also a reduction in SO2 and NOx

Diversification of the national supply of energy; Local development of renewable energy use; Reduction of dependency on imports of fossil fuels;

Reduction of GHG emissions; national and foreign investments; Clean technology transfer; Job Creation

20-Feb-06

07-Apr-06

15-May-06

18-May-06

21-May-06

(ACC) Blended cement projects at

New Wadi Plant, Tikaria Cement Plant,

Chanda Cement Works, Kymore

Cement Works, Lakheri Cement

Works and Chaibasa Cement Works

GACL Blended Cement Projects in

India

Under Review

India 68,014 Optimal use of clinker by replacing clinker with fly-ash in Portland

Pozzolanic Cement (from 21 to 34% fly-ash). Will conserve resources

(limestone and coal) and reduce direct GHG emissions (coal) and indirect emissions (power generation). Require CDM funding.

Direct and indirect reduction of GHG emissions; Industrial waste utilisation;

Thermal and electrical energy conservation; Resource conservation (less quarrying, biodiversity conservation)

Malaysia 61,946 Lafarge Malayan Cement Bhd (LMCB) developed the technology to substitute 5% of the coal at Kanthan and Rawang plants with Palm Kernel

Shell (PKS) Biomass from the Oil Palm Industry as renewable energy source. Barriers: technology and prevailing practice.

Direct GHG emission reduction. Reduces Malaysia’s dependence on coal imports, also benefits environment by preserving fossil fuels and utilising a waste biomass stream.

India 70,796 Waste heat recovery system by utilising preheater exit gases: Around

45% of heat generated by fossil fuel burning is "lost" through preheater exit gas and radiation heat losses. About 10% is used for the drying of materials. The remainder will be uitlised for electricity generation.

Sustainable industrial economic growth; job creation; reduction in fossilfuel based electricity generation; reduction in CO2 emissions and associated pollution, waste water conservation

India 107,074 Partial replacement (15%) of fossil fuel by biomass fuel (e.g. rice husk, soybean husk, sawdust). Biomass (agricultural byproducts) are available in excess quantities. Technology barriers, not common practice in India.

Based on two cases : PKS and Indocement.

Conservation of fossil fuels, direct reduction of GHG emissions; Biomass supply chain creates employment; Income generation for poor farmers.

India 405,314 Increase in the blending of fly ash in the Suraksha PPC cement The % blend will be increased from 19.5% to 30% and above. Reduce clinker production and the associated CO2 emissions. This requires significant effort and investment.

Environmental impact - conservation of limestone & reduce impact of mining. Fly ash disposal. Conservatio of energy - power shortages are prevalent - will assist India’s development process. Reduction in GHG emissions.

Emission reduction through partial substitution of fossil fuel with alternative fuels like agricultural byproducts, tyres and municipal solid waste (MSW) in the manufacturing of

Portland cement at Grasim Industries

Limited-Cement division South (GIL-

CDS)

Optimum utilisation of clinker by PPC production at Binani Cement Limited,

Rajasthan

29-May-06

18-Jun-06

India 551,829 Increase in fly-ash content at Gujarat Ambuja Cement from 5 to 32%.

Barriers: Quality and brand reputation risks;

India 51,932 Reduction of CO2 emission in the cement production trough partial replacement (30%) of fossil fuels with alternate fuels (coal; lignite and pet coke) with alternative fuels (agricultural by-products (De-oiled rice bran), tyres and municipal solid waste).

Reduced clinker production, lower CO2 emissions. Employment creation for

R&D and fly-ash handling facilities; Resource conservation; Reduction of

GHG; Development of technology

Increased employment; Effective disposal of waste and reduction of methane generation in landfills.

India 21,961 Reduction in clinker by replacing clinker with fly-ash (from 26.2% to

28.2%). Direct and indirect GHG emission reduction; Industrial waste utilisation; Thermal and electrical energy conservation; Resource conservation; Technological barriers; Consumer perception.

Direct and indirect GHG emission reduction; Industrial waste utilisation; thermal and electrical energy conservation; resource conservation

69

Table 10 (continued). Summary of registered cement-sector CDM projects (Executive Board, 2006)

Title

Taishan Cement Works Waste Heat

Recovery and Utilisation for Power

Generation Project

Optimum utilisation of clinker by production of Pozzolana Cement at

UltraTech Cement Ltd. (UTCL),

Andhra Pradesh

“Blended cement with increased blend” at Orient cement’s Devapur and Jalgaon plants in India

Optimal utilization of clinker:

Substitution of Clinker by Fly ash in

Portland Pozzolana Cement blend at

OCL, India

Increasing the Additive Blend in cement production by Jaiprakash

Associates Ltd (JAL)

Century Textiles & Industries Ltd blended cement projects at: • Century cement • Manikgarh cement • Maihar cement

Indocement Blended Cement Project

Optimal utilization of clinker:

Substitution of Clinker by Slag in

Portland Slag Cement at OCL,

Rajgangpur Sundargarh Orissa

Project Activity

Status

24-Jun-06

28-Jul-06

27-Aug-06

11-Sep-06

Review

Requested

Requesting

Registration

Requesting

Registration

Requesting

Registration

Host

Parties

China

India

India

India

India

India

Reductions tons of CO2e

/year

Notes SD criteria

105,894 Waste heat recovery and utilisation for power generation project at Taishan

Cement Works in Shandong, Reduce greenhouse gas emissions through

Significant reduction in pollution (SOx, NOx); conservation of cooling water; creation of additional employment; Supports efficient use and the recovery and use of waste heat. Boilers, flash steam generators and turbine. Technological and financing barriers.

recycling of resources; Increased energy supply from clean energy sources and improved energy security (shortages);

41,838 The project activity entails a reduction of the clinker content by producing the Portland Pozzolana cement (PPC), replacing an equivalent amount of clinker. Investment Barriers include high initial R&D, capex and marketing investment cost; technical and market acceptance.

Sustainable development at the local, regional and global levels: There will be direct (less clinker) and indirect (lower electricity consumption) reduction of GHG emissions, utilisation of Industrial waste and reduction of land pollution and water contamination

83,208 Increased replacement of clinker by of fly ash above prevailing practices in the region. Project will lower GHG emissions. Selected default annual 2% increase in additives. Barriers to implementation: significant market uncertainty (due to customer perception).

Resource conservation (limestone); fly-ash disposal; energy saving - releasing to power-stressed areas; reduced environmental load (pollution) and direct GHG reduction.

12,554 Reduction in clinker content in PPC by increasing fly ash additive from 15-

35% = reduction in GHG emissions. Baseline estimate assumes an annual

2% increase in additives. Technological barriers (fly-ash quality); Market barriers; Infrastructure investment.

Reduction in direct (lower clinker) and indirect emissions of CO2, NOx and

SOx (thermal power plants). Socio-economic benefits development of a value-added supply chain between cement & power industries by using waste products; Better resource utilisation

33,608 Increased level of fly-ash additive to replace clinker in the manufacturing of PPC above levels in geographic cluster. Brand development through

Technical development of PPC grades; Developing technical literature and promotional materials.

153,078 The project activities consist of increasing the fly ash in the cement from

24.2% to 30%. This will reduce clinker production and associated GHG emissions. To qualify additionality, regional best practice is defined.

Barriers include: Technical (early strength), market perception

Reduction in direct (lower clinker) and indirect emissions; Employment opportunities; Resource conservation; Reduced energy requirement leads to enhanced energy security in the region; Waste disposal and pollution reduction.

Employment opportunities; project implementation, R&D, marketing;

Environmental conservation; Fly-ash disposal;

Indonesia 469,750 Manufacture and sell a new type of cement (“blended cement”) under a new Cement Standard - increased proportion of additive materials (coal fly

Sustainability by diversification and conservation of natural resources for production; alternative solution to landfill of fly-ash; employment ash and volcanic ash (trass)) thus reducing the clinker content of cement.

Calcination-, fuel-, and power-related emission reductions.

opportunities; technology transfer; conservation of energy and transfer to power stressed areas will assist India's development.

India 42,346 The project activity aims at reducing clinker content in cement by increasing slag from 42 to 57%. Reduction in onsite GHG emission in process and indirect electricity generated emissions; R& D, infrastructural upgrading; market resistance by the consumers;

Reduction in reduction of CO2, NOx and SOx emissions; Creation of employment and skills development; resource conservation (coal and limestone); waste (slag) disposal;

70

Table 11. Summary of selected data extracted from registered cement-sector CDM projects (Executive Board, 2006).

Project

Ref

42

183

247

284

287

302

304

PKS

JK

ACC

SCL

Key

Tétouan

SCL (FA)

GAGL

Summary category

Renewable energy

Blended cements

Alternative fuel

Waste heat recovery

Blended cements

Alternative fuel

Blended cements

Project Activity

Status

23-Sep-05

Host

Parties

Morocco France

Other Parties

20-Feb-06

07-Apr-06

15-May-06

21-May-06

India

Malaysia France

India

India United Kingdom of Great

Britain and Northern Ireland

18-May-06 India

Under Review India United Kingdom of Great

Britain and Northern Ireland

29-May-06

18-Jun-06

24-Jun-06

India

India

China United Kingdom of Great

Britain and Northern Ireland

Activity

Category

(Sectoral

Scope)*

1

4

4

1

Methodology *

Reductions tons of CO

2 e

/year

Crediting period

AMS-I.D. ver. 5 28,651 0 Oct 05 - 30 Sep 12 (21 years, over three periods of seven renewable years,)

ACM0005 ver. 1 68,014 01 Aug 00 - 31 Jul 10 (Fixed)

ACM0003 ver. 1 61,946 01 May 00 - 30 Apr 10 (Fixed)

ACM0004 ver. 1 70,796 01 Oct 07 - 30 Sep 17 (Fixed)

Number of credit years

21

10

10

10

4

4

ACM0005 ver. 2

ACM0003 ver. 2

ACM0005 ver. 2

405,314 02 April 04 - (Fixed)

107,074 01 April 06 - (Fixed)

551,829 01 Jan 04 - 31 Dec 13 (Fixed)

339

361

366

Grasim

Binani

Taishan

Alternative fuel

Blended cements

Waste heat recovery

438

454

456 Orient

473 OCL

Blended cements

Blended cements

526 Indocemen Blended cements

548

Ultratech Blended cements

JAL

Century

Blended cements

Blended cements

28-Jul-06

Review

Requested

27-Aug-06

11-Sep-06

Requesting

Registration

Requesting

Registration

India

India

India

India

Indonesia Netherlands

India

Finland

United Kingdom of Great

Britain and Northern Ireland

579 OCL Blended cements Requesting

Registration

Total Cement-sector CERs issued (as a % of total)

All CERs issued (16/10/2006 hhtp://cdm.infccc.int Annex x)

India

-

4

4

1 & 4

ACM0003 ver. 1 51,932 01-Apr 05 - 31 Mar 15 (Fixed)

ACM0005 ver. 2 21,961 01 Apr 03 - 31 Mar 13 (Fixed)

AM0024 105,894 01 Jan 06 - 31 Dec 12

(developed for this Project

(Renewable)

4

4

4

4

4

4

4

Activity)

41,838 01 Apr 00 - 31 Mar 10 (Fixed)

ACM0005 ver. 2 33,608 01 Apr 04 - 31 Mar 11

(Renewable)

ACM0005 ver. 3 83,208 01 Apr 02 - 31 Mar 12 (Fixed)

ACM0005 ver. 4 12,554 01 Apr 01 - 31 Mar 11 (Fixed)

ACM0005 ver. 3 469,750 01 Jan 05 - 31 Dec 14 (Fixed)

ACM0005 ver. 3 153,078 01 Oct 06 - 30 Sep 16 (Fixed)

ACM0005 ver. 3 42,346 01 Apr 01 - 31 Mar 11 (Fixed)

2,309,793

16,767,110

(13.8%)

*KEY

Sectoral scope 1

Sectoral scope 4

Energy industries (renewable - / non-renewable sources)

Manufacturing industries

ACM0003 ver. 1

ACM0004 ver. 1

ACM0005 ver. 1-3 Consolidated Baseline Methodology for Increasing the Blend in Cement Production

AM0024

AMS-I.D. ver. 5

Emission reduction through partial substitution of fossil fuels with alternative fuels in cement manufacture

Consolidated methodology for waste gas and/or heat for power generation

Methodology for GHG reductions through waste heat recovery and utilization for power generation at cement plants

Renewable electricity generation for a grid

10

10

10

10

10

21

10

10

7

10

10

10

10

71

8.6

Discussion of results

The key findings of the analysis are:

 The projects are distributed between five host countries - India,

Morocco, China, Malaysia and Indonesia.

 Thirteen projects (76%) originated in India, with one each in the other host countries.

 Only one cement-sector project was registered in 2005, the majority of projects were registered in 2006 or are awaiting registration.

 The twelve cement-sector registered projects contributed 13.7% (2.3 million) of the total CERs (16.8 million) issued by the EB.

 All projects are registered in the Sectoral scope 1 (Energy industries

(renewable- /non-renewable sources) and/or Sectoral scope 4

(Manufacturing industries).

 The majority of projects used the Consolidated Methodology for

Increasing the Blend in Cement Production (ACM0005). This accounts for 81.5% of annual GHG reductions (Table 12). The methodology is applicable to projects that increase the share of additives (extenders) in the production of cement types beyond current practices in the country (or geographic regions in India). Project participants also have to demonstrate that there is no alternative allocation or use for the additional amount of additives (extenders) used in the project activity (Executive Board, 2006).

 The majority of CERs (71%) were issued to India. The Indian cement plants are located in geographical aggregated or clustered regions in and around the limestone reserves of India. This allowed a number of project applicants to comply with the additionality criteria by defining regional manufacturing practices. Regional manufacturing practices are used to define “existing practices” or “business-as-usual” against which project activity baselines are compared.

 Three projects account for 62% of the CERs (Table 13).

72

Table 12. Selected Methodologies for cement-sector CDM project activities.

% of total

Methodology Description annual GHG reductions (tons

CO

2 equivalent)

ACM0003 Emission reduction through partial substitution of fossil fuels with alternative

9.6

ACM0004

ACM0005

AM0024

AMS-I.D. fuels in cement manufacture.

Consolidated methodology for waste gas and/or heat for power generation.

Consolidated Methodology for increasing the blend in cement production.

Methodology for GHG reductions through waste heat recovery and utilization for power generation at cement plants.

Renewable electricity generation for a grid

3.1

81.5

4.6

1.2

Table 13. Cement-sector CER potential (largest contributors as a % of the issued CERs from 17 registered projects).

1

2

3

Rank Project

Host

Country

GACL Blended Cement Projects India

Indocement Blended Cement Project Indonesia

ACC Blended cement projects India

% of issued

CERs

23.9

20.3

17.5

8.7

CDM opportunities

The results and literature review were used to identify opportunities for

CDM project activity in South Africa:

The major opportunities for CDM projects lie in the following:

 The opportunities lie in waste management, either by using alternative fuels or blending cement.

 Improved energy efficiency projects through retrofitting of energyefficient technology. The potential for emission reduction through adoption of the most energy-efficient technology is 15% or 0.5 million

73

tons CO

2

. A significant proportion of energy that is lost through radiation can be recovered for displacement of thermal electricity generation.

Total clinker production capacity

Average specific fuel consumption

(tons/a)

(MJ/kg)

9,830,000

3.55

Benchmark specific fuel consumption (MJ/kg)

Potential for energy reduction

Potential for energy reduction

3.01

(Mt CO

2

) 0.50

15%

(Source: Table 7)

 Fuel switching to gas and renewable energy. This may become feasible when the price differential between coal and gas narrows, or where CDM funding makes this a viable economic alternative. The price of coal (3.74 - 8.61 ZAR/GJ) is much lower than the price of natural gas (21.25 -21.50 ZAR/GJ) (Rosslyn and Lawley CDM PDDs in

Executive Board, 2006).

8.8

Constraints in using the CDM

8.8.1

Capacity

Capacity of the DNA to process project applications is a key factor in attracting investment and minimising investor risk perception. Silayan

(2005) argues that the number of CDM projects a country is able to offer in the market is a direct reflection of how well a country’s DNA performs. In addition, the process of Government approval of

Environmental Impact Assessments must be streamlined to prevent lengthy delays and cost escalation making projects unviable.

74

PricewaterhouseCoopers of South Africa is the only locally present designated operational entity (DOE) that is accredited to conduct validation and verification of the CERs (Moodley, 2006).

8.8.2

Legislative requirements

The successful implementation of CDM projects requires both an effective institutional framework and an environment conducive to CDM participation. The Legislative requirements and governance framework in South African can be onerous. The Department of Environmental

Affairs and Tourism (DEAT) has issued a climate change policy statement and identified the Department of Minerals and Energy (DME) as its main partner in addressing climate change. The National

Environmental Management Policy of 1997 developed from the

Constitution (1996), and gave rise to the Environmental Management

Act of 1998 (Figure 15). The Waste Management Bill is currently being drafted. The national guideline document will be available in September

2006.

Figure 15. Legislative requirements and Environmental Framework

(Yawitch, 2006)

The Constitution (1996)

The National Environmental Management Policy (1997)

The National Environmental Management Act (1999)

NEMA 1st amendment

(2003)

NEMA 2nd amendment

(2004)

ECA 1st amendment

(2004)

Air Quality Act

(2004)

Protected Areas

Act (2004)

Biodiversity Act

(2004)

Waste

Management Bill

75

8.8.3

Baseline and reporting protocol

The current reporting methodology of the Kyoto Protocol measures emission reductions in absolute terms (i.e. total tons) not unit-based reductions (tons per unit of ton of product). The ACMP reports tons

CO

2

/ton of cement produced, which masks the increasing total emissions in a growing market. The figures are also reported in relative terms to a 1990 baseline, and benchmark comparisons are difficult.

There is an argument that the practice of blending products at the manufacturing source restricts the addition of waste as aggregates in concrete. This penalises producers of CEM I products. Where a CEM I product is used in concrete, the addition of slag or fly-ash is common practice, especially in large civil construction projects. Where blended cement is used, more cement is required in the final concrete mix.

8.8.4

Transaction Costs

Transaction costs arise from initiating and completing transactions to secure CERs. These consist of pre-operational costs (search, negotiation, validation, and approval), implementation costs

(monitoring, certification, enforcement) and trading costs (brokerage costs and costs to hold an account in national registry). Several studies show that the transaction cost per ton of CO

2

for small-scale projects is quite significant, while for large projects the costs may be relatively small or even negligible. Given this, it is evident that investors would prefer large-scale projects (Lee, 2004).

76

8.8.5

CDM demand and supply factors

The projected demand and supply balance shows a net surplus of emissions reductions in 2010. The surplus however will only materialise if emissions reductions supply is freely traded in a competitive market

(Szabo et al., 2006).

Developing countries have a limited capacity to implement CDM projects which is made worse by the differing concerns of CDM stakeholders and investors regarding the ability of the CDM to result in sustainable development (Kim, 2003). Stakeholders are concerned about the lack resources, leadership, governance and decision-making procedures at the ministerial level. There is also skepticism concerning the benefits that could accrue from the CDM scheme and the potential impact on the economy and technology market.

8.8.6

Taxation by SA government

The sale of CERs will generate additional income for South African project developers. This will be at the usual corporate tax rate of 30% if this income is treated as normal revenue (Spalding-Fecher, 2002)

77

8.9

Summary

The CDM is a flexible market mechanism that enables Annex I countries to reduce GHG emissions cost-effectively while developing countries benefit through financial investment and transfer of clean-technology to assist in achieving their sustainable development goals.

Thus far, the majority of cement-sector CERs originated in India through cement blending projects. CDM opportunities for the cement sector in South Africa lie in waste management, energy-efficiency improvements, and fuel switching.

Successful CDM projects have to meet, inter alia, additionality and sustainable development criteria. Constraints include a lack of capacity, legislative requirements, relative transaction costs, demand and supply factors, reporting methodologies and taxation issues.

78

9.

Conclusion and recommendations

There is a growing consensus that the sustained and rapid rise in global temperatures over the last century is attributable to human activity.

Global warming is ascribed to greenhouse gas emissions which are primarily due to fossil fuel burning. Although substantial uncertainties in climate modelling remain, scientists project that future climate change will impact on the environment and global economy. Developing countries are most vulnerable to the adverse effects of climate change and also have the least capacity to deal with the impact.

The Kyoto Protocol established targets for reducing greenhouse gas emissions in industrialised countries. It created a framework of market mechanisms to direct investment towards climate change mitigation measures. The Protocol is linked to the developing world through the

Clean Development Mechanism, which allows developed countries to earn certified emission reduction credits through investment in sustainable development projects in developing countries.

The Clean Development Mechanism enables simultaneous progress on climate mitigation, sustainable development and local environmental issues in developing countries. The potential of these benefits should provide a strong incentive for South Africa to participate in this mechanism.

The cement manufacturing process is energy and resource intensive.

Direct greenhouse gas emission arises from the calcination process and burning of fossil fuel, while grinding of materials contributes to indirect emissions. Greenhouse gas emission reduction can be achieved by more efficient energy and raw materials utilisation. Improved energy efficiency can be achieved by using new technology or substituting fossil fuels with waste material or low-carbon alternative sources. Raw material utilisation can be improved by substituting primary raw

79

materials with waste or incorporating waste materials into the final product.

Although the cement industry in South Africa does not contribute significantly to greenhouse gas emissions it still faces the challenges of climate change. A strategic response to climate change is driven by public concerns about local-level social and environmental impacts. The climate mitigation measures are also taken as precautionary measures against future cost of impacts and cost of adaptation, which will be more significant in the developing world. Government policies and regulations on climate-related issues are also becoming increasingly restrictive. Good corporate governance also demands that businesses take accountability for their policies and practices with respect to human rights and environmental stewardship.

The challenges of global climate change and the opportunity for project funding through the Clean Development Mechanism calls for an effective strategy to mitigate climate change and achieve sustainable development goals. The most important initiatives should include carbon management plans, business strategies for the implementation of alternative fuel and raw materials programs, and adoption of energyefficient technology.

Carbon management plans

In the short term significant cost-effective carbon dioxide reductions can be achieved by establishing internal corporate carbon management plans to improve the eco-efficient use of raw materials and fossil fuels.

80

Producers should develop and publish environmental policies on climate protection. Sustainable development criteria should be routinely applied to business decisions and emission reduction projects funded through the CDM should be actively pursued. Current and historical companyspecific and industry-level carbon dioxide emission levels and emission reduction targets should be documented and publicly reported on. This should be done by using the standard emission accounting protocol.

The Association of Cementitious Material Producers has committed to reduce carbon dioxide emissions, and should report progress in a transparent manner.

A cement-sector hazardous waste technical group should be formed with the objective of promoting public-private partnerships for AFR projects in the industry. A Hazardous Waste Technical Group in

Australia advises on technical issues associated with the environmentally sound management of hazardous waste (Australian

Department of Environment and Heritage, 2006).

Alternative fuel and raw materials programs

A business strategy for the implementation of an alternative fuel and raw materials program should be developed. This should allow for increasing replacement of fossil fuel with alternative fuels which have a zero net climate impact. It will require a continuous assessment of waste source, and the impact of waste utilisation on financial, environmental and social benefits.

The share of sales and marketing of blended cement with lower clinker content should be increased. The industry should further influence and promote cement product standards and market practices to influence market perceptions of innovative, but safe cement products with lower

81

CO

2

emissions (Humphreys and Mahasenan, 2002). The Cement and

Concrete Institute can play a major role and should consider this as part of their strategy. The industry should cooperate with stakeholders to develop and influence government policies relating to the use of appropriate alternative fuel and raw materials that will reduce lifecycle carbon dioxide emissions.

It is unlikely that the projects which will increase in extender content will qualify for Clean Development Mechanism funding, as this practice will not meet the additionality requirement. Cement with high extender content (CEM V) is already produced in South Africa, and will exclude projects on the basis of business-as-usual. Regional geographic clustering, as in the case of the Indian cement-sector projects, will not meet project requirements because the market is relatively small.

Opportunities for meeting the additionality requirement could lie in the identification of non-traditional sources of waste that may be suitable for use in cement products.

In the longer term, product innovation should be pursued for radical mitigation solutions. In the future, sustainable development strategies may lead cement manufacturers to change their business models to transform them into waste management companies that use waste for fuel and extract minerals from waste as raw materials.

Energy efficiency

Appropriate process technology should be adopted for improved energyefficiency. Although no wet-process kilns are in operation in South

Africa, the retrofitting of multi-stage preheater and precalciner technology should be considered (Szabo et al., 2006). Rising fuel cost and environmental demands make the capital investment an increasingly attractive option. The overall energy efficiency of the industry and will further improve when the new capacity come on-line

82

and allows the retirement of older long dry kilns. Technology retrofitting projects should qualify for additionality where CDM funding is a decision factor for economic feasibility.

In the medium and longer-term climate change CO

2

reduction measures should allow for the retirement of inefficient equipment. The capitalintensive nature of the cement industry usually implies long-term equipment life.

The Kyoto Protocol and sustainable development strategies should be considered as the first of many steps toward significant long-term GHG emission reductions.

83

10.

Further research recommendations

The research has identified a gap in the understanding of the future impact of consumption and production of cement, rising fuel prices, international trade and capacity investment on GHG emissions in South

Africa. A model should therefore be developed to simulate the effects of demand and supply factors, specifically advances in technology, alternative fuels and materials options and CDM funding. A working model could also assist in matching technology with predicted future capacity.

84

11.

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95

Appendix 1. Carbon emission indicators (Winkler, 2004).

Responsibility / Emissions Capability Renewables Status in negotiations

Country

Australia

Canada

EU

Japan

Russia

US

China

Brazil

India

South Korea

Mexico

South Africa

World

1%

2%

17%

5%

9%

26%

10%

1%

3%

1%

1%

1%

100%

26%

22%

0%

12%

-32%

18%

39%

53%

64%

85%

25%

17%

14%

1.8

0.5

3.0

1.5

2.6

1.6

6.6

6.0

2.9

2.8

3.8

6.6

1.1

73

99

185

125

200

147

193

172

99

104

427

162

201

-11.4%

-7.8%

-18.1%

-2.4%

2.6%

-14.5%

-46.8%

17.6%

-3.6%

2.1%

-11.3%

-1.7%

-13.1%

25,693

27,840

23,645

26,755

8,406

34,142

3,976

7,604

2,358

17,470

8,985

9,466

7,295

9%

61%

15%

10%

19%

9%

17%

90%

14%

2%

19%

1%

19%

Yes

Yes

Yes

Yes

Yes

No

Yes

Yes

Yes

Yes

No

Yes

No

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

96

Appendix 2: Energy Information Administration (2006).

Country Analysis Briefs. South Africa. Online at www.eia.doe.gov.

Profile

Country Overview

Chief of State

Location

Independence

Population (2005E)

Languages

Religion

Ethnic Group(s)

President Thabo Mbeki

Southern Africa, at the southern tip of the continent of Africa

31 May 1910 (from UK)

44,344,136

IsiZulu 23.8%, IsiXhosa 17.6%, Afrikaans 13.3%, Sepedi 9.4%, English 8.2%,

Setswana 8.2%, Sesotho 7.9%, Xitsonga 4.4%, other 7.2% (2001 census)

Zion Christian 11.1%, Pentecostal/Charismatic 8.2%, Catholic 7.1%, Methodist

6.8%, Dutch Reformed 6.7%, Anglican 3.8%, other Christian 36%, Islam 1.5%, other 2.3%, unspecified 1.4%, none 15.1% (2001 census) black African 79%, white 9.6%, colored 8.9%, Indian/Asian 2.5% (2001 census)

Economic Overview

Minister of Trade and

Industry

Currency/Exchange Rate

(2/2/06)

Inflation Rate (Consumer

Mandisi Bongani Mabuto Mpahlwa

Rand (ZAR) US$1=6.0951 ZAR

(2005E): 3.6%, (2006F): 4.2%

Price Index)

Gross Domestic Product

(2005E): $237.1 billion

Real GDP Growth Rate

Unemployment Rate

External Debt (2004E)

Exports (Merchandise)

Exports - Commodities

(2004E): 4.5%, (2005E): 4.4%, (2006F): 4.1%

(2005E): 26%

$27 billion

(2005E): $53,963 million gold, diamonds, platinum, other metals and minerals, machinery and equipment

(1998 est.)

Exports - Partners (2004E)

US 10.2%, UK 9.2%, Japan 9%, Germany 7.1%, Netherlands 4%

Imports (Merchandise)

Imports - Commodities

(2005E): $56,075 million machinery and equipment, chemicals, petroleum products, scientific instruments, foodstuffs (2000 est.)

Imports - Partners (2004E)

Germany 14.2%, US 8.5%, China 7.5%, Japan 6.9%, UK 6.9%, France 6%,

Saudi Arabia 5.6%, Iran 5%

Current Account Balance

(2005E)

$ -9,151 million

97

Energy Overview

Minister of Mineral and

Energy Affairs

Proven Oil Reserves

Lindiwe Benedicta Hendricks

15.7 million barrels

(January 1, 2006E)

Oil Production (2005E)

230.8 thousand barrels per day, of which 15% was crude oil.

Oil Consumption (2005E)

496.2 thousand barrels per day

505 thousand barrels per calendar day

Crude Oil Refining

Capacity (2005E)

Proven Natural Gas

Reserves (January 1,

1.3 trillion cubic feet

2006E)

Natural Gas Production

(2003E)

Natural Gas Consumption

(2003E)

Recoverable Coal

Reserves (2003E)

0.1 trillion cubic feet

83 billion cubic feet

53,737.7 million short tons

Coal Production (2003E)

Coal Consumption

(2003E)

Electricity Installed

Capacity (2003E)

Electricity Production

(2003E)

263.8 million short tons

187.8 million short tons

40.5 gigawatts

215.9 billion kilowatt hours

Electricity Consumption

(2003E)

Total Energy

197.4 billion kilowatt hours

4.9 quadrillion Btus*, of which Coal (75%), Oil (20%), Nuclear (3%), Natural Gas

Consumption (2003E)

Total Per Capita Energy

(2%), Hydroelectricity (0%), Other Renewables (0%)

108.8 million Btus

Consumption (2003E)

Energy Intensity (2003E)

10,942.9 Btu per $2000-PPP**

Environmental Overview

Energy-Related Carbon

Dioxide Emissions

(2003E)

Per-Capita, Energy-

Related Carbon Dioxide

Emissions (2003E)

411.3 million metric tons, of which Coal (82%), Oil (17%), Natural Gas (1%)

9.1 metric tons

Carbon Dioxide Intensity

0.9 Metric tons per thousand $2000-PPP**

98

(2003E)

Environmental Issues

Major Environmental

Agreements

Oil and Gas Industry

lack of important arterial rivers or lakes requires extensive water conservation and control measures; growth in water usage outpacing supply; pollution of rivers from agricultural runoff and urban discharge; air pollution resulting in acid rain; soil erosion; desertification party to: Antarctic-Environmental Protocol, Antarctic-Marine Living Resources,

Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-

Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Marine Life Conservation, Ozone Layer Protection,

Ship Pollution, Wetlands, Whaling signed, but not ratified: none of the selected agreements

Organization

State-owned Petroleum Oil and Gas Corporation (PetroSA) manages the licensing of oil and gas exploration in the country.

BP, Total Elf Fina, Caltex, Shell

Foreign Company

Involvement

Major Refineries

(capacity, bbl/d)

Sapref (172,000), Enfref (135,000), Calref (110,000), Natref (87,547)-Synthetic

Fuel Refineries, Sasol (160,000), PetroSA (45,000)

* The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar, wind, wood and waste electric power. The renewable energy consumption statistic is based on International

Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, industrial and municipal wastes. Sectoral shares of energy consumption and carbon emissions are also based on IEA data.

**GDP figures from OECD estimates based on purchasing power parity (PPP) exchange rates.

99

Appendix 3: Common Cements (South African Bureau of Standards,

2000, p.14)

Main types

THE 27 PRODUCTS IN THE FAMILY OF COMMON CEMENTS

Composition (percentage

Main Constituents

Notation of the 27 products

(types of common cement)

Clinker

Blastfur nace slag

Silica fume

Fly Ash siliceous calcareous

Limestone

Minor additional constituents

CEM l Portland Cement

Portland -slag cement

CEM 1

CEM II/A-S

CEM II/B-S

K

95-100

80-94

65-79

S D 0

-

6-20

21-35

-

-

V

-

-

W L

-

-

-

-

LL

-

-

0-5

0-5

0-5

Portland-silica fume cement

CEM II/A-D 90-94 6-10 0-5

CEM ll

Portland-pozzolana cement

CEM ll/B-P

CEM ll/B-P

CEM ll/A-Q

CEM ll/B-Q

CEM ll/A-V

Portland-fly ash cement

CEM ll/B-V

CEM ll/A-W

80-94

65-79

80-94

65-79

80-94

65-79

80-94

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

6-20

21-35

-

-

-

-

6-20

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

0-5

0-5

0-5

0-5

0-5

0-5

0-5

Portland-burnt shale cement

CEM II/B-W

CEM ll/A-T

CEM ll/B-T

CEM ll/A-L

65-79

80-94

65-79

80-94

-

-

-

-

-

-

-

-

-

-

-

-

21-35

-

-

-

-

-

-

6-20

-

-

-

-

0-5

0-5

0-5

0-5

Portland-limestone cement

Portland-composite cement C

CEM ll/B-L

CEM ll/A-LL

CEM ll /B-LL

CEM ll/A-M

CEM ll/B-M

65-79

80-94

65-79

80-94

65-79

-

-

-

-

-

-

-

-

-

-

-

-

< ------------------------ 6-20 -----------------------

< ----------------------- 21-35 ---------------------

CEM lll Blastfurnace cement

CEM lll/A

CEM lll/B

CEM lll/C

CEM lV/A

35-64

20-34

5-19

65-89

36-65

66-80

81-95

-

-

-

-

-

-

-

-

-

< -------------- 11-35 --------------

CEM IV Pozzolanic cement C

a.

CEM lV/B

CEM V/A

45-64

40-64

-

18-30 -

--------------- >

--- 18-30 ---

CEM V Composite cement C

CEM V/B

20-38 31-50 --- 31-50 --

The values in the table refer to the sum of the main and minor additional constituents.

-

-

b.

c.

21-35

-

-

-

-

-

-

-

-

-

-

6-20

21-35

-

-

-

-

-

-

-

0-5

0-5

0-5

0-5

0-5

0-5

0-5

0-5

0-5

0-5

0-5

0-5 cements CEM V/A and CEM V/B the main constituents other than clinker shall be declared by designation of the cement (for example see clau

100

Appendix 4

Source http://cnci.org.za/annual_review_2006/Review.pdf

101

Appendix 5

102

Appendix 5 (continued)

103

Appendix 6: Secondary Blenders Product Grid.

SABS EN 197-1

Calsiment (Pty) Ltd

Castle Cement CC

Cemlock Gauteng (Pty) Ltd

Cemlock Nelspruit (Pty) Ltd

Craigan (Pty) Ltd (trading as Trojan Cement)

Independent Concrete Supplies cc (t/a Buffalo Cement)

Industrial Dry Milling (Pty) Ltd

Industrial Dry Milling (Pty) Ltd - Kempton Park

Mega Super Cement (Pty) Ltd

Multi Purpose Cement CC

Rustcem Trust

Victory Cement cc

SABS ENV 413-1

Calsiment (Pty) Ltd

Cemlock Gauteng (Pty) Ltd

Cemlock Nelspruit (Pty) Ltd

Craigan (Pty) Ltd (trading as Trojan Cement)

Industrial Dry Milling (Pty) Ltd

Industrial Dry Milling (Pty) Ltd - Kempton Park

Mega Super Cement (Pty) Ltd

Multi Purpose Cement CC

Constructed from various sources.

CEM V A

42,5N

Power Build

CEM III A

32,5N

Calsiment

Buffalo Cement GPC

PBFC, Super Struct

CEM V A

32,5N

Power Build

Cemsure

Cemsure

Trojan All Purpose

Cement

Bestbuild

IDM Bestbuild

Multi Purpose Cement

Power Build

Top Build

MC 22,5X

Calsiment

Cemsure

Cemsure

Trocrete

Valuebuild

IDM Valuebuild

Super Crete

Multi Purpose Cement

MC 12,5X

Super Cement

104

Appendix 7: Executive Board CDM Project Activity (29 October 2006).

Your location: CDM-Home > CDM Statistics 12:15 29 Oct 06

CDM Statistics

Annual Average CERs* Expected CERs until end of 2012**

CDM project

> 1,400,000,000

of which:

--- 379 are registered 100,254,825

> 660,000,000

--- 59 are requesting

6,026,832

registration

> 30,000,000

* Assumption: All activities deliver simultaneously their expected annual average emission reductions

** Assumption: No renewal of crediting periods http://cdm.unfccc.int/Statistics

105

Results on project search for cement-sector

Your location: CDM-Home > Project Activities

Project Search

12:07 29 Oct 06

Total Projects found: 17

Registered

23 Sep 05

20 Feb 06

07 Apr 06

Title

Host

Parties

Other

Parties

Tétouan Wind Farm

Project for Lafarge

Cement Plant

Morocco

“Optimal Utilization of

Clinker” project at

Shree Cement Limited

(SCL), Beawar,

Rajasthan

India

France

Replacement of Fossil

Fuel by Palm Kernel

Shell Biomass in the production of Portland

Cement

Malaysia France

15 May 06

18 May 06

21 May 06

Waste Heat Recovery

Power Project at JK

Cement Works (Unit of

JK Cement Limited),

Nimbahera,

Chittorgarh, Rajasthan

India

Partial replacement of fossil fuel by biomass as an alternative fuel, for Pyro-Processing in cement plant of Shree

Cements Limited at

Beawar in Rajasthan,

India

India

ACC Blended cement projects at New Wadi

India

United

Kingdom of

Methodology * Reductions ** Ref

AMS-I.D. ver. 5

ACM0005 ver.

1

ACM0003 ver.

1

1

ACM0004 ver.

ACM0003 ver.

2

ACM0005 ver.

2

28651 0042

68014 0183

61946 0247

70796 0284

107074 0302

405314 0287

106

Plant, Tikaria Cement

Plant, Chanda Cement

Works, Kymore

Cement Works,

Lakheri Cement

Works and Chaibasa

Cement Works

Great

Britain and

Northern

Ireland

ReviewCorrections

29 May 06

18 Jun 06

24 Jun 06

GACL Blended

Cement Projects in

India

India

United

Kingdom of

Great

Britain and

Northern

Ireland

ACM0005 ver.

2

Emission reduction through partial substitution of fossil fuel with alternative fuels like agricultural by-products, tyres and municipal solid waste

(MSW) in the manufacturing of portland cement at

Grasim Industries

Limited-Cement division South (GIL-

CDS), Tamilnadu,

India.

India

Optimum utilisation of clinker by PPC production at Binani

Cement Limited,

Rajasthan

India

Taishan Cement

Works Waste Heat

Recovery and

Utilisation for Power

Generation Project

China

ACM0003 ver.

1

ACM0005 ver.

2

United

Kingdom of

Great

Britain and

Northern

AM0024

551829 0304

51932 0339

21961 0361

105894 0366

107

Ireland

28 Jul 06

27 Aug 06

11 Sep 06

Optimal utilization of clinker: Substitution of

Clinker by Fly ash in

Portland Pozzolana

Cement blend at OCL,

India

India

Increasing the Additive

Blend in cement

Review Requested production by

Jaiprakash Associates

Ltd (JAL)

India

26 Oct 06

27 Oct 06

Requesting

Registration

Optimum utilisation of clinker by production of Pozzolana Cement at UltraTech Cement

Ltd. (UTCL), Andhra

Pradesh

India

“Blended cement with increased blend” at

Orient cement’s

Devapur and Jalgaon plants in India

India

Century Textiles &

Industries Ltd blended cement projects at: •

Century cement •

Manikgarh cement •

Maihar cement

India

ACM0005 ver.

2

ACM0005 ver.

2

2

ACM0005 ver.

ACM0005 ver.

2

United

Kingdom of

Great

Britain and

Northern

Ireland

ACM0005 ver.

3

Indocement Blended

Cement Project

Indonesia

Netherlands

Finland

ACM0005 ver.

3

Optimal utilization of clinker: Substitution of

Clinker by Slag in

Portland Slag Cement at OCL, Rajgangpur,

India

ACM0005 ver.

3

41838 0438

83208 0456

12554 0473

33608 0454

153078 0548

469750 0526

42346 0579

108

Sundargarh, Orissa.

* AM - Large scale, ACM - Consolidated Methodologies, AMS - Small scale

** Estimated emission reductions in metric tonnes of CO2 equivalent per annum (as stated by the project participants) http://cdm.unfccc.int/Projects/projsearch.html

109

Your location: CDM-Home > CDM Statistics > Registration

Registration

12:24 29 Oct 06

Country

Egypt

El Salvador

Fiji

Guatemala

Honduras

India

Indonesia

Israel

Jamaica

Malaysia

Mexico

Argentina

Armenia

Bangladesh

Bhutan

Bolivia

Brazil

Cambodia

Chile

China

Colombia

Costa Rica

Dominican

Republic

Ecuador

1

1

12

41

115

6

1

7

3

10

1

2

1

Number

Of

Projects

14

29

4

2

1

76

1

6

2

2

1

110

Mongolia

Morocco

Nepal

Nicaragua

Panama

Papua New

Guinea

Peru

Philippines

Republic of Korea

Republic of

Moldova

South Africa

Sri Lanka

Tunisia

Viet Nam http://cdm.unfccc.int/Statistics/Registration/NumOfRegisteredProjByHostPartiesPi eChart.html

1

3

4

7

1

3

2

2

4

3

4

3

1

2

111

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