Decarbonising Cement: A Landscape of Opportunities for Startups

Cement, along with its derivatives like concrete, constitutes the adhesive that holds much of our built environment together. Globally, almost half a ton of cement is consumed per person per year, with cement production alone accounting for 3% of the total energy consumption and 8% of anthropogenic CO2 emissions.

With specific reference to India, the country’s per capita energy use and emissions numbers for cement output are currently less than half of the global average despite it being the second largest cement manufacturer in the world. Having said that, India’s building stock is projected to double by 2040, necessitating a surge in both the use of construction materials, most notably cement, as well as their accompanying emissions. Resultantly, India is expected to see one of the largest increases in cement manufacturing output till 2050, growing by a staggering 2.6x from 2019 levels (See Figure 1). Decarbonising the cement industry is thus a first-principles driven imperative towards achieving Net Zero for the built environment.

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Several Indian cement companies have announced operational mandates to reduce carbon emissions from their production activities. Dalmia Cements has committed to becoming carbon negative by 2040 by engaging carbon capture, utilisation and storage (CCUS) while ACC has pledged to reduce its Scope 1 GHG emissions per tonne of cementitious material by 21.3% till 2030 with respect to 2018 as base year.

Over the years, Indian manufacturers have undertaken a range of voluntary steps to stay significantly ahead of the curve. India’s cement facilities are already among the most energy and emissions efficient in the world, having reduced average CO2 emissions by 36% between 1996 and 2017. A lot more, of course, needs to be done, especially since the rate of  decoupling production volumes with emissions increase in the cement sector has been relatively tardy. The RBI estimates an investment requirement of USD 29-50 billion to decrease the prevailing carbon intensity of cement production by half till 2050.

To better understand the decarbonisation imperatives in the sector, it is useful to delineate the two major sources of emissions production: the energy use powering the heat production for the kilns, and the chemical processes responsible for the conversion of limestone into calcium oxide. The primary environmental gravamen with cement’s manufacturing process relates to the latter, and, more specifically, to calcination: the thermo-chemical process through which limestone is mixed with certain other raw materials, ground to a fine powder, and heated to 1400-1500 degree celsius in a kiln to form lumpy nodules called “clinker”. Clinker calcination produces about 60% of all emissions released during cement production and substituting or greening the process has proved to be incredibly difficult. While processes relating to heating, crushing, storage, and transportation lend themselves to greater integration with greener pathways, such as by the use of renewable energy or electric freight transport, altering the underlying chemical basis is much less straightforward.

Despite the challenges, however, serious technological attempts are being made to decarbonise the industry. According to the Third Derivative, scalability and acceptability are the two major axes on which the successful adoption of an intervention will eventually depend. At present, three broad pathways exist:

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Carbon Capture, Utilisation and Storage (CCUS) ‍

Carbon capture has gained prominence for its potential to significantly address process based emissions for a host of manufacturing and energy production industries. As the name suggests, CCUS includes a suite of technologies which capture carbon emissions at source—often exhausts of manufacturing plants—with the intention of either reusing them in the production of various chemicals or fuels, or storing them deep underground to prevent their entry into the atmosphere. Arguably, CCUS offers the most promising long-term bet to reach Net-zero or near Net-Zero emissions for the cement sector. It can address both the emissions emanating from heat generation as well as those from chemical processes without making any major. Carbon capture could, therefore, be used “either as a single decarbonization route for all emissions from cement plants, or for process emissions only combined with a switch in fuel to mitigate emissions from heat production.” Indeed, studies have shown that carbon capture combined with a low-cost, high biogenic fraction alternative fuel such as one derived from municipal solid waste can secure the largest reductions in CO2 emissions.

There are, however, a clutch of issues that currently plague the deployment potential of CCUS in cement production. Firstly, costs associated with carbon capture are higher for cement when compared to other hard-to-abate sectors such as ammonia or steel. Carbon capture costs are inversely related to the concentration of CO2 in exhaust streams. Exhaust emissions from cement production usually contain just 20% carbon dioxide by volume, more than what is produced in thermal power plants (~12%), but significantly lower than, say,  process emissions resulting from ammonia production wherein steam methane reforming emits a relatively pure and concentrated stream of CO2 which is better suited for carbon capture. Elevated costs also stem from the relatively steep capital expenditure incurred to deploy viable capture mechanisms which, in turn, inevitably results in higher final costs for the end consumer. Secondly, transporting and storing the captured carbon in cement’s case is both more cumbersome and expensive than in other sectors. Unlike steel or petrochemical industries which depend on heavy clustering, cement facilities are usually a lot more dispersed since transporting a “heavy low-value product” beyond a certain distance threshold is both costly and logistically complex. This also partly explains the unusually high degree of market fragmentation in cement’s case with different states and regions in India being dominated by different players. And, lastly, the storage of captured carbon is an uphill task with the need for necessary geological formations which are neither common nor evenly distributed across geographic landscapes.

Learning curves and the development of technologies that help produce a purer, more concentrated exhaust stream of CO2 should allow for costs to fall over time. Fortunately, the utilisation potential for captured CO2 and its byproducts is incredibly high in the built environment space. Captured carbon can be absorbed into concrete or into aggregates, most notably during the curing process—a set of techniques that helps maintain satisfactory temperature and moisture conditions to aid cement hydration for the orderly development of desired concrete properties—wherein carbonated concrete has been shown to demonstrate “rapid early strength gains, reduced curing times, overall greater strength, and improved freeze/thaw durability.” Unfortunately, the process currently requires the use of specialised curing chambers which ramps up the costs and severely limits widespread application.

CCUS is thus a promising long-term bet, but its underlying cost structures and current technological unsuitability for cement exhaust streams effectively render it unfeasible for immediate large-scale deployment.

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Low Carbon Cement‍

Low carbon cement remains the venerable holy grail for innovations in the cement space by directly targeting process emissions related to clinker calcination. According to Third Derivative, these innovations generally try to achieve one of the following— i) reduce the amount of clinker used; ii) readjust the clinker making process by decreasing the amount of limestone in the feedstock or modifying the calcination process; or iii) reformulate the underlying chemistry through the development of novel binders and use of low-carbon processes. Table 1 gives an overview of the different categories and Figure 3 looks at the emission reduction potential of certain low-carbon cement chemistries.

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California-based startup, Brimstone, is an interesting company in this space. The startup has pioneered the development of conventional portland cement using a proprietary carbon-negative production process that uses carbon-free calcium silicate rocks instead of limestone.

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Downstream Applications‍

This category looks at interventions which seek to lower or eliminate emissions emanating from cement production from the value chain post clinker calcination. Process emissions, as mentioned earlier, are dominated by the clinker making process, yet incremental improvements in other aspects can still deliver sizeable decarbonisation gains. Efficient packing of aggregates and cement into concrete, for instance, can reduce cement use and consequently the accompanying emissions. Similarly, the use of “chemical admixtures — a class of materials that can improve concrete’s performance when used in small amounts — combined with adoption of artificial intelligence and digital tools in cement and concrete production allows producers to optimise cement use by improving the consistency of cement and concrete and predicting the performance of the final product, all while reducing emissions.”

Further downstream, second-life applications can be probed for unhydrated cement at the end of life of the structure it once helped buttress. Concrete is usually made by mixing cement with water, gravel, and sand. A portion of the cement, however, remains unhydrated and can potentially be re-used to make concrete or even as a substitute for limestone in a kiln. For both these use-cases, however, considerations regarding cost and retrieval efficiency will remain paramount.

Challenges for Early Stage Startups

Notwithstanding the array of opportunities, the cement industry’s operational characteristics offer some rather peculiar challenges to early stage companies looking to build in the space. Foremost among these hurdles is the necessity to develop a cement variant that not only matches the cost efficiency of OPC but also satisfies the stringent performance demands of the construction industry. Yet, the industry exhibits considerable resistance towards solutions that mandate the redesign of existing production facilities, primarily due to the capital-intensive nature of this sector.

Moreover, cement, despite its massive consumption, remains a low-value product, requiring raw inputs that are not only inexpensive but also reliable and abundant. Introducing new manufacturing processes could potentially escalate material and energy costs or necessitate further investments in storage capacity and material processing, thereby straining already narrow profit margins. The challenge further compounds as the cement market is highly commoditized and price-sensitive, making it difficult to transfer these increased costs to end-users.

On the demand side, consumer resistance, stemming from a lack of awareness or scepticism regarding new cement variants, stands as a significant barrier. This resistance is exacerbated by the industry's fragmented supply chain, hampering the streamlined adoption of innovative products across construction markets. Additionally, stringent testing standards further complicate market entry, necessitating rigorous compliance to secure acceptance of novel cement formulations.

The biggest challenge, however, as mentioned earlier, is the fact that a preponderant share of cement’s climate impact comes “not from energy use, but as process emissions, a byproduct of a fundamental chemical reaction which is difficult to reformulate.”

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Key Takeaways ‍

Global cement production emits as much CO2 as India. There are thus few industries, if any,  with comparatively higher ceilings for large outcomes, both in terms of their decarbonisation potential and the prospects of investor returns. With regard to the latter, a few basic heuristics can be laid down. Startups which can devise solutions that leverage existing infrastructure and value chains are likely to find it easier to scale in light of the challenges discussed above, namely, the “industry’s maturity, high costs of entry, and low margins.”

Given the need for abundant and cheap raw materials, those that can establish less energy and resource intensive end-product pathways utilising prevalent supply chains, easy to source base compounds, and established production ecosystems are more likely to protect their margins and necessitate buy-in from incumbent stakeholders. Partnerships and demand offtake agreements with large cement producers can help in this regard. Despite the relatively capex-heavy nature of the exercise, the cost curves for the production of  novel low-carbon cement formulations should follow Wright’s law—falling at a consistent rate as a function of cumulative production.

Understanding the intricate balance between cost differentials and market incentives is pivotal, alongside validating technical equivalency and, if applicable, patent defence strategies. Ultimately, successful investments in this sector hinge on teams adept at amalgamating technological prowess with an astute comprehension of the cement industry's nuances, paving the way for impactful innovations and a sustainable future.