Requirements for content of recycled material, higher CO2 price, sustainability requirements in connection with green public procurement, and increased circular requirements from investors. It is only a small sample of the circular pressure that the cement and concrete industry can expect to hit them when the EU's avalanche of demands comes rolling in over the next few years. Requirements which will therefore to a large extent set a new and much more circular direction for the cement and concrete industry - a direction with less outgoing production, lower resource consumption and a greater degree of reuse and recycling. This is the conclusion of the Green Transition Denmark's mappingThe EU's upcoming requirements – a circular game changer for the cement and concrete industry', which shows that the cement and concrete industry will be hit from several sides. The mapping is part of a larger project, supported by Realdania, which investigates how to promote a circular transformation of the cement and concrete industry.

An end to CO2 quotas

A significant driver of the increasing adjustment pressure comes from the EU's decision to put an end to their massive distribution of free CO2 quotas. For many years, the cement industry has received free CO2 quotas that correspond to the vast majority of their emissions. While several other industries have had to pay for each and every one of their CO2 emissions, the cement industry throughout the EU has, until now, largely had a free pass in relation to paying for their towering climate footprint. The phasing out of free CO2 quotas must therefore be a wake up call for the cement industry, which in 2034 will have to pay for all of their emissions. This will have consequences for the price of cement, which will become significantly more expensive if the climate footprint from cement production is not significantly reduced in the near future.

This is good news for the development of both low-emission cement and for the development of concrete with a lower cement content – ​​a development that will have positive impacts when it comes to concrete's climate account. Emissions from cement account for around 90 percent of the total climate footprint from concrete. And there is a great need for a drastic reduction – both in relation to CO2 emissions per tonne, but also in relation to reducing resource consumption.

In addition, with the revision of the so-called Construction Product Regulation (CPR) in the future, there will be environmental requirements that can be used to reduce both the climate and resource footprint of cement and certain types of concrete. In addition to environmental requirements for, among other things, maximum emissions, resource efficiency, recycled or reused content and energy consumption and efficiency, with CPR it is also a plausible scenario that the EU may in the next few years introduce limit values ​​or performance classes for cement and concrete. It will potentially be a big game changer for producers who do not follow the circular development, who in the long run may risk losing their competitiveness or being completely excluded from the EU market.

Sustainability requirements for cement and concrete

At the same time, the EU is also increasing the requirements for green public procurement. With CPR, it has also been made possible to set sustainability requirements for cement and certain types of concrete in connection with green public procurement. This means that if you, as a cement or concrete producer, want to bid on green public building and construction tenders in the future, there may be very specific requirements that must be met. This is positive for ensuring greater demand for more climate-friendly and circular cement and concrete, which can be expected to spread like wildfire to the private market.

And the EU, with its ambition to strengthen sustainable financing, has also set out to activate the private market. The EU Taxonomy in particular plays a major role here, which sets very specific requirements for cement and concrete if an activity or investment is to be called sustainable on the basis of circularity. These include requirements for recycled content, emissions from cement and design for circularity. The circular requirements will therefore specifically affect the cement and concrete industry, which must screw up the circular agenda in order to meet investors' demands for sustainability.

Overall, the upcoming EU requirements will therefore be a huge circular game changer for the cement and concrete industry, which must expect new climate, environmental and circular requirements lurking just around the corner. And if you look at the big task facing the cement and concrete industry, if they are to produce within the planetary limits, then the industry should already start preparing for a circular gear change.

This debate submission has been published on the Stock Exchange on 30 April 2024.