Imported file: ACT_cement_methodo_1st_draft_0.6.docx.

Last updated 9:22am Mar 31


Attachments

or drag files here.

Loading...

Instructions: Reviewing the ACT Cement methodology

If you want to provide comments – click on the new comment button located on the right side.

You will be asked to register by clicking on the yellow register button.  

If you are already registered on ScribeHub, please sign in (top right corner) before accessing the document and commenting.

Registering

If you are not already registered to ScribeHub, you will be asked to register on the platform - providing your email address, name and creating a password. You will then be sent a confirmation email.  Click on the Confirm my account link in the email and you will be redirected to the login screen for ScribeHub. Enter you email and password and you will then have access to the document.

Please note that your name and email address will be used by the ACT team to record the list of people providing comments during this public consultation. Remember the email and password you use to register as this information will always be required to log in to ScribeHub.

Commenting

Once on ScribeHub, please use the comment button 

cid:image005.png@01D5B010.D9D61930

beside each section header to input your feedback. Pressing on the + sign will open a dialog box where you can input the title of your comment, the related section of the document, and your comment.  You can also attach documents to your comment and assign a label (e.g. editorial comment, technical comment, etc.). Keep in mind that comments are publicly visible.  You can also reply directly to a comment already posted.  

Elements to focus on when reviewing

When reviewing the methodology, please focus on the following elements:

  • Are any elements missing to assess the progress of a company towards their low-carbon transition?
  • Are any of the data points mentioned difficult to collect or report? Why?
  • Are any explanations or calculations unclear? If so, could you suggest an improvement?
  • Are any of the calculations inconsistent?
  • Do you have additional data sources to suggest?

The methodology will be proofread before publication, so no need to flag minor editing issues.

Timeline 

Please provide your feedback by Friday 27th March 2020

Contact 

If you encounter any problems at all with the ScribeHub platform, or if you have any questions about the content of the document, please contact us via email at marlene.dresch@ademe.fr.

You can also download the ACT Framework from the ACT website for more context.

Thank you!

Thank you once again for providing valuable feedback, we look forward to reviewing it.

 

 

 

 

Cement sector methodology

Draft of the methodology

(version 0.6 – February 2020)

 

 

Acknowledgments

ADEME and CDP warmly thank the members of the Technical Working Group for their inputs and feedbacks on the methodology.

authors:
ACT co-founders:

 

 

supported by:
 
Technical assistance provided by:

© CDP Worldwide & ADEME 2020. Reproduction of all or part of work without licence of use permission of CDP Worldwide & ADEME is prohibited.

 

1. Introduction

The 2015 United Nations Climate Change Conference (COP21) in Paris entrenched the recognition to act on climate change with the political agreement to hold the increase in the global average temperature to well under the 2°C above pre-industrial levels. The ‘Assessing low-Carbon Transition’ (ACT) Initiative measures how a company is ready to transition to a low carbon economy. The ACT initiative aims at helping businesses to drive their climate strategy, their business model(s), their investments and operations and set targets compatible with low-carbon pathway. The general approach of ACT is based on the Sectoral Decarbonization Approach (SDA) developed by the Science-Based Targets initiative (SBTi) in order to compare a company’s alignment with a “low-carbon world” (compatible with 2°C - or beyond - climate change scenarios), the application of which is described in the ACT Framework [1].

[1] Framework for ACT sector methodologies development, version 1.1, 2019

Why do we need to develop a methodology for cement?

The cement industry is the second largest industrial carbon emitter and the third largest industrial energy consumer. The cement sector currently emits 7% of global CO2 emissions [2]. The global population is expected to grow an additional 30% by 2050, increasing the need for buildings and transport infrastructure (e.g. roads, bridges, tunnels…), and in turn increasing global demand for cement. A low-carbon world is therefore impossible without a transformative change in the cement sector, which is why the sector is crucial to achieving this transition and needs an ACT assessment methodology to hold it accountable.

[2] IEA, CSI, Technology Roadmap - Low-Carbon Transition in the Cement Industry, 2018

The cement sector has a well-defined primary activity (clinker production) with generally easily accessible emissions intensity data, as confirmed by the Cement Technical Working Group which was consulted during the development of this methodology. The ACT Cement methodology considers scenarios that include predictions such as increasing demand for cement, improved efficiency of the assets (factories) and growth of new business models and in operation and new decarbonization technologies over time.

For the cement sector, the methodology focuses on the cement production capacity and the existing and planned production technologies. The Sectoral Decarbonisation Approach (SDA) was developed mainly for integrated cement companies which have direct access to their production data (e.g. clinker intensity). However, the emergence of blenders and grinding operators manufacturing cement from bought or imported clinker, or without clinker at all, means that these new types of business models shall be taken into account in the methodology. The method considers several factors such as: current production assets (factories), locked-in emissions from these assets, production technology changes such as the deployment of renewables and/or carbon capture and storage CCS, future investments and partnerships in low-carbon technologies. Such data feed simplified assessment models that quantify the effects of, for example, technology choices for future emissions. Qualitative topics will also be considered as relevant, including new business models, customer behaviour influence and policy engagement, past performance, and the overall stated strategy.

It is important to note that the choice of low carbon benchmark might differ between each ACT sectoral methodology, so it is not always possible to compare assessment results across sectors.

1.1. Context about Cement

 

1.1.1. Cement Description

There are 27 types of common cement products described in the EN 197-1 cement standard (Cement Composition, specifications and conformity criteria for common cements) that could be described based on their:

  • Composition (ex: Portland cement, composite cement, ...)
  • Performance based on (ASTM C-1157) or strength classes

The EN 197-1 European standard contains the following nomenclature:

  • CEM I Portland cement (>95% clinker)
  • CEM II Portland-composite cement (65-94% clinker)
  • CEM III Blast furnace cement (5-64% clinker)
  • CEM IV Pozzolanic cement (45-89% clinker)
  • CEM V Composite cement (20-64% clinker)

A cement is a binder, a substance used for construction that sets, hardens, and adheres to other materials to bind them together. Cement is seldom used on its own, but rather to bind sand and gravel (aggregate) together. Cement mixed with fine aggregate produces mortar for masonry, or with sand and gravel, produces concrete.

Cement is a material mainly known for its strength. Its other properties are its fineness, its soundness, its consistency, its setting time, its heat of hydration, its loss of ignition, its bulk density, and its specific gravity (Relative density).

1.1.2. What are the Main Sources of Emissions from Cement Production?

The cement-manufacturing process can be divided into two basic steps:

  1. Clinker (the main constituent of cement) is first made in a kiln with gas up to 2000°C, which heats raw materials such as limestone (calcium carbonate) with small quantities of other materials (e.g. clay) to 1,450°C. During this process, known as calcination, the calcium carbonate (limestone) is transformed into calcium oxide (lime), which then reacts with the other constituents from the raw material to form new minerals, collectively clled clinker. This near-molten material is rapidly cooled to a temperature of 100 - 200°C.
  2. Clinker is then ground with gypsum and other materials to produce the grey powder known as cement.
Figure 1: Cement production process [2]

 

[2] IEA, CSI, Technology Roadmap - Low-Carbon Transition in the Cement Industry, 2018

 

The carbon footprint of cement is directly linked to the amount of clinker in the cement (clinker rate). Clinker is also the main ingredient for material resistance and therefore the strength of infrastructures and buildings.

Cement production involves several chemical reactions, with the main reaction being the decomposition of limestone into lime and carbon dioxide. Half of the CO2 emissions associated with the production of cement is released from this reaction – other 40% are emitted from burning fuel to power the process. There are several ways to reduce cement energy inputs and emissions, including (i) substituting clinker for other materials, (ii) substituting the fuel used in the process for less carbon intensive fuel, and (iii) capturing the carbon generated during the process to prevent its release to the atmosphere.

Figure 2: CO2 emissions linked with the manufacturing steps of cement [5]

[5] mbabi; Carrigan; McKenna,Trends and developments in green cement and concrete technology, 2012

Finding a Life Cycle Assessment (LCA) focused on cement is not easy as most LCA studies (including Environmental Product Declarations – EPD) cover concrete products or buildings. However, LCA of concrete do confirm that cement production emits most of the GHG emissions, and more precisely during the cement manufacturing stage.

 

1.1.3. Companies Segmentation in Cement Industry

There are three segments of companies in the cement industry.

1. Blenders: supply cement and substitutes from imported or bought cement / materials.

  • Main emission sources are due to transport (scope 1) and electricity consumption (scope 2).

2. Grinding plant operators: manufacture cement from imported or bought clinker or, for vertically integrated companies, transferred from other sites.

  • Main emission sources are due to energy consumption for clinker grinding (scope 2), drying material and transport (scope 1).

3. Vertically integrated manufacturers: manufacture cement from clinker they produce themselves.

  • Main emission sources will include calcination of raw materials in addition to kiln and non-kiln fuels (and transport) (scope 1).

During the development phase, the Cement Technical Working Group looked at clinker operators as well, but no quantitative information was provided regarding how much of the cement market the clinker operators represent. As a result, the market share of clinker operators is considered insignificant and they are not included for themselves in the scope of the methodology but are assessed through the blenders and grinding operators (as well as integrated companies if these companies buy clinker).

To be sure to address the right issues to each type of companies, the methodology has been differentiated for integrated companies (relative to A in the assessment) and blenders and grinding operators (relative to B in the assessment).

 

1.1.4. Scope 1, 2, 3 – Accounting CO2 for Cement Industry

The WBCSD Working Group Cement: Toward a Sustainable Cement Industry has developed the Cement CO2 Protocol [7], which includes guidelines and tools to calculate GHG emissions from the cement sector.

[7] WBCSD,The Cement CO2 Protocol: CO2 Emissions Monitoring and Reporting Protocol for the Cement Industry, 2002

This document defines the boundaries for CO2 accounting in the cement industry as presented in chapter 4. This table give just the way of accounting CO2 relative to the process, it doesn’t give the importance of the each steps that is it presented in the chapter 4.

Table 2: Emissions from scope 1, 2 & 3 [7]

  Scope 1 Scope 2 Scope 3
Cement and Lime 

Process emissions (calcination of limestone)

Stationary combustion (clinker kiln, drying of raw materials, production of electricity)

Mobile combustion (quarry operations, on site transportation)

Stationary combustion (consumption of purchased electricity, heat or steam)

Stationary combustion (production of purchased materials, waste combustion)

Process emissions (production of purchased clinker and lime)

Mobile combustion (transportation of raw materials/ products/ waste, employee business travel, commuting)

Fugitive emissions (mining and landfill CH4 and CO2, outsources process emissions)

Note relative to emissions from waste fuel or heat to comply to the ghg Protocol corporate

The cement manufacturers might use waste fuels to reduce their overall emissions. It is important here to clarify the way these emissions are accounted:

  • If the cement producer burns directly waste to produce heat or energy on its own site, these emissions are accounted in Scope 1;
  • If the cement producer purchases heat or electricity from waste incineration from another operator (waste management service done by a third party), these emissions are accounted in Scope 2.

Note relative to emissions from clinker production

As the clinker production is the most intensive step in the traditional cement manufacturing, it is important to clarify how these emissions shall be accounted in the methodology:

  • If the cement producer does not produce the clinker that enters into the process, the clinker emissions are in its scope 3, so they shall collect the specific factor from the supplier(s);
  • If the cement producer produces its own clinker, the clinker emissions are in its scope 1

For the rest of the document, when we will reference to inclusive scope 1+2, it includes scope 3 for actors that have a high part of their emissions in the scope 3 (examples are for blenders and grinding operators).

2. Principles

The selection of principles to be used for the methodology development and implementation is explained in the general ACT Framework. Table 1 recaps the principles that were adhered to when developing the methodology.

Table 1: PRINCIPLES FOR IMPLEMENTATION

RELEVANCE - Select the most relevant information (core business and stakeholders) to assess low-carbon transition.
VERIFIABILITY - The data required for the assessment shall be verified or verifiable.
CONSERVATIVENESS - Whenever the use of assumptions is required, the assumption shall be on the side of achieving a 2° maximum global warming.
CONSISTENCY - Whenever time series data is used, it should be comparable over time.
LONG-TERM ORIENTATION - Enables the evaluation of the long-term performance of a company while simultaneously providing insights into short- and medium-term outcomes in alignment with the long-term.

 

3. Scope

 

3.1. Scope of the document

This document presents the ACT assessment methodology for the cement (CEM) sector. It includes the rationales, definitions, indicators and guidance for the sector-specific aspects of performance, narrative and trend scorings. It was developed in compliance with the ACT Guidelines for the development of sector methodologies [4], which describe the governance and process of this development, as well as the required content for such documents. It is intended to be used in conjunction with the ACT Framework, which describes the aspects of the methodology that are not sector specific.

[4] Civil Engineering, “8 Main Cement Ingredients & Their Functions,” [Online]. Available: https://civiltoday.com/civil-engineering-materials/cement/10-cement-ingredients-with-functions. [Accessed 10 2019].

3.2. Scope of the ACT cement METHODOLOGY

This section on the scope of the ACT Cement methodology specifies which type of company the methodology can assess [1]

[1] Framework for ACT sector methodologies development, version 1.1, 2019

The CEM sector includes cement manufacturing as categorised in the CDP Activity Classification System (CDP-ACS). The CEM sector comprises all activities necessary to produce cement, from the provision of raw materials to the production of cement (gate). These activities include the use of raw material (e.g. limestone, fly ash, etc.) and/or purchased materials and fuels (e.g. fossil fuels, waste fuels), manufacturing activities (e.g. calcination, grinding, blending, etc.) and services to customer (consultancy...).

The activities excluded from the scope of the methodology, even if some companies in the CEM sector also operate in these segments, are:

  • The extraction of lime, which is covered by quarries management;
  • The distribution and manufacturing activities of refractory mortars, concrete, articles of cement, ready-mixed and dry-mix concrete and mortars;
  • The manufacture of cements used in dentistry.

The ACT Cement methodology aims at assessing companies on an international level, covering cement manufacturing in various regions. The methodology should be used to assess cement production entities with the NACE code 2351(2) or ISIC code 2394 (3).

(2)  Eurostat, 2008, NACE Rev.2, Statistical classification of economic activities in the European Community, https://ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF

(3)   International Standard Industrial Classification of All Economic Activities Revision 4, Department of Economic and Social Affairs, 2008, https://unstats.un.org/unsd/publication/seriesM/seriesm_4rev4e.pdf

 

The NACE and ISIC classifications include manufacturers of clinkers and hydraulic cements, including Portland cement, aluminous cement, slag cement and superphosphate cement. However, both classifications exclude:

  • manufacture of refractory mortars, concrete etc., see 2320 (4)
  • manufacture of articles of cement, see 2369
  • manufacture of ready-mixed and dry-mix concrete and mortars, see 2363, 2364
  • manufacture of cements used in dentistry, see 3250.

(4) NACE and ISIC classification code – ISIC with a “.” After the two first numbers, for example 23.20

CPC version 2 code for cement is 37440 for Portland cement, aluminous cement, slag cement and similar hydraulic cements, except in the form of clinkers.Some cement production companies are involved in all the activities of cement manufacturing, while others only operate in specific areas.

Companies manufacturing blended cement can either produce their own clinker or they can buy it from their suppliers. If buying clinker from suppliers, the company shall collect the emission factor for the bought clinker for accurate emissions reporting.

Figure 3 shows the type of companies that can use the ACT Cement methodology to carry out an assessment. Integrated cement companies, blenders and grinding operators can be assessed on the full cement production process, except for product transport. Please refer to the Scope and Boundaries sections of this methodology for more detailed information.

 

Figure 3 : Summary of the type of companies that can use the act CEMENT Methodology to carry out an assessment (scope) and the emission sources covered (Boundaries).

 

RATIONALE FOR SCOPE DEFINITION

Cement Technical Working Group participants questioned the decision to focus on cement and asked to consider clinker and concrete as the methodology scope. Firstly, the end use of clinker is cement production, and encompassing cement activities covers a majority of CO2 emission sources. Secondly, the sectors considered for developing the ACT methodologies were chosen according to the recommendations from the TCFD (Task Force on Climate-related Financial Disclosures), which consider cement and not clinker or concrete. Thirdly, the benchmark for low carbon scenarios from the International Energy Agency covers cement production, no benchmark for clinker or concrete was identified. As a result, it was concluded that a cement scope was the most relevant for the methodology.

 

4. Boundaries

The Boundaries section specifies which emission sources are included in this methodology [1]

[1] Framework for ACT sector methodologies development, version 1.1, 2019

For companies who manage the full supply chain of cement, as presented in Figure 2, 90% of CO2 emissions come from clinker production. A majority of these emissions occur during the calcination of limestone in kilns, both from the chemical reaction as well as from the fuel supply of kilns which require extremely high temperatures. The remaining 10% of CO2 emissions come from other operations in the manufacturing site.

At this stage, for integrated companies, carbon emissions from scope 1 and 2 are accounted. For blenders and grinding operators, the carbon emissions relative to clinker imported are included in the calculation so it is called inclusive scope 1+2.

 

Use & end of life Phases of Cement

Most of the time cement is transformed into concrete that has no (or low) emissions as its use phase. If concrete is ground into fine elements at its end of life, it can capture CO2. This phenomenon is called carbonatation and occurs when cement is blended with water. It can begin during the use phase (i.e. when concrete is used to build buildings) but it is accelerated when the exposed surface is higher, so when concrete is ground into fine elements and exposed to the air. The time aspect is thus an important issue. Carbonatation is an opportunity to capture CO2 (e.g. Fastcarb or Recybeton projects). The ground concrete could be recycled or reused to create new concrete and save using additional resources. The disadvantage of carbonatation is that it induces steel rebar corrosion.

The carbonatation phenomenon during the use phase and end of life phase of cement will only be included in the qualitative modules of the methodology. If carbonatation is used on the manufacturing site, captured CO2 emissions should not be accounted for in the quantitative calculations because no method currently exists to accurately estimate the quantity of emissions removed.

Transport activities

The transport phase represents less than 5% of the CO2 emissions, as presented in Figure 2, so it is excluded from the quantitative indicators. Transport activities are included in the qualitative indicators in the supplier engagement module.

White and grey cement

The share of cement in the concrete, and as a result the total GHG emissions, can vary significantly based on the specifications of the application that concrete will be used for. The CO2 benchmark from the IEA considers cement as a commodity without differentiation between white and grey cements. Therefore, the ACT Cement methodology considers just cement without differentiating between cement performance or between type of cement (white or grey).

The Cement methodology focuses on the cement production segment, e.g. the production of clinker and its incorporation into cements. The focus of the analysis is on CO2 emissions resulting from manufacturing activities which are monitored and reported in companies’ production emissions, including clinker (reporting of the company). If the company buys clinker from another company, direct emissions from the clinker production at their supplier site shall also be included.

The emissions intensity of cement is strongly influenced by the equipment performance (kilns and grinding machines) because of their direct emissions linked to fuel consumption. Fuel types is influenced by country regulations, market structure and network infrastructure and therefore these factors will also be taken into consideration by the evaluator in their global recommendations.

Figure 4 presents how the life cycle phases of cement are integrated in the ACT methodology for the cement sector.

Figure 4 : consideration of cement life cycle in the act assessment

 

RATIONALE FOR BOUNDARY SETTINGS

The focus is on cement manufacture emissions for two main reasons: (1) It is expected that these will generally represent more than 90% of production emissions, including clinker emissions (inclusive scope 1+2) of a cement company [8], and (2) it represents a homogeneous activity indicator that can accurately measure a company’s low-carbon transition.

[8] C. House, «Making Concrete Change, Innovation in Low-carbon Cement and Concrete,» 2018.

Companies could have different segmentation in their organisation. For example, blenders and grinding plants can have significant Scope 3 emissions due to imported or bought clinker. To consider all integrated and non-integrated companies in the methodology and to improve the low carbon transition strategy of the company, emissions from all segments have to be taken into account in the assessment in addition to the qualitative indicators.

The choice of producing white or grey cement, as well as the performance of the product, depends on client requirements. The cement manufacturer shall inform their client of the relative environmental impact (CO2 emissions as a minimum) of the product they buy and advise them on the quantity of cement to use depending on their activity. In addition, white cement is a small part of the global cement production (it represents an amount of about 20 million tons per year(5) ).

(5) https://www.globalcement.com/magazine/articles/1054-global-cement-top-100-report-2017-2018

The carbon intensity of cement is used as a unit (gCO2e/ton of cement) for some quantitative indicators. This unit is the same for every type of cement (grey or white cement, CEM I, CEM II, CEM III, alternative binders, etc.). No standard is currently available to characterise cement based on performance (strength) between these different products, so as a result, the unit ‘gCO2e/ton of cement’ is used throughout the methodology.

5. Construction of the Data Infrastructure

Indicators are built according to the bibliographical work and the other sectors indicators development. Weighting for modules is proposed in accordance to the ACT Framework Guidance [1].

[1] Framework for ACT sector methodologies development, version 1.1, 2019

5.1 Data sources

In order to carry out a company level assessment, many data need to be gathered which can be sourced from various locations. Principally, ACT relies on the voluntary provision of data by the participating companies. Besides, external data sources are consulted where this would streamline the process, ensure fairness, and provide additional value for checking, validation and preparation of the assessment narrative.

The ACT assessment uses the following data sources:

Table 2: ACT ASSESSMENT DATA SOURCES

Data source Main use
Company data request Primary data source for most indicators.
Contextual and financial information database sources (E.g. Online and press news, RepRisk) Contextual and financial information on company and events related to the company that could impact the ACT assessment
IPCC WG3 Assessment

Emission factors and related figures (“Mitigation of climate change” IPCC, Contrib. Work. Group III Fifth Assess. Rep. Intergov. Panel Clim. Change, 2014)

Technology level data ("Climate Change", IPCC, 2014)

Asset activity database : GlobalData asset database. Available at :https://www.globaldata.com

Cemnet asset database. Available at www.cemnet.com/global-cement-report/

GNR database: Available at https://www.wbcsdcement.org/GNR-2016/

Additional information used to fill the gaps of company reporting :
Environmental Product Declaration Information about life cycle assessment of product produces by the company (traditional product or low carbon product).
Roadmaps Give an overview of the strategy of the company and the targets
CDP questionnaire (where cited in this document, the questions refer to the 2019 question numbers) Data regarding company emission, targets

Where indicators refer to third party data sources as the default option, reporting companies may provide their own data to replace it if they can provide a justification for doing so, and information about its verification status, any assumptions used and the calculation methodology.

5.2 Company Data Request

In accordance with the approach presented in 1 Introduction, the data request will be presented to companies in a comprehensive data collection format.

The CDP questionnaire (2019 version) is also used for the data collection.

All the data would be collected by the evaluator or the company. If the clinker imported by a company is lower to 5%, a cut off rule would be applied on this imported value to simplify the calculation.

To be sure to address the right issues to each type of companies, the methodology has been differentiated for integrated companies (relative to A in the assessment) and blenders and grinding operators (relative to B in the assessment).Only modules 2 and 4 are specific, others are common whatever the company’s type.

If a company has produced a quantity of cement in their A assets (integrated) and b quantity of cement in their B assets (blenders and grinding operators), the company should answer to the questionnaire with the relative quantity of cement produced for each type of asset.

5.3 Performance indicators

Table 3: PERFORMANCE INDICATORS OVERVIEW

 

 

5.3.1. Targets

 

5.3.1.1. CEM 1.1 ALIGNMENT OF inclusive scope 1+2 EMISSIONS REDUCTION TARGETS

DESCRIPTION & REQUIREMENTS CEM 1.1 ALIGNMENT OF INCLUSIVE SCOPE 1+2 EMISSIONS REDUCTION TARGETS
SHORT DESCRIPTION OF INDICATOR A measure of the alignment of the company’s emissions reduction target with its decarbonization pathway. The indicator will identify the gap between the company’s target and the decarbonization pathway as a percentage, which is expressed as the company’s commitment gap.
DATA REQUIREMENTS

The questions (from CDP questionnaire 2019) covering the information relevant to this indicator are:

  • CEM0.B (reporting year) [C0.1]
  • CEM1.A (company’s target) [C4.1a], [C4.1b]
  • CEM2.A (tons of cement produced per plant; emission factor (metric tonnes CO2e/tons of cement) [C-CE9.3b] & [C6.1], [C6.3], [C6.5], or [C-CE7.4/C-CH7.4/C-CO7.4/C-EU7.4/C-MM7.4/C-OG7.4/C-ST7.4/C-TO7.4/C-TS7.4], [C-CE7.7/C-CH7.7/C-CO7.7/C-MM7.7/C-OG7.7/C-ST7.7/C-TO7.7/C-TS7.7] ; The IEA scenario only allows differentiation between OECD and non-OECD regions. This distinction could be relevant.

External sources of data used for the analysis of this indicator are:

  • IEA ETP [9] – background scenario data
  • SDA [10] – specific benchmark pathway definition + https://toddfincannon.com/sda/

[9]  IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.

[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

The benchmark indicators involved are:

 

HOW THE ANALYSIS WILL BE DONE

The analysis is based on the difference between the company’s target (𝑇𝑆12) and the company benchmark (𝐶𝐵S12) 5 years after the reporting year.

The company target (𝑇𝑆12) is the decarbonization over time, defined by the company’s emissions reduction target. To compute T, a straight line is drawn between the starting point of the analysis (i.e. reporting year) and the company’s target endpoint.

The company benchmark (𝐶𝐵S12) pathway is the ‘company specific decarbonization pathway’. See section 6.1 for details on the computation of this pathway.

The indicator compares 𝑇𝑆12 to 𝐶𝐵S12, by assessing the difference between these pathways 5 years after the reporting year. The pathways are expressed in grams of CO2e per unit of activity (intensity measure). The unit of activity for the cement sector is tons of cement produced. Where necessary, targets shall be normalized to this activity unit. The result of the comparison is the commitment gap.

To assign a score to this indicator, the size of the commitment gap shall be compared to the maximum commitment gap, which is defined by the business-as-usual pathway (𝐵𝐴𝑈S12). 𝐵𝐴𝑈S12 is defined as an unchanging (horizontal) intensity pathway, whereby the emissions intensity is not reduced at all from the reporting year.

CALCULATION OF SCORE:

The score is a percentage of the maximum commitment gap. The commitment gap is calculated by dividing the company’s commitment gap by the maximum commitment gap:

The score assigned to the indicator is equal to 1 minus the commitment gap and is expressed as a percentage (1 = 100%). Therefore, if 𝑇𝑆12- 𝐶𝐵S12 is equal to zero, the company’s target is aligned with the sectoral benchmark and the maximum score is achieved.

RATIONALE CEM 1.1 ALIGNMENT OF INCLUSIVE SCOPE 1+2 EMISSIONS REDUCTION TARGETS
RATIONALE OF THE INDICATOR

RELEVANCE OF THE INDICATOR:

Targets are included in the ACT CEM assessment for the following reasons:

  • Targets are an indicator of corporate commitment to reduce emissions and are a meaningful metric of the company’s internal planning towards the transition.
  • As most emissions of the sector are within the sector boundaries of control, targets are a very powerful management tool to reduce these emissions. Most emissions from the cement sector can be captured in targets using existing target-setting frameworks.
  • Targets are one of the few metrics that can predict a company’s long-term plans beyond that which can be projected in the short-term, satisfying ACT’s need for indicators that can provide information on the long-term future of a company.

SCORING RATIONALE:

Targets are quantitatively interpreted and directly compared to the low-carbon benchmark for the sector, using the 𝐶𝐵S12 benchmark. This is done because the vast majority of the emissions from the sector are from cement production emissions, which makes the cement production emissions benchmark the most relevant to the company.

Targets are compared to the benchmark directly, and the relative gap is calculated compared to the business-as-usual pathway. The gap method was chosen for its relative simplicity in interpretation and powerful message, which aligns with the UNEP’s narrative of the global commitment gap of the UNFCCC Climate Agreements [6]. The simple percentage score also needs no further computation to become meaningful on its own, as well as be useable for aggregation in the performance score.

[6]  wbcsd, «Guidelines for Emissions Monitoring and Reporting in the Cement Industry v.2.0,» 2012.

To ensure comparability of the scores and replicability of the measurement, targets are compared to the benchmark at a fixed point in time, similar for all companies. This is necessary, because the method interprets linear decarbonization pathways from the targets, while the decarbonization pathways are nonlinear. Therefore, the measurement gaps would vary over time if the time of measurement was not constant, and an undesired precedent would be set for reporting only targets with short-time horizons.

5 years after the reporting year is chosen as the reference for this measurement, as it is far enough in time to make a meaningful measurement of the company’s future pathway, while close enough to be able to include the typical short to medium time scale of present-day company targets. It also aligns with the time horizon of the SEI metrics project that is being developed in parallel with ACT (more information at https://seimetrics.org )

 

5.3.1.2. CEM 1.2 TIME HORIZON OF TARGETS

DESCRIPTION & REQUIREMENTS CEM 1.2 TIME HORIZON OF TARGETS
SHORT DESCRIPTION OF INDICATOR A measure of the time horizons of company targets. The ideal set of targets is forward looking enough to a long-time horizon that includes the majority of a company’s asset lifetimes (major infrastructures lifetime of the asset as kilns, grinders, storages silos for rocks, powder, clinker, cement or homogenization), but also includes short-term targets that incentivise action in the present. However, because some assets may have an expected lifetime that is too long, it is more meaningful to choose a fixed period for the cement sector (i.e. 25 years from the reporting year) to calculate the horizon gap.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM0.B (reporting year) [C0.1]
  • CEM1.A (target year) [C4.1b]
  • CEM2.A (year of commissioning, expected lifetime, decommissioning year if planned, tons of cement produced per plant)

External sources of data used for the analysis of this indicator are:

  • INNOVATION IN THE CEMENT INDUSTRY, CEMBUREAU “cement plants typically have a lifetime of as long as 30-50 years” p.5 [11]
  • “Plant lifetime in the order of 15-20 years” p.2 [12]

[11]  CEMBUREAU, «Innovation in the cement industry,» 2017.

[12]  I. ETSAP, «Technology Brief I03 - Cement Production,» 2010.

The benchmark indicators involved are:

 

HOW THE ANALYSIS WILL BE DONE

The analysis has two dimensions:

  • A comparison of: (a) the longest time horizon of the company’s targets, and (b) the quantiles and median of the company’s capacity weighted asset lifetimes.
  • The company has interval targets that ensure both short and long-term targets are in place to incentivise short-term action and communicate long-term commitments.

DIMENSION 1 – TARGET ENDPOINT:

The company’s target endpoint (𝑇𝑒) is compared to the company’s 1st quantile (Qw.1st), median (Mw) and 3rd quantile (Qw.3rd) of ranked asset lifetimes, weighted by capacity and baselined on the reporting year. The company’s target endpoint (𝑇𝑒) is equal to the longest time horizon among the company’s targets, minus the reporting year:

 

The quartiles (Qw.1st, Qw.3rd) and median (Mw) are calculated by ranking the company’s assets by estimated lifetime, while also weighting this ranking with information on capacity. This means that at the median lifetime, 50% of the company’s capacity will have been decommissioned. At the quartiles this is 25% and 75%, respectively.

Please see Figure 4 for a visual representation on how the weighted median and quartiles are derived. In the example shown on this figure, the weighted median lifetime horizon would amount to 20 years into the future, while the weighted 3rd quartile would amount to 36 years. Target endpoints would be benchmarked towards these horizons. While not visualized, the weighted 1st Quartile lifetime horizon would be 6 years.

 

Figure 4: Weighted lifetime emissions curve 6 definition and derivation of weighted lifetime benchmark by ranking a set of illustrative generation assets by lifetime and yearly CO2 emissions

 

The assessment will compare 𝑇𝑒 to Q1st, M and Q3rd. This assessment measures the horizon gap:

 

The company’s target endpoint is compared according the following scoring table:

 

DIMENSION 2 – INTERMEDIATE HORIZONS:

All company targets and their endpoints are calculated and plotted. The ideal scoring company does not have intervals between target endpoints larger than 5 years from the reporting year.

Measurements are done in five-year intervals between the reporting year and 𝑇𝑒.

The company’s targets are compared according the following scoring table:

 

FOR ALL CALCULATIONS:

  • If the company enters a ‘year target was set’ in the data request, then the calculations may be redone using this as the baseline instead of the reporting year. The company can attain up to 80% of the maximum score with this alternate calculation. The baseline that results in the higher score will be used for the final score.
  • Targets that do not cover > 95% of inclusive scope 1+2 emissions are not preferred in the calculations. If these types of targets only are available, then the score is adjusted downwards equal to the % coverage that is missing.

AGGREGATE SCORE - DIMENSION 1: 50%, DIMENSION 2: 50%.

RATIONALE CEM 1.2 TIME HORIZON OF TARGETS
RATIONALE OF THE INDICATOR

RELEVANCE OF THE INDICATOR:

The time horizon of targets is included in the ACT CEM assessment for the following reasons:

  • The target endpoint is an indicator of how forward looking the company’s transition strategy is.
  • The long expected time horizon of production assets means that cement producers ‘commit’ a large amount of GHG emissions into the future, which requires targets that have time horizons that are aligned with this reality.
  • Aside from communicating long-term commitments, short-term action needs to be incentivised. This is why short-time intervals between targets are needed.

SCORING RATIONALE:

The score of this indicator is tied to how the target timeline compares to the lifetimes of the company’s asset portfolio. The company has a ‘horizon gap’ if its targets do not include a significant part of its asset portfolio. It is however recognized that some assets may have lifetimes that exceed meaningful target endpoints.

 

5.3.1.3. CEM 1.3 Achievement of previous targets

DESCRIPTION & REQUIREMENTS CEM 1.3 ACHIEVEMENT OF PREVIOUS TARGETS
SHORT DESCRIPTION OF INDICATOR A measure of the company’s historical target achievements and current progress towards active emissions reduction targets. The ambition of the target is qualitatively assessed and is not included in the performance indicators.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM0.B (reporting year) [C0.1]
  • CEM1.A (target year) [C4.1b]
HOW THE ANALYSIS WILL BE DONE

For the performance score, this will be assessed on two dimensions, whereby companies achieve the maximum score if

DIMENSION 1: The company achieved all previous emissions reduction targets with a target year in the past.

DIMENSION 2: The company is currently on track to meet an existing emissions reduction target, whereby the ratio between the remaining time period and the level missing to target achievement (Progress Ratio p) is not lower than 0.5:

The highest score (100%) is attained if p is 1 or higher, and the lowest score (0%) is attained if p is 0,5 or lower. A percentage score is assigned for any value between 0.5 and 1.

AGGREGATE SCORE - DIMENSION 1: 25%, DIMENSION 2: 75%.

FOR ALL CALCULATIONS:

  • Companies whose past targets did not have target years but which only have target years in the future are not assessed on dimension 1 (score = 0), but only on dimension 2.
  • Targets that do not cover >95% of inclusive scope 1+2 emissions are not preferred in the calculation of dimension 2, but will not be penalized, as other indicators already penalize companies for not having a large coverage in the target.
  • If the company has several active targets in different scopes that can be assessed according to the above criteria, then the score will be an average score based on the progress ratios of all targets assessed.

The performance score does not assess the ambition level and scope of previous targets, and therefore dimension 1 only has a low weight in the final performance score. This information is assessed in the analysis narrative, which will look at the following dimensions:

  • Achievement level: To what degree has the company achieved its previously set emissions reduction targets?
  • Progress level: To what degree is the company on track to meet its current emissions reduction targets?
  • Ambition level: What level of ambition do the previously achieved emissions reduction targets represent?
RATIONALE CEM 1.3 ACHIEVEMENT OF PREVIOUS TARGETS
RATIONALE OF THE INDICATOR

RELEVANCE OF THE INDICATOR:

  • The ACT assessment only looks to the past to the extent that it can inform on the future. This indicator is future-relevant by providing information on the company’s organizational ability to set and meet emissions reduction targets. Dimension 1 of this indicator adds credibility to any company claim to commit to a science-based reduction pathway.
  • Indicators 1.1 and 1.2 look at targets in a vacuum. Dimension 2 of this indicator adds value to the analysis of a comparison to the company’s performance with respect to its targets in the reporting year.

SCORING RATIONALE:

Quantitative interpretation of previous target achievement is not straightforward. The performance score thus makes no judgement of previous target ambition and leaves it to the analysis narrative to make a meaningful judgement on the ambition level of past targets.

  • Dimension 1 of the performance score will penalize companies who have not met previous targets in the past 10 years, as this means the company has lower credibility when setting ambitious science-based targets.
  • Dimension 2 uses a simple ratio sourced from existing CDP data points (CC 3.1e) in order to compare targets. The threshold 0.5 was chosen as it allows companies some flexibility with respect to the implementation of the target, but it does have the ability to flag companies that are definitely not on track towards achievement. When p is lower than 0.5, the company needs to achieve more than twice the reduction per unit of time than the target originally envisioned.

5.3.2. A - Material Investment

This module shall be calculated and assessed only integrated companies (companies called A).

5.3.2.1. CEM 2.1 A - Trend in Past Emission Intensity

DESCRIPTION & REQUIREMENT CEM 2.1 A TREND IN PAST EMISSION INTENSITY
Short description of indicator A measure of the alignment of the company’s recent emissions intensity trend with that of its decarbonization pathway according to the cement strength performance. The indicator will compare the gradient of this trend over a 5-year period to the reporting year (reporting year minus 5 years ) with the decarbonization pathway trend over a 5-year period after the reporting year.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 0.B: The start and end date for which data is reported for the most recent year – CDP0.2
  • CEM 1.A: Declaration of the company targets. Variation of [CDP C4.1] + [CDP C4.1a] + [CDP C4.1b]
  • CEM 2.A: For all existing and planned assets : Asset name, Geographic Location (country level), Plant type, Technology, Fuel mix , Status, Total capacity (ton), Active capacity (ton), Emissions factor (metric tonnes CO2e/t cement), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
  • CEM 2.B: The reporter shall provide plant activity and emissions data by plant type
  • CEM X: The reporter shall provide the carbon intensity of the plant according to the average compressive strength of the produced cement (MPa)

External sources of data used for the analysis of this indicator are:

  • The Global Cement Report - Online Database of Cement Plants for plant listing
  • IEA ETP [9] – background scenario data
  • SDA [10] – specific benchmark pathway definition
  • IPCC (2006) [13] – Total emission intensity
  • Environmental Product Declaration according to ISO 21930:2017 or EN15804+A1:2014 (or EN15804+A2:2019)
  • Standards for compressive strength or strength class: EN 196-1, ISO 679, EN 459-2, EN 1015-11, EN 13454-2, ASTM C109/C109M, ISO 7500-1 and ASTM E4, NF EN 197-1.

[9] IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.

[10] S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

[13] IPCC, «IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3, Chapter 2,» 2006.

The benchmark indicators involved are:

 

How the analysis will be done

The analysis is based on the comparison between the company’s recent (reporting year minus 5 years) emissions intensity trend gradient (𝐶𝑅’S12), the company’s recent (reporting year minus 5 years) emissions intensity trend gradient based on the average cement strength performance (𝐶𝑅’S12_MPa) and the company’s decarbonization pathway trend gradient (𝐶𝐵’S12) in the short-term (reporting year plus 5 years ).

𝐶𝑅’S12 is the gradient of the linear trend-line of the company’s recent inclusive scope 1+2 emissions intensity (kgCO2/ton cement) over time (𝐶𝑅S12).

𝐶𝑅’S12_MPa is the gradient of the linear trend-line of the company’s recent inclusive scope 1+2 emissions intensity (kgCO2/ton cement.MPa) based on the average of the cement strength performance (𝐶𝑅S12_MPa).

𝐶𝐵’S12 is the gradient of the linear trendline of the company benchmark pathway for emissions intensity (kgCO2/ton cement) (𝐶𝐵𝑆12). See section 6.2. Quantitative benchmarks used for the indicators for details on the computation of the company specific decarbonization pathway.

If 𝐶𝑅’S12 > 𝐶𝑅’S12_MPa , it means that the strength performance of the cement has increased

The difference between 𝐶𝑅’S12 and 𝐶𝐵’S12 will be measured by their ratio (𝑟𝑆12). This is the inclusive scope 1+2 emissions Transition ratio’ which is calculated by the following equation, with the symbol ‘used to denote gradients:

 

If the transition ratio is a negative number, it means the company’s recent emissions intensity has increased (positive 𝐶𝑅’S12) and a zero score is awarded by default. If the company’s recent emissions intensity has decreased, the transition ratio will be a number between 0 and 1.

The transition ratio is compared according the following scoring table, to take into account the change in cement strength performance:

 

RATIONALE CEM 2.1A TREND IN PAST EMISSION INTENSITY
Rationale of the indicator

Relevance of the indicator:

Trend in past emissions intensity is included in the ACT CEM assessment for the following reasons:

  • The trend shows the speed at which the company has been reducing its emissions intensity over the recent past Comparing this to the decarbonization pathway gives an indication of the scale of the change that needs to be made within the company to bring it onto a low-carbon pathway.
  • The change in cement strength performance is taken into account to make sure that the decrease in emissions intensity is not due to degradation of cement quality. This is the main reason that a specific intensity metric in kgCO2/ton cement.MPa is added.
  • While ACT aims to be as future-oriented, it nevertheless does not want to solely rely on projections of the future, in a way that would make the analysis too vulnerable to the uncertainty of those projections. Therefore, this particular measure, along with projected emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.

Scoring rationale:

While ‘gap’ type scoring is preferred for any indicator where possible, this indicator only looks at past emissions, and would therefore require a different baseline in order to generate a gap analysis. Thus, instead of a gap analysis, a trend analysis is conducted to compare current data of the company to the past data and improvements that have been made since the past data. An advantage of the trend analysis is that it does not require the use of a business-as-usual pathway to anchor the data points and aid interpretation, as trends can be compared directly and a score can be directly correlated to the resulting ratio.

 

5.3.2.2. CEM 2.2 A - Locked-in Emissions (WEIGHTING: %)

DESCRIPTION & REQUIREMENT CEM 2.2A LOCKED-IN EMISSIONS
Short description of indicator A measure of the company’s cumulative emissions from the reporting up to 2050 from installed and planned plants. The indicator will compare this to the emissions budget entailed by the company’s intensity decarbonization pathway and projected trends in the sector at the country/regional level. The assets to be considered for the calculation of this indicator are the same as the ones used for the company’s GHG emissions reporting.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 0.B: The start and end date for which data is reported for the most recent year – CDP0.2
  • CEM 1.A: Declaration of the company targets - Variation of [CDP C4.1] + [CDP C4.1a] + [CDP C4.1b]
  • CEM 2.A: For all existing and planned assets : Asset name, Geographic Location (country level), Plant type, Technology, Fuel mix , Status, Total capacity (ton), Active capacity (ton), Emissions factor (metric tonnes CO2e/t cement), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
  • CEM 2.B: The reporter shall provide plant activity and emissions data by plant type

External sources of data used for the analysis of this indicator are:

  • IEA ETP [9]– background scenario data
  • SDA [10] – specific benchmark pathway definition
  • IPCC (2006) [13] – Total emission intensity
  • Cemnet – lifetime of assets

[9] IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.

[10] S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

[13] IPCC, «IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3, Chapter 2,» 2006.

The benchmark indicators involved are:

 

How the analysis will be done

The analysis is based on the ratio between the company’s installed and planned emissions for the 15 years after the reporting year [𝐿𝐺(𝑡)], and the emissions budget entailed by the company’s carbon budget [𝐵𝐺(𝑡)] over the same period of time.

(𝑡) is calculated as the total cumulative emissions implied by the lifetimes of currently active and confirmed planned assets that are going to be commissioned in the near future. If unknown, the commissioning year of projects is estimated from the project status (e.g. bidding process, construction, etc.) and data on typical project periods by plant type. An average historical capacity factor over a 5-year period to the reporting year is applied to cement plant capacities to estimate future production.

(𝑡) is calculated as the company’s locked-in carbon commitments, up until the chosen time period t, which is derived by taking the area under the company’s future locked-in emissions curve. This curve in turn is derived from the company’s intensity pathway 𝐶𝐴𝐺, multiplied by activity 𝐴𝐺:

 

(𝑡) is calculated as the company’s carbon budget up until time t, which is derived by taking the area under the absolute emissions reduction curve. This curve in turn is derived from the company benchmark pathway (CBG) by multiplying it by activity 𝐴𝐺:

Depending on the data availability, the computation of these areas may not be as straightforward as the equations shown and will be done by approximation, but the principles will hold.

The locked-in ratio (rLB) is calculated as follows:

The default value for t is 15 years after the reporting year.

Calculation of the score:

If 𝑟𝐿𝐵 is 1 or lower, then the company stays within its carbon budget, and will be assigned the maximum score (100%). If 𝑟𝐿𝐵 is 1.5 or higher, then the company strongly exceeds its carbon budget, and will be assigned the minimum score (0%). If 𝑟𝐿𝐵 is between 1 and 1.5, then the company will be assigned a score of 1.5- 𝑟𝐿𝐵 divided by 50%.

RATIONALE CEM 2.2A LOCKED-IN EMISSIONS
Rationale of the indicator

Relevance of the indicator:

Locked-in emissions are included in the ACT CEM assessment for the following reasons:

  • Absolute GHG emissions over time are the most relevant measure of emissions performance for assessing a company’s contribution to global warming. While the indicator CEM 2.3A has a short-term measurement point on reporting year plus 5 years, the concept of Locked-in emissions allows a judgement to be made about the company’s outlook in more distant time periods.
  • Analysing a company’s locked-in emissions alongside science-based budgets also introduces the means to scrutinise the potential cost of inaction, including the probability of stranded assets.
  • Examining absolute emissions, along with recent and short-term emissions intensity trends, forms part of a holistic view of a company’s emissions performance in the past, present, and future.

Scoring rationale:

“The global production capacity of both clinker (the main component of cement) […] has doubled since 2000, suggesting that the production facilities are relatively young (the typical lifetime of a cement plant is 30 to 50 years with regular maintenance)” [14] . According to this IEA analysis, existing industrial infrastructure and facilities currently under construction would lock in around one-quarter of the total emissions allowable in the IEA Sustainable Development Scenario (SDS) (IEA, 2018). Industry is therefore the second-largest source of potentially locked-in emissions after the power sector, which accounts for around half of all locked-in emissions.

[14]  IEA, «Transforming Industry through CCUS,» 2019.

The only data coming in is provided by the asset dataset: currently active plants and plants and modernization / retrofit plans that are ‘in the pipeline’ (which can be estimated to become active in the short-term).

When a plant reaches the end of its estimated lifetime, no replacement is assumed because those decisions have not been made yet. In fact, cement plant are not often decommissioned but more modernized with new important equipment, so the lifetime of the asset is assumed to be the average lifetime of the process equipment (kiln, storage, mills, mixers, buildings…), which is between 30 and 50 years.

So the locked-in emissions calculated are the locked-in emissions of committed (existing and pipeline) plants only. Therefore, the indicator describes the proportion their 2015-2050 budget that will be used up by committed activity.

Unlike the ‘gap’ and ‘trend’ comparisons done in all other quantitative indicators, this indicator compares two areas: that of the carbon budget until t and the locked-in emissions until t. It is expected that companies will exceed their budget when t is in the short-term future but will not when it is in the long-term future. However, any short-term exceedance will have to be compensated for in later time periods. This is called carbon budget displacement, which makes the company’s actual decarbonization pathway steeper than the original benchmark. There is a dimension of risk from inaction here.

When the company exceeds its full carbon budget up to 2050, it will not be able to displace enough carbon from later time periods to nearer ones and will be faced with stranded assets when the current lifetime estimates are held up. This is a major problem, and this situation will certainly result in a zero score.

When companies are closer to their carbon budget than others, they will be less flexible in their future strategy as there is more pressure to change their equipment on a plant (modernization on a kiln for example). There is also less room for refurbishment to extend the lifetimes of existing assets as this carries the risk of exceeding the carbon budget. Therefore, there is rationale for intermediate scoring levels that magnify this level of risk due of future flexibility in the future.

Note on calculating LG and BG:

Where data on plant emissions intensity is unavailable at the asset level (requested in CEM 2A), default factors are applied and are the median of the range of values published in annex A.III. 4.2.1 of IPCC. Data on typical project periods by plant type is also obtained from this source. Where plant lifetime information is unavailable (requested in CEM 2A), the median of known lifetimes in Cemnet will be applied. The rationale for using these sources is that the medians are built on comprehensive samples of data.

 

5.3.2.3 CEM 2.3 A -Trend in Future Emissions Intensity for Cement Production

DESCRIPTION & REQUIREMENT CEM 2.3A TREND IN FUTURE EMISSIONS INTENSITY FOR CEMENT PRODUCTION
Short description of indicator A measure of the alignment of the company’s projected emissions intensity with its decarbonization pathway. The indicator will identify the gap in 5 years after the reporting year between the company’s performance and the decarbonization pathway as a percentage, which is expressed as the company’s ‘action gap’.
Data requirements

 

 

The questions comprising the information request that are relevant to this indicator are:

  • CEM 0.B: The start and end date for which data is reported for the most recent year – CDP0.2
  • CEM 1.A: Declaration of the company targets. Variation of [CDP C4.1] + [CDP C4.1a] + [CDP C4.1b]
  • CEM 2.A: For all existing and planned assets : Asset name, Geographic Location (country level), Plant type, Technology, Fuel mix , Status, Total capacity (ton), Active capacity (ton), Emissions factor (metric tonnes CO2e/t cement), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
  • CEM 2.B: The reporter shall provide plant activity and emissions data by plant type

External sources of data used for the analysis of this indicator are:

• IEA ETP [10] – background scenario data

• SDA [11] – specific benchmark pathway definition

• IPCC (2006) [13] – Total emission intensity

• Cemnet – lifetime of assets

[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

[11]  CEMBUREAU, «Innovation in the cement industry,» 2017.

[13]  IPCC, «IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3, Chapter 2,» 2006.

 

The benchmark indicators involved are:

[9]  IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.

[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

How the analysis will be done

The analysis is based on the difference between the company’s action pathway (𝐴𝐺) and the company’s benchmark (𝐶𝐵𝐺) developing from the reporting year to 5 years after.

The company’s action pathway (𝐴𝐺) is the weighted average plant emissions intensity over time, assuming the continuation of active plants until anticipated decommissioning and the completion of known plant / retrofit projects. If unknown, the commissioning year of projects is estimated from the project status (e.g. bidding process, construction, etc.) and data on typical project periods by plant type.

The company’s benchmark (𝐶𝐵𝐺) pathway is the ‘company specific decarbonization pathway’. See section 6.1 for details on the computation of this pathway.

The analysis compares 𝐴𝐺 to 𝐶𝐵𝐺, by examining the difference between these pathways in 5 years after the reporting year. The pathways are expressed in grams of CO2 per unit of activity (intensity measure). The unit of activity for the cement sector is ton of cement. The result of the comparison is the action gap.

Calculation of the score:

To assign a score to this indicator, the size of the action gap will be compared to the maximum action gap, which is defined by the business as usual pathway (𝐵𝐴𝑈𝐺). 𝐵𝐴𝑈𝐺 is defined as an unchanging (horizontal) intensity pathway, whereby the emissions intensity is not reduced at all over a period after the reporting year.

The score assigned to the indicator is equal to 1 minus the action gap and is expressed as a percentage (1 = 100%). Therefore, if 𝐴𝐺- 𝐶𝐵𝐺 is equal to zero, the company’s target is aligned with the sectoral benchmark, and the maximum score is achieved.

RATIONALE CEM 2.3A TREND IN FUTURE EMISSIONS INTENSITY FOR CEMENT PRODUCTION
Rationale of the indicator

Relevance of the indicator:

The trend in future emissions intensity is included in the ACT assessment for the following reasons:

  • The recent emissions intensity performance indicates the company’s progression towards, or away from, the future emissions intensity necessary for the sector to decarbonize in line with a low-carbon scenario.
  • This indicator is the most valuable in terms of the information it provides on the company’s actual action towards decarbonization.
  • This particular measure, along with recent emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.

Scoring rationale:

The scoring rationale follows the same narrative as indicator CEM 1.1: please refer to the rationale of this indicator to understand the choices made.

NOTE ON CALCULATING AG:

Where data on plant emissions intensity is unavailable at the asset level (requested in CEM 2A), default factors are applied and are the median of the range of values published in annex A.III. 4.2.1 of IPCC. Data on typical project periods by plant type is also obtained from this source. Where plant lifetime information is unavailable (requested in CEM 2A), the median of known lifetimes in cement will be applied. The rationale for using these sources is that the medians are built on comprehensive samples of data.

5.3.3. Intangible investment

 

5.3.3.1. CEM 3.1 R&D FOR LOW-CARBON TRANSITION

DESCRIPTION & REQUIREMENTS CEM 3.1 R&D FOR LOW-CARBON TRANSITION
Short description of indicator A measure of the ratio of R&D investments in mitigation-relevant technologies. The indicator will identify the ratio between the company’s R&D investment and the required investment as set by a scientific benchmark of R&D requirements.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • Provide Capital Expenditure and total R&D Expenditure - Variation of [CDP C-CO9.6/C-CE9.6/C-OG9.6] for the three last years
  • R&D costs/investments in mature and non-mature climate change mitigation technologies of the company for the three last years

External sources of data used for the analysis of this indicator are:

Mitigation technology:

  • Ecofys-WWF Energy model [15] – benchmark data 5%
  • IEA Technology Roadmap Low-Carbon Transition in the Cement Industry report, 2018 [2]
  • CEMBUREAU roadmaps. [11], [16]
  • Other roadmaps for the cement sector

[15]  E. &. WWF, «The Energy Report: 100% renewable energy by 2050,» 2010.

[2]  IEA, CSI, “Technology Roadmap - Low-Carbon Transition in the Cement Industry,” 2018.

[11]  CEMBUREAU, «Innovation in the cement industry,» 2017.

[16]  CEMBUREAU, «The role of CEMENT in the 2050 low carbon economy,» 2013.

 

Maturity of technology – Technology Readiness Levels (TRLs):

 

How the analysis will be done

The analysis is based on the ratio of the company’s ‘annual R&D expenditure on technologies that mitigate climate change’ (𝐶𝐴𝑃𝐸𝑋′𝑀𝑅&𝐷) to the company’s ‘total annual capital expenditure’ (𝐶𝐴𝑃𝐸𝑋). The highest scoring level will compare only ‘R&D expenditure on non-mature technologies (see the indicator’s rationale) that mitigate climate change’ (𝐶𝐴𝑃𝐸𝑋′𝑀𝑅&𝐷𝑛𝑜𝑛−𝑚𝑎𝑡𝑢𝑟𝑒).

The ratios are defined as the ‘mitigation R&D intensity’ ratios (𝐷) or (𝐷(𝑛𝑜𝑛−𝑚𝑎𝑡𝑢𝑟𝑒)):

Three years are taken as a reference because some pilots projects require high expenses one year and less expenses other years.

DIMENSION 1 - INCLUSIVE R&D INVESTMENT RATIO:

This intensity will be compared to a benchmark for mitigation R&D (𝐵𝑅𝐷) intensity, and a score will be assigned depending on the company’s proximity to the benchmark. This benchmark is defined by the IEA Technology Roadmap Low-Carbon Transition in the Cement Industry report. The inclusive R&D investment ratio includes all investment in carbon mitigation technologies (mature and non-mature).

The score is a percentage of the maximum R&D investment ratio. It is calculated by dividing 𝐷 by 𝐵𝑅𝐷.

The score for dimension 1 is calculated by multiplying the investment ratio by 50% as long as the ratio is lower than 1. For values higher than 1, 50% will be assigned as a score.

 

DIMENSION 2 - NON-MATURE R&D INVESTMENT RATIO :

R&D investment is not as necessary for some technologies as it is for others. The non-mature technology investment ratio 𝐷𝑛𝑜𝑛−𝑚𝑎𝑡𝑢𝑟𝑒 is compared to the benchmark for dimension 2:

A company with an investment ratio of 1 for dimension 2 shall achieve 100% of the maximum score. If the ratio is lower than or equal to 1, the score for dimension 2 is the value of the calculated ratio.

The highest score between dimensions 1 and 2 is chosen as the company’s final score.

RATIONALE CEM 3.1 R&D FOR LOW-CARBON TRANSITION
Rationale of the indicator

Relevance of the indicator:

R&D for low-carbon transition is included in the ACT assessment for the following reasons:

  • To enable the transition, sectors such as the CEM sector rely heavily on R&D to develop: low-carbon technologies replacing their currently high-emitting portfolio of asset, new cement with low-ratio of clinker or no clinker at all and the use of new and low-emitting fuels, carbon capture, storage and use .
  • R&D is also one of the principal tools to reduce the costs of a technology in order to increase its market penetration.
  • Lastly, the R&D investment of a company into non-mature technologies allows for direct insight into the company’s commitment to alternative technologies that may not currently be part of its main business model.

Defining R&D:

Research and development (R&D): Refers to the activities companies undertake to innovate and introduce new products and services. It is often the first stage in the development process. Investment in R&D is a type of operating expense associated with the research and development of a company's goods or services. (definition from CDP guidance).

Research and experimental development (R&D) comprises creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications. The term R&D covers three activities:

  • Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view.
  • Applied research is also original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific practical aim or objective.
  • Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, which is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed.

R&D covers both formal R&D in R&D units and informal or occasional R&D in other units.

(OECD 2012)

DEFINING THE R&D SCOPE:

The indicator focuses on mature and non-mature technologies or construction and organizational methodologies that mitigate climate change.

Climate mitigation technologies for the cement sector may include:

  • Dry kiln (a preheater is used to be much more thermally efficient than the wet process)
  • Waste heat recovery
  • Improving energy efficiency
  • Switching to alternative fuels
  • Reducing the clinker to cement ratio or low clinker cement
  • Using emerging and innovative technologies
  • Alternative low-CO2 cements/binders
  • Carbon capture and storage (CCS)
  • Carbon capture, utilization and storage (CCUS)

R&D expenditures should cover development of concepts and ideas and development of pilots’ projects. A first environmental balance should demonstrate that the solution reduces the overall CO2 emissions on the life cycle and doesn’t make pollution transfers.

DEFINING ‘MITIGATION R&D’:

The ‘mitigation R&D’ is defined by the categorization employed by IEA Technology Roadmap Low-Carbon Transition in the Cement Industry report.

DEFINING ‘NON-MATURE R&D’:

A Technology Readiness Level (TRL) should be used to assess the maturity of a technology. Higher scoring levels of this indicator exclude research in technologies that are already considered mature in terms of market penetration, in order to incentivise a focus on those technologies that have a higher need for R&D investment, in order to break through technical barriers and reduce the levelized costs of deploying these technologies

To formalize this distinction in the analysis, the company is asked for a detailed breakdown of R&D expenditure in Section 3 of the data request. As defining what type of R&D is ‘non-mature’ is theoretically difficult, the classification is inversed, and done based on the principle of exclusion. This methodology excludes only those low-carbon technologies that are considered mature in terms of market position and levelized cost.

The mature and non-mature technologies are defined in chapter 11.3 - Identification of the technologies used to decarbonize the cement sector

Scoring rationale:

To align with the narrative of ratios that is also used in the other indicators, the indicator is computed as the ‘R&D investment ratio’. This investment ratio is only assigned 50% of the maximum score, as the analysis aims to incentivise R&D in non-mature technologies as opposed to mature technologies. Therefore, the achievable score for achieving a high R&D in non-mature technologies (D_(non-mature)) is double that of the score when this criterion is not included (D).

Expenditures over the 3 last years are used for the indicator to take into account that expenditure for major R&D projects may not be linear over years.

.

5.3.4 B - Sold Product Performance

This module shall be calculated and assessed only for blenders and grinding assets (companies called B).

5.3.4.1. CEM 4.1b Trend in Past Emission Intensity

DESCRIPTION & REQUIREMENT CEM 4.1 B TREND IN PAST EMISSION INTENSITY
Short description of indicator A measure of the alignment of the company’s recent emissions intensity trend with that of its decarbonization pathway according to the cement strength performance . The indicator will compare the gradient of this trend over a 5-year period to the reporting year (reporting year minus 5 years ) with the decarbonization pathway trend over a 5-year period after the reporting year.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 0.B: The start and end date for which data is reported for the most recent year – CDP0.2
  • CEM 41.A: Declaration of the company targets - Variation of [CDP C4.1] + [CDP C4.1a] + [CDP C4.1b]
  • CEM 42.A: For all existing and planned assets : Asset name, Geographic Location (country level), Plant type, Technology, Fuel mix , Status, Total capacity (ton), Emissions factor (metric tonnes CO2e/t cement), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%) , Comment
  • CEM 4.B: The reporter shall provide plant activity and emissions data by plant type
  • CEM 4.C: The reporter shall provide the carbon intensity of the plant according to the average compressive strength of the produced cement (MPa)

External sources of data used for the analysis of this indicator are:

  • The Global Cement Report - Online Database of Cement Plants for plant listing
  • www.cemnet.com/global-cement-report/
  • IEA ETP [9] – background scenario data
  • SDA [10] – specific benchmark pathway definition
  • IPCC (2006) [13] – Total emission intensity
  • Environmental Product Declaration according to ISO 21930:2017 or EN15804+A1:2014 (or EN15804+A2:2019)
  • Standards for compressive strength or strength class: EN 196-1, ISO 679, EN 459-2, EN 1015-11, EN 13454-2, ASTM C109/C109M, ISO 7500-1 and ASTM E4, NF EN 197-1.

[9]  IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.

[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

[13]  IPCC, «IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3, Chapter 2,» 2006.

The benchmark indicators involved are:

 

How the analysis will be done

𝐶𝐵’S12 is the gradient of the linear trendline of the company benchmark pathway for emissions intensity (𝐶𝐵𝑆12). See section 6.2. Quantitative benchmarks used for the indicators for details on the computation of the company specific decarbonization pathway.

The analysis is based on the comparison between the company’s recent (reporting year minus 5 years ) emissions intensity trend gradient (𝐶𝑅’S12), the company’s recent (reporting year minus 5 years) emissions intensity trend gradient based on the average cement strength performance (𝐶𝑅’S12_MPa) and the company’s decarbonization pathway trend gradient (𝐶𝐵’S12) in the short-term (reporting year plus 5 years ).

𝐶𝑅’S12 is the gradient of the linear trend-line of the company’s recent inclusive scope 1+2 emissions intensity (kgCO2/ton cement) over time (𝐶𝑅S12).

𝐶𝑅’S12_MPa is the gradient of the linear trend-line of the company’s recent inclusive scope 1+2 emissions intensity (kgCO2/ton cement.MPa) based on the average of the cement strength performance (𝐶𝑅S12_MPa).

𝐶𝐵’S12 is the gradient of the linear trendline of the company benchmark pathway for emissions intensity (kgCO2/ton cement) (𝐶𝐵𝑆12). See section 6.2. Quantitative benchmarks used for the indicators for details on the computation of the company specific decarbonization pathway.

If 𝐶𝑅’S12 > 𝐶𝑅’S12_MPa , it means that the strength performance of the cement has increased

The difference between 𝐶𝑅’S12 and 𝐶𝐵’S12 will be measured by their ratio (𝑟𝑆12). This is the inclusive scope 1+2 emissions Transition ratio’ which is calculated by the following equation, with the symbol ‘used to denote gradients:

If the transition ratio is a negative number, it means the company’s recent emissions intensity has increased (positive 𝐶𝑅’S12) and a zero score is awarded by default. If the company’s recent emissions intensity has decreased, the transition ratio will be a number between 0 and 1.

The transition ratio is compared according the following scoring table, to take into account the change in cement strength performance:

If the data for clinker emissions is not collected, the score 0 is assigned to this indicator.

RATIONALE CEM 4.1B TREND IN PAST EMISSION INTENSITY
Rationale of the indicator

Relevance of the indicator:

Trend in past emissions intensity is included in the ACT CEM assessment for the following reasons:

  • The trend shows the speed at which the company has been reducing its emissions intensity over the recent past Comparing this to the decarbonization pathway gives an indication of the scale of the change that needs to be made within the company to bring it onto a low-carbon pathway.
  • The change in cement strength performance is taken into account to make sure that the decrease in emissions intensity is not due to degradation of cement quality. This is the main reason that a specific intensity metric in kgCO2/ton cement.MPa is added.
  • While ACT aims to be as future-oriented, it nevertheless does not want to solely rely on projections of the future, in a way that would make the analysis too vulnerable to the uncertainty of those projections. Therefore, this particular measure, along with projected emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.

Scoring rationale:

While ‘gap’ type scoring is preferred for any indicator where possible, this indicator only looks at past emissions, and would therefore require a different baseline in order to generate a gap analysis. Thus, instead of a gap analysis, a trend analysis is conducted to compare current data of the company to the past data and improvements that have been made since the past data. An advantage of the trend analysis is that it does not require the use of a business-as-usual pathway to anchor the data points and aid interpretation, as trends can be compared directly and a score can be directly correlated to the resulting ratio.

 

5.3.4.2. CEM 4.2 B ENERGY MANAGEMENT

DESCRIPTION & REQUIREMENT CEM 4.2 B ENERGY MANAGEMENT
Short description of indicator A measure of the company’s energy management action plan from the reporting up to 2050 from installed and planned plants. The indicator will evaluate the implementation of global recommendations to decarbonize the assets consuming energy
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 0.B: The start and end date for which data is reported for the most recent year – CDP0.2
  • CEM 41.A: Declaration of the company targets Variation of [CDP C4.1] + [CDP C4.1a] + [CDP C4.1b]
  • CEM 4.A: For all existing and planned assets : Asset name, Geographic Location (country level), Plant type, Technology, Fuel mix , Status, Total capacity (ton), Active capacity (ton), Emissions factor (metric tonnes CO2e/t cement), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
  • CEM 4.B: The reporter shall provide action plans regarding energy management
  • CEM 4.C: Details on the electricity, heat, steam, and/or cooling amounts that were accounted for at a low-carbon emission factor in the market-based Scope 2 figure reported in C6.3 - Variation of [CDP C8.2f]

External sources of data used for the analysis of this indicator are:

  • IEA ETP [9] – background scenario data
  • SDA [10] – specific benchmark pathway definition
  • IPCC (2006) [13] – Total emission intensity
  • Cemnet – lifetime of assets
  • Press

[9]  IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.

[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

[13]  IPCC, «IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3, Chapter 2,» 2006.

How the analysis will be done

Calculation of the score:

To be ready for the transition to a low-carbon economy, cement companies (especially blenders and grinding operators) need to plan and carry out energy management to reduce GHG emissions of their assets.

The maturity matrix used for the assessment is the following:

RATIONALE CEM 4.2 B ENERGY MANAGEMENT
Rationale of the indicator

Relevance of the indicator:

Locked-in emissions are not well relevant for blenders and grinding operators, as they are not high energy consumers in the cement value chain. and It is nevertheless essential to give them strong recommendations to help them to decarbonize. Energy management is key for these actors. Lots of companies are beginning by the energy management to reduce their carbon emissions. This indicator looks at specific renewable energy or energy efficiency pathways, as this information is expected to be reflected in the company’s Scope 1+2 emissions pathway.

It is important to have a double requirement, on energy efficiency and carbon reduction. Switching from a fossil energy source

to a decarbonated one (solar, biomass, district heating network fed by renewable energy…) without improving energy

efficiency is not considered as satisfactory. It is important to ask them these questions to be sure that there is no potential cost of inaction.

 

5.3.4.3. CEM 4.3 B - Clinker / Material-Specific Interventions

DESCRIPTION & REQUIREMENT CEM 4.3 B Clinker / material-specific interventions
Short description of indicator An analysis of the company’s reporting of mature interventions to reduce GHG emissions for purchased or imported clinker / material determined as being high GHG impact, relative to the other categories of products relevant to the company. This indicator focused also on the actions taken to low carbon final products of the company.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 4.C: Identify emissions reduction initiatives active in the reporting year [CDP C4.3a + C4.3b + C4.3c]

External sources of data used for the analysis of this indicator are:

  • Online and press news

Clinker value collected could be benchmarked for example with CSI or IPCC values (IPCC default value is 510 kg CO2/t grey clinker and CSI default value is 525 kg CO2/t grey clinker). White clinker value is higher than these average values.

How the analysis will be done

To be ready for the transition to a low-carbon economy, cement companies (especially blenders and grinding operators) need to plan and carry out “interventions” within the value chain in order to exercise their market position and influence to reduce GHG emissions.

For all its activity, the company identifies interventions that determine the most ambitious impacts achievable, and highlights the GHG hotspots in accordance with best practices.

The analyst compares the interventions reported by the company with this benchmark and against other interventions reported by other reporting companies, whereby the analyst assigns a ‘maturity scoring’ to the reported interventions.

Several measures are combined to assign a score to the intervention. These measures are:

  • Scope of the intervention
  • GHG emissions reduction at the clinker / material supplier
  • Future emissions assessment
  • Transport of clinker / material

The maturity matrix used for the assessment is the following:

 

SIGNIFICANCE AND EXTENT OF THE INTERVENTION:

Whether the intervention is large or small in scale affects its overall level of impact on GHG emissions. Large-scale interventions receive more points (e.g. significant interventions covering a high percentage of clinker / material purchased).

This assesses how advanced the intervention is relative to current practice, and other elements that can ensure its success like clear goals and measures of success, use of supporting technology, use of certification and verification

RATIONALE CEM 4.3 B Clinker / material-specific interventions
Rationale of the indicator

Relevance of the indicator:

While other sectors in the ACT project may have one activity indicator (generation emissions for electric utilities, fleet emissions for car companies) that can account for the majority of their total emissions, this is not the case for cement, where emissions sources are scattered across the value chain and have different points of origin according to the company’s type. To address all emissions, different types of actions are necessary to address different types of emissions sources. Furthermore, this multidimensionality means that large efforts, such as Life Cycle Assessments (LCA), are needed to accurately gain insight and information on exactly where the significant emissions sources are and what can be done.

A key issue with the interventions approach is that if interventions have no measurable impact on GHG emissions, they are effectively “greenwash”. However, we recognise that, when attempting to influence GHG emissions outside of direct operations, measurement may be difficult. Barriers to measurement should not be barriers to action, therefore the analysis will consider interventions where the GHG emissions mitigation has not been measured. Nonetheless, companies should describe the rationale for emissions reduction connected to the intervention so that it is clear this potential exists.

The reporting should also include, where possible, enough detail on mitigation potential, and the scale of impact expected, to distinguish between interventions that could be considered greenwash and those with a material, positive climate change mitigation impact.

5.3.5. Management

 

5.3.5.1. CEM 5.1 OVERSIGHT OF CLIMATE CHANGE ISSUES

DESCRIPTION & REQUIREMENT CEM 5.1 OVERSIGHT OF CLIMATE CHANGE ISSUES
Short description of indicator The company discloses that responsibility for climate change within the company lies at the highest level of decision making within the company structure.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 5.A: Details on where is the highest level of direct responsibility for climate change within the organization - Variation of [CDP C1.1] + [CDP C1.2]
  • CEM 5.B: Position of the individual or name of the committee with this responsibility and outline their expertise regarding climate change and the low-carbon transition Variation of [CDP C1.1a] + [CDP C1.2a]
How the analysis will be done

The benchmark case is that climate change is managed within the highest decision-making structure within the company. The company situation is compared to the benchmark case, if it is similar then points are awarded.

The position at which climate change is managed within the company structure is determined from the company data submission and accompanying evidence.

The maturity matrix used for the assessment is the following:

RATIONALE CEM 5.1 OVERSIGHT OF CLIMATE CHANGE ISSUES
Rationale of the indicator

Successful change within companies, such as the transition to a low-carbon economy, requires strategic oversight and buy-in from the highest levels of decision-making within the company. For the cement sector, a change in strategy and potentially business model will be required and this cannot be achieved at lower levels within an organisation. Evidence of how climate change is addressed within the top decision-making structures is a proxy for how seriously the company takes climate change, and how well integrated it is at a strategic level. High-level ownership also increases the likelihood of effective action to address the low-carbon transition.

Changes in strategic direction are necessarily future-oriented, which fits with this principle of the ACT project.

Management oversight of climate change is considered good practice.

 

5.3.5.2. CEM 5.2 CLIMATE CHANGE OVERSIGHT CAPABILITY

DESCRIPTION & REQUIREMENT CEM 5.2 CLIMATE CHANGE OVERSIGHT CAPABILITY
Short description of indicator Company board or executive management has expertise on the science and economics of climate change, including an understanding of policy, technology and consumption drivers that can disrupt current business
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 5B: Identify the position of the individual or name of the committee with this responsibility and outline their expertise regarding climate change and the low-carbon transition. Variation of [CDP C1.1a] + [CDP C1.2a]
How the analysis will be done

The presence of expertise on topics relevant to climate change and the low-carbon transition at the level of the individual or committee with overall responsibility for it within the company is assessed. The presence of expertise is the condition that must be fulfilled for points to be awarded in the scoring.

The analyst determines if the company has expertise as evidenced through a named expert biography outlining capabilities. The analysis is binary: expertise is evident or not. A check is performed against CDP 3.1 questionnaire on the highest responsibility for climate change, the expertise should exist at the level identified or the relationship between the structures/experts identified should also be evident.

The maturity matrix used for the assessment is the following:

RATIONALE CEM 5.2 CLIMATE CHANGE OVERSIGHT CAPABILITY
Rationale of the indicator

Effective management of the low-carbon transition requires specific expertise related to climate change and its impacts, and their likely direct and indirect effects on the business. Presence of this capability within or closely related to the decision-making bodies that will implement low-carbon transition both indicates company commitment to that transition and increases the chances of success.

Even if companies are managing climate change at the Board level or equivalent, a lack of expertise could be a barrier to successful management of a low-carbon transition.

 

5.3.5.3. CEM 5.3 LOW-CARBON TRANSITION PLAN

DESCRIPTION & REQUIREMENT CEM 5.3 LOW-CARBON TRANSITION PLAN
Short description of indicator The company has a plan on how to transition the company to a business model compatible with a low-carbon economy.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 5.C: Details on the organization’s low-carbon transition plan. Variation of [C-AC3.1b/C-CE3.1b/C-CH3.1b/C-CO3.1b/C-EU3.1b/C-FB3.1b/C-MM3.1b/C-OG3.1b/C-PF3.1b/C-ST3.1b/C-TO3.1b/C-TS3.1b] + [C-AC3.1e/C-CE3.1e/C-CH3.1e/C-CO3.1e/C-EU3.1e/C-FB3.1e/C-MM3.1e/C-OG3.1e/C-PF3.1e/C-ST3.1e/C-TO3.1e/C-TS3.1e]
How the analysis will be done

The analyst evaluates the description and evidence of the low-carbon transition plan for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence is compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

Among the best practice elements identified to date are:

  • The plan includes financial projections
  • The plan should include cost estimates or other assessment of financial viability as part of its preparation
  • The description of the major changes to the business is comprehensive, consistent, aligned with other indicators
  • Quantitative estimates of how the business will change in the future are included
  • Costs associated with the plan (e.g. write-downs, site remediation, contract penalties, regulatory costs) are included
  • Potential “shocks” or stressors (sudden adverse changes) have been taken into consideration
  • Relevant region-specific considerations are included
  • The plan’s measure of success is SMART - contains targets or commitments with timescales to implement them, is time-constrained or the actions anticipated are time-constrained
  • The plan’s measure of success is quantitative
  • The description of relevant testing/analysis that influenced the transition plan is included
  • The plan is consistent with reporting against other ACT indicators
  • Scope – should cover the entire business, and is specific to that business
  • The plan should cover the short, medium and long terms. From now or the near future <5 years, until at least 2035 and preferably beyond (2050)
  • The plan contains details of actions the company realistically expects to implement (and these actions are relevant and realistic)
  • The plan has been approved at the strategic level within the organisation
  • Discussions about the potential impacts of a low-carbon transition on the current business have been included
  • The company has a publicly-acknowledged low carbon (or beyond) science-based target.

The maturity matrix used for the assessment is the following:

The maximum score (100%) is assigned if all of these elements are demonstrated.

RATIONALE CEM 5.3 LOW-CARBON TRANSITION PLAN
Rationale of the indicator

The cement sector will require substantial changes to its business to align with a low-carbon economy over the short, medium and long term, whether voluntarily following a strategy to do so or if forced to change by regulations (ex: obligations to use waste as alternative fuels) and structural changes to the market (ex: customer demands come from low-carbon solutions). It is better for the success of its business and of its transition that these changes occur in a planned and controlled manner.

The Investor Expectations of Companies in the Construction Materials Sector document [17] specifically states that companies in the sector should develop such a plan.

[17]  IIGCC, «Investor Expectations of Companies in the Construction Materials Sector,» 2019.

 

5.3.5.4. CEM 5.4 CLIMATE CHANGE MANAGEMENT INCENTIVES

DESCRIPTION & REQUIREMENT CEM 5.4 CLIMATE CHANGE MANAGEMENT INCENTIVES
Short description of indicator The Board’s compensation committee has included metrics for the reduction of GHG emissions in the annual and/or long-term compensation plans of senior executives; the company provides monetary incentives for the management of climate change issues as defined by a series of relevant indicators
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 5.D: Whether the company provides incentives for the management of climate change issues, including the attainment of targets? Same as [CDP C1.3]
  • CEM 5.E: Details on the incentives provided for the management of climate change issues. Same as [CDP C1.3a]
How the analysis will be done

The analyst verifies if the company has compensation incentives set for senior executive compensation and/or bonuses, that directly and routinely reward specific, measurable reductions of tons of GHG emitted by the company in the preceding year and/or the future attainment of emissions reduction targets, or other metrics related to the company’s low-carbon transition plan.

The maturity matrix used for the assessment is the following:

 

RATIONALE CEM 5.4 CLIMATE CHANGE MANAGEMENT INCENTIVES
Rationale of the indicator

Executive compensation should be aligned with overall business strategy and priorities. As well as commitments to action the company should ensure that incentives, especially at the executive level, are in place to reward progress towards a low-carbon transition. This will improve the likelihood of a successful low-carbon transition.

Monetary incentives at the executive level are an indication of commitment to successful implementation of a low-carbon transition strategy.

 

5.3.5.5. CEM 5.5 CLIMATE CHANGE SCENARIO TESTING

DESCRIPTION & REQUIREMENT CEM 5.5 CLIMATE CHANGE SCENARIO TESTING
Short description of indicator Testing or analysis relevant to determining the impact of the transition to a low-carbon economy on the current and projected business model and/or business strategy has been completed, with the results reported to the Board or C-suite (CEO, CFO, etc.), the business strategy revised where necessary, and the results publicly reported.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • CEM 5.F: Details on the organization’s climate change scenario testing. Variation of [CDP C3.1a] + [CDP C3.1d]
  • CEM 5.G: Consideration of risk types in organization's climate-related risk assessments (C2.2c)
  • CEM 5.H: Details of risks identified with the potential to have a substantive financial or strategic impact on business (C2.3a)
How the analysis will be done

The analyst evaluates the description and evidence of the low-carbon economy scenario testing for the presence of best-practice elements and consistency with the other reported management indicators. The company description and evidence is compared to the maturity matrix developed to guide the scoring and a greater number of points is allocated for elements indicating a higher level of maturity.

  • Best-practice elements to be identified in the test/analysis include:
  • full coverage of the company’s boundaries;
  • timescale from present to long-term (2035-2050);
  • results are expressed in value-at-risk or other financial terms;
  • multivariate: a range of different changes in conditions are considered together;
  • changes in conditions are specific to a low-carbon climate scenario;
  • climate change conditions are combined with other likely future changes in operating conditions over the timescale chosen.

The maturity matrix used for the assessment is the following:

Maximum points are awarded if all of these elements are demonstrated.

RATIONALE CEM 5.5 CLIMATE CHANGE SCENARIO TESTING
Rationale of the indicator

Changes predicted to occur due to climate change could have a number of consequences for the cement sector, including the risk of “stranded assets”, increased costs, a dramatically changed operating environment and major disruptions to the business. There are a variety of ways of analysing the potential impacts of climate-related changes on the business, whether these are slow and gradual developments or one-off “shocks”. Investors are increasingly calling for actions to reduce greenhouse gas emissions across the value chain (see IIGCC investor expectations document for the sector [17]), effective abatement will require a combination of action: improve energy efficiency, use alternative fuels, use clinker substitution, develop new technologies, sell less cement but sell services or advice to use cement in a better way…. These actions should be linked with a strong governance framework to manage physical risks of the sector. The ACT methodology thus provides a broad definition of types of testing and analysis that can be relevant to this information requirement, to identify both current and best practices and consider them in the assessment.

[17]  IIGCC, «Investor Expectations of Companies in the Construction Materials Sector,» 2019.

Risk management plan is an important management tool for preparing for the low-carbon transition. For businesses likely to be strongly affected by climate change impacts (both direct and indirect), and businesses with large fixed asset bases and long management horizons, such as the cement sector, it has even greater importance.

 

5.3.6. Supplier engagement

The suppliers for the cement industry vary considerably depending on the structure of the company and activities: quarries, raw materials, secondary raw materials, waste treatment for fuels or heat supply and especially transport. Transport emissions are excluded from the scope of the quantitative modules, but a specific focus should be done when the evaluator completes the supplier engagement module.

Even for an integrated company, quarries are considered in the suppliers’ module. For blenders and grinding operators, engagement with clinker producers is not considered in this module assessment because they are already considered in the sold product performance module. No specific sub dimensions are given for the two indicators, but a global evaluation should be used to rate the level of the company. The evaluator should make sure to identify the most important suppliers in the company’s supply chain. This identification is necessary to give recommendations on where emissions could be lowered.

5.3.6.1. CEM 6.1 Strategy to influence suppliers to reduce their GHG emissions (weighting %)

DESCRIPTION & REQUIREMENT CEM 6.1 STRATEGY TO INFLUENCE SUPPLIERS TO REDUCE THEIR GHG EMISSIONS
Short description of indicator The company has a strategy, ideally governed by policy and integrated into business decision making, to influence, enable, or otherwise shift suppliers’ choices and behaviour in order to reduce GHG emissions.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • Details of the methods of supplier engagement, strategy for prioritizing supplier engagements and measures of success - Part of [CDP C12.1a]
  • Number of suppliers with whom the company is engaging, the proportion of the total spend that they represent, part of the inclusive scope 1+2 carbon emissions. Variation of [CDP C12.1a]
  • If data on suppliers’ GHG emissions and climate change strategies are available, explain how the company makes use of that data- Variation of [CDP C12.1a]

OR/AND

List of environmental contract clauses in purchasing & suppliers’ selection process

How the analysis will be done

The assessment will assign a maturity score based on the company’s formalized strategy with their suppliers, expressed in a maturity matrix.

A company that is placed in the ‘aligned’ category will receive the maximum score. Companies who are at lower levels will receive a partial score, with 0 points awarded for having no engagement at all.

This maturity matrix is indicative but does not show all possible options that can result in a particular score. Companies responses will be scrutinized by the assessor and then placed on the level in the matrix where the assessor deems it most appropriate.

Maturity matrix is based on following questions:

  • What is the scope of the action levers used?
  • What action levers are used by the company to encourage suppliers to develop low carbon offer?
  • To what extent carbon issues are integrated in the selection process of suppliers?
  • To what extent GHG emissions reduction issues are integrated in engagement with suppliers?

No specific sub dimensions are given but a global evaluation should be used to rate the level of the company. The evaluator should pay attention to identify the most important suppliers in the company’s global carbon emissions. This identification is necessary to give recommendations.

 

   
RATIONALE CEM 6.1 STRATEGY TO INFLUENCE SUPPLIERS TO REDUCE THEIR GHG EMISSIONS
Rationale of the indicator

Since the raw material is linked to the environmental performance of the final product, the cement. Suppliers have to be involved in the strategy action plan of the company. Even if raw materials are from quarries, from other industries, or also bought clinker. Remind that bought clinkers has a high impact in the company GHG accounting because it is considered in the target calculation. The choice of the sustainable purchased product is a lever to help the company to apply his low carbon transition.

Supplier engagement is included in the ACT CEM assessment for the following reasons:

  • As the cement manufacturing value chain is highly specialized, technologically complex and could be integrated, cement companies rely heavily on innovations within their supply chain.
  • Decarbonization of the supply chain is also key to achieving ambitious decarbonization goals in both the manufacturing of cement or alternative to cement but with the same function

Natural conservation of quarries is also an important part of cement supply chain to have in mind because CO2 affects also biodiversity.

SCORING THE INDICATOR:

Because of data availability and complexity, a direct measure of the outcome of such engagement is not very feasible at this time. It is often challenging to quantify the emissions reduction potential and outcome of collaborative activities with the supply chain. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and assess them together towards a single score for Supplier Engagement.

 

5.3.6.2. CEM 6.2 Activities to influence suppliers to reduce their GHG emissions (weigthing %)

DESCRIPTION & REQUIREMENT CEM 6.2 ACTIVITIES TO INFLUENCE SUPPLIERS TO REDUCE THEIR GHG EMISSIONS
Short description of indicator This indicator assesses the level of engagement that the company has with its suppliers, based on an assessment of previous initiatives that show whether or not the company engages with suppliers in various ways
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • List of initiatives implemented to influence suppliers to reduce their GHG emissions, green purchase policy or track record, supplier code of conduct
How the analysis will be done

Maturity matrix is based on following questions:

  • How the company encourage suppliers to reduce their GHG emissions?
  • Does the company develop a low-carbon demand?

The maturity matrix used for the assessment is the following:

rationale CEM 6.2 ACTIVITIES TO INFLUENCE SUPPLIERS TO REDUCE THEIR GHG EMISSIONS
Rationale of the indicator

As some of the companies have integrated plant with quarries, they are particularly concern by this indicator. But this could not be sufficient. Interesting and sustainable ideas could appear if companies are working together and also if structured company could use some of their resources to help their suppliers to improve their selves.

SCORING THE INDICATOR:

Because of data availability and complexity, a direct measure of the outcome of such engagement is not very feasible at this time. It is often challenging to quantify the emissions reduction potential and outcome of collaborative activities with the supply chain. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and assess them together towards a single score for Supplier Engagement.

 

5.3.7. Client engagement

The clients for the cement industry are mainly companies of the construction sector, including buildings and infrastructure. Concrete producers are also part of their client.

Phenomenon of carbonatation should be qualitatively assessed in this module as strategies and activities that encourage and promote to reduce the overall carbon footprint of the final use of the cement.

For some countries, the evaluator should pay attention on the use of cement because blenders could mix the cement with others raw materials as mineral admixtures added to the make the final concrete.

 

5.3.7.1. CEM 7.1 Strategy to influence customer behaviour to reduce ghg emissions

DESCRIPTION & REQUIREMENTS CEM 7.1 STRATEGY TO INFLUENCE CUSTOMER BEHAVIOUR TO REDUCE GHG EMISSIONS
SHORT DESCRIPTION OF INDICATOR The company has a strategy, ideally governed by policy and integrated into business decision making, to influence, enable, or otherwise shift customer choices and behaviour in order to reduce GHG emissions.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 7.A (methods of client engagement) [C12.1b]
  • CEM 7.B (% of customers) [C12.1b]
HOW THE ANALYSIS WILL BE DONE

The analyst checks if the policy or strategy exists and analyses if it targets customer behaviour through specific actions undertaken by the company. The strategy has to mention whether:

  • GHG emissions reduction is part of the goal.
  • Customers are engaged either through education/information sharing or through collaboration & innovation.
  • It is an active rather than a reactive strategy; a reactive strategy responds only to customer demand for more low-carbon systems and services, whereas an active strategy attempts to change the existing customer demand towards low-carbon alternatives.
  • If it is widespread. The strategy has to apply to the majority of customers.

Maturity matrix is built as following:

Scoring:

The maximum score of 100% is assigned if the company strategy is widespread, proactive, engaging directly or indirectly with customers, and directly mentions emissions reduction as part of the goal. If the analyst deems that the strategy is missing any of the 4 concepts, 25% of the score is deducted for each.

Rationale CEM 7.1 STRATEGY TO INFLUENCE CUSTOMER BEHAVIOUR TO REDUCE GHG EMISSIONS
RATIONALE OF THE INDICATOR

RELEVANCE OF THE INDICATOR:

Strategy to influence consumer behaviour to reduce GHG impacts is included in the analysis for the following reasons:

  • A significant part of emissions associated with cement production is incompressible, linked to clinker and one of the most efficient ways to reduce its impact is to reduce the amount of clinker in cement (increase the use of alternative cement to CEM1) and to optimize construction to reduce the amount of cement.
  • As cement producers are often in direct contact with cement users, they can influence users to diversify their use of cement and optimise the amount used.

Scoring rationale:

The scoring of elements in the way that it is presented is similar to the CDP scoring methodology, whereby a narrative answer that details a certain strategy is checked for whether it includes certain elements that the ACT assessment deems vital for any sound customer engagement strategy.

 

5.3.7.2. CEM 7.2 Activities to influence customer behaviour to reduce ghg emissions (weighting %)

DESCRIPTION & REQUIREMENTS CEM 7.2 ACTIVITIES TO INFLUENCE CUSTOMER BEHAVIOUR TO REDUCE GHG EMISSIONS
SHORT DESCRIPTION OF INDICATOR The company participates in activities, to influence, enable, or otherwise shift customer choices and behaviour in order to reduce GHG emissions.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 7.D (reported activities or interventions)
HOW THE ANALYSIS WILL BE DONE

The analyst assigns a maturity score based on the company’s demonstration of engagement with its customers, expressed in a maturity matrix. This indicator takes a holistic viewpoint on the interventions reported and assesses how together they paint a picture of the company’s level of active engagement with their customers.

It uses a maturity matrix to cover different types of activities under one score. The level that the company has achieved is determined by the analyst after reviewing all the information provided on the value chain interventions.

Successive levels into this matrix represent a more advanced level of engagement that works towards a collaborative effort of decarbonizing the cement sector and assumes that the actions in the previous level are also part of the company’s engagement. Note that this matrix is illustrative.

Maturity matrix is built as following:

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

Rationale CEM 7.2 ACTIVITIES TO INFLUENCE CUSTOMER BEHAVIOUR TO REDUCE GHG EMISSIONS
RATIONALE OF THE INDICATOR

RELEVANCE OF THE INDICATOR:

While measurement of strategy as in CEM 7.1 is important, measuring activities and their outcome is more insightful with regard to the company’s actual emissions reduction activities in the supply chain. Because of the difficulty in measuring this, the ACT assessment uses this maturity matrix approach that has been piloted by several other institutions (see scoring rationale) to fill this gap in indicators CEM 6.2 and CEM 7.2.

Scoring rationale:

Because of data availability and complexity, a direct measure of the outcome of supply chain engagement activities is not very feasible at this time. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of client engagement and analyse them together towards a single score. This approach has been used before by several institutions that attempt to make measurements of progress in the complex and multidimensional industry sectors.

 

5.3.8. Policy engagement

 

MODULE RATIONALE

The cement industry is not regulated in a uniform way due to its structural importance to economies as presented below:

  • As noted in the CDP cement report, building pressure, [18], “alternative fuels from waste offer another way to decarbonize at a low cost with international companies in countries with robust waste legislation set to benefit compared to their Indian peers”,

[18]  CDP, «Building pressure, Which cement companies will be left behind in the low-carbon transition?,» 2018.

  • US EPA has a specific cement manufacturing enforcement initiative,
  • IEA(6): Nevertheless, further policy efforts across all countries will be required to achieve necessary cement sector decarbonisation.
    • Policy and private sector efforts are facilitating reductions in energy use and emissions in key cement-producing economies, so regulations influencing fuel types used to heat kilns are important to look at.
    • As part of its 13th Five-Year Plan (2016-20), China aims to reduce the thermal energy intensity of clinker production to 3.07 GJ/t clinker on average by 2020, which would shrink the gap between the current level and best available technology thermal energy performance by two-thirds.
    • Between 2011 and 2015, 85 cement plants in India participated in the first cycle of Perform, Achieve, Trade (PAT), a market-based mechanism to improve energy efficiency. They achieved energy demand reductions equivalent to 9% of India’s 2014 cement sector energy consumption, and the cement sector is now involved in the second PAT cycle, with higher targets and coverage.
    • In Europe, the mandate to develop cement standards within the European Committee for Standardisation was recently widened to allow possible low-carbon alternatives to OPC clinker that rely on different raw materials or mixes.
    • In 2015 in the private sector, 18 key cement companies developed the shared objective to reduce their CO2 emissions by 20-25% from the business-as-usual level by 2030, equivalent to 1 GtCO2.

(6) https://www.iea.org/tcep/industry/cement/

However, regulation affecting the sector is usually developed in a consultative fashion due to the need for technical inputs. This allows significant opportunity for influence of these regulations, potentially in a way that is negative for the climate. Since the industry is currently a major source of emissions, effective, timely regulation is necessary to ensure that scientific limits are observed and that there is a “level playing field” for businesses in this sector to approach the transition to a low-carbon economy.

 

5.3.8.1. CEM 8.1 Company Policy on Engagement with Trade Associations (WEIGHTING %)

DESCRIPTION & REQUIREMENTS CEM 8.1 COMPANY POLICY ON ENGAGEMENT WITH TRADE ASSOCIATIONS
SHORT DESCRIPTION OF INDICATOR The company has a constructive policy on what action to take when industry organisations in which it has membership are found to be opposing “climate-friendly” policies.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 8.A: The company shall disclose if it has a policy to govern action when trade associations supported take positions on legislation that could hinder progress on transition to a low-carbon economy, and if this policy is public
  • CEM 8.B: If it has a policy as outlined at EU 8.A, the company shall describe this policy including the following details: Include [CDP C12.3f]
  • CEM 8.E: The company should attach supporting documentation, if this exists, giving evidence
HOW THE ANALYSIS WILL BE DONE

The analyst evaluates the description and evidence of the policy on trade associations and climate change for the presence of best-practice elements and consistency with the other reported management indicators. The company description and evidence is compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

Best practice elements to be identified in the test/analysis include:

  • Having a publicly available policy in place
  • The scope of the policy covers the entire company and its activities, and all group memberships and associations
  • The policy sets out what action is to be taken in the case of inconsistencies
  • The action carries the option to terminate membership of the association
  • The action carries the option of publicly opposing or actively countering the association’s position
  • Responsibility for oversight of the policy lies at the top level of the organisation
  • Presence of a process to monitor and review trade association positions

The maturity matrix used for the assessment is the following:

Maximum points are awarded if all of these elements are demonstrated

RATIONALE CEM 8.1 COMPANY POLICY ON ENGAGEMENT WITH TRADE ASSOCIATIONS
RATIONALE OF THE INDICATOR

See also the module rationale.

Trade associations are a key method by which companies can influence policy on climate indirectly. Thus, where trade associations take positions that are negative for the climate, companies need to take action to ensure that this negative influence is countered or minimised. Transparency about public policy is a specific request of the Investor Expectations report [17]

[17]  IIGCC, «Investor Expectations of Companies in the Construction Materials Sector,» 2019.

 

5.3.8.2. CEM 8.2 Trade Associations Supported do not have Climate-Negative Activities or Positions

DESCRIPTION & REQUIREMENTS CEM 8.2 TRADE ASSOCIATIONS SUPPORTED DO NOT HAVE CLIMATE-NEGATIVE ACTIVITIES OR POSITIONS
SHORT DESCRIPTION OF INDICATOR The company is not on the Board or providing funding beyond membership of any trade associations that have climate-negative activities or positions. It should also be considered if the company is supporting trade associations with climate-positive activities and/or positions.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 8.C: The company shall disclose if (yes or no) it is on the board of any trade associations or provides funding beyond membership. Same as [CDP C12.3b]
  • CEM 8.D! "If yes, the reporter shall provide details of those trade associations that are likely to take a position on climate change legislation. Same as [CDP C12.3c]
  • CEM 8.E: The company should attach supporting documentation, if this exists, giving evidence

External sources of data shall also be used for the analysis of this indicator:

  • RepRisk database,
  • Climate Action 100+
  • Ellen Macarthur Foundation [19]
  • press news
  • EP100 – Climate Group www.theclimategroup.org/project/ep100
  • Low Carbon Technology Partnerships initiative www.wbcsd.org/Programs/Climate-and-Energy/Climate/Low-Carbon-Technology-Partnerships-initiative
HOW THE ANALYSIS WILL BE DONE

The list of trade associations declared in the CDP data and other external sources entries relating to the company is assessed against a list of associations that have climate-negative activities or positions. The results will be compared to any policy described in CEM 8.1.

If the company is part of trade associations that have climate-positive activities and/or positions, this should be considered for the analysis.

The maturity matrix used for the assessment is the following:

 

RATIONALE CEM 8.2 TRADE ASSOCIATIONS SUPPORTED DO NOT HAVE CLIMATE-NEGATIVE ACTIVITIES OR POSITIONS
RATIONALE OF THE INDICATOR

See also the module rationale.

Trade associations are a key instrument by which companies can indirectly influence policy on climate. Thus, participating in trade associations that actively lobby against climate-positive legislation is a negative indicator and likely to obstruct the low-carbon transition.

 

5.3.8.3. CEM 8.3 Position on Significant Climate Policies (WEIGHTING %)

DESCRIPTION & REQUIREMENTS CEM 8.3 POSITION ON SIGNIFICANT CLIMATE POLICIES
SHORT DESCRIPTION OF INDICATOR The company is not opposed to any significant climate relevant policies and/or supports climate friendly policies.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 8.E: The company should attach supporting documentation, if this exists, giving evidence
  • CEM 8.F: "The company shall disclose details of the issues on which it has been directly engaging with policy makers and its proposed legislative solution. Same as [CDP C12.3a]

External sources of data shall also be used for the analysis of this indicator (e.g. RepRisk database, press news, actions in standard development).

HOW THE ANALYSIS WILL BE DONE

The analyst evaluates the description and evidence on the company’s position on relevant climate policies for the presence of best practice elements, negative indicators and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points will be allocated for elements indicating a higher level of maturity.

Maturity matrix contents include (in order of decreasing maturity):

a. The company publicly supports relevant significant climate policies

b. No reports of any opposition to climate policy

c. Reported indirect opposition to climate policy (e.g. a via trade association or in standards development)

d. Reported direct opposition to climate policy (third-party claims are found)

e. The company publicises direct opposition to climate policy (e.g. direct statement issued or given by a company representative in a speech or interview)

The maturity matrix used for the assessment is the following:

RATIONALE CEM 8.3 POSITION ON SIGNIFICANT CLIMATE POLICIES
RATIONALE OF THE INDICATOR

See also the module rationale.

Policy and regulation that acts to promote transition to a low-carbon economy is key to the success of the transition. Companies should not oppose effective and well-designed regulation in these areas but should support it.

 

5.3.9. Business model

 

MODULE RATIONALE

In addition to developing low-carbon cement, a company may transition its business model to other areas to remain profitable in a low-carbon economy. The company’s future business model should enable it to decouple financial results from GHG emissions, in order to meet the constraints of a low-carbon transition while continuing to generate value. The business model shifts identified do not conflict with the changes that are implied by decarbonizing the company’s production and sales.

These indicators aim to identify both relevant current business activities and those still at a burgeoning stage. It is recognized that transition to a low-carbon economy, with the associated change in business models, will take place over a number of years. The analysis will thus seek to identify and reward projects at an early stage as well as more mature business activities, although the latter (i.e. substantially sized, profitable, and/or expanding) business activities will be better rewarded.

A variety of sources have been consulted to develop a comprehensive review of the challenges facing the cement sector in relation to the low-carbon transition. A number of opportunities for the sector have been identified which the ACT initiative has formatted under a taxonomy for reporting the development of business activities connected to them. The main reference sources for building these indicators are extracted from the literature and from exchanges with the experts during the methodology development process.

Climate scenarios can identify shifts in modes of construction and use of the buildings that will foster the transition to a low-carbon economy. Companies committed to adapting their business to these predicted changes will be better positioned to take advantage of associated opportunities and successfully transition to a low-carbon economy.

The maturity matrix used for the assessment is the following:

  Basic Advanced 2° aligned  
Associated score 0% 50% 100% Weight of the indicator in business model score
Profitability of business model Non estimated or in a very early stage of development (research or conception stage) Mature business model but non profitable or in a development stage (prototype / demonstration or test) Mature and profitable business model 25%
Size of business model Non estimated Limited size of business for the company (few FTE or time dedicated, small turnover, few revenues expected, etc.) Substantial size of market for the company (significant number or FTE or dedicated hours, great turnover, great anticipated profitability, etc.) 25%
Growth potential of business model Non estimated or exploration of the business model interrupted Scheduling next development steps Scheduling the expansion of the target or size of the business model 25%
Deployment schedule of business model Non scheduled Deployment scheduled with a 2 years horizon or less Deployment scheduled with a 2 years horizon or more 25%

 

 

5.3.9.1. CEM 9.1 Business Activities that Reduce Structural Barriers to Market Penetration of low Carbon Cement (WEIGHTING %)

DESCRIPTION & REQUIREMENTS CEM 9.1 BUSINESS ACTIVITIES THAT REDUCE STRUCTURAL BARRIERS TO MARKET PENETRATION OF LOW CARBON CEMENT
SHORT DESCRIPTION OF INDICATOR The company is actively developing business models for a low-carbon future, and participating in business activities that reduce structural barriers to market penetration of low carbon cement.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 9.A: Business model category, Business model subcategory, Description of business activity, Stage of development, Activity timeframe, Indicator of business size (over activity timeframe), Business size, What are your future plans for this activity?, What is your deployment timeframe ?, How do you manage this business plan deployment ?

External sources of data used for the analysis of this indicator are:

  • Climate-strategies [20]
  • WBCSD_Cement sustainability initiative [21]
  • Ellen Macarthur Foundation [19]
  • EuropeanCement Research Academy (ECRA)
  • ITRI (Taiwan)
  • The Portland Cement Association (USA)

[19]  M. E. Ellen Macarthur Foundation, «Completing the picture how the circular economy tackles climate change,» 2019.

[20]  C. Strategies, «Carbon Control and competitiveness post 2020 - the cement report,» 2014.

[21]  WBCSD, «The cement sustainability initiative - progress report,» 2005.

HOW THE ANALYSIS WILL BE DONE

The analysis is based on the company’s degree of activity in one of the future business model areas used to benchmark.

Relevant business activity areas for this indicator are, for example:

  • New cement type (ex: improve the air quality of building or cities)
  • Cement without clinker
  • Lower clinker content
  • Hazardous & Non-hazardous waste treatment (use as raw material or fuel)
  • Use of biomass
  • Use of hydrogen as an energy carrier or reduction agent
  • Electrification of heat production

Calculation of the score:

In order for companies to align with a low-carbon future and meet the future construction needs, it is expected that they pursue at least one of these future business model pathways and integrate them into their strategic plans. The analyst evaluates the description and evidence of the company’s degree of activity in one of the future business model areas for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

The minimum requirement for points to be awarded is that some level of exploration of one or more of these relevant business areas has started. This could include participation in collaborations, pilot projects, or research funding.

Best practice elements to be identified in the test/analysis include:

  • the company has developed a mature business model that integrates one or many of the above elements;
  • the business activity is profitable;
  • the business activity is of a substantial size;
  • the company is planning to expand the business activity;
  • expansion will occur on a defined timescale.

Maximum points are awarded if all of these elements are demonstrated.

RATIONALE CEM 9.1 BUSINESS ACTIVITIES THAT REDUCE STRUCTURAL BARRIERS TO MARKET PENETRATION OF LOW CARBON CEMENT
RATIONALE OF THE INDICATOR See the module rationale.

 

CEM 9.2 Business Activities that Contribute to low Carbon Optimization of Construction (and Design and use of Buildings or Infrastructures that could Increase the Lifetime or Environmental Performance of the Building or Infrastructure)

DESCRIPTION & REQUIREMENTS CEM 9.2 Business activities that contribute to low carbon optimization of construction
SHORT DESCRIPTION OF INDICATOR The company is actively developing business models for a low-carbon future, in participating in business activities associated with design and use of buildings or infrastructures that could increase the lifetime or environmental performance of the buildings or infrastructures.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 9.A: Business model category, Business model subcategory, Description of business activity, Stage of development, Activity timeframe, Indicator of business size (over activity timeframe), Business size, What are your future plans for this activity?, What is your deployment timeframe ?, How do you manage this business plan deployment ?

External sources of data used for the analysis of this indicator are:

  • 2018 - Chatam House_making concrete change [8]
  • Ellen Macarthur Foundation [19]
  • EU taxonomy on Sustainable Finance - Nearly Zero Energy Building Standard
  • PCR Cement and Lime EN 16908, PCR Concrete EN 16757
  • Standards on product lifetime or infrastructure lifetime (standards from TC59)

[8]  C. House, «Making Concrete Change, Innovation in Low-carbon Cement and Concrete,» 2018.

[19]  M. E. Ellen Macarthur Foundation, «Completing the picture how the circular economy tackles climate change,» 2019.

HOW THE ANALYSIS WILL BE DONE

The analysis is based on the company’s degree of activity in one of the future business model areas used to benchmark.

  • Relevant business activity areas for this indicator are for example:
  • Increase material efficiency in building or infrastructures
  • Increase the lifetime of buildings or infrastuctures (technical y but also with the patrimonial value, for example in increasing the biodiversity development)
  • Develop of new activities related to low carbon construction
  • Products and services around the low carbon construction
  • Advanced concrete products
  • Actions to help our customers to decarbonize their business model (concrete inertia, longer lifetime, active structure...)

The calculation of the score is the same as in the CEM 9.1 indicator.

RATIONALE CEM 9.2 BUSINESS ACTIVITIES THAT CONTRIBUTE TO LOW CARBON OPTIMIZATION OF CONSTRUCTION
RATIONALE OF THE INDICATOR See the module rationale.

 

5.3.9.3. CEM 9.3 Business Activities around Circular Economy

DESCRIPTION & REQUIREMENTS CEM 9.3 BUSINESS ACTIVITIES AROUND CIRCULAR ECONOMY
SHORT DESCRIPTION OF INDICATOR The company is actively developing business models around circular economy, in participating in business activities associated with reuse and recycling of material.
DATA REQUIREMENTS

The questions comprising the information request that are relevant to this indicator are:

  • CEM 9.A: Business model category, Business model subcategory, Description of business activity, Stage of development, Activity timeframe, Indicator of business size (over activity timeframe), Business size, What are your future plans for this activity?, What is your deployment timeframe ?, How do you manage this business plan deployment ?

External sources of data used for the analysis of this indicator are:

  • Ellen Macarthur Foundation [19]
  • 2018 - Chatam House_making concrete change [8]

[8] C. House, «Making Concrete Change, Innovation in Low-carbon Cement and Concrete,» 2018.

[19] M. E. Ellen Macarthur Foundation, «Completing the picture how the circular economy tackles climate change,» 2019.

HOW THE ANALYSIS WILL BE DONE

Relevant business activity areas for this indicator are for example

  • Increase the recycling rate of concrete and cement
  • Increase the amount of waste and secondary material used in cement (ex: the reuse of concrete ‘fines’ (particles with a small diameter) as a substitute for new cement)
  • Reduce the amount of waste during the manufacture (ex: leveraging digital technology to address structural waste in supply chains, 3D printing and innovation)
  • Application of the principles of industrial ecology to create symbiosis with other industries or organisations (include secondary material in cement, transmitting heat or vapour to another process or organization…)
  • Promote reuse and refurbishment of concrete structures rather than destruction
  • Increase carbonation
  • Develop CCS/CCU
  • Cement plants as key actors of the circular economy in their territory (e.g: sharing the surplus heat from the cement production to supply as district heating to the local citizens)

The calculation of the score is the same as in the CEM 9.1 indicator.

RATIONALE CEM 9.3 BUSINESS ACTIVITIES AROUND CIRCULAR ECONOMY
RATIONALE OF THE INDICATOR See the module rationale.

 

6. Assessment

 

6.1. Sector benchmark

The default sectoral benchmark is taken from the sectoral decarbonization approach (SDA [10]) to science-based targets. For the cement sector the SDA at scope 1 and 2 levels (production emissions, including clinker emissions = inclusive scope 1+2) only takes into account the CO2 emissions due to cement manufacturing.

[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

Inclusive scope 1 and 2 (production emissions, including clinker emissions) are chosen because the revised WRI / WBCSD Protocol requires that companies shall separately account for and report on scopes 1 and 2 and verification shall also cover scope 1 and 2 emissions. [22]

[22]  C. S. Initiative, «CO2 and Energy Accounting and Reporting Standard for the Cement Industry,» 2011.

For grinding plants and blenders, scope 3 could be relevant and is considered in the inclusive scope 1+2. According to the last report of IPCC from October 2018, and with IEA annual report from 2019(7), industry and energy sectors should be more ambitious than the 2°C scenario. With this commitment to be under 2°C, the suitable scenario is the beyond 2°C scenario (B2DS) from IEA. This scenario will be used as a default benchmark as presented in the Figure 5.

(7) https://www.euractiv.fr/section/climat/news/laie-voit-la-neutralite-carbone-a-portee-de-main/

Figure 5: Direct CO2 intensity of cement at World level (Scope 1) [2]

[2]  IEA, CSI, “Technology Roadmap - Low-Carbon Transition in the Cement Industry,” 2018.

Geographical Areas Coverage

The geographical zones are defined as a large world zone containing similar characteristics. Thus, some countries can be considered as geographical zones.

The external sources and available data used (IEA ETP 2017, n.d.) [9] (International Energy Agency, 2013 [12] [11] for the construction of the benchmark covers the following areas for the cement sector:

[9]  IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.

[11]  CEMBUREAU, «Innovation in the cement industry,» 2017.

[12]  I. ETSAP, «Technology Brief I03 - Cement Production,» 2010.

  • OECD
  • Non-OECD

The cement company production emissions benchmark (CBG as in the indicator calculation) is the company’s allocated decarbonization pathway, it is calculated from the sectoral decarbonisation pathway.

The sectoral decarbonisation pathway is divided into two pathways corresponding to the two regions represented (OECD and Non-OECD). The extent to which a company is tied to a scenario in any region is proportional to its production capacity in that country. Thus the CBG is geographically weighted.

The allocation mechanism, as defined in the SDA, is the convergence mechanism. This allocation takes the company’s emissions intensity in the initial year and converge it to the sector’s emissions intensity in 2050.

Thus, companies starting from a lower intensity will have a shallower decarbonization pathway than companies starting from a higher intensity. In this way, past action or inaction to reduce intensity is incorporated.

6.2. Benchmarks used for Indicators

The following table lists the benchmarks used for the quantitative indicators and their sources:

Table 4: BENCHMARKS FOR THE INDICATORS

Benchmark Parameter Source Indicator relevance
Company benchmark for production emissions including clinker emissions (Inclusive scope 1+2)

Production Emissions:

scope 1+2

CBG

IEA ETP [10] – background scenario data

SDA [11] – specific benchmark pathway definition + https://toddfincannon.com/sda/

CEM 1
Average lifetime of the company assets  

INNOVATION IN THE CEMENT INDUSTRY, CEMBUREAU [11] p.5 “cement plants typically have a lifetime of as long as 30-50 years” p.5

ETSAP, IEA Technology Brief I03 - Cement Production [12] p.2 “Plant lifetime in the order of 15-20 years”

CEM 2A

CEM 4B

R&D benchmark for cement technology

TRL

Ecofys report

Maturity of technology – TRL

https://www.iea.org/topics/innovation/industry/

https://www.iea.org/topics/innovation/industry/gaps/ccs-applied-to-cement-manufacturing-2.html

Ecofys / WWF report

CEM 3
Management benchmark for cement sector TCFD   CEM 5
Average values

Kiln type

Total production volumes of clinker

CO2 emission (gross and net)

Cement plant power consumption

Heat consumption and production

Mineral component

Clinker to ratio cement

GNR https://www.wbcsdcement.org/GNR-2016/

CEM 1

CEM 2A

CEM 4B

Business model  

Chatam House [8]

Ellen Macarthur foundation [19]

Roadmaps

CEM 9

[8]  C. House, «Making Concrete Change, Innovation in Low-carbon Cement and Concrete,» 2018.

[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.

[11]  CEMBUREAU, «Innovation in the cement industry,» 2017.

[12] I. ETSAP, «Technology Brief I03 - Cement Production,» 2010.

[19]  M. E. Ellen Macarthur Foundation, «Completing the picture how the circular economy tackles climate change,» 2019.

 

6.3 Weightings

The selection of weights for both the modules and the individual indicators was guided by the principles of value of information, impact of variation, future orientation and data quality sensitivity. See the ACT Guidance [23] and Framework [1] for more information.

[1] C. ADEME, «Framework for ACT sector methodologies development, version 1.1,» 2019.

[23] C. ADEME, «Guidance for ACT sector methodologies development, version 1.1,» 2019.

 

A. Concerns integrated companies, who produce their own clinker

B. Concern blenders and grinding operators who purchase the clinker from suppliers

For hybrid companies, who get A and B types of assets, the final rating is calculated according to the quantity of cement produced by type of assets (A or B). Then to aggregate the scores into a final rating, the evaluator shall:

  • For module 2, multiplied the score by the quantity a, and
  • For module 4, multiplied by the quantity b.
  • Then both module scores should be divided by the total quantity of cement produced (a+b).

With a represents the quantity of cement produced for A assets, b represents the quantity of cement produced for B assets.

Table 5: PERFORMANCE INDICATOR WEIGHTINGS

 

These percentage range comes from the ACT Guidance [1].

The quantitatively scored modules (Targets, Material investment, Intangible investment, Sold Product Performance) carry 58% of the final weight, and the qualitatively scored modules (Management, Policy engagement, Business model) carry 42%. The indicators within the modules also carry their own weighting.

Rationale for weightings

The selection of weights for both the modules and the individual indicators was guided by a set of principles (see the ACT framework document for more information). These principles helped define the value of the indicators.

Principle Explanation
Value of information The value of the information that an indicator gives about a company’s outlook for the low-carbon transition is the primary principle for the selection of the weights.
Impact of variation A high impact of variation in an indicator means that not performing in such an indicator has a large impact on the success of a low-carbon transition, and this makes it more relevant for the assessment.
Future orientation Indicators that measure the future, or a proxy for the future, are more relevant for the ACT assessment than past & present indicators, which serve only to inform the likelihood and credibility of the transition.
Data quality sensitivity Indicators that are highly sensitive to expected data quality variations are not recommended for a high weight compared to other indicators, unless there is no other way to measure a particular dimension of the transition.

According to roadmaps [16] [2] for cement sector, weighting have been defined as below:

[2] IEA, CSI, “Technology Roadmap - Low-Carbon Transition in the Cement Industry,” 2018.

[16] CEMBUREAU, «The role of CEMENT in the 2050 low carbon economy,» 2013.

 

3.1. Targets 15%

An ambitious target has been set for this sector because it is the second largest industrial carbon emitter.

Most of the CO2 emissions are accounted in the phase production emissions, including clinker emissions (inclusive scope 1+2).

In the roadmap, alternative fuels are a solution to reach the low carbon pathways. Alternative fuels have been accounted in the target indicators in the production phase (inclusive scope 1+2).

The targets module has a relatively large weight of 15%. Most of it is placed on the alignment of inclusive scope 1+2emissions reduction targets, with a strong weight of 10%. This indicator contains most of the information about the company’s future commitments with respect to GHG emissions reductions. Not having an ambitious target means it is very unlikely that the company is committed to a transition, and therefore this indicator has a high influence on the likelihood of a successful transition. Targets are also future oriented, as a valuable proxy for assessing the company’s long-term emissions pathway.

The time horizon of targets and achievement of previous targets have a medium weight of 5%. The time horizon of targets is a proxy of how forward-looking the company is, which is very long-term oriented. Finally, the achievement of previous targets indicator measures the company’s past credentials on target setting and achievement, which provides more contextual information on the company’s ability to meet ambitious future targets.

3.2. A Material investment 33%

Manufacture cement and notably manufacture clinker requires high and long-term investment with best available technologies. Roadmaps specific to the cement sector show that resources and energy efficiency are key for low carbon transition.

This is the primary module that assesses the development of the company’s assets, and how these existing assets influence the likelihood of a low-carbon transition. In the short-term, the company’s current portfolio and confirmed planned assets are used to generate an estimate of the company’s trend in future emissions intensity. As this is a direct measurement of the decarbonization pathway, with a high impact of variation, and which looks to the future, it receives a very strong weighting of 12%.

The locked-in emissions indicator uses the same information but tries to measure the amount of GHG emissions that the company has already committed from its individual carbon budget. This means it is also very future oriented, and also receives a strong weight of 12%. Finally, the trend in past emissions intensity is an indication of the ‘adjustment’ that the company has to make to place itself on a low-carbon pathway without degrading the cement strength performance .

3.3. Intangible investment 10%

Intangible investment is focused entirely on R&D. R&D technology such as carbon sequestration and use can be some means of avoiding CO2 emission that cannot be avoid anyway because there are proper to the chemical reaction (transformation of limestone into lime). In a long-term perspective the investment in R&D for cement, especially in CCS/CCU could help other sectors to have access to these types of technologies.

Intangible investment is a necessary condition for the cement industry as a whole to achieve progress in technology for a low-carbon future, and large R&D programs in climate-mitigating technologies are indicative of a strong financial commitment by the company. The analysis would like to focus on those R&D processes that contribute to climate change mitigating technologies, described in R&D for low-carbon transition. This is very future oriented, and thus has a relatively large weight of 10%.

3.4. B Sold product performance 33%

This module is specific to companies B – blenders and grinding operators. As the locked-in emissions are less important than integrated assets, this module needs to encourage downstream actors to have best practices from hotspot suppliers via clinker / material specific interventions indicator but also actions towards their own assets via energy management indicator.

The future emissions and the present and future actions are key to ensure the reduction of the GHG emissions, that’s why the indicator Clinker / material-specific interventions is weighted at 15%.

It is important to note that trend in past emissions measures the emissions for the final sold product (one ton of cement) but taking into account the performance of the product (compressive strengths in MPa).

3.5. Management 10%

Management is a multi-faceted module that makes up 10% of the score, because it incorporates many different smaller indicators that together draw a picture of the company’s management and strategic approach to the low-carbon transition.

Going by the principle of future orientation, the main part of this weight is placed on the low-carbon transition plan, weighted at 4%. The transition plan provides more information on how this company will specifically deal with the transition, given its unique constraints and opportunities, and therefore provide valuable insights into the company’s planning and narrative towards the final goal.

The two following indicators are climate change scenario testing and oversight of climate change issues, each indicator being weighted 2%.These two indicators provide more information on how this company will specifically deal with the transition, given its unique constraints and opportunities, and therefore provide valuable insights into the company’s planning and narrative towards the final goal.

The other three indicators have a low weight of 1%, as they are contextual indicators the outcome of which can strengthen or undermine the company’s ability to carry out the transition plan and meet ambitious science-based targets.

3.6. Suppliers 6%

In order to develop the technology required for the low-carbon transition, it is essential that cement manufacturers involve their supply chains. Nonetheless, it is not an indicator that is easy to measure and relies heavily on data quality to make a proper analysis. Therefore, considering these aspects, this indicator is given a weight of 6%.

This indicator focuses on the global strategy and general activities that a cement company has in place with respect to its engagement with suppliers.

3.7. Client 10%

The client engagement indicator is focused on the company’s efforts to promote low-carbon cement and more efficient use of cement (right cement for the right use, on the right quantities) to their customers. This is an important aspect, in order to identify companies that make real efforts to make low-carbon cement a significant part of their sales. Nonetheless, this indicator alone is a narrow aspect of the transition and therefore total weight is low at 10%.

3.8. Policy engagement 6%

In line with the rationale for the management indicators of low weight, the policy engagement indicators are also contextual aspects which tell a narrative about the company’s stance on climate change and how the company expresses it in their engagement with policy makers and trade associations. The total weight for this module is therefore medium at 6%. 2% is allocated to each of the 3 indicators: trade associations supported do not have climate-negative actions or positions indicator , company’s position on significant climate policies , company policy on engagement with trade associations.

3.9. Business model 10%

The integration of a low-carbon economy in current and future business model is a composite indicator that captures many elements and aspects that cannot otherwise be captured in any of the other modules. It includes those aspects that are relevant to the transition but are not directly a part of the primary activities. It is future oriented by asking the companies on their narrative on certain future directions that the sector can/has to take the transition. As this is an important aspect of any business long-term future planning, it holds a medium weight of 10% in the analysis.

The Low-carbon optimisation of optimization of construction covers new ways of building infrastructures with a part about maintenance and renovation towards better use of this material. This indicator, weighted at 4%, ask cement companies how they are engaging with the projected modal shift under a low-carbon scenario, which is important as this can have major impacts on the company’s future business model.

As more, downstream activities has a key role in roadmaps [16] [2] too.

[2] IEA, CSI, “Technology Roadmap - Low-Carbon Transition in the Cement Industry,” 2018.

[16] CEMBUREAU, «The role of CEMENT in the 2050 low carbon economy,» 2013.

The Business activities around the circular economy covers for example waste management and integration of recycled resources into cement material. It is weighted at 3%.

The Business activities that reduce barriers to market penetration of low-carbon cement indicator includes those aspects that are relevant to low-carbon cement adoption but are not directly a part of the primary manufacturing activities. Cement manufacturing is the core activity of the companies and as it would necessary to continue to manufacture cement because our population is growing, this indicator is weighted 3%.

 

7. Rating

The ACT rating shall comprise:

→ A performance score

→ A narrative score

→ A trend score

These pieces of information shall be represented within the ACT rating as follows:

a. Performance score as a number from 1 (lowest) to 20 (highest)

b. Narrative score as a letter from E (lowest) to A (highest)

c. Trend score as either “+” for improving, “-” for worsening, or “=” for stable.

In some situations, trend scoring may reveal itself to be unfeasible depending on data availability. In this case, it should be replaced with a “?”.

The highest rating is thus represented as “20A+”, the lowest as “1E-” and the midpoint as “10C=”.

to their customers:

Table 6: LOWEST, HIGHEST AND MIDPOINT FOR EACH ACT SCORE type

LOW SCORES

MID SCORES

HIGH SCORES

1,E,-

10,C,=

20,A,+

See the ACT Framework [1] for general information and methodology on the ACT rating.

 

7.1. Performance scoring

A detailed description of the performance indicators and of their weightings for the CEM sector is presented in 5.3 Performance indicators

TO BE COMPLETED with figure after Roadtest phase.

Performance scoring shall be performed in compliance with the ACT Framework. No additional sector-specific issue impacting the narrative scoring for this sector has been identified to date.

7.2. Narrative scoring

Narrative scoring shall be performed in compliance with the ACT Framework.

The information reported in module 2A for integrated companies and in module 4B for blenders and grinding operators, regarding the trend past emissions intensity shall be considered with peculiar attention for the analyse narrative because it is key for the sector to sold performing product regarding the use and with the optimal carbon intensity.

The information reported in Module 7 shall be considered with peculiar attention for the analysis narrative and narrative scoring for the CEM sector: with this information, the analyst can take a holistic view on the company’s sales efforts to redouble the identification of compliance cement and reward companies who have done real efforts to promote efficient and low-carbon systems and services.

The organisation of the company – integrated, blenders or grinding operators – shall be considered in the analysis narrative and narrative scoring for the CEM sector. The collected value for clinker CO2 emissions need to be looked closely because of the number of assets for a company could be multiple. Companies shall collect clinker emission that is at minimum included in the upstream value chain. However, the company targets should ideally also include ‘downstream’ value chain emissions, even if they are not benchmarked with the performance indicators. While downstream emissions targets are not assessed on the merits of that target itself, companies shall be recognized for their efforts.

No other sector-specific issue impacting the narrative scoring for this sector has been identified to date.

7.3. Trend scoring

Trend scoring shall be performed in compliance with the ACT Framework.

To apply the trend scoring methodology presented in the ACT Framework, the analyst should identify the trends from the existing data infrastructure based on the data points and/or indicators that can indicate the future direction of change within the company.

The table below includes an overview of which indicators/data points could possibly have valuable information about future directions for the CEM sector.

Table 7: RELEVANT PERFORMANCE INDICATORS FOR TRENDS IDENTIFICATION FOR THE CEM SECTOR

MODULE INDICATOR
1.Targets

CEM 1.1 Alignment of inclusive scope 1+2 emission reduction targets

CEM 1.2 Time horizon of targets

2A. Material investment

CEM 2.2 A Locked-in emissions

CEM 2.3 A Trend in future emissions intensity

3. Intangible investment CEM 3.1 R&D for low-carbon transition
4.B sold product performance

CEM 4.2 B Energy management

CEM 4.3 B Clinker / material specific interventions

5. Management

CEM 5.3 Low carbon transition plan

CEM 5.5 Climate change scenario testing

6. Supplier

CEM 6.1 Strategy to influence suppliers to reduce their GHG emissions

CEM 6.2 Activities to influence suppliers to reduce their GHG emissions

7. Client

CEM 7.1 Strategy to influence customer behaviour to reduce their GHG emissions

CEM 7.2 Activities to influence customer behaviour to reduce their GHG emissions

9. Business model

CEM 9.1 Business activities that reduce structural barriers to market penetration of low carbon cement

CEM 9.2 Business activities that contribute to low carbon optimization of construction

CEM 9.3 Business activities around the circular economy

 

8. Aligned state

The table below presents the response of a low-carbon aligned company of the sector to the 5 questions of ACT:

→ What is the company planning to do? [Commitment]

→ How is the company planning to get there? [Transition Plan]

→ What is the company doing at present? [Present]

→ What has the company done in the recent past? [Legacy]

→ How do all of these plans and actions fit together? [Consistency]

 

Figure 8: ALIGNED STATE FOR COMPANIES IN THE CEMENT SECTOR

 

 

9. Sources

 

[1]  C. ADEME, «Framework for ACT sector methodologies development, version 1.1,» 2019.
[2]  IEA, CSI, “Technology Roadmap - Low-Carbon Transition in the Cement Industry,” 2018.
[3]  Concrete society of southern africa, “FAQ's - Cement,” [Online]. Available: https://www.concretesociety.co.za/faqs/cement#Q4.
[4]  Civil Engineering, “8 Main Cement Ingredients & Their Functions,” [Online]. Available: https://civiltoday.com/civil-engineering-materials/cement/10-cement-ingredients-with-functions.  [Accessed 10 2019].
[5]  Imbabi, Carrigan and McKenna, “Trends and developments in green cement and concrete technology,” 2012.
[6]  wbcsd, «Guidelines for Emissions Monitoring and Reporting in the Cement Industry v.2.0,» 2012.
[7]  WBCSD, «The Cement CO2 Protocol: CO2 Emissions Monitoring and Reporting Protocol for the Cement Industry,» 2002.
[8]  C. House, «Making Concrete Change, Innovation in Low-carbon Cement and Concrete,» 2018.
[9]  IEA, «Tracking Clean Energy Progress 2017- Energy Technology Perspectives 2017 Exerpt,» 2017.
[10]  S. B. T. Initiative, «Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets in line with climate science.,» 2015.
[11]  CEMBUREAU, «Innovation in the cement industry,» 2017.
[12]  I. ETSAP, «Technology Brief I03 - Cement Production,» 2010.
[13]  IPCC, «IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3, Chapter 2,» 2006.
[14]  IEA, «Transforming Industry through CCUS,» 2019.
[15]  E. &. WWF, «The Energy Report: 100% renewable energy by 2050,» 2010.
[16]  CEMBUREAU, «The role of CEMENT in the 2050 low carbon economy,» 2013.
[17]  IIGCC, «Investor Expectations of Companies in the Construction Materials Sector,» 2019.
[18]  CDP, «Building pressure, Which cement companies will be left behind in the low-carbon transition?,» 2018.
[19]  M. E. Ellen Macarthur Foundation, «Completing the picture how the circular economy tackles climate change,» 2019.
[20]  C. Strategies, «Carbon Control and competitiveness post 2020 - the cement report,» 2014.
[21]  WBCSD, «The cement sustainability initiative - progress report,» 2005.
[22]  C. S. Initiative, «CO2 and Energy Accounting and Reporting Standard for the Cement Industry,» 2011.
[23]  C. ADEME, «Guidance for ACT sector methodologies development, version 1.1,» 2019.
[24]  IDDRI, SDSN, “Pathways to deep decarbonization,” 2015.
[25]  EpE, «ZEN 2050 - Imagining and building a carbon-neutral France,» 2019.
[26]  DECC, IEA and the Climate-KIC consortium, “The global calculator v23,” [Online]. Available: http://tool.globalcalculator.org/. [Accessed 10 2019].
[27]  Ecofys, WWF, «The energy report - 100% renewable energy by 2050,» 2011.
[28]  WLI, LMI, “The greenhouse gas protocol initiative, public sector protocol, provisionnal draft,” 2009.
[29]  T. P. Initiative, «Methodology and indicators reportVersion 3.0,» 2019.
[30]  Material Economics, “Industrial transformation 2050 - Pathways to Net-Zero Emissions from EU Heavy Industry,” 2019.
[31]  DDPP, [Online]. Available: http://deepdecarbonization.org/. [Accessed 10 2019].
[32]  IEA, «Energy Technology Perspectives 2014 - Harnessing Electricity's Potential,» 2014.
[33]  Climate-KIC, IEA, «Prosperous living for the world in 2050: insights from the Global Calculator,» 2015.
[34]  Shell, «World energy model a view to 2100,» 2017.
[35]  K. Jiang, L. Clarke, K. Akimoto, M. Babiker, G. Blanford, K. Fisher-Vanden, J.-C. Hourcade, V. Krey, E. Kriegler, A. Löschel, D. McCollum, . S. Paltse, S. Ros, P. R. Shuk, M. Tavoni, B. van der Zwaan et D. P. van Vuuren, «Assessing Transformation Pathways,» chez Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Chang, 2014. 
[36]  F. I. f. S. a. I. R. Ö.-I. Ecofys, «Methodology for the free allocation of emission allowances in the EU ETS post 2012, Sector report for the cement industry,» 2009.

 

10. Glossary

 

10.1. Glossary

2 degrees (2°C) A political agreement was reached at COP21 on limiting global warming to 2°C above the pre-industrial level (COP21: Why 2°C?). A 2°C scenario (or 2°C pathway) is a scenario (or pathway) compatible with limiting global warming to 2°C above the pre-industrial level.
ACT The Assessing low-Carbon Transition (ACT) initiative was jointly developed by ADEME and CDP. ACT assesses how ready an organization is to transition to a low-carbon world using a future-oriented, sector-specific methodology (ACT website).
Action gap In relation to emissions performance and reduction, the action gap is the difference between what a given company has done in the past plus what it is doing now, and what has to be done. For example, companies with large action gaps have done relatively little in the past, and their current actions point to continuation of past practices.
ADEME Agence de l'Environnement et de la Maîtrise de l'Energie; The French Environment and Energy Management Agency (ADEME webpage).
Alignment The ACT project seeks to gather information that will be consolidated into a rating that is intended to provide a general metric of the 2-degree alignment of a given company. The wider goal is to provide companies specific feedback on their general alignment with 2-degrees in the short and long term.
Analyst Person in charge of the ACT assessment.
Assess Under the ACT project, to evaluate and determine the low-carbon alignment of a given company. The ACT assessment and rating will be based on consideration of a range of indicators. Indicators may be reported directly from companies. Indicators may also be calculated, modelled or otherwise derived from different data sources supplied by the company. The ACT project will measure 3 gaps (Commitment, Horizon and Action – defined in this glossary) in the GHG emissions performance of companies. This model closely follows the assessment framework presented above. It starts with the future, with the goals companies want to achieve, followed by their plans, current actions and past actions.
Asset An item of property owned by a company, regarded as having value and available to meet debts, commitments, or legacies. Tangible assets include 1) fixed assets, such as machinery and buildings, and 2) current assets, such as inventory. Intangible assets are nonphysical such as patents, trademarks, copyrights, goodwill and brand value.
Barrier A circumstance or obstacle preventing progress (e.g. lacking information on supplier emissions and hotspots can be a barrier to companies managing and reducing their upstream Scope 3 emissions).
Base year According to the GHG Protocol and ISO14064-1, a base year is “a historic datum (a specific year or an average over multiple years) against which a company’s emissions are tracked over time”. Setting a base year is an essential GHG accounting step that a company must take to be able to observe trends in its emissions information (GHG Protocol Corporate Standard).
Benchmark A standard, pathway or point of reference against which things may be compared. In the case of pathways for sector methodologies, a sector benchmark is a low-carbon pathway for the sector average value of the emissions intensity indicator(s) driving the sector performance. A company’s benchmark is a pathway for the company value of the same indicator(s) that starts at the company performance for the reporting year and converges towards the sector benchmark in 2050, based on a principle of convergence or contraction of emissions intensity.
Business-as-usual No proactive action taken for change. In the context of the ACT methodology, the business-as-usual pathway is constant from the initial year onwards. In general, the initial year – which is the first year of the pathway/series – is the reporting year (targets indicators) or the reporting year minus 5 years (performance indicators).
Business model A plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing. Under ACT, evidence of the business model shall be taken from a range of specific financial metrics relevant to the sector and a conclusion made on its alignment with low-carbon transition and consistency with the other performance indicators reported.
Capital expenditure Money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.
Carbon Capture and Storage (CCS) The process of trapping carbon dioxide produced by burning fossil fuels or other chemical or biological process and storing it in such a way that it is unable to affect the atmosphere.
CDP Formerly the "Carbon Disclosure Project", CDP is an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. CDP works with market forces, including 827 institutional investors with assets of over US$100 trillion, to motivate companies to disclose their impacts on the environment and natural resources and take action to reduce them. More than 5,500 companies worldwide disclosed environmental information through CDP in 2015. CDP now holds the largest collection globally of primary climate change, water and forest risk commodities information and puts these insights at the heart of strategic business, investment and policy decisions (CDP website).
Cement A building material made by grinding clinker together with various mineral components such as gypsum, limestone, blast furnace slag, coal fly ash and natural volcanic material. Cement acts as a binding agent when mixed with sand, gravel or crushed stone and water to make concrete [2]
Climate change A change in climate, attributed directly or indirectly to human activity, that alters the composition of the global atmosphere and that is, in addition to natural climate variability, observed over comparable time periods’ (UNFCCC).
Clinker An intermediate product in cement manufacturing and the main substance in cement. It is the result of calcination of limestone in the kiln and subsequent reactions caused through burning. [2]
Company A commercial business.
Company pathway A company’s past emissions intensity performance pathway up until the present.
Company target pathway The emissions intensity performance pathway that the company has committed to follow from the initial year on until a future year, for which it has set a performance target.
Commitment gap In relation to emissions performance, the difference between what a company needs to do and what it says it will do.
Confidential information Any non-public information pertaining to a company's business.
Conservativeness A principle of the ACT project; whenever the use of assumptions is required, the assumption shall err on the side of achieving 2-degrees maximum.
Consistency A principle of the ACT project; whenever time series data is used, it should be comparable over time. In addition to internal consistency of the indicators reported by the company, data reported against indicators shall be consistent with other information about the company and its business model and strategy found elsewhere. The analyst shall consider specific, pre-determined pairs of data points and check that these give a consistent measure of performance when measured together.
COP21 The 2015 United Nations Climate Change Conference, held in Paris, France from 30 November to 12 December 2015 (COP21 webpage).
Data Facts and statistics collected together for reference and analysis (e.g. the data points requested from companies for assessment under the ACT project indicators).
Decarbonization A complete or near-complete reduction of greenhouse gas emissions over time (e.g. decarbonization in the electric utilities sector by an increased share of low-carbon power generation sources, as well as emissions mitigating technologies like Carbon Capture and Storage (CCS)).
Decarbonization pathway Benchmark pathway (See ‘Benchmark’)
Emissions The GHG Protocol defines direct GHG emissions as emissions from sources that are owned or controlled by the reporting entity, and indirect GHG emissions as emissions that are a consequence of the activities of the reporting entity, but occur at sources owned or controlled by another entity (GHG Protocol).
Energy Power derived from the utilization of physical or chemical resources, especially to provide light and heat or to work machines.
Fossil fuel A natural fuel such as coal, oil or gas, formed in the geological past from the remains of living organisms.
Future A period of time following the current moment; time regarded as still to come.
Power generation The process of generating electric power from other sources of primary energy.
Primary energy Primary energy is an energy form found in nature that has not been subjected to any conversion or transformation process. It is energy contained in raw fuels, and other forms of energy received as input to a system. Primary energy can be non-renewable or renewable.
Greenhouse gas (GHG) Greenhouse gas (e.g. carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) and three groups of fluorinated gases (sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs)) which are the major anthropogenic GHGs and are regulated under the Kyoto Protocol. Nitrogen trifluoride (NF3) is now considered a potent contributor to climate change and is therefore mandated to be included in national inventories under the United Nations Framework Convention on Climate Change (UNFCCC).
Guidance Documentation defining standards or expectations that are part of a rule or requirement (e.g. CDP reporting guidance for companies).
Horizon Gap In relation to emissions performance, the difference between the average lifetime of a company’s production assets (particularly carbon intensive) and the time-horizon of its commitments. Companies with large asset-lives and small time horizons do not look far enough into the future to properly consider a transition plan.
Incentive A thing, for example money, that motivates or encourages someone to do something (e.g. a monetary incentive for company board members to set emissions reduction targets).
Indicator

An indicator is a quantitative or qualitative piece of information that, in the context of the ACT project, can provide insight on a company’s current and future ability to reduce its carbon intensity. In the ACT project, 3 fundamental types of indicators can be considered:

Key performance indicators (KPIs);

Key narrative indicators (KNIs); and

Key asset indicators (KAIs).

Intensity (emissions) The average emissions rate of a given pollutant from a given source relative to the intensity of a specific activity; for example grams of carbon dioxide released per MWh of energy produced by a power plant.
Intervention Methods available to companies to influence and manage emissions in their value chain, both upstream and downstream, which are out of their direct control (e.g. a retail company may use consumer education as an intervention to influence consumer product choices in a way that reduces emissions from the use of sold products).
Lifetime The duration of a thing's existence or usefulness (e.g. a physical asset such as a power plant).
Long-term Occurring over or relating to a long period of time; under ACT this is taken to mean until the year 2050. The ACT project seeks to enable the evaluation of the long-term performance of a given company while simultaneously providing insights into short- and medium-term outcomes in alignment with the long-term.
Low-carbon scenario (or pathway) A low-carbon scenario (or pathway) is a 2°C scenario, a well-below 2°C scenario or a scenario with higher decarbonization ambition.
Low-carbon transition The low-carbon transition is the transition of the economy according to a low-carbon scenario.
Manufacture Making objects on a large scale using machinery.
Maturity matrix A maturity matrix is essentially a “checklist”, the purpose of which is to evaluate how well advanced a particular process, program or technology is according to specific definitions.
Mitigation (emissions) The action of reducing the severity of something (e.g. climate change mitigation through absolute GHG emissions reductions)
Model A program designed to simulate what might or what did happen in a situation (e.g. climate models are systems of differential equations based on the basic laws of physics, fluid motion, and chemistry that are applied through a 3-dimensional grid simulation of the planet Earth).
Pathway (emissions) A way of achieving a specified result; a course of action (e.g. an emissions reduction pathway).
Performance Measurement of outcomes and results.
Plan A detailed proposal for doing or achieving something.
Point A mark or unit of scoring awarded for success or performance.
Pozzolana A material that exhibits cementitious properties when combined with calcium hydroxide. [2]
Power Energy that is produced by mechanical, electrical, or other means and used to operate a device (e.g. electrical energy supplied to an area, building, etc.).
Relevant / Relevance In relation to information, the most relevant information (core business and stakeholders) to assess low-carbon transition.
Renewable energy Energy from a source that is not depleted when used, such as wind or solar power.
Reporting year Year under consideration.
Research and Development (R&D) A general term for activities in connection with innovation; in industry; for example, this could be considered work directed towards the innovation, introduction, and improvement of products and processes.
Science-Based Target To meet the challenges that climate change presents, the world’s leading climate scientists and governments agree that it is essential to limit the increase in the global average temperature at below 2°C. Companies making this commitment will be working toward this goal by agreeing to set an emissions reduction target that is aligned with climate science and meets the requirements of the Science-Based Targets Initiative.
Scenario The Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC) presents the results of an extensive climate modelling effort to make predictions of changes in the global climate based on a range of development/emissions scenarios. Regulation on climate change-related issues may present opportunities for your organization if it is better suited than its competitors to meet those regulations, or more able to help others to do so. Possible scenarios would include a company whose products already meet anticipated standards designed to curb emissions, those whose products will enable its customers to meet mandatory requirements or those companies that provide services assisting others in meeting regulatory requirements.
Scenario analysis A process of analysing possible future events by considering alternative possible outcomes.
Sectoral Decarbonization Approach (SDA) To help businesses set targets compatible with 2-degree climate change scenarios, the Sectoral Decarbonization Approach (SDA) was developed. The SDA takes a sector-level approach and employs scientific insight to determine the least-cost pathways of mitigation, and converges all companies in a sector towards a shared emissions target in 2050.
Short-term Occurring in or relating to a relatively short period of time in the future.
Scope 1 emissions All direct GHG emissions (GHG Protocol Corporate Standard).
Scope 2 emissions Indirect GHG emissions from consumption of purchased electricity, heat or steam (GHG Protocol Corporate Standard).
Scope 3 emissions Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc. (GHG Protocol Corporate Standard).
Sector A classification of companies with similar business activities, e.g. automotive manufacturers, power producers, retailers, etc.
Strategy A plan of action designed to achieve a long-term or overall aim. In business, this is the means by which a company sets out to achieve its desired objectives; long-term business planning.
Supplier A person or entity that is the source for goods or services (e.g. a company that provides engine components to an automotive manufacturing company).
Target

A quantifiable goal (e.g. to reduce GHG emissions).

The following are examples of absolute targets:

metric tonnes CO2e or % reduction from base year

metric tonnes CO2e or % reduction in product use phase relative to base year

metric tonnes CO2e or % reduction in supply chain relative to base year

The following are examples of intensity targets:

metric tonnes CO2e or % reduction per passenger.kilometre (also per km; per nautical mile) relative to base year

metric tonnes CO2e or % reduction per square foot relative to base

metric tonnes CO2e or % reduction per MWh

Trade association Trade associations (sometimes also referred to as industry associations) are an association of people or companies in a particular business or trade, organized to promote their common interests. Their relevance in this context is that they present an “industry voice” to governments to influence their policy development. The majority of organizations are members of multiple trade associations, many of which take a position on climate change and actively engage with policymakers on the development of policy and legislation on behalf of their members. It is acknowledged that in many cases companies are passive members of trade associations and therefore do not actively take part in their work on climate change (CDP climate change guidance).
Transport To take or carry (people or goods) from one place to another by means of a vehicle, aircraft, or ship.
Trend A general direction in which something (e.g. GHG emissions) is developing or changing.
Technology The application of scientific knowledge for practical purposes, especially in industry (e.g. low-carbon power generation technologies such as wind and solar power, in the electric power generation sector).
Transition The process or a period of changing from one state or condition to another (e.g. from an economic system and society largely dependent on fossil fuel-based energy, to one that depends only on low-carbon energy).
Verifiable / Verifiability To prove the truth of, as by evidence or testimony; confirm; substantiate. Under the ACT project, the data required for the assessment shall be verified or verifiable.
Weighting The allowance or adjustment made in order to take account of special circumstances or compensate for a distorting factor.

 

 

10.2 Abbreviations

 

2DS: 2°C scenario

B2DS: Beyond 2°C scenario

CCS: Carbon Capture Storage

CCU: Carbon Capture and Utilization

DDP: Deep Decarbonization Pathway

DDPP: Deep Decarbonization Pathway Project

HER: Excess Heat Recovery

ETP: Energy Technology Perspectives

GDP: Gross domestic product

GGBS: Ground granulated blast furnace slag

GHG: Greenhouse gas

HTC: Hydrothermal carbonization

IEA: International Energy Agency

IIGCC: Institutional Investors Group on Climate Change

IPCC: Intergovernmental Panel on Climate Change

ISO: International Organization for Standardization

Mtoe: Million Tonnes of Oil Equivalent

NDC: Nationally Determined Contributions

PSD: Particle size distribution

ORC: Organic Rankine Cycle

RCP: Representative Concentration Pathway

RTS: Reference Technology Scenario

WBCSD: World Business Council for Sustainable Development

 

11. Annexes

 

11.1. Cement Products and Uses

 

11.1.1. White and grey cement

Cement can be white or grey. White cement is quite similar to grey cement and has the same properties. Obtaining this color requires substantial modification to the manufacturing method, with a selection of the limestone and addition of kaolin to the mixture, in the process, with a higher temperature of the kiln (1600°C rather than an average of 1450°C). These additional tasks and specific requirements entail a manufacturing cost higher for white cement than grey cement. A key advantage of using white cement for decorative and architectural concrete is that it provides a neutral tinting base and consistent color results.

There are only 45 plants for white cement production distributed in 29 countries (31 producers) in 2014(8)

The CO2 emission for grey and white cement at world level give 637 kg CO2/t cement equivalent (Gross CO2 emissions average for 2016)(9).

The CO2 emissions for only white cement at world level give 928 kg CO2/t white cement (Gross CO2 emissions average for 2016).

(8) https://www.globalcement.com/magazine/articles/890-white-cement-review

(9) GNR project, https://www.wbcsdcement.org/GNR-2016/index.html, Cement (equivalent) is a cement production value, which is determined from clinker produced on-site applying the plant specific clinker/cement-factor. Hence, it is a virtual cement production under the assumption that all clinker produced in a plant is consumed for cement production in the same plant and applying the real plant specific clinker/cement factor.

https://www.cement-co2-protocol.org/en/#Internet_Manual/faq.htm?Highlight=equivalent

 

11.1.2. Mortar

Mortar is produced by mixing a binding material (cement or lime) with fine aggregate (sand, surki, etc) with water. For construction purpose, different types of mortar are used. Depending upon the materials used for mortar mixture preparation, the mortar could be classified as follows.

  1. Cement Mortar
  2. Lime Mortar
  3. Surki Mortar
  4. Gauged Mortar
  5. Mud Mortar.

Some of the numerous functions of mortar in construction are given below.

  1. Mortar is used to bind together the bricks or stones in brick or stone masonry.
  2. It is used to give a soft even bed between different layers of brick or stone masonry for equal distribution of pressure over the bed.
  3. It is used to fill up the spaces between bricks or stones for making walls tight.
  4. It is used in concrete as a matrix.
  5. It is used in plastering works to hide the joints and to improve appearance.
  6. It is used for moulding and ornamental purpose.

Mortar as concrete can use cement as raw material and are in the bottom of the supply chain. Mortar producers as concrete producers are clients of cement manufacturers.

11.1.3. Concrete

Concrete is the most significant application for the use of cement

Concrete is a versatile building material, in fact the most man-made used substance after water. Concrete is made of cement, sand, aggregates, water and admixtures. It can be moulded when in its “wet” state and solidifies over time, gaining strength and durability.

11.2. Low Carbon Scenarios (to be deleted after the public consultation)

 

Sectoral transition pathways are scenarios providing the carbon budget for a company of a given sector:

These pathways are calculated using the Sectoral Decarbonization Approach (SDA), a widely-adopted methodology. The SDA can be broken down in 3 steps:

1. Establish a global low-carbon pathway (extensive pathway modelling has been undertaken by numerous organizations including the International Energy Agency)

2. Disaggregate scenarios at sectoral level: dividing the budget between all economic sectors, to get an envelope for production emissions, including clinker emissions of the sector.

3. Apply an allocation mechanism for companies per sector (e.g. tons of cement produced)

In the ACT methodology, these sectoral pathways are used to assess the level of ambition of the company’s commitments and actions.

11.3. First Analysis of the Scenarios

The table below presents a first analysis of the scenarios presented in the previous chapter.

Table 8: Analysis of the Low Carbon Scenarios for the Cement Sector

 

 

11.4. Identification of the Technologies used to Decarbonize the Cement Sector

 

This table is used for CEM 3.1 calculation

 

 

TRL from IEA:

1. Initial idea: basic principles have been defined

2. Application formulated: concept and application of solution have been formulated

3. Concept needs validation: solution needs to be prototyped and applied

4. Early prototype: prototype proven in test conditions

5. Large prototype: components proven in conditions to be deployed

6. Full prototype at scale: prototype proven at scale in conditions to be deployed

7. Pre-commercial demonstration: solution working in expected conditions

8. First-of-a-kind commercial: commercial demonstration, full-scale deployment in final form

9. Commercial operation in relevant environment: solution is commercially available, needs evolutionary improvement to stay competitive

10. Integration at scale: solution is commercial but needs further integration efforts

11. Proof of stability: predictable growth