24 October 2008
HeidelbergCement anticipates threat to cement locations in Europe as a result of EU emissions trading plans
In the coming weeks, the decisive steps will be taken at European level to shape the emissions trading landscape in Europe from 2013. HeidelbergCement, the third-largest cement manufacturer worldwide, operates 36 plants in the European Union and is the market leader in Germany with 12 plants.
In the last few years, HeidelbergCement has made considerable progress in reducing its CO2 emissions. The goal of reducing the emissions per tonne of cement by 15% by 2010 compared with 1990 was exceeded as early as 2007, with a decline of 18% in Germany and 20% in Europe. Through their use of innovative technology, the European plants are among the most efficient locations worldwide in terms of CO2 reduction. This technology is being transferred to all cement plants throughout the Group.
The EU Commission's plans for the third emissions trading period from 2013 threaten the existence of the cement plants in the EU. Expert opinions from McKinsey and the Boston Consulting Group estimate that a full auction of the emission certificates, according to the certificate prices and transport costs, will substantially threaten the competitiveness of between 50% and 100% of the German and European cement capacities in 2020.
For HeidelbergCement, the worst case scenario – auctioning of all emission rights from 2013 – means additional expenditure of EUR 920 million per year. "If we were forced to close the German plants, for example, we could offset this with the construction of two new high-performance production facilities in China with an investment volume of EUR 300 million", explains Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. "The cost advantages of China would almost double as a result of the CO2 expense, making competitive domestic production in Europe no longer an option. It would be feasible to supply European markets from locations outside the EU via an efficient trading network." Heinz Schirmer, Deputy Chairman of the Supervisory Board of HeidelbergCement warns: "This poses a real threat to the jobs of our 1,500 employees in the cement business in Germany. In our European cement plants, as many as 8,200 jobs are at stake."
"Economic coercion to carry out relocations damages rather than protects the environment, and threatens the future viability of an important primary industry in the EU", states Dr. Martin Schneider, Chief Executive Officer of the German cement associations, "because, in the overall scheme of things, an auction will lead to significantly higher CO2 emissions worldwide."
In 2007, HeidelbergCement's sales volumes in Germany amounted to 8 million tonnes. In China, capacities are increasing to 14 million tonnes, with two facilities under construction. In Indonesia, the company has capacities of 13 million tonnes near the coast.