Why Cement - Version 1

“It is hard to think of a topic less sexy than cement” - Eric Toone, Technical Lead at Breakthrough Energy Ventures

Asked every day why I’m working in the cement industry:

• Second most consumed resource after water
• Human-Made Materials Now Weigh More Than All Life on Earth Combined [source]
• 8% of total global emissions:
  • 60% of emissions from cement are process emissions [released due to the processing of limestone —> lime]
  • Notoriously difficult industry to decarbonize
• Share of emissions has been rising since 2015 by ~10%
• Industrial expansion has accounted for about 45 percent of worldwide growth in GHG emissions over the last two decades (Lamb et al. 2021; IPCC 2022b)

My POV on what the state of the sustainable cement industry is in framing the biggest challenges which disruptors face in the market. But with every challenge comes an opportunity: framing the greatest opportunities within these markets.

Challenge #1: Incumbent Industry Dynamics:

• Challenge A: Mature market in which acquisitons have been prevalent and now very few players control cement industry
  • Variations of cement have been observed as long as 2,000 years ago [source]
  • The material that we know today has changed very little from Original Portland Cement, which was first patented in early 1800s in England - process resembles same process that is used today with a synthetic mixture of limestone and clay [source]
  • Through the time period of the industry, consolidation has occurred, now the top 10 players produce 1.4B tonnes / annum (30% of the 4B tonne / annum global market)
    • Individual markets are more consolidated with the top 10 US cement companies comprising 80% of annual tonnage in 2024 [source]
  • Kiln Timeframe: one of the reasons why the industry has been so resistent to change is because the cement kiln (the primary asset within a cement plant) has a lifespan of 20-50 years [source]
• Opportunity A: Disruptor who can figure out how to work with industry players (instead of against them) to disrupt will have a great opportunity
  • Provide technologies / solutions for which the customer is an incumbent cement provider (not a concrete customer or someone else in the construction value chain)
  • Disrupt in the markets which are growing quickly - e.g. in developing nations - e.g. China / India so that you don’t need to disrupt / displace the market, you can just grow as the industry grows [could be a topic for another article]
    • It is cheaper to build green than to retrofit green
    • China (55% of global market) and India (8% of global market) are the two biggest cement consumers, so outsized impact could be made there [source]
  • On growing with industry: an average of 6% more cement will be produced in 2050 than is produced today [source]
• Challenge B: Complex stakeholder ecosystem in the cement industry
  • Cement is the primary Raw Material input to concrete (cement makes up 10-15% of the total concrete mixture)
  • However, other stakeholders within the building value chain [screenshot of stakeholder map] are important in the decision making process as well
  • When developing a new technology, this is a lot of stakeholders to educate and bring along for the journey
• **Opportunity B: ‘**Purchaser’ goes beyond the concrete companies; other stakeholders can be leveraged to pressure concrete companies to purchase sustainable cement:
  • Property Developers: 47% of property developers globally see decarbonisation as fundamentally important to their business growth (HSBC)
  • Governments: in many countries governments are the largest buyers of cement (US public agencies procure between 33-46% of the country’s cement); procurement policy even just in the public sector could have a big impact) [source]
• Challenge C: Safety, Standards & a Track Record of Success
  • Industry has been around for 2,000 years and has operated very similarly the entire time - everyone knows what to expect when purchasing OPC
  • Cement is used in many applications, multiple of which (buildings, bridges, etc.) people’s lives are at stake if it fails
  • UK Standards: BS 197-1 governs most cement (can go into the specific applications in which it does / does not govern) and it specifies based on the material that is used in the cement, not on its measured performance
    • This seriously limits the applications in which novel cement can enter
  • Some industry changes have taken 50 years to be implemented
• Opportunity C: Industry and its major players have recognized and committed to a need to change
  • Global Cement and Concrete Association (GCCA) has committed to 20 percent reduction of CO2 per metric ton of cement and a 25 percent reduction of CO2 per cubic meter of concrete by 2030 compared to 2020 levels. The GCCA calls for complete decarbonization by 2050 [source]
• Challenge D: Carbon regulation is not as present for the cement industry as it is for other industries
  • With 0.8 tonnes of CO2 emitted for every 1 tonne of cement produced, even a low cost per abated tonne of CO2 would have a huge impact on the price (cement is a commodity product) [source]