Issue #08
4 march 2025
Issue #08
4 march 2025
— INDUSTRIAL TRANSFORMATION POLICIES – THE CEMENT INDUSTRY by ECCO
Sustainability is a key priority for the cement industry, which is constantly working to reduce its impact through increasingly innovative production processes and products. Between 2021 and 2023, businesses in the sector invested over 254 million euros in environmental and safety technologies[1]. With the same commitment, the industry is now facing the even greater challenge of achieving carbon neutrality, in line with European decarbonisation policies.
A strategy for decarbonisation
The businesses in the industry have developed and shared a strategy with actions, deadlines and goals that will lead to carbon neutrality by 2050. Each identified action will contribute to reducing CO2 emissions to varying degrees and over different timeframes. Some of these actions are already available and partially implemented by businesses, while others require further technological developments.
Overall, to implement this strategy, the Italian cement industry will need to invest 4.2 billion euros, with additional operational costs of approximately 1.4 billion euros per year.[2]
The use of alternative fuels to partially replace fossil fuels is already an active measure that, in 2023 alone, helped avoid 403,000 tons of CO2 emissions. However, despite its potential and clear advantages, including for the waste cycle, Italy remains at only 25.5%[3] substitution of petroleum products with alternative fuels (thermal substitution), compared to the European average of 57.6%. The main barrier lies in the lengthy and uncertain local authorisation processes, which limit the possibility of making full use of this resource.
This situation certainly warrants reflection. The use of alternative fuels is not only an opportunity for the environment, but also for the community and the country’s energy independence. It represents a zero-kilometre energy resource that positions cement plants as a key part of the circular economy. When used effectively, it can lead to a 12% reduction in CO2 emissions.[4]
Alternative fuels, such as SRF (Solid Recovered Fuels), are derived from non-recyclable and non-reusable waste that would otherwise be sent to landfills, incinerated, or exported to other countries. What would otherwise have been waste is therefore transformed into a productive resource, reducing waste disposal fees for citizens and lowering the risk of penalties for Italy due to the failure to close landfills.
A crucial element of the sector’s decarbonisation is CO2 capture technologies (CCUS – Carbon Capture, Utilisation, and Storage), to which the strategy attributes a 43% reduction in CO2 emissions.[5] The importance of this solution lies in the fact that 60-70% of direct CO2 emissions in cement production derive from the chemical reactions involved in the process, making it impossible to eliminate them without a capture system. Implementing these technologies requires a significant economic commitment from the cement industry, greater than that required by other energy-intensive sectors.
In addition to alternative fuels and CO2 capture, other actions can contribute to reducing emissions in the sector[6]: the use of natural gas and hydrogen, energy efficiency and renewable energy, reducing the clinker-to-cement ratio, use of alternative materials, sustainable transport and local sourcing, and optimising concrete in construction.
Federbeton’s national decarbonisation strategy will soon be updated to assess the impacts of recent technological developments in some of the identified levers, as well as the European and national regulatory context, on the sector’s journey towards carbon neutrality.
Competitiveness of the Italian industry: a value to protect
Decarbonisation is a crucial step towards sustainability, but it risks negatively impacting the competitiveness of Italian industry. European businesses are facing higher production costs due to investments in innovative technologies and the rising value of CO2 emission allowances (ETS). In contrast, cement producers outside the EU, particularly those in the Mediterranean region who also import cement to Italy, are not subject to the same environmental restrictions and have lower production costs, making them more competitive.
In 2023, non-EU cement imports increased by 22.6%, and between 2018 to 2023, they grew by 572%, compared to an increase of just 6.5% in intra-EU imports. The price of imported cement is 25% lower than the national average, creating unsustainable competition for Italian businesses.[7]
The loss of competitiveness in the Italian cement and concrete industry could have significant repercussions for the entire economic and social fabric. If national production were to decline, supply would become increasingly dependent on imports, destabilising both costs and the continuity of supply.
Beyond the economic impact, the issue also has environmental implications. The increase in imports would result in a “relocation” of CO2 emissions to countries with less stringent environmental regulations than those in Europe, thus increasing the sector’s global carbon footprint. Furthermore, longer transport distances would exacerbate the ecological impact.
Finally, the quality of materials used in construction could suffer, since the controls would be partly delegated to the exporting countries.
The European Union has introduced the CBAM (Carbon Border Adjustment Mechanism) to protect European businesses. However, full implementation of this system will take too long to avert the associated risks.
In conclusion, to translate the sector’s commitment to decarbonisation into a real competitive advantage, institutional intervention is necessary to support and protect the Italian industry. A clear regulatory framework consistently applied across the country, clear timelines for issuing authorisations and certifications, and support for investments in the development of innovative technologies are urgent measures required to safeguard a sector that is fundamental to the socio-economic development of the country.
[1] Data from Federbeton’s 2023 Sustainability Report
[2] Data from Federbeton’s Decarbonisation Strategy developed with the support of KPMG
[3] Data from Federbeton’s 2023 Sustainability Report
[4] Data from Federbeton’s Decarbonisation Strategy developed with the support of KPMG
[5] Data from Federbeton’s Decarbonisation Strategy developed with the support of KPMG
[6] Data from Federbeton’s Decarbonisation Strategy developed with the support of KPMG
[7] Analyses by the Federbeton Research Centre
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The industrial sector in Italy plays a central role in the national economy, contributing around 20% to GDP in 2022. Similarly, it makes a significant contribution to emissions, accounting for approximately 20% of the total.
The industrial sector encompasses a wide range of production sectors, interconnected across various levels throughout the value chains. As a result, an industrial strategy that is integrated with the decarbonisation process must consider individual supply chains and combine fiscal policies that support domestic production, trade policies to penalise anti-competitive behaviours and economic policies to secure supply chains.
Europe is currently facing this challenge, having built up a competitive and innovation gap compared to major global economies, while also dealing with generally higher energy costs. However, the decarbonisation process has sparked a new drive for innovation, and failure to effectively integrate this aspect into industrial policies risks widening this gap.
Italy is the second largest cement producer in the European Union, after Germany, despite experiencing a significant 60.7% drop in production volumes compared to 2006. In addition to being a leading producer, Italy is also a major consumer of cement and concrete, with demand primarily met by domestic production. However, in recent years, dependence on imports has grown, particularly from non-EU countries in the Mediterranean region (Turkey, Tunisia, Algeria).
Despite consolidation processes within the cement industry over the last decade, profit margins for major Italian operators remain limited, with products offering lower added value compared to other European producers. This situation underscores the need for a targeted industrial policy capable of ensuring positive outcomes both in the short-term (by 2030) and long-term (by 2050).
In terms of emissions, cement production in Italy generates 10.2 MtCO2/year (2022 data), accounting for 14% of total industrial emissions (78.3Mt CO2eq).
The transformation of the cement production process is particularly complex due to the nature of the production processes: on one hand, process emissions derive from unavoidable chemical reactions; on the other, the need for high temperature heat complicates the use of fossil fuel alternatives.
To illustrate this complexity, the sector’s CO₂ emissions have decreased by 61% over the last 15 years. However, this reduction has mainly been driven by a decline in production rather than an improvement in efficiency or the adoption of low-emission technologies. In fact, the sector’s emission intensity has remained almost unchanged, staying at around 0.65 tCO₂/t cement (Figure 1).
Figure 1 – Direct CO₂ emissions from cement production in Italy (absolute values and relative to production volumes)
Addressing the decarbonisation of the cement sector therefore requires an integrated approach; a set of industrial policies that must be prioritised and coordinated in their implementation. Supply-side policies should address investment costs and provide support for energy expenses related to natural gas (and electricity) consumption. At the same time, regulatory, incentive and protection measures must be introduced on the demand-side to encourage the development of a market that can accommodate more expensive ‘green’ cement production.
According to this approach, the study “Industrial transformation policies: the cement industry” proposes a dedicated sectoral in-depth analysis.
Among the solutions to reduce the sector’s environmental impact, the study identifies measures that can be applied in the short, medium and long-term.
Short-term solutions include the greater exploitation of energy efficiency, for example through Organic Rankine Cycle (ORC) systems, the use of alternative fuels such as waste-derived fuel, and the partial replacement of clinker with decarbonated materials through recycled materials, by-products and end-of-waste products. These solutions are expected to lead to a cumulative reduction of around 24% in emissions from production process. These are approaches that could help Italy align with other EU countries where, for example, the replacement rates of coal with alternative fuels are significantly higher. However, these solutions require an enabling regulatory framework and economic incentives for widespread implementation.
75% of emissions related to cement production clearly necessitate solutions that are not yet available or scaled up. Therefore, it is crucial to support research and development into solutions that could electrify the production process or improve the efficiency of CO₂ capture and storage. Among the most promising technologies is the Oxyfuel process, which uses pure oxygen instead of air in ovens, optimising combustion and increasing the concentration of CO₂ in exhaust gases, making it easier to capture. However, this approach entails high costs, requiring support through incentive measures. In any case, targeted support for research and development is vital, for example through greater use of European funds such as the Innovation Fund, while also better allocating the revenues from ETS auctions, particularly given the increased size of these funds driven by quotas from sectors subject to the CBAM, like cement.
On the demand side, it will be necessary to encourage the creation of markets for ‘green’ cements, defining the characteristics and standards for commercialisation, including through the revision of European public procurement legislation to integrate the climate variable into public sector purchasing standards, thus driving the diffusion of lower-carbon production methods.
Science dictates an accelerated timeline for decarbonisation and global economies are already advancing in the markets for the technologies that enable it. A framework of targeted and sectoral policies that complement technologically neutral policies, such as carbon pricing, is essential to turn the transition into a concrete opportunity. The publication of the strategic guidelines for the Clean Industrial Deal identifies the elements of a systemic approach, linking innovation, competitiveness and decarbonisation. This framework, however, cannot overlook vertical and supply chain insights, such as those planned at the EU level for the steel and chemical industries, and which are also hoped for in the cement sector, which, due to the scale of funding and the complexity of decarbonisation, deserves a dedicated space.
Wednesday, March 5
Fact-finding Inquiry on the Role of Nuclear Energy in the Energy Transition and Decarbonization Process – Joint Committees VIII (Environment) and X (Productive Activities) of the Chamber of Deputies – link
Thursday, March 6
Competitiveness (COMPET) Council – Internal Market, Industry: Policy Debate on Clean Industrial Deal for competitive industries – link
Monday, March 17
Energy Council – Expected to discuss energy dimension of Clean Industrial Deal
Thursday, March 20 and Friday, March 21
European Council (EUCO) – Costa announced focus will be on boosting Europe’s flagging economy, from competitiveness to trade and jobs
