1. 1 DEDICATED TO MAKING A DIFFERENCE Vincent Mages Climate Change Initiatives VP Lafarge vincent.mages@lafarge.com Greenhouse gas mitigation in the cement industry: a sectoral approach

2. 2 Some global convictions Whatever Copenhagen concludes, CO2 is on top of the agenda, worldwide  Climate change first visible impacts  Health /water management issues  Energy security and access  No country will escape! CO2 has a value  CO2 emissions rights in EU now, in US soon  Carbon taxes projects  Incentives to improve energy efficiency  CDMs … CO2 has also a growing “marketing” value  Carbon footprint becomes a selling point  Energy efficient buildings  Etc. What does it mean in our industry?

3. 3 CO2: an environmental issue and a double business challenge Clinker Cements Concretes Other Building Materials Construction modes Building and Civil Engineering CO2 CO2 reduction regulatory framework Energy efficiency regulatory framework “Carbon footprint” “Life Cycle Analysis” InnovationSolutions Illustrative

4. 4 We cannot hide and expect regulations not to come: let’s be proactive! Potential international regulatory frameworks (CO2 reduction) will be combined with national regulatory frameworks (energy efficiency): we must work at international and national levels! CO2 regulations could impact our ability to meet, business wise, new downstream demand and needs in Buildings and Infrastructures: we must have our voice heard at UNFCCC negotiations level to have the most efficient “CO2 reduction regulatory framework” put in place! First conclusions

5. 5 We, CSI members, have achieved a tremendous work, very positively considered,… WRI/CSI CO2 protocol GNR data base Sectoral Approach Modeling IEA / CSI Technology Roadmap CDM new methodology

6. 6 Sectoral Approach - What is it? A combination of policies and measures, developed to enhance efficient, sector-by-sector, greenhouse gas mitigation, addressing data, policy, technology and capacity building within each sector. 1.International Cooperation with major sector actors to develop and share: appropriate sector tools, systems, data, best practices, UNFCCC crediting policies, benchmarking and technology development 2.Nationally Appropriate Mitigation Actions (NAMAs) ‘tuned’ to sector. Emission goals and policies could differ depending on national ambition, common but differentiated responsibilities, and local circumstances

7. 7 Sectoral Approach - CSI Key Principles A sectoral approach to GhG management must:  Work within the UNFCCC, compatible with existing and future mechanisms (e.g. ETS,CDM/JI);  Include key developed and developing economies;  Use simple metrics and standardized methodologies;  Use verified emissions data to track compliance;  Involve government to help set, monitor and enforce agreed goals;  Enhance new technology development, especially CCS

8. 8 Transport & Trade CO 2 Prices, Policies Emissions Factors, Materials Availability Abatement Options Model Global trade flows Cement Demand Sector CO2 abatement Sector CO2 emissions Regional cement production Distributional cost impacts CO2 leakage effects Transport CO 2 Modeling Policy Options: from Principles to Practicalities Caution: most models are false, some are useful Results

9. 9 Policy scenarios evaluated : Scenarios involve different mixes of carbon prices, mitigation options, national or regional carbon policies and commitments, etc. Scope of international commitment post Kyoto Scenarios involve different combinations of carbon prices, mitigation options, national or regional carbon policies and commitments. Many other policy combinations are possible.

10. 10 Model reviewed by IEA, LBNL and RITE Comparison of scenario outputs: CO2 emissions projections Emissions increase in all cases from 2005-2030 Impacts occur late in the scenarios, if at all Only ‘Global caps’ ‘Global goals’ & ‘a sectoral approach’ show impact on emissions Cement demand forecast from International Cement Review and JP Morgan

11. 11 4 Levers for CO2 Reduction Quantities shown are relative to the “no-commitments” baseline scenario in 2030 Global Caps Sectoral Approach (high CO 2 price) (lower CO 2 price)

12. 12 Trade and Carbon Leakage impacts Changes in trade patterns, production location and CO 2 emissions can occur when different carbon policies in different regions cause significant price differences for the same product.  Policy options are available to help reduce these market distortions  An effective sectoral approach should include specific policies to address this issue

13. 13 1.‘Sectoral approach’ shows real impact from 2020 onwards, and seems to be the most practical to implement; 2.Greater worldwide sector CO 2 abatement is possible under scenarios which include non-Annex I actions; 3.Abatement potential varies by region: hence nationally tailored approaches are key.  Energy efficiency lever is weak in cement industry.  Alternative fuels and blending options are powerful but require national policies 5.Risk of leakage (trade and CO 2 ) exists where emissions are capped in one region and not in others. Key conclusions from Model Studies

14. 14 Sectoral Approach: summary  Shows promise to help address climate mitigation with greater speed and scale.  Retains ability for growth  If well designed, can permit different national carbon policies with minimum distortion of trade flows  Is a practical approach to engage business and key economies in mitigation action.  Needs national government policies and measures to help deliver applied technology at national level.  Requires good coordination with cement trade associations to develop local and regional action.

15. 15 We, CSI members, have achieved a tremendous work, very positively considered,… WRI/CSI CO2 protocol GNR data base Sectoral Approach Modeling IEA / CSI Technology Roadmap CDM new methodology

16. 16 … but The debates in Copenhagen will not end in December 2009: we must stay mobilized again in 2010 to promote, refine and adapt the Sectoral Approach proposition to NAMAs. As CSI, in cooperation with Trade Associations, throughout our international and national contacts, we have to be proactive and solution oriented

17. 17 You want to find out more details and discuss further sectoral approaches? Let’s meet at 3:15 in the Zirconium room!!

18. 18 www.wbcsdcement.org Thank you!