©2024BostonConsultingGroup1Thisarticleispartofaseriesexaminingthecompetitiveoutlookforkeyglobalprocessindustriesandhowtheycanprosperinanuncertainfuture.Cement’sCarbonFootprintDoesn’tHavetoBeSetinStoneTheFutureofProcessIndustriesSEPTEMBER10,2024ByGuillaumeRicome,MartaGuzzafame,JasonDegnan-Rojeski,andIshangJawaREADINGTIME:8MIN©2024BostonConsultingGroup2Aseveryoneintheindustryknows,theimmenseamountofcementproducedgloballyreleases3gigatonsofgreenhousegases(GHGs)annuallyintotheatmosphere,andthatamountisexpectedtoincreasesignificantlyasdemandforthiscriticalmaterialgrows.Theonlyrealisticwaytofullyabatethoseemissionsandmeettheindustry’s2050netzerogoalsinvolvesscalingcarboncaptureandstorage(CCS)toanindustriallevel.Industryexpertsexpectthisefforttorequiremorethan$1trillionofcapitaldeploymentoverthenext25years.Fortheindustrytoreachnetzeroin2050,sufficientCCScapacitymustbeavailabletoabatemorethan35%ofitsGHGemissions.Fortheindustrytoreachnetzeroin2050,sufficientCCScapacitymustbeavailabletoabatemorethan35%ofitsGHGemissions—anditsimplementationwilltransformtheindustry’scoststructureandtraditionalsourcesofcompetitiveadvantage.Today,mostcementisconsumedwithin200kmofwhereitwasproduced,sincethemostcost-effectivewaytosupplyitisbyservinglocaldemand,thusminimizingtransportcosts.Onlyaround5%oftheworld’stotalcementproductionistradedacrosscountryborders.ThecostofCCStechnologywillchangeallthat.CementproductioncostswillvaryconsiderablydependingonlocalaccesstoCO2storagecapacity,proximitytoindustrialCCShubs,andthecostandavailabilityofthegreenenergyneededtoproducecement.Thisinturnwilltransformtheindustry’sglobalgeographicalfootprintfromanalmostentirelylocalindustrytoonewheretheadvantagegoestolow-costproducers,wherevertheyare.Thisarticleexploresvariousfactorsthatwilldeterminethewinnersandlosersinthecementindustryofthefuture.(Seethesidebar,“TheFutureofProcessIndustries.”)Followingseveraldecadesofstronggrowthdrivenbyhighdemand,cheapcapital,technologicalchange,andtheriseofChinaandIndia,themetals,paper,cement,chemicals,andotherbasicindustriesareenteringafarmorechallengingbusinessenvironment.Geopoliticaltensionsarerisingalongwithtradebarriers,demandisshiing,agingworkersarebecominghardertoreplace,andregulators,customers,andotherstakeholdersareraisingthesustainabilitybar.HoweachoftheseTHEFUTUREOFPROCESSINDUSTRIES©2024BostonConsultingGroup3industriesnavigatethechallengestheyfacewillalsoaffectthefortunesofthemanydownstreamindustriesthattheprocessindustriessupply.Eacharticleintheserieswillexaminethenatureofthenewbusinessrealityfacedbyaparticularprocessindustry,andhowthecomingchangeswilldrivetechnologicalprogress,redefinetheindustry’scoststructure,andreshapeitscompetitivelandscape.Thegoal:toprovideindustryleaderswiththedataandguidanceneededtoensuretheircompaniescanthriveinthecomingyears.TheNetZeroTimelineThenumbersaredaunting.Intheabsenceofanyabatementactionatall,globalgrowthindemandforconcreteisforecasttoresultin3.8gigatonsofannualCO2emissionsby2050.Inthenearterm,to2030,theindustrywillfocusprimarilyonavarietyofwell-knowndecarbonizationlevers,includingthegradualsubstitutionofclinkermaterials(andtheirattendantprocessemissions),theuseofalternativefuels,andarelativedeclineindemandforconcreteasaresultofgreaterdesignandconstructionefficiency.Intheabsenceofanyabatementactionatall,globalgrowthinde...