12 Oct 2022 3 min read

Cement: can it cure its emissions reputation?

By John Daly

With a sizable carbon footprint and little progress on mitigation so far, the cement industry will come under pressure as environmental concerns mount.


The modern world is literally built on concrete, but it has recently earned a bad reputation.

Production of cement – the key ingredient of concrete – is responsible for around 8%1 of global carbon emissions per year. For the world to reach net zero the cement industry will need to decarbonise significantly.

A granular look at cement production

Cement is produced by heating limestone and clay minerals at very high temperatures to form clinker. Clinker is then mixed with gypsum and ground into a fine powder. Overall, cement production produces 0.8kg of C02 per kg of cement.2

Around 50% of the total CO2 produced is a result of the fundamental chemistry of the process3, the decarbonisation of limestone clinker, which is unavoidable. Of the remainder, 40% comes from the energy required to fuel the kiln – typically fossil fuels – and 10%4 comes from grinding and transportation.  

Once concrete is exposed to the air, it slowly re-absorbs around 20-25% of the C02 produced during its manufacture.5

Roadmap for emission reduction

Global cement production, driven by urbanisation, is expected to grow 34% by 2050 compared with 2014.6 For a beyond two-degree IEA scenario, in which the rise in global temperatures by 2100 is limited to two degrees compared with pre-industrial levels, IEA analysis7 shows a 45% cumulative reduction in cement industry carbon emissions is required by 2050 versus the 2020 base figure.8

The conventional pathways to lower cement’s emissions footprint are:

  1. Improving the energy efficiency of the production process
  2. Use of low-carbon fuels, potentially including hydrogen
  3. Reduce the clinker to cement ratio. The average clinker to cement ratio in the EU is around 75%.9 Adding clinker replacements helps reduce the amount of crushed limestone and hence CO2 from the process
  4. Carbon capture and storage. As C02 is released in clinker production, it is captured and sequestered offshore under high pressure. However, this is unproven at large scale

These strategies could significantly reduce C02 emissions by 2050.10 However, to reach net zero, technological breakthroughs are required.

While there has been extensive research into low-clinker and novel cements, such as injecting captured C02 back into curing cement, we have yet to see widespread application of these ideas.

Nonetheless, with cement accounting for a sizable chunk of global carbon emissions, the sector will face mounting scrutiny in the years ahead.

What does this mean for investors?

Significant technological changes in the way cement is produced are likely to be highly disruptive. IEA analysis11 indicates that the industry requires around $700 billion of cumulative capital expenditure by 2050 to meet a two-degree scenario, significantly more than the business-as-usual investment of around $450 billion.

This may lead to industry consolidation as emissions standards tighten and low-clinker cement patents are deployed. There will likely be first-mover advantages for producers that can deploy low-carbon solutions.

The industry may also need to contend with stranded assets. Given the high probability of disruption, a proportion of the value associated with existing infrastructure may not be realised without the use of carbon capture or offset.

Regulation and taxation of cement production CO2 emissions may increase. For example, the EU’s Emission Trading System carbon price is structurally designed to increase through time, and it targets cement producers, among other hard-to-decarbonise industries, a point I made in a previous blog.

This taxation mechanism will be used to encourage widespread adoption of low-carbon alternatives. However, in the short term higher prices are likely to be passed on to consumers, which is inflationary.

Impact on the construction industry

As the global emissions budget tightens, regulators may seek to optimise the use of concrete in construction by cutting waste and maximising the lifespan of buildings.

Buildings and infrastructure typically have lifespans of under 80 years, however concrete structures could last over 200 years if well maintained.12 As a result, urban planning could change to reflect this.

In summary, the cement industry faces significant disruption risk as it seeks to find a cure for its oversized emissions footprint. 


1. Source: https://www.chathamhouse.org/2018/06/making-concrete-change-innovation-low-carbon-cement-and-concrete

2. Source: https://www.ipcc.ch/report/ar5/wg3/ chapter 10, page 20

3. Source: ibid

4. Source: ibid

5. Source: https://www.dezeen.com/2021/08/31/cement-concrete-not-carbon-sinks-cambridge-materials-scientist/

6. Source: https://iea.blob.core.windows.net/assets/cbaa3da1-fd61-4c2a-8719-31538f59b54f/TechnologyRoadmapLowCarbonTransitionintheCementIndustry.pdf

7. Source: https://www.ipcc.ch/report/ar5/wg3/ chapter 10, page 20

8. Source: https://iea.blob.core.windows.net/assets/cbaa3da1-fd61-4c2a-8719-31538f59b54f/TechnologyRoadmapLowCarbonTransitionintheCementIndustry.pdf, pages 19 and 20

9. Source: ibid

10. Source: ibid, page 5

11. Source: https://www.iea.org/reports/technology-roadmap-low-carbon-transition-in-the-cement-industry, figure 17, page 49

12. Source: IPCC Industry Working Group, chapter 10, Page 759

John Daly

Senior Solutions Strategy Manager

John is a Senior Solutions Strategy Manager within the Solutions Group and has over 20 years of industry experience working in asset-management companies. He focuses on long-term global investment-grade credit and active liability investment strategies. His role encompasses designing developing and servicing investment strategies for DB pension schemes and other financial clients. John has been with LGIM since 2009 and has previously held institutional distribution roles at PIMCO and Fidelity. John holds a BSc in Business Economics from Cardiff University and is a CFA charterholder.

John Daly