German building material giant HeidelbergCement benefits from rising ETS price

The rising price for emissions allowances in the EU's trading system ETS is increasing the price of cement, giving German building material giant HeidelbergCement a "strategic competitive advantage" over other cement producers in the EU, the company's CEO Bernd Scheifele told the Frankfurter Allgemeine Zeitung. Prices for cement have risen by up to 15 percent over the last months as producers have had to pay more for emissions arising from the energy-intensive production process, but HeidelbergCement says it has enough emissions allowances to continue production until the end of 2022 and thus is shielded from the rising prices. Scheifele said especially smaller local producers across the EU would now have to buy allowances at higher prices, meaning many will go out of business as production becomes too costly. Coming from the process industry, HeidelbergCement has received its allowances free of charge in the first round of trading until 2020 and hopes it will not have to buy any allowances in the next round by reducing its CO2 output by another 30 percent through a “master plan" that includes powering its cement kilns with biomass instead of coal.

Prices in the ETS initially had been very low due to low growth rates across the EU in the aftermath of the global financial crisis but have been rising sharply since early 2018, from about 7 euros per tonne of CO2 at the beginning of that year to over 25 euros in late 2019. The ETS currently only covers emissions in industrial production and energy generation, but the German government aims to also include emissions from the transport and buildings sectors over the next decade.