Climate Hot Spots: Status of GHG Regulations and Implications for the Cement Industry

Climate change is quickly becoming solidified as the ultimate sustainability issue - a pressing environmental, financial, and social issue. Our paper does not seek to comment on or clarify the issue of whether climate change is real or is of the magnitude that society generally believes. However, given the current status of societal belief that this is an issue that requires immediate intervention, the issue of climate change regulation and its potential impacts to the cement industry are realities that must be managed. The rapid developments in the area of climate change have the potential to impact many sectors in widely varying ways. And, for sectors such as the Portland cement industry, it is crucial to have an in-depth understanding of the changing regulatory landscape, how scenarios may play out, and how companies should be positioning themselves to mitigate future climate risk. This paper provides a review of key federal, state and international legislation with the objective of summarizing what operators of cement plants in the US may face as legislation becomes regulation over the next several years. For example, this paper will discuss how the cement industry might fare with the allocation or auction of allowances and "upstream" versus "downstream" regulation of greenhouse gases (GHGs). Specific federal bills are reviewed with a lens on how future requirements could play out for the Portland cement industry. In addition, we discuss the implications should U.S. EPA regulate CO₂ as a National Ambient Air Quality Standard (NAAQS). In addition to the federal perspective, this paper reviews states that are implementing GHG reporting and reduction requirements. States with notable activity such as California and Florida will be highlighted with brief discussions on proposed and final regulatory requirements and impacts on recordkeeping, reporting, and energy costs in the Portland cement industry. This paper explores how portland cement companies are managing climate risk by implementing energy efficiency initiatives, planning for GHG emissions reductions, and evaluating external offset projects. Specific examples will be provided of how GHG reductions are managed and offset projects are evaluated. Finally, our paper concludes with suggested actions and considerations that cement producers should understand in the short-tern and long-term to navigate the complex regulatory regime that climate change will likely be.