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The CSI has been exploring a variety of policy options to see which may offer opportunities for faster, more effective, large-scale responses to climate change. An economic model of the sectoral approach for the cement industry (2009) showed that this concept would result in significantly larger greenhouse gas emissions reductions in the cement industry worldwide compared to global intensity targets. In the CSI model, developed countries would adopt cap & trade systems and developing countries intensity targets.

An introductory brochure on Sectoral Approach can be found here.

For the document "CSI Model - Scenarios and Results Overview (May 2009)", please click here.

The CSI worked with the international consultancy, ERM, to develop an economic model of the global cement business which helps in thinking through different business and policy scenarios. The model separates the world into eight different regions and calculates regional production and interactions between regions to meet a predicted global cement demand.1

Model inputs, generally drawn from public information, describe the features of each region including GDP growth rates, the energy performance and the mix of cement-kiln technologies, costs, and materials availability. These are combined to meet the forecast global cement demand at minimum cost. The model results include calculated cement production, trade, and CO2 emissions in each region over the period 2005 – 2030.

Regions seek to meet domestic demand and may then export to other regions where it is profitable to do (subject to cost of production, price in export market, transportation and tax costs, and any trade restrictions). The model determines the amount of energy and materials needed to produce one tonne of clinker. Using a marginal analysis, it calculates a regional cost, including CO2, and then considers the costs and benefits of abatement, such as: improved energy efficiency, the use of alternative fuels, the use of alternative blending materials, and carbon capture and storage (CCS).

Carbon policies and emission goals can be set across regions (and over time). The model incorporates the goals and costs associated with different carbon management approaches into its analysis. Different policy scenarios are applied to calculate differences in carbon emissions as a result of different policies. In this way, the impacts of different carbon policy choices can be analyzed and compared on a consistent basis. For example, it is possible to see how changing cement demand is met through a dynamic combination of regional production, imports and exports. These comparisons can be used to help inform decision-makers about the relative merits, costs, and impacts of different carbon and trade policy choices.

A simplified schematic flow diagram of the CSI model is shown below, illustrating the key model inputs and outputs:

 

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Six different policy scenarios were explored with a wide spread of carbon limits, ranging from “no commitments” to a full global cap on absolute CO2 emissions from the sector. A sectoral approach was modeled as a combination of fixed emission limits (caps) in Annex I countries, with emissions efficiency goals in non-Annex I countries – although this is only one of a number of possible policy combinations. The specific scenarios evaluated include for further details go to Sectoral Approach briefing note :

1.  No commitments    No carbon prices or cement sector commitments post-Kyoto 
2. Europe cap only Only Europe adopts commitment post-Kyoto - cement sector emissions are capped
3. Annex 1 caps All Annex 1 regions (Regions 1-4) adopt absolute caps post-Kyoto
4. Global goals Cement sector in all world regions adopts emissions efficiency goals (with credits & sanctions)
5.  Sectoral approach       Annex 1 caps ad emissions efficiency goals (with credits & sanctions) innon-Annex 1 regions 
6.  Global caps Cement sector in all world regions adopts absolute caps post-Kyoto 


Find more information on the Model results and The CSI Model Explained.

1Based on data from the Global Cement Report (2007) and forecast analysis by JP Morgan

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