BrazilCircular cement industry could unlock €110 billion by 2050
If the concrete and cement industry were to implement a circular value chain, the sector could generate a net value of €110 billion and mitigate about two billion tons of CO2 emissions by 2050 – if the opportunity is met with the appropriate action.
A recent report by McKinsey & Company lays out the huge potential for the relatively pollution-heavy industry to shift to a circular value chain. This would involve capturing and utilizing CO2 emissions from cement and concrete production, using waste materials for energy, and establishing a system of recycling and reusing resources throughout the built environment.
A circular value chain (or circular economy) is an economic model that minimizes waste and maximizes resource efficiency. Reusing, recycling, and regenerating materials and resources can create value while also minimizing impact on the environment. It aims to create a more sustainable system where resources are continuously circulated and waste is minimized.
Circular processes have the potential to decarbonize approximately 80% of all emissions associated with cement and concrete production by 2050, according to the report. It could also counterbalance more than half of the industry's losses that result from increased costs and reduced demand.
“Applying circular economy principles to cement and concrete would not only help decarbonize the built environment but generate enormous economic value,” according to Jukka Maksimainen, global co-leader of McKinsey’s Global Energy & Materials practice.
“The cement industry is perfectly positioned to create closed loops for CO2, materials and minerals, and energy. We estimate each of these circular technologies will be value-positive by 2050, while some are already more profitable than today’s typical solutions. This will also drastically reduce global emissions and 30% to 40% of the world’s solid waste created through construction and maintenance of the built environment.”
The report found that recycling and reusing construction materials alone could contribute nearly €80 billion in annual earnings, while reusing concrete structures could create an estimated net value of €24 billion by 2050. Regions with high landfill costs and significant construction and demolition waste would especially benefit from alternative fuels made from waste materials, with the global average share of alternative fuels reaching 43% by 2050.
“Cement and other industry players should engage in circular business building and use circular technologies to react to evolving financial risks,” said Sebastian Reiter, partner in McKinsey's Global Energy & Materials practice.
“The total value at risk from rising CO2 prices and landfill costs could reach approximately €210 billion by 2050 and this will significantly accelerate uptake of circular technologies. For example, our research shows that technologies utilizing CO2 such as curing ready-mix or precast concrete can create positive economic value at carbon prices of approximately 80% of CO2 while using construction waste as aggregates for concrete production avoids landfill costs.”
The cement industry is a major emitter of greenhouse gases and concrete is known to damage topsoil. Though concrete structures and groundcover are completely ubiquitous wherever humans inhabit, the production of cement accounts for around 36% of all emissions in construction activities.
The construction industry remains one of the top contributors to climate change and pushes towards further sustainability have been slow.
