Europe’s cement sector emissions are kept higher by rigid EU ETS rules that incentivise overproduction and have even turned the bloc’s producers from importers into exporters, environmental campaigners Sandbag said in a report Wednesday.

The report found that the cement sector overtook steel in 2013 to become the biggest holder of surplus EUAs, with enough to cover 2.2 years of additional emissions, a figure that is likely to swell to 2.5 years by 2020.

The findings undermine the sector’s case for continuing to receive a hefty share of their EU Allowances for free, as lawmakers grapple to allocate a dwindling share of the permits to sectors deemed vulnerable to carbon leakage.

“The EU ETS, far from decarbonising the cement sector, is actually leading to higher emissions … Cement must no longer receive more allowances than it needs relative to other sectors; instead, it should receive substantial support for the development of deep-decarbonisation technologies,” said Sandbag’s Alex Luta.

While the EU cement sector’s emissions have decreased, Sandbag found that this was largely due to other incentives such as renewables targets and the slump in demand following the bloc’s recession.

The organisation said the ETS caused the sector’s emissions to be 15 million tonnes higher than they would otherwise have been because of blunt allocation rules that only begin to curb an installation’s free allocation once their output drops to 50% of historic levels.

It added that this had meant many firms continued producing at just over half capacity purely to derive income from selling on the surplus allowances, and that this had happened to such an extent that the bloc had switched from a net importer to exporter of key ingredient clinker since the ETS started in 2005.

In 2014, the EU cement sector emitted 114 million tonnes of CO2e, accounting for 6.3% of all ETS emissions.

The report is being presented at an event in the European Parliament in Brussels later on Wednesday, and will be discussed with MEPs and cement industry representatives.

By Ben Garside – ben@carbon-pulse.com

Not yet signed up to CP Daily? Subscribe to our free newsletter here