Toward a Tradable Low-Carbon Cement Standard: Policy Design Considerations for the United States

This paper outlines design considerations for an effective low-carbon cement standard in the United States, including how to set benchmarks and stringency, how to address leakage and competitiveness, and how to structure cost containment policies.

A low-carbon cement standard offers several advantages as part of a broader climate change policy portfolio and can serve dual purposes: moving the market in the nearer term through existing technological opportunities while setting a clear regulatory roadmap to inspire long-term investment in deep emissions reductions.

We envision that this publication will equip policymakers to consider such a standard as an element of relevant climate policy packages and help ensure that if it is included, it will be designed in a sensible manner based on our recommendations.

• A low-carbon cement standard that sets a limit on the emissions intensity of cement by using tradable credits can encourage the adoption of existing abatement opportunities while setting a clear regulatory road map to inspire long-term investment in deep emissions reductions.
• Cement producers and importers would generate or need to surrender credits based on their performance against an emissions intensity benchmark. These credits would be tradable, rewarding companies that reduce emissions intensity.
• Such a standard would provide a targeted incentive to catalyze decarbonization in the sector in a potentially more effective manner than under economy-wide carbon pricing. The standard would provide incentives to adopt existing abatement options and to invest in emerging technologies.
• Addressing the technological, financial, market, and other barriers to abatement in the cement-concrete value chain will require a suite of complementary policies. Although a low-carbon cement standard can play a significant role, additional policies will be needed to decarbonize the full cement-concrete value chain.
• This paper outlines design considerations for an effective low-carbon cement standard, including how to define an emissions intensity metric, set the benchmark stringency, establish a price ceiling and floor for credits, and address the risk of leakage and competitiveness concerns.

Source: wri.org