Emitting 80 million tons of greenhouse gas emission each year - the equivalent to almost twice Switzerland's total annual emission level - Lafarge, the French, multinational global cement producer, is clamping down its own activities to create a greener, cleaner environment.
According to Christopher Boyd, general manager for Lafarge Cement Italy, cement production is one of the most greenhouse gas intensive industries.
"Reducing harmful emissions is a fundamental issue to our business," he says. "Lafarge is a responsible company and wants to take action. While the Kyoto Protocol calls for 5 percent reductions in emissions, Lafarge's goal is 20 percent, worldwide."
Known as 'Mr. Environment' at Lafarge's headquarters in Paris, Boyd took up his new position in Milan six months ago. Prior to joining Lafarge, Boyd worked for the European Union's Commission in Brussels.
Lafarge's cement plants are often important business pillars in local communities worldwide. These enormous installations, complete with chimneys, towers and production premises, influence local environments, such as the facility in Exshaw, in the Canadian province of Alberta, near the Rocky Mountains.
Social and environmental commitment
Central to Lafarge's business pledge are two main goals: To generate healthy profits while continuing to instill social values in its daily operations.
Says Boyd: "At Lafarge, we are committed to looking after our people and the environment. We often play a central role in the neighbourhoods around our plants. A focus on the environment and social responsibility is a high priority for us."
It will be a challenge for Lafarge to reduce its emissions. Temperatures of up to 1500 degrees are required to convert rocks to cement. This requires a lot of energy, which results in high levels of CO2 emissions.
"In fact, one ton of cement discharges some 750 kilos of CO2," Boyd says, "We also know that the market price of cement is less than that of bottled water."
In practical terms this means that a future carbon tax would reduce Lafarge's profit margin dramatically.
The European Union is currently in the process of establishing the EU
Emission Trading Scheme (EU ETS), the world's largest market for trading of greenhouse gas emissions allowances. This is the union's answer to the Kyoto Protocol. "To meet our commitments, we need to use the mechanisms recognised under the Kyoto Protocol. These mechanisms are likely to be recognised under the European trading scheme as well," says Boyd.
Pilot project in Malaysia
To take advantage of the new measures when the trading scheme comes into force, Lafarge has three pilot projects going on at different plants designed after the Clean Development Mechanism (CDM) criteria.
In principle, the CDM system allows governments or private enterprises to invest in emission reduction projects in developing countries to meet their own emission requirements, as stipulated in the Kyoto Protocol. CDM projects also promote technological transfer and contribute to the host country's sustainable development. It is expected that such projects will be inter-changeable with EU allowances.
One of Lafarge's three pilot projects is in Malaysia. "Through the Malaysian project we are meeting our emission quota, and CO2 reductions can be sold to other businesses in Europe as credits, as part of the trading scheme," says Boyd.
The project is pre-validated by DNV, and has been developed over the past three years. For example, fibre waste from rice husks is a significant problem in Malaysia, and Lafarge believes that by developing methods whereby this waste can replace coal as fuel will significantly reduce the company's emissions.
"The end result of these projects may include improved revenues and help us establish an edge over our competitors. I would like to see these three pilot projects expand to 30 in the course of the next five years," Boyd says.
When the trading scheme is operational, it will require an independent, third party inspection to validate emission volumes. The validation also confirms that the projects, as designed and documented, are sound and meet all relevant requirements.
"DNV, and especially the business development manager, Trygve Roed-Larsen, is a leading authority within climate change issues. Lafarge and DNV are already doing several projects together," says Boyd.
International Emission Trading Association
Chris Boyd also serve as vice chairman of the International Emission Trading Association (IETA), a business organization aimed at promoting a functional international framework for the trading of greenhouse gas emission reductions. Today, the organization has 70 international members. Both Lafarge and DNV have been members since IETA was established, in 1999. Boyd is scheduled to become chairman in 2004.
So far he is very satisfied with IETA's accomplishments: "We have made a lot of progress, and honestly, we can hardly believe how successful we've been. Five years ago, we expected to have carbon taxes imposed. Today, we have established the framework for an effective market-based trading system for greenhouse gas emissions that demonstrates fairness, environmental integrity, efficiency, accountability and global consistency. While we would all prefer not to be forced to change our behaviour, at least we are developing the most efficient option to control greenhouse gas emissions." concludes Boyd.