Benchmarking the Energy Performance of Canada’s Cement Industry

1. Benchmarking the Energy Performance of Canada’s Cement Industry Global Fuels Conference (Toronto, ON) June 15th, 2009

2. Purpose Provide an overview of the energy benchmarking study. Present study results and implications. Discuss next steps.

3. Study Overview

4. Study Objectives Analysis of energy performance and energy management Provide tools for on-going comparison of energy performance over time and across peer organizations First step in identifying and quantifying energy management potential The Canadian Cement Industry Energy Benchmarking study was undertaken by the Cement Association of Canada in partnership with Natural Resources Canada. It was co-sponsored by Natural Resources Canada’s Canadian Industry Program for Energy Conservation (CIPEC).

5. Study Scope National scope Study included all 15 Portland grey cement manufacturing facilities that fall within the purview of the CAC Study assessed use of all energy sources Energy performance assessment included 5 key processes: On-site raw materials preparation and transport; On site fuel preparation and transport; Clinker production (kiln operation); Storage, finish grinding; packing and on-site transport to loading terminals; and Operation of plant-wide support systems (e.g., compressed air systems, heat, lighting). Study did not include: Quarrying activities Any of above activities which take place at locations other than main production site Examined three critical dimensions of energy management Most studies only consider one or two

6. Approach • Focused on three key energy performance elements and their interactions: • Energy use & efficiency • Technical practices • Energy management practices Technical Best Practices Energy Efficiency EE TBP • Developed and administered surveys • Undertook benchmark analysis • For energy use and efficiency, considered: • Overall plant efficiency • On-site process steps / activity-specific assessment of efficiency MBP Management Best Practices

7. Benchmark • Definition • A systematic and comparative process, where the comparison is an external comparison of performance against similar businesses. • A measure of current performance. • Set as 75th percentile for the assessment – consistent with existing studies. • Energy Efficiency Index (EEI) • Energy use compared to a best practice plant - accounting for structural differences (normalized). • Best practice plant = 100

8. Management Best Practice Elements

9. Technical Best Practices: Process Steps

10. Results

11. Results Reported Energy Consumption by Energy Source • Coal and petroleum coke account for over 80% of purchased energy • Electricity, while only 13% of energy consumption is roughly 50% of energy costs 11

12. Results Reported Energy Consumption by Process The kiln process uses 90% of purchased energy including 99% of fuel and 1/3 of electricity consumption. 12 If the cement sector is to realize significant carbon reductions, low-carbon fuel substitution is necessary.

13. Results: Management Best Practices 13

14. Results: Technical Best Practices 14

15. Results: Cement Energy Intensity (1990 – 2007) • Overall 15% improvement in cement energy intensity since 1990.

16. Results: Energy Efficiency Index 16

17. Results: Energy Efficiency Index & Intensities 17

18. Results: Electricity Efficiency Index 18

19. Good energy management practices are essential to good energy performance: The highest four EEI scores are within the top five MBP rankings. The greatest opportunities for MBP implementation occur in the areas of: project development; planning; and measurement and reporting. MBP opportunities are consistent with other Canadian industry studies. Conclusions – Energy Management 19

20. There is significant potential for the Canadian cement sector to improve technical practices in support of improving energy efficiency: The 75th percentile for overall TBP implementation is 59%. Only 2 facilities received a “good practice rating” of 75. The greatest opportunities were found to be in raw material and fuel processing: The lowest TBP score (42%) is associated with raw material and fuel processing and the lowest EEI is a associated with raw meal preparation. Conclusions – Technical Practices 20

21. Canadian cement sector facilities are operating at a relatively high level of efficiency: EEI benchmark of Canadian cement plants is 82 out of a best practice rating of 100. 9 of the 15 plants scoring over the “good practice rating” of 75. Despite this performance, there remains considerable opportunity for improvement: Substantial difference between performance of lowest and highest performers particularly on a process-step basis. Despite avg. energy intensities of 4.2 GJ/t cement and 4.5 GJ/t clinker, the most efficient plant is twice as efficient as the least efficient facility. Conclusions – Energy Efficiency 21

22. Energy management opportunities in the kiln process have the greatest potential to translate into real GHG and cost savings for the industry: The kiln process consumes about 90% of facility energy, 1/3 of facility electricity and 99% of facility fuel However, the benchmarks for both TBP and EEI indicate: TBP implementation for the clinker production step is 68 EEI benchmark for the kiln is 85 with a median of 74 Kiln energy efficiency is already a priority focus for the industry Conclusions – Energy Efficiency 22

23. Coal and coke supply 83% of energy consumed. Significantly less expensive than other fuels, but carries substantial carbon risk. Low-carbon and fully renewable biomass energy sources presently contribute minimally as an energy source for cement industry. Access to competitively priced low-carbon alternative and fully renewable biomass energy sources is an important factor in determining whether the industry will be able to achieve its objectives in reducing carbon emissions. Conclusions – Energy Supply 23

24. Electricity represents only 13% of energy consumption, but close to 50% of energy costs. There is substantial variation in electrical energy efficiency performance: Most efficient plant had an electrical EEI of 138 (100 = best practice) while the least efficient plant had an electrical EEI of 36. Ignoring adjustments for structural differences, the most efficient facility consumed one third of the energy per tonne cement as compared with the least efficient. The greatest opportunities were found in the raw materials and fuel preparation, and cement and feedstock process steps. Potential to achieve substantial cost savings. However, reductions would have little impact on the industry’s carbon footprint. Conclusions – Electrical Systems 24

25. Next Steps • Regular updating of model inputs will provide basis for trend analysis. • Likelihood for future follow-up study (current study represents a snap-shot of the industry). • Canada’s cement sector is actively working with provincial governments to identify win-win opportunities with respect to alternative fuels and in particular residue-derived fuel use. • Sector is currently participating in a broader industry-wide benchmarking exercise in Ontario. • Cement sector is preparing a detailed plan to respond to the report’s recommendations.