The Cement Sustainability Initiative (CSI) Sectoral Approaches to Greenhouse Gas Reductions

1. The Cement Sustainability Initiative (CSI)Sectoral Approaches to Greenhouse Gas Reductions Howard Klee, WBCSD Bali December 2007

2. Ash Grove Cement (USA) • CEMEX (Mexico) • Cementos Molins (Spain) • Cementos Portland Valderrivas (Spain) • Cimentos Liz (Brazil) • Cimpor (Portugal) • CRH (Ireland) • Grasim Cement (India) • HeidelbergCement (Germany) • Holcim (Switzerland) • Italcementi (Italy) • Lafarge (France) • SCG (Thailand) • SECIL (Portugal) • Shree Cement (India) • Taiheiyo (Japan) • Titan (Greece) • Votorantim (Brazil) CSI Participants (with headquarters country) • Initiative operating since 2000 • Addressing a range of sustainability issues incl. • Climate protection, safety, land impacts, fuels • Currently 18 members • 700 facilities • Broad geographic reach: • 60% of global production outside China • 28% global production, but majority of production in EU, NA, LA, India. Poorly represented in Asia • 450 mil tonnes CO2 emissions in 2005 Collectively, participants have operations in more than 100 countries

3. Climate Protection – a critical business issue Joint Activities • Building and testing a Sectoral Approach as potential policy option post 2012: but basic steps first. • Building tools for consistent data collection – Common CSI CO2 Protocol, field tested, reviewed and revised • Building global database of facility emissions • Independent 3d party verification beginning 2006 • Capacity building on use of the tools, esp. in China and India • Development of new Sectoral Benchmarking CDM methodology Reinforced with individual company activities

4. Data Collection • Primary concerns: anti-trust, confidentiality, accuracy • No one sees competitively sensitive information • Need independent 3d party to own and manage database • Companies sign individual contracts with 3d party • Maximize participation by others to have the most data • Minimize bureaucracy and time delays for CSI members • Basic terms of individual contracts set out • Fixed confidentiality agreement and code of conduct for all participants • CSI agreement includes total damages cap for project so that this is not negotiated individually

5. Legal Arrangements WBCSD-CSI Each participating company or Organization signs with PwC Project Manual Info given to all WBCSD-CSI signs with PwC • Individual Service Agreement • Confidentiality Agreement • Code of Conduct • Project Charter • Project Agreement • Confidentiality • Code of Conduct • Project Charter • Basic Provisions • PwC Employees • Technical Description including: • IT structure • Data entry process • Legal matters Cap on Damages

6. Data Quality Management • Validity checks • Business sensibility checks • Request for company verification of suspect values • Confidential review by external expert (~20 of 24500 data elements) • Independent 3d party verification from 2006

7. CSI CO2 emissions: Stable in Annex-1 and 4+% annual growth in non-Annex-1 Specific CO2 emissions Efficiency is improving and specific emissions are falling, but absolute emissions are rising with market demand in developing economies. Absolute CO2 emissions

8. Technology Distribution – CSI Companies

9. Biomass use – CSI companies Increasing, but more could be done

10. Next Steps • Expansion to other organizations – European Trade organization has joined • Next round of data collection, 2008 • Regional differentiation • Indication of external verification • Scenario analyses – what if? • Use in benchmark calculations for possible future use in new CDM methodology, sectoral approach pilot project