Carbon Management in an Emissions-Intensive Industry in a Developing Economy: Cement Manufacturing in Indonesia

Abstract

Around 600 Mt carbon dioxide equivalents (CO2e) of anthropogenic greenhouse gases (GHG) emission originates from energy production and consumption in Indonesia annually. Of this output, 40 Mt CO2e comes from cement production. This makes the cement industry a key sector to target in Indonesia’s quest to reduce its emissions by 26% by 2020. Substantial opportunities exist for the industry to reduce emissions, mainly through clinker substitution, alternative fuels, and the modernization of kiln technologies. However, most of these abatement options are capital intensive and considered as noncore business. Due to this, the private sector is unlikely to voluntarily invest in emission reduction unless it saves money, improves revenue, enhances the strategic position of the firm, or unless governments provide incentives or force adoption through regulatory and policy controls. In this study, we review the profile of the Indonesian cement industry and assess the carbon management and climate policy actions available to reduce emissions. The case highlights opportunities for improved carbon management in emission-intensive industries in developing countries.

Toward the best practice emissions reduction in an emerging economy: an analysis of cement manufacturing in Indonesia

“…The production process can be divided into the preparation of raw materials, followed by clinker and cement making (Figure 1) (Afkhami et al, 2015;Panjaitan et al, 2018). The basic ingredients, such as limestone, clay and correction materials, are crushed and ground to produce raw meal.…”

“…They will then undergo rapid cooling using air exchange. The resulting clinker is mixed with additives to produce cement (WBCSD-IEA, 2009;Afkhami et al, 2015;Panjaitan et al, 2018). (WBCSD-IEA, 2009;Galvez-Martos & Schoenberger, 2014;Afkhami et al, 2015;Stafford et al, 2016)…”

“…It has been prioritized for emission mitigation by the government, especially in stronglycontributing industries such as cement, iron and steel, and paper (Iklim, 2010;Ke et al, 2012). Cement-making is the most significant of these fields, accounting for 20% of national total manufacturing GHGs, specifically CO2 (Panjaitan et al, 2018). It consumes about 7% of the total energy supplied in Indonesia, comprising nearly 40% of its total production costs (Haryanto & Martawardaya, 2015;Panjaitan et al, 2018).…”

“…Cement-making is the most significant of these fields, accounting for 20% of national total manufacturing GHGs, specifically CO2 (Panjaitan et al, 2018). It consumes about 7% of the total energy supplied in Indonesia, comprising nearly 40% of its total production costs (Haryanto & Martawardaya, 2015;Panjaitan et al, 2018). Coal is the focus and usage had risen from 10.54 million in 2010 to 16.16 million tons in 2018 (Ali et al, 2011;Ke et al, 2012;Haryadi & Suciyanti, 2018).…”

“…Yet, most measures are capital intensive and pose inherent difficulties in a developing economy. Accordingly, industry has limited funds for improvements to achieve anything near world best practice (Haryanto & Martawardaya, 2015;Panjaitan et al, 2018). Grubler (2012) states that policies or strategies applied in developed countries should not be directly translated to developing ones.…”