Cement’s pollution windfall from the EU ETS

The cement industry in 20 European countries generated €5 billion in windfall profits between 2008 and 2015 due to the EU ETS, which the document argues subsidises pollution and hinders decarbonisation. These profits were derived from surplus allowances (€2.7 billion), cost-pass through (€2.1 billion), and offsets (€0.1 billion), with the highest gains in Spain, Italy, and Germany. The brief identifies failures such as low carbon prices and benchmarks that incentivise high-carbon clinker production, noting that European production is less energy efficient than that of India. To drive decarbonisation, the author recommends ending free allocations, introducing 100% auctioning with benchmarked border levelling to prevent carbon leakage, and replacing clinker benchmarks with cement benchmarks.

• The cement industry across 20 European countries earned €5 billion in windfall profits from the EU ETS between 2008 and 2015. These profits were generated through three primary channels: selling surplus free allowances (€2.7 billion), using low-cost international offsets to sell remaining free allowances (€0.1 billion), and passing the cost of free allowances to customers (€2.1 billion).
• Windfall profits were concentrated in several European nations, with Spain recording the highest amount at €1,124 million, followed by Italy (€895 million), Germany (€446 million), France (€425 million), Greece (€405 million), the UK (€371 million), Poland (€239 million), and Portugal (€205 million). In Spain specifically, nearly €800 million was made by selling surplus allowances.
• Major cement multinationals have acknowledged these profits in their own reports. Between 2008 and 2014, LafargeHolcim profited by €1,100 million, Heidelberg-Italcementi by €630 million, and Cemex by nearly €350 million.
• The EU ETS has failed to promote decarbonisation because carbon prices are too low, companies profit from pollution, and the system incentivises the use of high-carbon clinker by awarding free allowances to the clinker production step. Consequently, European cement production is less energy efficient than Asian production; specifically, Indian production is 20% more energy efficient than European production.
• To ensure the EU ETS drives decarbonisation, the document recommends ending free CO2 allowances, implementing 100% auctioning combined with benchmarked border levelling to address carbon leakage, and replacing clinker benchmarks with cement benchmarks to encourage low-carbon substitutes.

APA

Carbon Market Watch (2016). Cement’s pollution windfall from the EU ETS. https://carbonmarketwatch.org/wp-content/uploads/2016/11/Cement-windfall-from-the-ETS_4page_final.pdf

Chicago

Carbon Market Watch. Cement’s pollution windfall from the EU ETS. 2016. https://carbonmarketwatch.org/wp-content/uploads/2016/11/Cement-windfall-from-the-ETS_4page_final.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=Cement’s pollution windfall from the EU ETS |date=November 2016 |url=https://carbonmarketwatch.org/wp-content/uploads/2016/11/Cement-windfall-from-the-ETS_4page_final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2016cements, author = {{Carbon Market Watch}}, title = {{Cement’s pollution windfall from the EU ETS}}, institution = {Carbon Market Watch}, year = {2016}, month = nov, url = {https://carbonmarketwatch.org/wp-content/uploads/2016/11/Cement-windfall-from-the-ETS_4page_final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }