Sustainability Outlook spoke to Mr. V.P Sharma, COO of Dalmia Cement, about ways in which sustainability imperatives are catalyzing innovation in the cement industry and the ambition for sustainable practices in the industry.
The cement industry has seen a huge spur in innovation to try and constrain the extremely energy intensive process that occurs in cement production. How would you categorize this rush – is it because of the regulatory environment, is it to do with brand promotion or is this spur a reaction to severe resource constraints?
Cement is one of the most traded commodities in the world. It uses a lot of natural resources and most of that gives rise to a lot of carbon dioxide emissions. I think the basic need for cement industry to reinvent itself came when climate change talks escalated and we started thinking about how to reduce carbon emissions and make cement production a sustainable and eco-friendly process. Not only does cement production use natural resources like limestone but is also an extremely energy intensive process. The energy requirement in cement production process is very high at 60%: which breaks down two fold into thermal and electrical energy. In a country like ours, electrical and thermal energy both come from coal thus giving rise to even more GHG emissions. The main effort is to ensure limited use of limestone which is growing scarce by the day. For every one ton of cement that is used, 1.4 tons of limestone is needed in its manufacturing. If we use some additives which could either be naturally available or a waste product of an industry, this dependence on a depleting resource like limestone can be reduced.
The need to preserve limestone gave rise to a spike in the production of blended cement. For example, in manufacturing slag cement, we can use 50-60% of slag which translates into that much limestone being saved. If limestone is saved, then the carbon emissions which arise from its processing obviously reduce too. That is how Dalmia Cement and the rest of the country promotes blended cement. The technology has advanced so much that blended cement is now as good as Portland cement which was used for many years.
What would you say are the major challenges to sustainability in the cement industry?
The biggest challenge is the regulatory environment. Take the example of fly ash. Fly ash comes from thermal power plants after the coal is burnt. Till 2009, there was a mandatory order from the Supreme Court of India, that all fly ash would be provided free of cost to the cement industry. For that we invested in technology and we started promoting that kind of cement. After 2009 all thermal power plants started charging money for it and now they are auctioning the fly ash. Also, prices have skyrocketed from barely Rs. 100-200 per ton to Rs. 800-900 a ton which is as good as the cost of clinker. The government needs to step in and ensure that the cement industry continues to get this fly ash so that we use more and more of it, thus reducing the use of limestone and ultimately help in controlling carbon emissions.
Secondly, when it is the question of hazardous and/or non- hazardous alternate fuels, the government should clearly support us. For instance, till recently, the pharmaceutical industry and the oil industry used to pay us almost Rs. 12000-14000 per ton to use their hazardous wastes. Today they have stopped paying us because there is so much demand for it. Regulations are still lenient so these industries can always get away by throwing it in the ground too. Regulations need to be really strict and they should make it mandatory for them to pay the cement industry to dispose of this waste in a sustainable manner. One needs to also understand that we can’t just take these hazardous wastes as-is. It needs to be processed, we need to store it which is quite a process since it’s extremely unsafe and these are costs that we have to bear.
Thirdly, a lot of plants are putting up waste heat recovery systems. After using quite a good amount of heat, plants put out the rest into the atmosphere. We are now redirecting all of that heat into a boiler to produce power and many cement plants, including our own, have done that. Now this should also be considered as a renewable energy source and should get the benefit of Renewable Energy Certificates. That being said, people are continuing to do it even in the absence of incentives and even though the initial capital required is a lot. However, operating costs are almost negligible and the only cost really is of maintenance. Minimum support is required from the government even if it is only that hazardous wastes are brought to our factories directly.
What do you think is the preparedness of the cement industry when it comes to the PAT scheme?
We are definitely working with PAT. The government agencies and auditors have visited some of our plants. We have given them a clear cut path to show how we are going about it. In fact we will call for capital investment as well to upgrade our plants. To some level we can do with existing technology by looking at energy efficiency but beyond a point you need investment as well. There too the government should step in and ensure that the investment comes at a minimum cost. We are also planning to substantially improve our plants and go in for some modifications where the plants are old. Our new plants though are quite good and are extremely energy efficient in terms of fuel and power consumption.
I would say that the Indian cement industry is over all doing very well. Almost 60% of our cement is blended cement. Apart from that, a very important thing that the government can help us with is in making the use of Blended Portland Cement (BPC) in most constructions mandatory. For example even in construction of the national highways or in construction of CPWD buildings, there is a clear preference for Ordinary Portland Cement (OPC). These are government sectors where BPC should be promoted and the government should in fact ask the industry to make BPC that is as good as OPC. The government needs to lead by example and generate a demand for BPC. Going forward, we will not be left with many limestone deposits anyway. Most of the new plants are coming up on those deposits which had been rejected 25-30 years back because they had been deemed unsuitable for putting up cement plants.
Dalmia Cement is a member of the WBCSD’s Cement Sustainability Initiative. Could you tell me something about the initiative and what inspired Dalmia Cement to be a part of it?
The Cement Sustainability Initiative (CSI) is a global effort by 24 major cement producers across the world to work towards sustainable development. We enrolled last year in the CSI to support the global action on climate change and exemplified our commitment to sustainable development. We are the third company in India that joined the initiative. We have clear targets that we have to achieve to retain that membership going forward. We have to improve our sustainability commitments in terms of fuel consumption, power consumption and we have to declare those targets with the timelines publicly. Under CSI, we also report in the public domain in areas of climate change and carbon emission reduction targets.
Could you tell us something about the targets/goals for cement industry as proposed by the recently announced technology road map for low carbon growth pathways?
The technology roadmap for low carbon growth pathways was launched in January 2013. CSI has outlined the ways to achieve a low carbon pathway for the Indian cement industry. The target is to reduce carbon emissions by 45% by 2050. They have also road mapped the new technologies that will come to India to facilitate this in the near future. The way to go about achieving these targets could either come with increased use of blended cement, through increased energy efficiency, advanced technology and more use of alternative fuels.
We are also trying to maximize the use of fly ash because according to CSI we can use as much as 35% of it. We are already at 30 plus. As a company we produce 62% blended cement which is very close to the industry average. Going forward, we will put in our efforts to increase that percentage.
Dalmia Cement is involved in significant R&D projects. What kind of technological advancements do you conceive of in order to be more resource efficient in the cement production process?
We invest a lot in R&D projects. While making blended cement, we also need to ensure the quality of the product. Even while using slag, fly ash etc or any other unconventional raw material we need to ensure that the quality of our cement doesn’t suffer. So we engage in a lot of R&D work. Before we implement something we need to be absolutely sure of its feasibility from safety to quality. These are very critical parameters to be taken into consideration.
We have been engaged in the last 2 years with DuPont, who are world leaders in safety. They have facilitated all our safety management. That’s a big initiative that we are taking across the company.
Given Dalmia Cement’s CSR activities, how do you feel about the new Companies Bill mandating companies to spend 2% of their profits on CSR?
CSR is a very holistic term and we mean it. CSR is not charity. It is about helping communities improve their over-all life. So what we did is we conducted a survey across all of our manufacturing units to see what it is that the people wanted us to help them with. Every location has different needs. We identified 3 basic things in which all communities needed help. These were health, education, and livelihood and income generation. At Dalmia, I think, education is our forte. We have 2 big schools which are very renowned along with an IT training center in which we give vocational training to a lot of people.
My personal view is that the 2% mandatory CSR policy is very welcome; in fact it should be more than 2%. If you ask me, the work that is already being done, in terms of money spent on schools, health and other parameters, basically points to the same figure. But it is very important, that it does not become throw-away money. There needs to be community participation, even if the value added is nominal. Job creation is the only way to ensure some kind of felt ownership among all stakeholders. That’s why we should ensure that all of our schemes should be inclusive. The schemes should be for the people and by the people and we can only act as facilitators.
V P Sharma is the Chief Executive Officer of North and Special Projects of the cement business at Dalmia Bharat Limited. with a Masters degree in chemistry from Rajasthan University, Mr. Sharma has a rich experience of 30 years in the cement industry. His areas of specialization include project management, plant operations, installations and commissioning, marketing strategies, supply chain and HR related functions.