Cement manufacturers in the Western Balkans have an opportunity to reduce reported embedded emissions through qualifying renewable electricity arrangements under the European Union Carbon Border Adjustment Mechanism (CBAM). Unlike most covered steel and aluminium products, the current definitive CBAM methodology includes indirect electricity-related emissions for covered cement goods.
This distinction gives electricity procurement a direct role in the regulatory emissions calculation. However, the effectiveness of renewable power investments depends on the availability of eligible generation data, appropriate contractual arrangements and reliable allocation of electricity consumption to individual cement products.
The largest emissions components in cement manufacturing remain associated with clinker production, calcination and thermal energy consumption. Renewable electricity can improve the reported carbon intensity of covered products, but it cannot replace measures addressing direct process emissions and kiln fuel consumption.
For export-oriented cement producers, the investment challenge is therefore to combine electricity-related improvements with clinker and process decarbonisation while maintaining evidence that supports the applicable CBAM methodology.
Clinker Production and Electricity Require Different Emissions Controls
Cement manufacturing involves several production stages with different energy requirements and emissions characteristics.
Calcination during clinker production generates substantial direct carbon dioxide emissions through the chemical transformation of raw materials. Thermal energy used in kiln operations represents another major component of the sector’s carbon intensity.
Electricity consumption is associated with activities such as grinding, conveying, fans, mills and shared utility systems.
Because these processes contribute differently to the reported emissions result, manufacturers need to distinguish between clinker, individual cement types and other relevant production outputs.
The monitoring system should connect electricity consumption to the applicable production stages and allocate shared energy use consistently.
Reliable production volumes and clinker-to-cement ratios are also necessary because changes in product composition can affect embedded emissions intensity even when overall site energy consumption remains relatively stable.
Renewable Power Procurement Can Support Actual CBAM Electricity Values
Covered cement products can benefit from lower eligible electricity emissions factors where the manufacturer satisfies the requirements of the applicable CBAM methodology.
Potential electricity arrangements include on-site solar photovoltaic generation, direct technical connections and qualifying physical power purchase agreements (PPAs).
The relevant generation and consumption measurements must be preserved at the required time intervals, while the generating installation must provide the necessary verified emissions information.
These requirements make the structure of electricity procurement agreements important to regulatory reporting.
A conventional annual purchase of renewable electricity certificates may support other corporate renewable energy claims, but it should not automatically be treated as sufficient evidence for an actual-value electricity calculation under CBAM.
The industrial buyer must establish which electricity quantities meet the methodology’s conditions rather than relying exclusively on the annual renewable procurement percentage.
Grid Imports and Generation Shortfalls Need Separate Treatment
A cement factory operating under a long-term renewable electricity contract may still consume substantial quantities of grid electricity.
Generation shortfalls, interruptions or periods when renewable output does not correspond to industrial demand can require the purchase of additional electricity.
The factory’s monitoring, reporting and verification (MRV) system should distinguish between qualifying renewable electricity consumption and volumes requiring the applicable fallback emissions treatment.
Applying one renewable electricity factor to total annual consumption would not necessarily reflect the actual eligibility of the electricity used.
Separating these quantities allows management to evaluate how much additional qualifying renewable supply could improve the reported indirect emissions component.
It also provides a basis for assessing whether further procurement, storage or operating adjustments would deliver sufficient value to justify their cost.
Electricity Efficiency and Grinding Operations Can Improve Performance
Renewable electricity procurement should be coordinated with conventional industrial energy-efficiency measures.
Grinding optimisation, high-efficiency electric drives, improved fan controls and preventive maintenance can reduce electricity consumption per tonne of cement.
Lower energy demand provides direct operating-cost benefits while reducing the quantity of renewable electricity required to cover the factory’s consumption.
Where production schedules allow, selected electricity-intensive processes may also be operated during periods of greater renewable electricity availability.
Cement plants with several grinding mills or production lines can examine differences in their energy efficiency and allocate production accordingly.
Using a more efficient mill during periods of abundant renewable generation may improve both electricity costs and the indirect emissions component, provided that product quality and operating requirements are maintained.
Such changes should be evaluated using actual production data rather than assumptions about the performance of individual manufacturing lines.
Product Mix Can Change Carbon Intensity Without Reducing Electricity Demand
Cement producers need to evaluate energy performance together with the composition of their finished products.
A cement product containing a lower proportion of clinker may demonstrate lower embedded emissions because its direct process-emissions contribution is reduced.
However, producing that cement may require additional grinding, potentially increasing electricity consumption per tonne.
A single energy-intensity indicator could therefore suggest deteriorating efficiency even while the overall product emissions result improves.
Management should assess electricity consumption alongside clinker content, production route, process emissions and finished product quantities.
The same principle applies when allocating electricity between quarry operations, clinker manufacturing and cement production.
Where the applicable CBAM reporting boundary requires these activities to be distinguished, site-wide renewable electricity percentages may not adequately represent the electricity associated with individual covered products.
Complete Factory Evidence Remains Essential for Verification
A lower electricity emissions factor cannot compensate for missing or unreliable information concerning clinker production and direct industrial emissions.
A verification-ready cement monitoring system needs to integrate raw-material records, kiln emissions, fuel consumption, measurable heat where relevant, electricity measurements and manufacturing output.
These records must support the calculation of embedded emissions under the appropriate product and production boundaries.
Electricity data should therefore form part of the wider installation-level evidence system rather than operate as a separate renewable energy reporting exercise.
This allows independent reviewers to examine how direct process emissions, precursor or material information, thermal energy and qualifying electricity consumption contribute to the final reported result.
Investment Priorities Depend on Cost per Verified Tonne
Cement producers can compare decarbonisation investments according to their expected cost and the emissions reductions recognised under the applicable methodology.
Potential measures include renewable electricity procurement, alternative kiln fuels, clinker substitution, waste heat recovery and industrial process-efficiency improvements.
These options can differ considerably in capital expenditure, implementation requirements and potential emissions impact.
Renewable electricity may address a smaller share of the total cement footprint than measures reducing clinker-related emissions, but it can be quicker to implement and easier to verify.
A combined marginal abatement cost assessment allows management to compare the cost of achieving a verified tonne of emissions reduction through different investments.
This can support a phased investment programme in which electricity-related improvements are introduced while larger and more complex process-decarbonisation projects are developed.
Renewable Electricity Evidence Can Strengthen Industrial Financing
The inclusion of eligible indirect electricity emissions in the CBAM methodology provides cement manufacturers with a clearer connection between qualifying renewable electricity arrangements and regulatory emissions performance.
For lenders assessing a solar photovoltaic investment or physical PPA, the manufacturer can demonstrate how electricity measurements and supporting generator information enter the product-level emissions calculation.
However, the financial appraisal must also establish whether the resulting carbon-related value is captured by the exporter or initially benefits the EU importer.
A reduction in the importer’s potential CBAM certificate obligation does not automatically become additional revenue for the cement producer.
Banks should therefore examine the commercial arrangements through which any carbon-related benefit is recognised, together with the contractual reliability of the electricity evidence.
The financing assessment can distinguish between direct electricity-cost savings, recognised emissions improvements and additional customer value supported by contractual commitments.
Customer Carbon Footprints Can Use the Same Electricity Evidence
Verified electricity information can also support cement manufacturers responding to customer reporting requirements beyond CBAM.
European industrial buyers may request broader product carbon footprint calculations incorporating electricity consumption and other production-related emissions.
The same controlled electricity measurements, generation records and procurement documentation can provide source information for these calculations where the relevant methodology permits their use.
However, the treatment of electricity, production boundaries and applicable emissions factors may differ between CBAM and broader product-footprint frameworks.
Maintaining one reliable evidence base while preparing separate methodology-specific calculations allows cement exporters to support customs-related reporting, commercial product declarations and corporate sustainability disclosures without assuming that the resulting carbon figures must be identical.
