European Ceramics Industry Faces Decarbonization Challenges
The European ceramics industry, accounting for 10% of all industrial sites subject to the EU Emissions Trading System (ETS), contributes only around 1% of the region's industrial carbon emissions. However, despite its relatively low emissions, the sector faces significant challenges in decarbonization. Ceramic kilns, known for their high energy consumption, primarily rely on natural gas for firing. Nonetheless, the industry is obligated to meet the EU's emissions reduction target of 55% by 2030, compared to 1990 levels. With an annual turnover of €26 billion, the industry needs to explore alternative manufacturing processes that are not dependent on fossil fuels.
Since 1990, ceramic producers across Europe have achieved a one-third reduction in emissions, primarily through the transition from coal to natural gas and improving energy efficiency. To make further progress, ceramic manufacturers will need to make substantial investments in alternative energy sources to power their furnaces, such as hydrogen, electrification, or biofuels. Additionally, modifications to raw materials and the implementation of carbon capture technology will be necessary to address "process emissions."
The European ceramics trade body, Cerame-Unie, highlights that the choice of fuel options will depend on the factory's location and the energy policies of respective countries. However, the industry's diversity poses a challenge, as Cerame-Unie categorizes it into nine sectors, each with different technologies. Ceramics sites are often small and situated close to raw material sources. Moreover, approximately 80% of ceramics companies are classified as small and medium-sized enterprises (SMEs), which limits their scale and financial capabilities compared to industry leaders like ArcelorMittal. This hinders the industry's ability to drive change and does not support consolidation efforts.
The lack of access to government funding for greener technologies presents another obstacle. The fragmented nature of the industry also hampers research and development programs for hydrogen and carbon capture projects. Some ceramics executives argue that the EU's targeted pace of emission reductions is too rapid, particularly considering the long lifespan of ceramic kilns, which can be as long as four decades. They contend that currently, no cost-competitive alternatives to natural gas exist, and should alternative energy sources like hydrogen become viable, the industry would require at least 15 years to transition. Concerns over global competitiveness further compound these challenges, especially considering that energy costs account for approximately 30% of a producer's cost base. The industry supports a carbon border tariff but calls for additional support for low-carbon technology investments and measures to prevent carbon leakage.
