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Holcim to spend two billion zlotys to capture 1 million tons of CO2 in Kujawy each year

Publication date:
14
.
06
.
2024
Update date:
14
.
06
.
2024

In its expectations of businesses, the EU repeats “zero net emissions” likea mantra. Holcim is taking up this challenge. As a result, the Kujawy Cement Plant may become the first fully decarbonised construction materials plant in Poland. Jolanta Zdunowska, Technical Director of Carbon Capture and Storage Projects at Holcim Polska, talks about the PLN 2-bln investment project.

The carbon capture facility built at the Kujawy Cement Plant as part of theGo4ECOPlanet project is the first CCS project of this size in Poland. The management board must have been working on it for quite a while?

Holcim has developed a strategy to reduce carbon dioxide emissions. The company has been moving in this direction for a long time, not only by implementing carbon capture technologies but also by using alternative fuels and decarbonised raw materials. The goal is to achieve the smallest possible carbon footprint for the end products. Sources of emissions include technological processes and the combustion of fuels. In our case, the former type of emissions is the problem. Emissions are generated during the production of clinker, in the process of breaking down calcium carbonate. Calcium carbonate is the main ingredient in the powder used to produce clinker, which means that we are unable to decarbonise the technological process to zero. To meet the Net Zero Pledge – Holcim's global decarbonisation strategy – we need to use carbon dioxide capture technologies.

When did the idea of the project first come up?

The first reason for the construction of the carbon capture facility was the ECO2CEE project, previously known under the name INTERCONNECTOR. It was developed in collaboration with partners, and our main goal is to create a carbon dioxide hub in a seaport. From there, the gas will be transported to the storage site in the North Sea. In 2021, in order to be able to complete the project, we submitted a joint application with our partners to the European Commission. It was selected for the fifth PCI list, i.e. Projects of Common Interest. These two projects are interrelated. We want to create a hub to capture carbon dioxide and then store it.

What is the motivation behind the project and what problems will the new infrastructure solve?

CCS (Carbon Capture and Storage) is the only way to reduce carbon dioxide emissions to zero. Naturally, we are also taking other steps in the process of clinker burning and the production of low-emission cements in order to minimise the carbon footprint on the way to decarbonisation. As a result, what remains to be captured is only a relatively small amount of CO2,which is important because capturing it is an energy-intensive process.  We have also introduced the ECOPact and ECOPlanet product lines, which are distinguished by their low emissions, as confirmed by EPD certificates. Hence the name of the project – Go4ECOPlanet,which shows the coherence and multidimensionality of these activities.

So the project will definitely happen. It is not something you are only considering, but a range of realactions aimed at reducing emissions to zero.

Yes, these are not just theoretical deliberations. We have submitted an application to the EC with our proposal for a project as an innovative solution. It was selected for financing from EU funds. In January 2023, we signed a grant agreement with the EC and we are implementing it according to the schedule we indicated in the project documentation.

Do you know when exactly you will break ground on the construction of the installation?

According to the schedule, this year we are planning to start ordering the equipment and its delivery should be completed by the end of 2026. In the meantime, we have to prepare the construction site, which will start this year. The beginning of the construction of the facility itself, or what we call the ground-breaking ceremony, is planned for the second half of 2025.

So is the actual carbon capture estimated to start in 2027?

Exactly, these are our plans. At present, in line with the schedule presented to the EC, 2027 seems to be a realistic deadline. These activities must be complemented by the launch oft he hub, because in fact the facility could be built much sooner, but without a supply chain ensuring the transport of carbon dioxide to the North Sea, launching the installation wouldn’t make sense. We, for our part, are trying to ensure the supply chain. Talks are underway with suppliers of railway cars suitable for transporting carbon dioxide, as well as with operators of storage sites, and at the moment they are at a very advanced stage. Together with partners who want to create a hub in the port of Gdansk, we have submitted a project proposal to the CEF (Connecting Europe Facility) programme for the preparation of full design documentation that covers the hub and the transport infrastructure. This project has been selected for joint implementation by a number of companies.

Jolanta Zdunowska, Technical Director of CarbonCapture and Storage Projects at Holcim Polska

I would like to learn more about this technology. Have you selected the supplier? What were the selection criteria?

The technology we proposed in the documentation submitted to the European Commission is innovative,because it has never been implemented in a cement plant before. Granted, the supplier has used this technology before, but only in hydrogen production processes and a few other branches of industry. In our case, the technology supplier is Air Liquide.

Using this technology in a cement plant is difficult because additional cleaning of the kiln flue gases is necessary. We will have to remove sulphur and nitrogen compounds, which is not the case in hydrogen production. We selected Air Liquide after analysing 9 bids and solutions proposed by different companies. We paid attention to the CAPEX,i.e. capital expenditure, as well as operating costs, and in each of these respects, the Cryocap technology turned out to be the most advantageous.

Carbon capture projects vary widely from one installation to another. In each case, the technology has to be adapted to a particular source of CO2 emissions. What is it going to be like in the case of the Kujawy Cement Plant? What elements will the project consist of? Do you expect any changes in the operation of the plant once the installation is built?

I would not like to speak on behalf of the designer of the facility, which in this case will be the technology provider.  These are the last days before the completion of Front-End Engineering Design. A number of devices and components in the engineering project were modified to adapt their performance and specifications to the kiln flue gases. These are the components that make up the facility that will capture, purify and liquefy carbon dioxide using the cryogenic method. So the design is tailored to the needs of our cement plant.  A capture project for the metallurgical or refining industry would probably be designed differently. Especially in the case of fuel production, the characteristics of the gases that are to be captured are different, so different technologies can be used. In our case, we excluded technologies that required additional steam production and chose Cryocap, but Holcim has plants that have opted for other methods of capturing process emissions. Each project is considered individually and adapted to the conditions prevailing in a given country and a given plant. What’s particularly important is at what stage of the cement plant’s lifecycle the CO2 capture installation is built. Is it built at the very beginning, simultaneously with the clinker kiln? Or is it added to an existing plant? The stage at which it is built impacts the choice of technology.

What is the cost of building an installation like this? You said that you had managed to obtain external financing. How much of the expenditure was covered by it?

We received the technology supplier’s bid in 2022. As we all know, the reality around us has changed since then. Russia's invasion of Ukraine is ongoing, and inflation has increased significantly. Originally, the cost of the investment was calculated at EUR 264 million, of which EUR 228 million is to be covered by the grant. The Innovation Fund covers a maximum of 60% of capital expenditure and 60% of discounted operating costs. We managed to obtain the highest possible amount of funding for our project.

The decarbonisation of cement production is a pressing issue. When it comes to this market, Poland is a European leader and reducing emissions is the only way to maintain the competitiveness of the domestic cement sector. So, what is the situation at the Kujawy Cement Plant – how much carbon dioxide do you produce and what reduction do you expect to achieve thanks to CO2 capture? What are you planning to then do with the captured gas?  You talked about the hub and about storage in the North Sea, but maybe broader solutions are available?

The European Commission requires all companies to achieve full decarbonisation by 2050, and Holcim is also striving to achieve this target. Currently, each plant has different emission levels. The Kujawy Cement Plant is among those that emit the lowest amount of CO2 per tonne of cement produced. This is due to continuous product improvement and implementation of new investment projects. So far, 85% of conventional fuels have been replaced with alternative fuels, and we are aiming to achieve 100%. This is one of the factors reducing greenhouse gas emissions. This year, we are also implementing a platform for decarbonised raw materials for the production of clinker. Furthermore, we launched the Mixing Plant in Kujawy in January. It is a plant that produces low-emission products that have a very small amount of clinker in their composition while maintaining the parameters expected by consumers. This is yet another step to reduce CO2, which we had taken before the start of the carbon capture installation. Once this facility is operational, we will be able to capture 100% of carbon dioxide. Green carbon dioxide can be used in the production of synthetic fuels, such as e-methanol.

Is building a carbon capture installation financially feasible? Can a company that decides to do it benefit in some way, for example by saving on ETS-related expenses? And what is the payback period for this investment to pay off?

Investing in a carbon capture installation is not cheap. Currently, there is no co-financing mechanism for projects aimed at decarbonising process emissions in Poland. And this is a huge problem for enterprises, because financing them from a company's budget only is unprofitable at the moment. First of all, mechanisms to support decarbonisation should be put in place. Many countries have such instruments, but they have not been created in Poland yet. EU funds are the only way out, and companies have to apply for them, because without them an investment like this would not have any business justification. When we submitted the application to the EC, the price of CO2 emissions was EUR 80 per tonne. Late last year and early this year, it was about EUR 60. Now there is an upward trend again, with the price set to rise back to the level from when we submitted the application. At these levels, the entire supply chain is much more expensive than the ETS costs. As a result, we should look at this investment from a slightly different perspective than the carbon prices alone. This perspective should be environmental protection, which really requires us to interrupt the increase in average temperatures of 1.5°C. However, at the end of the day, the business side must also make sense and you must not make a loss on your projects. In this case, EC funding is the only way to stay on the market and at the same time build a CCS installation.

In the long run, however, we expect ETS prices to rise to very high levels. It is forecast that it will be up to EUR 200 by 2030. At this point the installation will already be running and getting closer to break even.  I need to remind you that our supply chain is a really huge cost item, because it consists of rail and sea transport and fees for using the hub in Gdańsk. This also impacts our CAPEX, because the modification of the siding for the railway cars is our responsibility. Naturally, we are doing everything we can to optimize these expenses. But this investment is a necessity, not a choice. At the moment, the North Sea is the only CO2 storage location available. In cooperation with the CCUS.pl cluster with Dr Paweł Gładysz at the helm, we are making efforts to create a team of experts coordinating the work on preparing CO2 storage facilities in Poland. Initially, these will probably be designated sequestration sites in the Baltic Sea, but land-based storage should also be made available. This will make the access to injection points more affordable and minimise operating costs. But it will take at least 10 years, because we are constrained by legislation, among other things.

And this is where another question arises: is Poland in any way ready for CCS in terms of legislation? What barriers does an investor who wants to build a carbon capture installation have to face? Is it at all possible to start such an investment project at the moment?

As for the project itself, there are no barriers. It involves the same requirements as the construction of any other element of an industrial plant. An environmental decision must be applied for on the basis of an environmental impact report. Having obtained the decision, a construction design is prepared in order to obtain building permits and the application is sent to the local authorities in the county. If it is accepted, the work can begin.

Legislative changes are mainly needed to start on-shore storage, because clear guidelines have not yet been established for it. There was an amendment to the Geological and Mining Law last year, which created the first important tools to take a step forward, but its implementation now requires a number of regulations and assorted special-purpose laws. When we talk about creating infrastructure for gas transport by pipeline, it is certainly impossible to accelerate progress without these special-purpose laws. The commissioning of the infrastructure also follows the same path as any other project we have implemented so far. We are about to submit documents for a building permit and expect to obtain it by the end of May – because this is the time the authorities have to issue a decision. Once this happens, we will start preparing the site.

More and more companies announce their participation in the development of the supply chain. For example, PKN Orlen and GAZ-SYSTEM signed a letter of intent regarding the construction of a pipeline transporting CO2 to the hub in Gdańsk, from where it will be transported to the North Sea. Does Holcim Poland cooperate with other companies?

We are in talks and we are indeed aware that the pipeline will not be operated by a private company. An operator managing the entire infrastructure must be appointed. Discussions are underway, but we do not yet know who will be the operator. The plan is to build a main pipeline across the whole country, which will lead to Gdańsk. The issue of connecting subsequent plants to it is also being considered. We also want to be connected to the pipeline and be able to pump carbon dioxide directly into it. This may result in much lower operating costs than in the case of rail transport. We are open to cooperation with the operator and I think it is a matter of the coming months to determine exactly which way this project is heading.

Holcim is a multinational company that owns many cement plants throughout Europe. You said that other plants were also implementing the carbon capture technology. What plans does the company have in the context of CCS?

Holcim's strategy includes investing CHF 2 billion in carbon capture facilities. This will be a money pool intended exclusively for the development of carbon capture projects. The Kujawy Cement Plant was one of the first plants to apply for and obtain an Innovation Fund grant for its project from the European Commission. In the same year, our colleagues from the German branch did the same. Their application was also approved. Recently, the third call for funding under the Innovation Fund took place, and the fourth one is about to begin. Over the past few years, six Holcim Group plants have secured grants, which will allow the company to implement its decarbonization plan more quickly.

What about jobs? Will there be new positions at the Kujawy Cement Plant?

Carbon capture technologies guarantee hundreds of new jobs in the manufacturing of the components for the system, their assembly, and the preparation of the site for further construction. According to our estimates, about 40 new jobs will be created at the Kujawy Cement Plant, some of which will be related to the loading of carbon dioxide onto railway cars, and some to the operation of infrastructure.

Ultimately, two trainloads of carbon dioxide will depart from the plant every day. As a result, the plant will transport 1 million tons of CO2 over a period of eleven months. January will be the only month when the installation will not function. It is when maintenance work on the kiln takes place, in preparation for the year’s working season.

So long as the transport is carried out by rail, it is Holcim's responsibility to ensure the logistics. This will no longer be the case once the pipeline operator has been appointed and the main pipeline constructed. The Kujawy Cement Plant is in a comfortable situation because it is relatively close to Gdańsk, so rail transport is justified from an economic point of view. Plants further south will have to face higher expenses until a transmission pipeline for carbon dioxide is built.

Source: magazynbiomasa.pl.

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