“People want more sustainable cement, but they don’t want to pay for it”

To be a leader in one of the most difficult sectors to decarbonize is not without its challenges, as demonstrated by the CEO of Cementos Pacasmayo, Humberto Nadal. Despite the sector’s efforts to reduce its carbon footprint, Nadal regrets that civil society finds it difficult to accept the higher costs of green innovation, but he continues to rely on it for the ongoing improvement of the cement industry.

Photo: The CEO of Cementos Pacasmayo, Humberto Nadal. Credit: Courtesy of the interviewee

By Henar Martínez

The floors you walk on and the walls you live within contain cement: it is one of the most widely used building materials and is used to make other materials such as concrete. It is therefore a cause for concern that 8% of the world’s annual carbon dioxide emissions come from its manufacturing process.

Aware that it is one of the most difficult industries to decarbonize, the CEO of the Peruvian company Cementos Pacasmayo, Humberto Nadal, reviews what challenges it faces in terms of sustainability, and relies on innovation and technology as transformational levers. In this regard, 2017 was a turning point for the company: they went from being a cement company to providing construction solutions, which led to a digital and cultural transformation process that is still ongoing.

What are the main challenges facing the cement industry in terms of greenhouse gas emissions?

Emissions are a huge challenge. Three years ago, the Global Concrete and Cement Association (GCCA) was created, which now, if we take China out of the equation, represents 60% of the world's cement production. The GCCA is committed to becoming carbon neutral by 2050. It has launched an initiative called "Innovandi", which brings together the entire cement value chain, cement plants, logistics, kilns, and so on. It is a global initiative with tremendous force, as the committee is made up of all the Chief Executive Officers (CEOs) of the major cement companies. In the past there may have been trade union efforts, but never a signed agreement or something so structured and on such a large scale.

What efforts are Cementos Pacasmayo making to reduce emissions?

In the 1990s we began to work a lot on the clinker factor [the percentage of clinker in cement], because it is the main CO2 emitter. 90% of global emissions were due to the production of clinker, which we reduced to 80% and today it makes up around 73%, and the world average is higher. We try to make cements with a lower clinker factor and with a different energy matrix, which is what humanity needs. But there is no point in producing cement with zero clinker if it costs $2,500 per ton, because no one will be able to use it.

We are working on LC3, Limestone Calcined Clay Cement, a cement that uses kaolinite clay and has decreased the clinker factor from 73% to 50%. It's a sidereal drop. The problem is that people want the cement industry to be free of emissions, but they don't want a different cement. It is a contradiction.

In recent years, some construction materials have been launched, such as thermochromic and translucent cement. Are they isolated innovations or do they represent a paradigm shift? Will they reach every corner of the planet?

These are still technologies with a very high level of sophistication and cost. They have a huge barrier in countries like ours: 80% of cement sales in Peru are for self-construction, which is absolutely archaic. Not only are these technologies not going to arrive, but they are not applicable, because they are for concrete and here, we are talking about cement.

We work very hard to help our master builder. If he does not apply a little technology, it is useless to reduce the clinker factor. When building, they are very inefficient, not because they want to, but because of the lack of tools and resources. Sustainability also means that people with fewer resources can build in an accessible way. For me, this is as important a challenge as that of emissions, especially because they are closely linked. If I don't get them to build efficiently, pollution will continue.

Many of the emission problems stem from energy consumption. Are you innovating in this area to make the cement production process more sustainable?

The key is to produce cements that require less energy. For example, to make clinker, you need about 1,400 °C. We must look for other materials, such as clays or pozzolans, that are made at a lower temperature. We must go for renewable energies, but it is not enough to say: "I want renewables". If there is no government policy to support them, it is very difficult for the private sector to do so.

A decade ago, MIT Technology Review chose 'green cement' as one of the ten most important emerging technologies. How has it evolved?

If you ask three experts for the definition of 'green cement' none of them will be exactly the same. It's more of a concept that has had a problem on the final consumer side. People want cement that is more environmentally friendly, but they don't want to pay for it. That's why I believe that initiatives that don't involve everyone (producers, marketers and end consumers) don't work. 'Green cement' will be the precursor to better cements. I think that philosophically it is very important, more than how many tons have been sold or not.

Like other sectors, the construction industry is undergoing a digital transformation. How is this digitalization impacting Cementos Pacasmayo?

Our transformation has a very high digital component that has allowed us to get closer to the client. For example, the master builders have a chat where they can ask questions and receive an automatic response. They can also enter our application to buy cement, and they will have it in probably the next 40 minutes.

Artificial intelligence (AI) is one of the latest technologies. What improvements is it bringing to the cement industry?

On the one hand, it brings improvements to the process itself. One example is concrete with the ability to prevent or correct certain scuffing. On the other hand, it contributes a lot to bringing you closer to the end consumer to help them. Also, with respect to carbon capture, I believe that in a few years' time, when a cement plant is set up, another plant will be built next to it to capture all the emissions. That will be done only with artificial intelligence, I am convinced of that.

Cement manufacturing is a productive activity that has been going on for many years. How did you approach the cultural change you decided to undertake in 2017? Did the sector's own culture affect you?

The best time to transform a business vision is when you don't need to, because you have the peace of mind to do it. In 2017, Cementos Pacasmayo was at the top in both the economic and financial sense. The process was very hard. It's not that there was resistance, but rather that it is complicated to explain to someone who is winning a game 5-0 that you are going to change the team or the way it plays. When they understand that what you want to do is to make sure that the 5-0 score not only stays the same, but that it becomes 7-0, they understand. It's a process. The first thing is for the management layers to be leaders in it. It is also important to define clear Key Performance Indicators (KPIs) and start recruiting differently, without losing what you have, but complementing it.