Carbon Management in an Emissions-Intensive Industry in a Developing Economy: Cement Manufacturing in Indonesia

Abstract

Around 600 Mt carbon dioxide equivalents (CO2e) of anthropogenic greenhouse gases (GHG) emission originates from energy production and consumption in Indonesia annually. Of this output, 40 Mt CO2e comes from cement production. This makes the cement industry a key sector to target in Indonesia’s quest to reduce its emissions by 26% by 2020. Substantial opportunities exist for the industry to reduce emissions, mainly through clinker substitution, alternative fuels, and the modernization of kiln technologies. However, most of these abatement options are capital intensive and considered as noncore business. Due to this, the private sector is unlikely to voluntarily invest in emission reduction unless it saves money, improves revenue, enhances the strategic position of the firm, or unless governments provide incentives or force adoption through regulatory and policy controls. In this study, we review the profile of the Indonesian cement industry and assess the carbon management and climate policy actions available to reduce emissions. The case highlights opportunities for improved carbon management in emission-intensive industries in developing countries.