CBAM impact limited in Egypt as decarbonization pressure shifts to power, alternative fuels

The EU's Carbon Border Adjustment Mechanism has so far made little impact on Egyptian cement and clinker prices, with exposure concentrated among the limited producers shipping cement to Europe, Clean Carbon Ventures co-founder and managing partner Omar El Hassanein told Platts, part of S&P Global Energy.

"The only impact is seen on companies that are exporting [to Europe]," Hassanein told Platts on the sidelines of the Intercem conference in Dubai Feb. 3. "Royal El Minya Cement is the only company from Egypt that is exporting to Europe."

Egyptian producers are focusing mainly on clinker exports to non-EU destinations, including West Africa, as well as nearby markets such as Libya and Syria, he said.

Egyptian cement demand remains strong and continues to grow, helping keep the market oriented toward domestic sales rather than compliance-driven repositioning for Europe-bound volumes, Hassanein said.

"Domestic demand for cement in Egypt is very strong and growing," he said.

Javier Martinez, CEO and partner at Spain-based consultancy Globbulk, told Platts Feb. 2 that decarbonization is uneven between regions, with Europe leading the way on investment urgency.

"Right now, the top pressure in decarbonization is Europe," Martinez said.

Middle Eastern producers are facing rising expectations in some markets, with Saudi Arabia a key example as parts of the construction value chain increasingly emphasize lower-carbon materials, even as large projects can face delays or rescoping, Martinez said.

Martinez said the US market is moving more slowly on decarbonization, while in much of Latin America, it is not yet a central operating priority. For exporters in Turkey, Algeria, Egypt and Morocco, he said, decarbonization measures become more important when sales depend on access to European buyers.

"Every region moves at a different pace," he said.

Beyond carbon policy, Martinez pointed to plant cost optimization as an immediate focus across multiple markets, including efforts over the last three years to reduce fixed and variable costs and adjust corporate structures. He also flagged Africa as a region with significant potential for operational optimization and advisory work.

Rising power costs

Martinez pointed to rising power and thermal energy costs as the largest variable influencing cement pricing, linking the issue to the industry's parallel push to decarbonize electricity supply.

The premium for "green power" versus conventional supply is a growing concern for producers.

"Power consumption is very complicated these days because there is a transition to be green," Martinez said. "Green power is three times the cost of traditional power."

He said that alternative fuel substitution rates remain relatively low at many plants, typically around 10%, but that there is growing intent in several markets to raise usage as economic and policy pressures evolve.

Waste-to-fuel adoption

Speaking on a panel, Hassanein used Egypt as a case study for alternative fuels development, saying the country's sizable municipal solid waste generation and high concentration of cement plants could make co-processing a partial solution to waste management challenges.

Egypt's progress in expanding alternative fuels has been influenced by a government strategy launched in 2020 to upgrade waste value-chain infrastructure and improve collection efficiency so that larger volumes of waste become accessible for industrial use, Hassanein said.

Several structural barriers limit faster adoption, with the absence of a single-channel waste collection system being a key issue, resulting in mixed waste streams that combine organics, combustibles and non-combustibles. This raises processing costs for alternative fuel producers, which must extract the combustible fraction before it can be used as refuse-derived fuel or similar products.

Hassanein said the cost burden can be difficult to recover because cement producers may be unwilling to pay prices that fully reflect sorting and treatment expenses.

Standardization, longer contracts

Hassanein said the next phase of adoption would likely depend on mechanisms to share risk and improve bankability across the value chain, pointing to the potential role of subsidized loans or other funding support for waste treatment and processing.

Egypt's market remains dominated by spot transactions and one-year purchase orders, which can discourage capital investment by alternative fuel producers, he said. Moving toward multiyear contracts can be a practical step to provide enough visibility for suppliers to invest while still giving cement producers flexibility, he said.

Platts, part of S&P Global Energy, assessed cement clinker FOB Turkey at $45/metric ton Jan. 29, up 25 cents/mt week over week.