The Impact of Implementing CCUS Cost on the Egyptian Cement Companies' Financial Position | Case Study, an Egyptian Cement Company

AbstractThe greenhouse gases (GHGs) are behind the symptoms of climate change (Ahmed I. Osman, 2023). CO2 occupies the largest portion of the GHGs by around 81% of the total GHG (Hong, 2022) Although the cement industry is one of the most important industries for being the major contributor to the Egyptian gross domestic product (GDP) and the creator of direct and indirect jobs, as it is the most indispensable material consumed. However, it also contributes a huge amount of carbon dioxide (CO2) emissions to the environment for around 750 kg CO2 / ton of cement produced (ElGhamrawi, 2023). Despite the other measures that are commonly used for CO2 emissions reduction over the previous decades (Adina Bosoaga, 2009). The carbon capturing and storing CCS technologies are considered the most effective technology, regardless of the high cost of the technologies and the uncertainty of the cost estimation, which are still barriers to the technology distribution (Kasper Storrs, 2023). Methodology: Multiple methodological and analytical approaches are used to gather both qualitative and quantitative data. The qualitative approach includes analysing secondary data, conducting a case study of a leading cement company in Egypt, and performing a semi-structured interview with one of the top managers of the case study company. For the quantitative approach, techno-economic assessment and cost-benefit analysis are employed to evaluate the impact of implementation costs on the company's financial position. Multiple scenarios are proposed, and sensitivity analyses of variables such as carbon pricing, government support, and changes in capital structure are examined. These efforts encourage investment in such technologies and support the goal of reaching net-zero emissions in the industry. Findings: The high capital expenditure (CapEx) and operational expenditure (OpEx) of the technologies affect the companies’ financial position negatively in terms of Internal Rate of Return (IRR), Net Present Value (NPV), Discounted PayBack Period (DPBP), and Real Option Approach (ROA). The moderating variable, the increase in the CO2 price, controls the relationship positively at a high carbon price of $70. This still needs the governmental support to raise the IRR above the weighted average cost of capital WACC. However, governmental support alone does not impact the relationship positively. But the change in the capital structure shows incrementally a positive impact on the financial position metrics. The Keywords: Cement industry, carbon emissions, CCUS cost, governmental support, CO2 prices, change in capital structure, and financial position.