October 2009

WHAT IS AT STAKE
       Carbon dioxide (CO2) and methane are the main greenhouse gases (GHG). As such, they trap some of the sun's energy in the atmosphere, warming the land and the ocean. The greenhouse effect is a natural process. Without it, Earth would not be warm enough to support life.
       Climate change is attributed to increased concentration of greenhouse gases within the atmosphere, due to human activities.

THE EFFECTS OF A RISE IN CO2 EMISSIONS
       It is expected that temperatures will rise by between 1.4°C and 5.8°C on average by the end of the century. Due to this rise of temperature:

• We will have more frequent heat waves.
• Climatic disorders will be more violent.
• Rainfall patterns will change, which will impact agriculture performance.
• Insects will reproduce easily and move to areas where it was previously too cold for them
• The sea level will rise, endangering populations who live in coastal regions.

       Furthermore, climatic disruption would be likely to contribute to the spread of epidemics, particularly in developing countries. Water resources could become rarer in some regions, which would lead to health problems, to population moves and potentially to conflicts.

       We thus have two different challenges:

• The first one is to mitigate greenhouse gas emissions rapidly.
• The second one is to begin to adapt our behavior, organizations and infrastructures to the unavoidable consequences of climate change.

TACKLING CLIMATE CHANGE IS THE ENVIRONMENTAL PRIORITY OF THE 21ST CENTURY
       The demand for building products including cement will continue to grow, driven in particular by economic growth in developing economies and by the increase in urbanization. Today, 50% of the world population lives in an urban environment and this figure will continue to rise, increasing the need for infrastructure and housing. The demand for cement is likely to double by 2030 globally.
       Since the cement industry currently represents 5% of total world men made CO2 emissions (this is equivalent to the tourism sector emissions for example), it is a key issue for Lafarge as well as for the industry to face these challenges of mitigation and adaptation.

THE CEMENT MAKING PROCESS NATURALLY EMITS CO2
       In order to manufacture cement, limestone is heated to produce clinker. The simplified formula is limestone (CaCO3) plus heat combustion resulting in reactive lime (CaO) and carbon dioxide (CO2). Decarbonated additives are then mixed into the clinker to make cement.

       Carbon dioxide comes 60% from embedded carbon dioxide in the limestone, and 40% from the fossil fuels used in the combustion process

       Cement is then mixed with aggregates and water to produce concrete and mortar. Concrete and mortar are used as building materials for housing and infrastructure. Concrete has thermal inertia properties that make of it a material of choice for energy efficient buildings.
       Lafarge net CO2 direct emissions in 2008 were of 105,4 million metric tons globally, including emissions from our Gypsum activity (fuel combustion in the plasterboard drying process).
       Besides these direct emissions, indirect emissions (so-called scope 2) related to electricity consumption, represent 9.1 million tons of CO2 at Group level and related emissions (so-called scope 3) dealing with employee business travel, external distribution and logistics represent 2.4 million tons.
       CO2 emissions are also a major concern for the whole construction sector, which is responsible for 20% of CO2emissions annually and 40% of the energy consumed annually. Buildings are, in fact, together with transport, major and growing sources of CO2 emissions.

WHAT IS LAFARGE DOING?

   TO REDUCE ITS OWN CO2 EMISSIONS
       Lafarge has been addressing the issue of CO2 emissions for several years.
       As part of its partnership with WWF, Lafarge took in 2001 an ambitious, voluntary commitment to cut CO2 emissions, before the application of the Kyoto Protocol, and with targets that were more ambitious than those of the Kyoto Protocol.

• 20% reduction in net emissions per metric ton of cement worldwide between 1990 and 2010.
• 10% cut in absolute gross CO2 emissions in industrialized countries between 1990 and 2010. (vs. Kyoto target of 5% average cut in CO2 emissions in industrialized countries over the same period).

       Lafarge's commitment to reducing its CO2 emissions has no geographical restrictions, even if rules and regulations are very different from one country to another. This ambitious and challenging commitment is on a worldwide scale and includes countries not participating in the Kyoto Protocol.
       The main drivers to mitigate CO2 emissions in the cement industry are:

• Increasing energy efficiency by optimizing processes and modernizing factories.
• Substituting fossil fuels with other energy sources.
• Using additives in cement to develop a large range of products according to their application.

LAFARGE POSITION PAPER
       Climate change is a global problem and should therefore be addressed at a global level.
       It is our responsibility as a leader to stay a step ahead of our sector and to lead the whole cement industry in mitigating CO2 emissions.
       About our industrial and decision processes

• Lafarge believes that it is not possible to progress in mitigating emissions without a system to measure, report and verify (MRV) data.
• Our investment decisions include a detailed assessment of the CO2 dimension of each project.
• More than 50% of our R&D budget is dedicated to sustainable development innovations.

       Lafarge is transparent about its CO2 emissions

       CO2 figures are released annually in our sustainable development report. They are audited by Ernst & Young and communicated to WWF.
       Lafarge issued its first Sustainability Development report in 2001, a step ahead of the industry. Our 2008 report received an A+ grading from the Global Reporting Initiative. Lafarge is also, at present, the only company in the construction sector that is listed in the "Global 100 Most Sustainable Companies in the World".

       CO2 in the construction sector

• Clinker and cement are carbon-intensive, concrete is not. Concrete is made of 5% to 10% of cement; its main components are water and aggregates, which are natural products.
• It is our responsibility to reduce the carbon footprint of our products, but also to contribute to the reduction of CO2 emissions during the life time of buildings. CO2 has to be tackled during the whole construction chain. We are part of the problem; we want to be part of the solution.
• We believe in the possibility to construct "zero net energy" buildings.
• Lafarge wants to develop partnerships with its customers to better understand the carbon footprint along the value chain.

       About regulations

• Lafarge started to reduce its CO2 emissions before international and national regulations came into effect.
• In the first semester of 2010, the group announced it has exceeded the objective assumed to reduce its global CO2 emissions by 20%, almost ten years before the deadline voluntarily agreed with WWF
• Our position on the new EU-ETS directive, voted in December 2008

       Climate change is a global problem : at Lafarge we continue to work to reduce our CO2 emissions, our operations around the world and, until a global agreement is in place, to promote a sectoral approach which would involve the whole cement sector, including players in emerging markets where today 80% of cement is produced and consumed.