• The EU has a goal to decarbonize its economy, and cement production has been a critical area of focus in accomplishing its goals.
• A new chemical process, developed by Calix, separates CO₂ during limestone heating offering a potential solution.
• The EU has taken first steps by funding almost half of the total costs for two projects, LEILAC 1 & 2, demonstrating this technology and the potential for incentives as an effective industrial policy tool that can concurrently address climate concerns.

To match global industrial decarbonization goals and reach climate neutrality by 2050, the European Union (EU) is betting on new carbon capture technologies to decarbonize its hardest sectors. The cement and lime industries, responsible for roughly 8% of global CO₂ emissions, have lagged the oil and gas industries in carbon capture innovation due to the technical difficulty of managing process emissions. About two-thirds of these carbon emissions come from its initial calcination process, the chemical breakdown of limestone (CaCO₃) into lime (CaO) and CO₂. These process emissions cannot be avoided through efficiency gains or fuel switching alone but require a more hands-on approach like Direct Separation, wherein CO₂ released during production is captured separately from other combustion gases. A novel technology developed with the help of EU funding, however, holds promise for addressing this.

An added challenge comes with Europe’s tightening carbon pricing and emissions regulations, such as the EU’s cap and trade system known as the Emissions Trading System (ETS). Manufacturers now face increasing costs for each ton of CO₂ emitted, which reduces their incentive to continue production within the EU. Instead of abiding by EU regulations and investing in cleaner production, companies choose to avoid these added costs by moving their operations to other countries with weaker or no carbon constraints, resulting in a phenomenon known as carbon leakage. This not only undermines the EU’s climate goals but also threatens industrial jobs and competitiveness within Europe.

A clear example of this is found in French manufacturing firms that adapted their supply chains to source more carbon-intensive materials such as steel and chemicals from non-EU countries like China and Russia. By 2019, the share of ‘dirty’ inputs imported from non-EU countries rose by 15%, and the probability of importing such goods increased by 30%, marking the path towards carbon leakage. Without affordable and scalable capture solutions, the EU risks becoming less attractive as a cement production hub, as firms may soon seek regions with lax carbon policies as their new hosts.

To prevent this and balance its climate goals and economic competitiveness, the EU has stepped in to help industry catch up. The EU started by signing a two-step funding agreement for two projects located in Belgium and Germany known as the Low Emissions Intensity Lime And Cement projects or LEILAC-1 and LEILAC-2. The first step in this initiative was the European Commission’s funding of LEILAC through its Horizon 2020 research and innovation funding program under the “Secure, Clean and Efficient Energy” challenge. The program’s goal is to de-risk innovation in a cost-sensitive, emissions-intensive sector and to maintain industrial competitiveness under the EU ETS.

The grant for LEILAC-1 was signed in November 2015 and was used to construct and operate a 240 t CO₂/day pilot at Heidelberg Cement’s Lixhe site in Belgium. The project was built utilizing Calix’s technology, in which limestone is heated indirectly in a steel reactor that isolates calcination gases from combustion gases. This approach produces a high-purity CO₂ stream avoiding traditional issues with flue-gas dilution; the CO₂ then only requires compression before transport or storage. As a result, there are no other additional steps and the energy demand for the process stays similar to that of a conventional calciner. The reactor is also intended to be fuel-agnostic (electricity, hydrogen, biomass, or traditional fuels) and designed as a modular, scalable unit that can be replicated across plants.

With around €12 million in initial funding from the EU, the project demonstrated that indirect calcination could achieve more than 95% separation efficiency of the process CO₂ stream handled by the reactor. Because the unit represents only a module of a full plant, that corresponds to about 5% of the typical plant’s process CO₂ stream at pilot scale in Heidelberg’s Lixhe plant. Following early success at this plant in Lixhe, Belgium, the EU doubled down with a second grant of €16 million for LEILAC-2 in March of 2020, which scales the same technology to a 100,000 t CO₂/year demonstration plant in Germany, integrating it into an operating cement plant. This represents roughly 20% of the plant’s process emissions in a single module at the comparatively smaller site of Heidelberg at Ennigerloh, Germany and the plan is to test this for commercial pathways of CO₂ transport, storage, and utilization.

Across both projects, the EU has invested approximately €28 million, about half of the combined project costs. The numerous partners who provided financial and in-kind support for this project include Heidelberg Materials, CEMEX, Lhoist, Tarmac, Calix, Imperial College London, Politecnico di Milano, CERTH, IKN GmbH, Amec Foster Wheeler, Carbon Trust, and Quantis.

European industry roadmaps suggest that up to 85% of clinker production (an ingredient in many cement products) will need some form of CCUS by 2050 to meet their climate targets. LEILAC’s public-private model shows how shared investment can de-risk early deployment and attract private capital while striving towards these goals. In 2024, LEILAC and Heidelberg Materials formed a joint venture to deliver the LEILAC-2 carbon-capture plant, now relocated to Heidelberg Materials’ Ennigerloh cement site in Germany. The project retains its €16 million EU Horizon 2020 grant and is still scheduled to begin construction this year, with the expectation of commissioning it by mid-2026. Following a three-year testing phase, Heidelberg Materials has the option to claim ownership of the project if performance targets are met.

Calix’s 2025 reports reflect that engineering and financing work are underway with initial licensing revenues anticipated from 2027 onward. With its design to capture up to 100,000 t CO₂/year, LEILAC-2 paves the way for a commercial scale LEILAC-3 module capable of capturing up to 1 million t CO₂/year, supported by a licensing agreement covering over 150 Heidelberg Materials plants globally. The partners see this milestone as a key step toward full-scale commercial deployment of Direct Separation technology across Heidelberg Materials’ global network. If successful, Direct Separation could become a new standard for cement plants across Europe and a template for low-cost capture in new and established cement plants.

Beyond emissions reduction, LEILAC serves as an example of how a strategic industrial policy tool can be utilized while adhering to the many European regulations and incentives used as mechanisms for combating climate change. By financing newer capture technologies within Europe, the EU is addressing its global climate concerns while also supporting domestic producers exposed to rising carbon costs. The projects work directly in conjunction with the EU ETS, which is among the most important pillars of the EU’s policy efforts at making carbon pricing effective and equitable.

Under the ETS, cement producers must hold allowances for each ton of CO₂ emitted, but any CO₂ that is permanently captured and stored under EU law is considered “not emitted.” LEILAC’s Direct Separation technology directly reduces these compliance costs by capturing process emissions at source and allows domestic producers to meet ETS obligations without the need to purchase excess allowances.

Mechanisms like these shift the EU from a model of protection to one of innovation where projects like LEILAC give European producers a technological advantage to remain globally competitive while meeting climate commitments. This partnership and work towards industrial competitiveness and climate ambition make it clear that the EU’s intent is to lead the transition to net-zero industry through incentives, not just regulation.