Uncertainty and "a lack of visibility" in the EU Emission Trading Scheme (EU ETS) was preventing the company from going ahead with planned capital expenditure according to Group Lafarge chairman and CEO Bruno Lafont.
The recently published draft directive for phase three of the emissions trading scheme, stipulates that 100% of European power companies' carbon allocations will be distributed by auction. It covers the period from 2013 to 2020.
But other carbon-intensive industries such as cement, paper and glass manufacture will not have their allocations determined until 2011 at the earliest.
Lack of clarity as to what extent these allocations will be issued by auction rather than being determined by individual member states as they are now is at the heart of the matter. Under the scheme carbon allocations are set to be issued from a centralised "pot" with the stated aim of reducing Europe-wide emissions by 13.5% between 2013 and 2020.
This lack of visibility, argued Lafarge, means that the company is unable to plan ahead with any certainty. It said it could not wait until the situation was clarified in 2011.
Manager of legislative programmes at the British Cement Association Dr Richard Leese said Lafarge's decision to freeze European plant development is indicative of the mood in carbon-intensive manufacturing as a whole.
The cement industry is one of the largest contributors to global carbon dioxide emissions, producing more than 5% of the total.