IPCC climate change report: can industry decarbonise in time?

The IPCC’s latest landmark report could not be clearer: It’s now or never if we want to limit global warming to 1.5C and avoid the very worst effects of climate change.

Global greenhouse gas emissions must peak before 2025 at the latest and be reduced by 43% by 2030. Without immediate and deep emissions reductions across all sectors, it will be impossible.

Emissions from the industrial sector are notoriously hard to abate: This sector accounts for about a quarter of global emissions and have been growing faster than in any other sector since 2000, largely driven by increased activity.

Achieving net zero in the industrial sector will be very challenging and require a transformational shift in processes and production, says the report. But the good news is, it’s possible.

Here are the key takeaways for industry – and a hint at the transformational shifts businesses need to consider over the next few years.

A shift to circular economy models.

Industry will need to step its game up from “important but incremental” improvements such as energy efficiency, to a step change in the way they operate. One such shift will be to reduce materials demand through circular economy models. In simple terms it means a shift away from linear “make and dispose” economic models to those that emphasize product longevity, reuse, refurbishment, recycling, and material efficiency. Hundreds of businesses are already working towards circular economy models, including Volvo, Ford, and HP.

Zero carbon energy supply with carbon capture and storage.

Industry will need to switch to low to zero greenhouse gas (ghg) energy sources for production, including electricity, hydrogen and biofuels. Carbon capture and storage (CCS) will then be required to mop up remaining CO2 emissions. These options require substantial scaling up of clean energy infrastructure, as well as phase-out or conversion of existing industrial plants.

CCUS is still in its infancy, but the UK government has pledged to deliver four CCUS clusters to capture industrial emissions per year by 2030. The Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme is providing up to up to £140 million to fund new hydrogen and industrial carbon capture business models.

The cost to consumers will be low.

Costs and emissions reductions potential in industry, and especially heavy industry, are highly contingent on innovation, commercialisation, and market uptake policies. Technologies exist to take all industry sectors to very low or zero emissions, but require 5–15 years of intensive innovation, commercialisation, and policy to ensure uptake. However, the report suggests that given the small fraction of consumer cost based on materials, this investment is expected to translate into minimal cost increases for final consumers.

Low to zero emissions steel is possible.

Material efficiency can potentially reduce steel demand by up to 40% based on design for less steel use, long life, reuse, constructability, and low contamination recycling. Secondary production through high quality recycling must be maximised.
Production decarbonisation will also be required, starting with the retrofitting of existing facilities for partial fuel switching, CCU and CCS, followed by very low and zero emissions production based on high-capture CCS or direct hydrogen, or electrolytic iron ore reduction followed by an electric arc furnace.

More thoughtful use of cement could slash emissions by 50%.

The report says cement and concrete are currently overused because they are inexpensive, durable, and ubiquitous. It estimates that basic material efficiency efforts to use only well-made concrete thoughtfully and only where needed (e.g., using right-sized, prefabricated components) could reduce emissions by 50% through lower demand for clinker.

Cementitious material substitution with various materials (e.g., ground limestone and calcined clays) can reduce process calcination emissions by up to 50% and occasionally much more. Until a very low GHG emissions alternative binder to Portland cement is commercialised – which is not anticipated in the near to medium term – CCS will be essential to eliminating the limestone calcination process emissions for making clinker, which currently represent 60% of GHG emissions in technology plants.

Industry may relocate to decarbonise.

The geographical distribution of renewable resources has implications for industry. The potential for zero emission electricity and low-cost hydrogen from electrolysis powered by solar and wind, or hydrogen from other very low emission sources, may reshape where emissions-heavy production plants are located, how value chains are organised, trade patterns, and what gets transported in international shipping.

Regions with bountiful solar and wind resources, or low fugitive methane co-located with CCS geology, may become exporters of hydrogen or hydrogen carriers such as methanol and ammonia, or home to the production of iron and steel, organic platform chemicals, and other energy intensive basic materials.

We need coordinated policies to stop carbon leakage.

Industry has so far largely been sheltered from the impacts of climate policy and carbon pricing due to concerns about carbon leakage and reducing competitiveness. However, new approaches are needed if we’re to get to net zero, including international coordination of climate and trade policies. This week, an influential group pf UK MPs called for a “carbon border adjustment mechanism” that would subject high-carbon imported goods to new tariffs, to level the playing field.

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