Heavy Industry

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Industrial sectors that produce the materials we use everyday, including buildings, cars and consumer goods, represent some of the hardest parts of the decarbonization challenge.

Not only do the production processes for steel, aluminum, cement and plastics demand a huge amount of energy, they also release carbon dioxide (C02) into the atmosphere as a by-product.

Heavy industry accounts for a quarter of total energy use and around a fifth of global CO2 emissions. But the good news is that technologies already exist to enable these crucial materials to be produced, while ensuring we remain on track to limit global warming to a maximum of 1.5ºC.

The solution is threefold:

  1. Reducing demand through a combination of circular economy practices that make better use of existing materials and materials substitutes.
  2. Increasing electrification and the use of zero-carbon fuels, including Green Hydrogen.
  3. Reducing supply-chain emissions through energy efficiency and deploying carbon capture and storage (CCS) for residual emissions.

Overall investment needs are manageable (amounting to around 0.5% of global GDP by 2050, based on analysis from the Energy Transitions Commission) and the price impact on final consumer goods can be marginal.

Delve into the sections below to see how heavy industry is set to be transformed. Or jump to Take Action to see how business leaders and policy makers can help to create genuinely zero-carbon materials by 2050.

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The tech breakthroughs to decarbonize industry are already here

It is technically possible to produce cement, steel and plastics while releasing close to zero CO2 emissions, research from the Energy Transitions Commission (ETC) shows. The challenge will come in deploying these technologies at scale, coordinating across sectors and driving down costs.

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Acombination of existing technologies will help…

Zero-carbon (green) hydrogen and the direct electrification of industrial processes will help reduce the carbon emissions associated with industrial energy demand, according to the ETC. Carbon capture and storage (CCS) can help eliminate the remaining emissions, including process emissions. Sustainably sourced bioenergy must be reserved mainly for aviation fuel.

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But materials and energy efficiency are also critical

The energy requirements to recycle industrial materials are generally a fraction of those required for virgin materials. Research indicates that a more circular economy could reduce CO2 emissions from the plastics, steel, aluminum and cement sectors by 40% by 2050.

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The economics are there but challenges remain

Analysis by McKinsey and the ETC estimates that cement decarbonization would cost on average $130 per ton while steel could be decarbonized for less (at $60 per ton on average). Plastics decarbonization, meanwhile, could come in at an average cost of $295 per ton.

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End costs to consumers will be low

Research from the ETC suggests that full decarbonization by mid-century would cost the economy less than 0.5% of global GDP, with a minimal impact on consumer living standards. For example, low carbon steel use would add only 1 per cent to the price of a typical car while decarbonizing ethylene would likely increase the price of a soda bottle by the same amount.

Cutting emissions from cement

The IEA and the Cement Sustainability Initiative (now the Global Cement and Concrete Association) estimate that the process emissions intensity of cement making could fall by nearly a third by 2050 – owning mainly to the substitution of alternative materials for lime-based clinker.

Steel standard and steel recycling

In November 2019, Responsible Steel – a membership body which includes many of the world’s largest steel manufacturers as well as customers – published its first ever steel standard which includes tough emissions standards. It is expected that the first Responsible Steel site will be certified in August 2020.

Hydrogen replaces coal for steelmaking

Replacing the coking coal used to make steel from iron ore is one way of decarbonizing the process emissions from steel, alongside the roll-out of electrified blast furnaces (which are already used for steel recycling). Hydrogen can be used to produce virgin steel via direct reduction of iron.

Electrification of plastics production and bio-based feedstocks to replace petrochemicals

Zero carbon plastics are already being produced by electrifying the heat input or switching to biogas or hydrogen. Carbon capture, meanwhile, can also be applied to the exhaust gases of pyrolysis furnaces. There is also a growing market for plastics made from bio-feedstocks rather than from (oil based) ethane or naphtha.

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The Circular Economy of materials is crucial

A more circular economy can reduce CO2 emissions from the four main heavy industry sectors (plastics, steel, aluminum and cement) by 40% globally, and by 56% in developed economies.

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Plastics demand could halve by mid-century

Primary plastics production could be reduced by 56% versus business as usual, through more extensive mechanical and chemical recycling.

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Primary steel demand to fall by over a third

Primary steel production could be cut by 37% from today, through reduced losses across the value chain, reduced downgrading in the recycling process, greater reuse of steel-based products, and a shift to car-sharing.

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Buildings will require less virgin cement

Global emissions from cement production could be reduced by some 34% by 2050, just by adopting well-known circular-economy practices into building design.

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Cement leaders commit to scient-based targets

Two of the world’s largest cement makers – Switzerland’s LafargeHolcim and Germany’s HeidelbergCement – both have approved science-based targets, while India’s largest cement maker Ultratech Cement Limited has committed to set a science-based target. These bold commitments demonstrate that leading companies are dedicated to transforming one of the hardest-to-abate industrial sectors for the zero-carbon future.

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HYBRIT project launches zero carbon steel

The Swedish-based Hydrogen Breakthrough Ironmaking Technology project (HYBRIT) was launched in 2016 as a joint venture between the steel producer SSAB, iron ore extractor LAB and state-owned electricity company Vattenfall, with the support of the Swedish government. The aim is to develop a zero-carbon steelmaking process based on hydrogen reduction of iron – instead of coal and coke – and to scale a fossil-free, ore-based industrial steel production process by 2040.

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Dalmia Cement targets net-zero emissions by 2040

Dalmia Cement is increasing its use of ‘blended’ cement, hence optimizing the clinker-to-cement ratio, and reducing its energy intensity. It has been able to reduce CO2 emissions to 342kg/t in its most efficient operations (in comparison to a global average of 900kg/t) – cutting costs by 27% at the same time. Dalmia is also the first global cement company to join RE100.

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Neste converts plastic waste into fuels

The Finnish energy company Neste is collaborating with the British company ReNewELP to convert plastic waste into fuels, chemical feedstocks and new plastics. A plant is planned in the UK that could convert 20,000 Mt of plastic waste into fuels. Analysts Material Economics estimate that the lifecycle carbon emissions of plastics produced through chemical recycling could fall to 1 ton of CO2 per ton of plastics, compared to over 5 tonnes of CO2 for virgin plastics.

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Unilever targets net-zero emissions

Major consumer products company Unilever is creating a new €1bn Climate and Nature Fund to spend solely on climate change projects and commit to reaching its zero-emissions goal by 2039. The fund promises to achieve a deforestation-free supply chain, promote regenerative agriculture and transition to biodegradable ingredients by 2023, as key ways to reach this goal.

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COVID-19 and Green stimulus

The heavy industrial sectors are all trade, capital and labor intensive, so the challenges posed by the Covid-19 crisis are stark. However, the opportunities created by a fiscal stimulus to refit plant and operations are huge. The IEA has been clear that “clean energy should be at the heart of any stimulus”.

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Additional investment support on top of carbon pricing

When growth in the global economy returns, carbon prices will be required but should be carefully designed to avoid international competitiveness effects. However, high upfront investment costs may act as a barrier to investment (even where carbon prices make a shift to zero-carbon technologies economical).

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Public support for innovation and investment

Harder-to-abate sectors should benefit from public support for innovation and investment. Electrolysis cost reduction for Green Hydrogen is a key priority alongside investment in transport and storage tank infrastructure for Hydrogen and ammonia. The deployment of Carbon Capture and Storage (CCS) has been stalled for too long and needs rapid attention and funding.

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Energy policy should plan for increases in clean power demand from industry

National decarbonization plans and industrial strategies should set out an integrated vision for power decarbonization and electrification, ensuring that increased power demand (including that for electrolysis) can be met by zero-carbon power.

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Biomass use must be constrained

The use of forest bioenergy is severely constrained by the availability of truly sustainable feedstocks. Bioenergy typically produces less than 1% of the energy that solar power can produce per hectare, making electricity-based solutions more effective where available and technically feasible.

Consumers are demanding green products

Two-thirds (67%) of consumers would like to see a carbon label to illustrate that “products have been made with a commitment to measuring and reducing their carbon footprint”, according to the Carbon Trust. Unilever plans to put labels on 70,000 of its products that show how much greenhouse gas was emitted in the process of manufacturing and shipping them to consumers.

Buyers are starting to work together to move markets

Improved materials circularity cannot occur without greater coordination between companies in a supply chain. High-quality recycling requires new approaches to product design as well as to end-of-life dismantling and materials separation. Major buyers can accelerate change and ResponsibleSteel, for example, is set to launch a Buyers’ Forum in late 2020.

Regulation and consumer pressure are combining to push for clearer labelling

Adequate labelling of lifecycle and embedded carbon intensity of products (e.g. cars, appliances) and services (e.g. flights) could create traceability and become a powerful tool for consumer awareness.

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The power sector has a huge role to play

In any feasible path to a net-zero-carbon economy, electricity’s share of total final energy demand will rise from today’s 20% to over 60% by 2060. As a result, total global electricity generation must grow from about 20,000 TWh today to 85-115,000 TWh by mid-century (about 5 times as big) at the same time as fossil fuels are phased out, according to the ETC.

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Hydrogen demand will rocket

Achieving a net-zero-CO2 emissions economy is highly likely to require an increase in global hydrogen production from 60 Mt per annum today to something like 425-650 Mt by mid-century, according to the ETC.

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But Green Hydrogen production costs are falling rapidly

Bloomberg New Energy Finance predicts renewable hydrogen could be produced for $0.8 to $1.60/kg in most parts of the world before 2050. That would make green hydrogen cost competitive with current natural gas prices in Brazil, China, India, Germany and Scandinavia on an energy-equivalent basis.

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Energy efficiency is a non-negotiable

Strong policies to improve energy efficiency, increase materials efficiency and circularity, and manage demand for heavy-duty transport could reduce the additional demand for electricity by around a quarter, according to the ETC. Given the scale of the investment challenge, it is vital to maximize the opportunity. Saving a KWh remains a great deal cheaper than generating an additional KWh, IEA data shows.

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Upfront investment needs remain significant

In the industrial sectors, total incremental capital investment from 2015 to 2050 could amount to $5.5 to $8.4 trillion, according to McKinsey. A particular difficulty is creating strong enough financial incentives to trigger the required investment from the private sector. In heavy industry, very long asset lives could delay the deployment of new technologies, unless there are strong policy incentives for early asset write-offs. In steel, for instance, a switch from blast furnace reduction to hydrogen-based direct reduction may require scrapping of existing plants before end of useful life.

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Will there be enough carbon storage?

As Carbon Capture and Storage needs to become more widespread as a means to tackle residual industrial emissions, underground carbon storage will become ever more important, according to IPCC. A comprehensive survey is needed to ascertain the true global scale of the capacity and the differences between regions.

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Plastics recycling doesn’t work without consumer buy-in

Reaching zero lifecycle emissions from plastics constitutes a significant challenge, as it requires eliminating end-of-life as well as production emissions, according to Material Economics. Limits to sustainable biomass supply will likely make it impossible to entirely substitute fossil fuels with bio-feedstock. It will therefore be essential to manage existing fossil fuel-based plastics through mechanical and chemical recycling, as well as secured end-of-life storage for solid plastic but this will require coordination and buy-in along the value chain from suppliers, to consumer brands and on to consumers themselves.

Companies

Join other leading businesses, step up and commit to bold climate action.

Policy Makers

Drive change at the pace and scale required to achieve net-zero heavy industry globally by 2050.

  • Set a clear industry roadmap with interim targets and milestones to net-zero by 2050.
  • Put in place clear policies and standards to drive energy and materials efficiency and circularity.
  • Ensure public support for research, development and deployment of new technologies.
  • Facilitate financing and public procurement to create demand and accelerate private sector investments to deploy proven technology at scale.