The 4 Pathways to Industrial Decarbonization
Add bookmark
The targets that global leaders announced at last year's COP26 to tackle climate change will not be achievable without dramatic reductions in the carbon emissions from the industrial sector.
These industries – which include cement, steel, aluminium, fertilizer producers, among others – have emissions that are “hard to abate” because of the equipment, processes and heat required to produce these products.
The industrial sector currently accounts for approximately 30% of all domestic American GHG emissions and is notoriously difficult to decarbonize. America’s Department of Energy has identified four key technology pathways for industrial decarbonization: energy efficiency, electrification, low-carbon fuels, and CCUS.
Pathway 1: Energy Efficiency
Increasing energy efficiency is one of the low hanging fruits of decarbonization. Reducing the amount of energy that’s required for an industrial process or facility, by definition, reduces the amount of carbon released during a given process.
Many technologies already exist to rapidly and radically improve the energy efficiency of buildings and industrial processes.
While energy efficiency won’t solve the entire problem of high emissions in hard to abate sectors, the cumulative effects of widescale improvements in energy efficiency across the industry can make a real impact.
As a bonus, most energy efficiency improvements also result in a direct cost savings to a business, which makes it an ideal starting point for companies starting down the net zero path.
Pathway 2: Electrification
In industrial terms, electrification means replacing technology and equipment that relies on fossil fuels with electricity-driven ones.
The industrial sector consumes a huge amount of energy to power machines and fuel the processes (such as through high-heat furnaces) that convert one material into another state or another material.
McKinsey estimates that technology existing today could enable the replacement of 50% of the fuel that industrial companies use for energy, including to generate heat up to approximately 1,000 degree Celsius (which excludes cement and virgin steel production as they require heat above 1,000 degree Celsius).
But electrification is no magic bullet. If the electricity used to is powered by coal or other dirty fuels, the net benefit of substitution is small.
That's one reason that some industrial companies are starting to develop their own renewable sources of power near their plants. For instance, Tesla’s Gigafactory in Nevada, which produces Lithium-ion batteries, utilizes rooftop solar panels to power the plant. When complete, the company claims that the plant will be entirely powered by solar panels.
However, at the time of writing, the project was still not complete, and it is unclear how much of Tesla’s industrial processes at the plant are powered by renewable energy, demonstrating the difficulty of relying exclusively on renewable power sources.
Similarly, the economic benefit is not yet as compelling as increasing energy efficiency unless electricity prices are reliably lower than fossil fuel inputs.
McKinsey suggests that hybrid set ups (such as companies relying on a combination of renewable energy sources and conventional fossil fuels) coupled with ongoing research and development into electric industrial equipment with lower capital investment costs and increased energy efficiency will help to make a more compelling case for electrification.
Pathway 3: Low-Carbon Fuels
Low-Carbon Fuel is exactly what it says on the box: an energy source that produces lower or no carbon emissions. There are a number of low-carbon fuels available on the market with varying impacts on carbon emissions.
Natural gas, for instance, is considered a low-carbon fuel. Natural gas is considered the “cleanest” of the fossil fuels. According to Shell, the gas releases approximately half the C02 of coal and about a tenth of the air pollutants. By switching to natural gas to run their processes industrial companies can see an immediate reduction in their carbon footprint.
Many would consider natural gas to be the bridge between our fossil fuel-based economy today and the future, which will be powered by alternative and renewable sources of energy. But despite the environmental benefit of switching from oil or coal to natural gas, many environmentalists argue that this approach merely extends our reliance on fossil fuels and delays the adoption of alternatives.
Other fuels include hydrogen, biofuels, biogas. Shipping giant Maersk, for instance, recently announced that it expects to be operating 8 methanol powered container vessels by 2024.
READ: Insight Report: 5 Steps to Effective Carbon Data Management
The Biden administration, meanwhile, is betting big on hydrogen as a fuel of the future. Hydrogen emits only water when it is used as a fuel. That’s why it is seen as a strong contender to help reduce emissions in industrial processes such as steel manufacturing and cement that are hard to abate.
In its proposals for industrial decarbonization, the US Department of Energy envisions a series of regional Green Hydrogen hubs to facilitate the production, processing, delivery, and storage of hydrogen. A total of $8 billion will be available to fund these hubs.
With the exception of natural gas, many of these low carbon alternatives are not yet widely available at scale and the production costs are still high when compared with fossil fuel alternatives. Further research and development is required to reduce those costs and achieve the scale necessary for industrial decarbonization.
Like what you're reading? Sign up for our bimonthly newsletter for a summary of our latest content.
Pathway 4: Carbon Capture, Utilization and Storage (CCUS)
CCUS technologies have been around for decades. These technologies capture, utilize and store carbon from power generation or other industrial processes.
For instance, Archer Daniels Midland (ADM), one of the world’s largest agribusiness companies, has been using CCUS at its ethanol plant in Decatur, Illinois. Last year, the company announced that it had successfully stored up to 3.4 million tons of carbon through its CCUS projects.
The technologies for CCUS are well established but, until recently, were considered too expensive for widescale deployment. That’s why the Biden administration is stepping up with more than in $12 billion in investments as a key component of its bipartisan infrastructure bill.
Biden’s Build Back Better bill proposes increasing the 45Q tax credit (which gives polluting companies tax credits for carbon that is captured and stored) from $50/metric ton to $85/metric ton carbon. Many see this the economic tipping point that would allow for a wider variety of emissions to be captured and stored.
Some environmentalists are opposed to the widespread deployment of CCUS as they believe it detracts from investing in alternative energy sources and maintains fossil fuel dependence.
The International Energy Agency (IEA) says that the world needs 1.7 billion tonnes of C02 capture capacity by 2030 in order to meet net zero targets but the CCUS projects currently in the pipeline will fall well short of delivering this.
Much more will need to be done to accelerate the adoption of CCUS if it is to play a significant role in decarbonizing the industrial sector. New infrastructure, such as pipelines, will need to be developed to transport carbon from production to storage facilities.
Interested in learning more about this topic?
Join over 200 of your industry peers as they advance clean manufacturing and help reinvigorate America's industrial sector at Decarbonizing America's Industrial Sector September 13-15, 2022.
Decarbonizing America's Industrial Sector is the most inspiring showcase of decarbonization innovation in North America. It's the best place to discover powerful solutions - from innovations in AI and robotics, to solutions in carbon capture and electrification to use cases from industry titans such as Eastman, Lafarge and Shell who are paving a new way forward.
Find out more about the event here.
