The industrial sector produces essential materials that make up the buildings in which we live and work, the cars we drive, and other products we use every day. Almost all parts of modern-day society function because of heavy industry. However, this energy–intensive sector is currently responsible for nearly one-third of global carbon emissions and 30% of U.S. emissions. Iron, steel, and cement alone accounted for nearly 70% of industrial sector greenhouse gas (GHG) emissions in 2019.
To tackle the climate crisis and reach net-zero emissions by 2050, it is imperative that private and public sector industry and manufacturing move quickly to remove emissions from their operations. We are starting to see this sector being prioritized, with government agencies outlining blueprints for this effort and allocation of funds. Furthermore, there is a corporate push to reduce all three scopes of emissions, including the GHG intensity of all the goods they procure. Initiatives such as SE2050 have become a driving force for the built environment to push the industry to procure the lowest carbon materials possible for buildings.
However, industrial decarbonization presents an ongoing challenge and has been labeled a hard-to-abate sector. Fundamental changes are required to the manufacturing process to achieve or even come close to net-zero emissions. This holistic change in manufacturing and other industrial processes needs to be balanced with the inevitable increase in the cost and production rate of the manufactured goods.
Focusing on two specific subsets of industrial facilities — carbon-integral heavy industry and high energy use manufacturing campuses — There is a need to look at both the energy supply and demand to be able to sufficiently decarbonize the sector from a holistic standpoint.
Reducing emissions is more complicated in the industrial sector than in other high-emitting sectors like transportation and power because the processes used to create them are incredibly varied. Consequently, a one-size-fits-all solution doesn’t work, and pathways to decarbonization will involve a range of approaches. Decarbonization methods for manufacturing and heavy industry must reduce CO2 emissions while minimizing process disruptions and production cost impacts.
The abatement of GHG from heavy industry is difficult, due to its reliance on carbon-based feedstocks within the manufacturing process. In many of these applications, electrification of the energy sources is either not possible or not sufficient to fully decarbonize the process. This points to a need for new technologies for manufacturing everyday materials. However, replacing existing technology and facilities with entirely new ones will require many decades to roll out. As such, these sectors must review the best available options for deep decarbonization of the industry today, like carbon capture, and other potential future pathways with green energy and other novel technologies.
The other area that is hard to abate is large manufacturing campuses, such as those that produce cars and semiconductor chips. They tend to have many small emissions points that once aggregated, have high GHG impact. They also have high electricity demand and need reliable backup power that traditionally comes from diesel generators. Being able to harness on-site green energy production, either for primary or backup energy, is key to ensuring resiliency of the energy supply as well as limiting Scope 2 emissions.
The producers of materials such as cement and steel operate with small profit margins. As a result, it can be difficult to justify and reap returns on large investments in decarbonization. This is where the carrot and stick theory comes into play. Without a regulatory push to meet these decarbonization targets, other incentives are needed to spend the capital required to make the necessary modifications. However, we are now seeing a shifting attitude within the industrial sector, with many industrial and manufacturing facilities, especially within the built environment supply chain, seeking opportunities to decarbonize.
To decarbonize manufacturing and heavy industry, one must look both at the energy demand and supply of the processes.
Broadly speaking, there are three main categories of solutions that can be applied in different ways across sub-sectors to advance industrial decarbonization: fuel switching, including electrification and efficiency improvements; carbon capture, utilization, and sequestration (CCUS); and alternative manufacturing processes. Each has a different potential for decarbonization, depending on the industry, with distinct benefits and drawbacks for each.
While “sticks” have historically been used throughout a variety of countries to reduce emissions, like sulfur dioxide (SO2) and other regulated pollutants, CO2 regulations have had slower rollout. European countries are at the forefront of CO2 regulation, which in some cases impose penalties for GHGs emitted over the allowable threshold. Meanwhile, the US has employed “carrots” more than most countries or regions. The primary motivation for emission reduction projects is tax credits, paid back after the decarbonization program is implemented. Tax credits for a litany of decarbonization project types were included in the Inflation Reduction Act.5 In theory, the government tax credits will prorate the overall cost of the decarbonization project.
Other such carrots in existence in the US and abroad are government grants for transformational technologies and innovative projects. The Department of Business, Energy & Industrial Strategy (BEIS) in the UK is developing industrial carbon capture (ICC) business models and has allocated billions of pounds to funding relevant projects.6 The US may have the most money allocated, with $12.1 billion in federal funding for carbon management projects alone from the Bipartisan Infrastructure Investment and Jobs Act (IIJA).
Another noticeable driver for decarbonizing the manufacturing and heavy industry sector is commercial purchasing preferences. As more companies have taken a corporate stance to reduce GHG impact to net zero, including Scope 3 emissions, there is pressure for manufacturers to ensure their environmental product declarations (EPDs) are as low as possible. There are a variety of forward-thinking companies that will seek to procure materials with the lowest possible global warming impact (GWP) to avoid purchasing additional offsets.
This growing momentum toward industrial decarbonization shows the progress that has been made in recent years. Many governments are already investing in the development and demonstration of new technologies, providing significant financial support, and creating standards and regulations that encourage the development of a lower-carbon industrial ecosystem. This, paired with the private sector deploying its own purchasing standards and advance market commitments, is creating greater demand for low-carbon products. While there is no single solution within this sector, heavy industry, and manufacturing are still poised to make waves with deep decarbonization projects on both the energy supply and demands side, which will have a beneficial impact on the built environment and beyond.
Tim Ashworth is an associate principal at Thornton Tomasetti and has more than two decades of experience in the analysis, assessment, decommissioning, and demolition of nuclear structures, and in producing safety documentation and arguments required to support domestic and international clients through the process. His primary area of expertise is risk reduction for high-hazard facilities in the energy, heavy civil engineering, nuclear, power, and defense industries.
Emily Kunkel is a vice president at Thornton Tomasetti and is a specialist in decarbonization strategies, with a focus on the energy and industrial sectors. She has an extensive background in the development of carbon capture, transportation, use, and storage projects for mitigating carbon dioxide emissions.
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