What does it take to create a carbon-neutral industry?

Heavy industry is one of the key GHG emitters, with the production of basic materials accounting for 22% of global CO2 emissions. As a result, the decarbonization of heavy industry comes as a top priority if we are to ensure a liveable climate. 

A new paper suggests that we can make heavy industry carbon neutral by 2050 and provides a roadmap to make it happen. Its author advocates for the development of regional and sectoral plans to serve as the basis for a low-carbon transition. The plans would be implemented through policy packages, unique for each country or region and considering available capacities, stakeholder perspectives, and other factors.

Plenty of challenges remain to achieving a carbon-neutral industry. They include a wide range of energy-intensive processes, low-profit margins for industrial firms and the expected rise of demand for carbon-intensive materials and others. To address them, the paper suggests that simple carbon pricing or discrete interventions won’t do. Comprehensive policy packages that consider both short- and long-term perspectives, as well as decarbonizing both production and demand side, are required.

Christopher Bataille, the author of the paper, suggests a list of strategies that could form a basis of the required policy mix. They include replacing GHG-intensive materials or reducing their use, implementing circular economy principles, as well as funding decarbonization research and development.

Fast-paced decarbonization will also require removing subsidies from GHG-intensive processes while subsidizing the early stages of new low-carbon technologies commercialization and upscaling. Tailored sunset policies for older carbon-intensive facilities, supporting institutions and consideration of justice would be other essential ingredients in the policy mix.

Yet no single interventions will be sufficient without ambitious partnerships among all actors, including governments, industry associations, companies, and others.

A vivid example of such collaboration comes from the Swedish HYBRIT joint venture, which created a mine-to-fabrication zero carbon steel supply chain. Another one comes from the UK Carbon Trust Offshore Wind Accelerator Program, which supported joint research and commercialization on low-carbon options for key elements of the offshore wind supply chain.

For such transitions to actually work, all suggested elements should be fine-tuned considering specifics within developed, in-transition and less developed countries, as well as a myriad of local factors. If this is achieved, “very low and zero GHG industry compatible with the Paris Agreement goals is technically possible within one to two capital stock generations,” the author says.

The findings are in line with earlier research that suggested that a circular economy could help achieve over half of the required emission reductions from the heavy industry.