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Until recently, it was exceptionally difficult to reduce greenhouse gas emissions from steel, cement, and chemical manufacturing plants. These industries, among others, are considered ‘hard to abate’ since they’re highly energy-intensive and require plenty of heat — making them difficult to electrify.
However, a new generation of plants is cropping up across the world and proving that industrial decarbonisation is both possible and efficient.
Why it matters: Heavy industry is responsible for 22% of global emissions of heat-trapping gases, meaning alternative production methods are critical if the world is to avert a full-blown climate catastrophe.
But aside from their high-heat needs, many conventional industrial processes produce emissions as a byproduct of chemical reactions, which complicates things further and necessitates entirely fresh approaches.
Steel shows the way: Iron and steelmakers have led the charge towards low-carbon manufacturing processes, Julia Attwood, industrial decarbonisation specialist at BloombergNEF, tells The Progress Playbook.
Nowadays, iron ore can be transformed into usable iron by employing green hydrogen as a reducing agent, replacing the need for fossil fuel-derived gases. That low-carbon iron can then be fed into a renewables-powered electric arc furnace to produce green steel.
A number of governments are supporting the shift to hydrogen, while the market for clean iron and steel is also being driven by demand from offtakers including car manufacturers, who want to decarbonise their supply chains, Attwood says.
The likes of BMW Group have already secured offtake agreements with green steel suppliers in Europe, the US, and China.
Using green steel to make cars delivers meaningful climate benefits while having a negligible impact on the price consumers pay, according to an analysis by non-governmental research group Transport and Environment (T&E). A vehicle made using 40% green steel in 2030 would cost just €57 more than usual, while one made using 100% green steel in 2040 would raise the sticker price by a mere €8.
The Chinese government appears to have recognised the opportunity to both reduce emissions and supply low-carbon steel to multinationals, having halted permitting for new coal-based steel projects in 2024. Instead, it’s only approved electric arc furnaces that process scrap steel.
China is also increasingly powering its aluminium smelters using renewable energy, according to Dutch bank ING.
Cement poised to follow: The cement industry is probably two or three years behind steel when it comes to decarbonisation, Attwood reckons.
There are two relatively clear routes forward for the sector: Using carbon capture technologies to reduce emissions — as Heidelberg Materials is doing — and electrifying cement plants while also using alternative feedstocks.
Brimstone is one of several companies pursuing the latter route. Instead of using limestone, which releases carbon dioxide during the cement-making process, Brimstone uses carbon-free calcium silicate rocks. A competitor, Sublime Systems relies on climate-friendly electrochemical processes.
In chemicals, options abound: A number of different strategies are in play in the chemicals sector, and it’s not yet clear which will stick.
Green hydrogen makes it relatively easy to decarbonise the fertiliser industry (the same goes for glass), says Attwood.
Meanwhile, German chemicals giant BASF has teamed up with SABIC and Linde to cut emissions by using renewable electricity as a heat source, rather than conventional fuels.
The companies commissioned the world’s first large-scale electrically heated steam cracking furnace in the first half of 2024. Steam crackers, which are used to produce basic chemicals, require lots of heat to break down hydrocarbons into olefins and aromatics.
BASF also plans to build the world’s biggest industrial heat pump, which will harness waste heat from chemical plants and cooling systems to produce ultra-hot steam, which is needed to make formic acid.
Elsewhere, a number of plastic recycling plants powered by clean electricity are coming online in the US and Europe, with the aim of vastly reducing emissions. But even virgin plastics can be made without fossil fuels, says ING. Avantium, for example, makes plastic out of sugars.
An electricity and heat revolution: Many lighter industrial processes are already being rapidly cleaned up as they don’t require quite as much heat.
Guinness’ flagship brewery in Dublin is swapping out fossil fuels for electric heat pumps and biogas. For the past 264 years, the facility has relied on either coal or gas for its power, steam and heating requirements, but that’s about to change.
“The potential for industrial electrification is huge,” says Jan Rosenow, European programme director at the Regulatory Assistance Project.
A recent study by Agora Industry found that direct electrification could meet 90% of the energy demand not yet electrified by European industry by 2035.
Other solutions are coming to the fore as well. For instance, thermal batteries can be deployed as a heating source for industrial processes, research group RMI says.
In this case, graphite, crushed rock, or bricks are heated to temperatures of up to 1,800°C using electricity. These insulated bricks can store heat for days and release it as needed to facilitate chemical reactions, distillation, and drying.
Another option is to use concentrated solar thermal plants for heat production, as Mars Petcare is doing in Australia to displace its gas consumption. Alternatively, Finnish start-up Coolbrook says it can generate ultra-high heat for industrial customers using a rotating device.
Long road ahead: For now, we’re still in the early days of industrial decarbonisation. While solutions exist, many of them remain expensive — although they’ll grow increasingly competitive as the technologies mature, carbon prices increase, and the fight against climate change intensifies.
Attwood expects carbon capture to be deployed at scale from the late 2020s, while new industrial plants designed to run on electricity will move from the pilot phase into large-scale applications in the mid-2030s.
Financial instruments designed specifically for the energy transition could speed things up, according to ING.
Encouragingly, issuances of transition bonds, which are used to reduce emissions in hard-to-abate sectors, were up almost eightfold in the first half of 2024, compared to the second half of 2023, the bank says. Japan currently dominates the market for transition bonds thanks largely to the country’s Climate Transition Bond Framework.
