The EU needs an industrial strategy that helps basic material industries achieve net-zero emissions by 2050, and innovation needs to be a large part of it, write Tomas Wyns and Gauri Khandekar.
Reducing greenhouse gas emissions from energy-intensive industries to zero by 2050 is perhaps the toughest challenge facing the EU. The most promising low-emission technologies are going to need to prove industrial scale demonstration by 2030 at the latest.
But how do you do this? How, for example, do you convert high-temperature blast furnaces – practically all of which currently burn fossil fuels – to run off green electricity (or on hydrogen produced by green electricity, which is what the Hybrit project in Sweden is attempting to do) without crippling European industry and/or massively pushing up consumer costs?
Our new report, Industrial Transformation 2050, makes detailed suggestions along five lines. It draws on new research also published today (25 April) by Material Economics, examining pathways for decarbonising the basic materials industries. Material Economics has looked at the “what”. We have looked at the “how”.
First the “What”. There are several pathways for cutting industrial emissions in the steel, cement and chemicals sectors to zero by 2050. A more circular economy is a large part of the answer. Increased materials efficiency could cut up to 171 MtCO2 per year by 2050 and around 70% of steel could eventually be produced from recycled feedstock.
Processes need to improve as well. In the automotive sector, for example, up to a third of primary steel doesn’t make it into the body of the car but is instead returned as “new scrap” to be re-melted. This is a huge waste of energy as well as material.
In the case of plastics, using end-of-life plastics as feedstock for new production could significantly reduce the need for fossil fuels. The current figure for plastics recycling (of around 30%) is misleading as most of this is “thermal recycling”; the plastics are simply burnt to produce energy. This can and must change.
Cement is another good example, with innovations like SmartCrusher, showing that, with the right policy incentives, up to half of all cement could be efficiently re-separated from concrete during demolition and re-used. Cement production, although improving, is still a very high-emissions industry.
We’ll also need new technical processes. Material Economics estimates that between 143 and 241 MtCO2 per year could be cut by 2050 by rolling out new industrial processes.
Finally, there is carbon capture and storage (CCS), to take care of the residual emissions from industry – and there are residual emissions left over in each of the pathways Material Economics has developed. The range is large, as it depends on the degree to which we can improve materials efficiency and technological innovation.
So how do we do this?
Clearly, the innovation needs are substantial. They encompass a broad spectrum ranging from the creation and acceleration of new low-carbon production processes to innovation that applies not only to the value chains of basic materials industries but also to the energy systems that power them.
We suggest that the EU develops an industrial climate neutrality grand challenge under the EU’s innovation flagship Horizon Europe in coordination with national industrial R&D programmes to address outstanding basic R&D gaps. For materials efficiency specially, we need to support pilots for innovative technologies that help to preserve material value during design as well as deconstruction processes, advanced recycling processes and decontamination systems.
A connected challenge is raising the up-front capital at acceptable rates. Low-carbon tech will need to be able to compete with high-carbon incumbents both inside and outside the EU. But there is no getting away from the fact that reducing emissions to zero in sectors which are currently very emissions-intensive is going to require investment on a large scale. The pathways developed by Material Economics cost 20-30% more for steel and 20- 80% for cement and chemicals.
The good news is that the end consumer might barely notice a difference in the price of final goods (consumer prices of cars, houses, packaged goods, etc. would increase by less than 1%) but the challenges for the industry in raising the investment are substantial.
Industrial Investment Platforms for Carbon Neutral Industry could be part of the solution. These would be one-stop-shops for financing large industrial demonstration projects, made from combined EU funds, national support and financing from private investors. A European sovereign wealth fund could also provide long-term, strategic support.
Finally, we need to coordinate all of this. In the maximum case scenario, an additional 710 TWh of electricity per year could be needed for the steel, cement and chemicals sectors alone. The whole industrial sector currently uses around 1,000 TWh/yr. So we are talking about a lot of additional clean electricity. And that is on top of the full electrification of power, heating and transport, as envisioned by some studies such as Fossil Free Energy in 2050 – developed by Cambridge Econometrics and published last month.
To avoid a catch-22 situation where investments in new processes are delayed by the lack of infrastructure or vice versa where new infrastructure is not viable due to lack of demand from new processes, a proactive approach will be needed.
A Joint Industry-Energy Inter-Service Taskforce could develop a virtuous circle between the energy and industry transitions and ensure that incentives and support are aligned. Part of this will, of course, be about disincentivisng investment in old, high-carbon energy generation.
None of this is easy. But we hope our report, in conjunction with Material Economics’ work on the technical pathways that are available, has done some of the heavy lifting. Net-zero emissions from industry is possible be we need to be innovative ourselves in order to make it happen.
Tomas Wyns and Gauri Khandekar will be discussing the findings of both reports at an event in Brussels hosted by the European Climate Foundation on 25 April. The event takes place from 15.30 to 18.30 at The Office, Rue d’Arlon 80, Brussels. Registration details here.