Is the industry ready for change?

Energy-intensive industries have been making an effort to decarbonise their activities, but most are still far off from reaching the Paris Agreement goals. Industry needs to put this agenda at the centre, and strong policy-making is important to make this happen.

Energy-intensive industries are often described as difficult to decarbonise as they are characterised by high energy-related and process emissions that are not easy to reduce. They traditionally focused on improving energy efficiency, but the Paris Agreement has served as a “wake-up call” for many, making it clear that much more radical changes would be needed. 

Some companies in the basic materials sector have been adopting ambitious targets for decarbonisation and embarking on the development of new, low-carbon process technologies using renewable energy sources like green hydrogen and electricity [see HYBRIT case study], biofuels [see Lime kiln case study] as well as fossil-free feedstock [see DuraSense case study]. Despite a variety of technical solutions for the different sectors, several factors will determine whether the industry is really prepared to introduce a transition that will allow them to attain a level well below the 2°C target.

The speed of the research and development scale-up will be crucial: over the course of this decade many companies will face large-scale reinvestment decisions for existing production facilities. It is now important that new low-carbon production technologies are available on an industrial scale and that investment costs quickly become competitive. It is currently still uncertain whether and how innovations can scale-up in this way.

In addition, industry is still often reluctant to aim for deep decarbonisation, either through a reduction in the demand for materials or a wider use of recycled materials for high-value purposes. This would also mean a reduction in the consumption of primary materials. In parallel with the increased use of recycled materials, industry should also make greater use of new product lines. For example, alternative and lower-emission products could be complementary to meat and dairy products instead of rejecting them as disruptive innovations brought to the market by new entrants. 

This raises the question whether energy-intensive industries are really ready for disruptive changes or whether these changes still have to be imposed on them from outside, for example by political governance mechanisms. However, the latter need to be designed quickly to enable the economic viability of new low-carbon technologies (including carbon taxes and border adjustment, public procurement and low-carbon material quotas, etc.). Policies should also focus on the demand side, by creating stronger incentives and rules for the use of recycled and fossil-free products.