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Industry Decarbonization

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Photo by Morteza Mohammadi on Unsplash

Fast Facts About
Industry Decarbonization

Industry, which includes large-scale manufacturing and production processes to make products such as steel, cement, and chemicals, is a significant source of greenhouse gas emissions. Reducing emissions from heavy industry is challenging. Unlike the electricity sector, which already has economically viable solutions like wind and solar, the industry sector is still developing the technologies needed for cost-effective and scalable decarbonization.

Industry uses fossil fuels for two primary purposes:

  • Energy - generating heat for industrial processes through combustion, which emits CO2 and air pollution
  • Feedstocks - the raw materials that produce products like steel, fertilizer, chemicals, and plastics

To decarbonize industry, it is essential to eliminate the use of fossil fuels for energy production. Fossil fuel combustion is a mature technology that achieves the high temperatures often required by industrial processes, making fossil fuels difficult to replace. However, certain electrical technologies can generate the same high temperatures and be powered by carbon-free electricity sources. The main challenges are the higher cost of electricity versus natural gas or coal, and up-front costs to retool factories, such as by increasing electrical capacity or installing electrified industrial machinery. That said, electricity is used more efficiently than fossil fuels and can be cost effective with the right policy support or with technological means of reducing electricity costs, such as by relying on the exceptionally high efficiency of industrial heat pumps or by using thermal energy storage to enable industrial facilities to buy electricity only in the hours of the day when it is cheapest.

Government policies and market incentives can help facilitate the transition to decarbonized industry. In the U.S., the Inflation Reduction Act and the Bipartisan Infrastructure Law include industrial decarbonization incentives, but more are needed.


Significance

Share of GHG Emissions from Industry

World 33% ๐ŸŒŽ
U.S. 30% ๐Ÿ‡บ๐Ÿ‡ธ
of global GHG emissions come from industry

When purchased electricity is not included, these percentages are 24% for the world and 23% for the U.S. Purchased electricity is relatively easy to decarbonize, but the remaining portion is more difficult.

Share of Energy Used for Industry

World 37% ๐ŸŒŽ
U.S. 35% ๐Ÿ‡บ๐Ÿ‡ธ
of energy use is accounted for in the industrial sector

Share of Final Energy Used in Industry From Renewable Resources

World 17% ๐ŸŒŽ
U.S. 9% ๐Ÿ‡บ๐Ÿ‡ธ
of energy used in industry comes from renewable resources


World

Highest Annual GHG Emissions from Industry

China* 45% ๐Ÿ‡จ๐Ÿ‡ณ
U.S. 7% ๐Ÿ‡บ๐Ÿ‡ธ
India 7% ๐Ÿ‡ฎ๐Ÿ‡ณ
of global annual industrial GHG emissions

Highest Energy Use for Industry

China 29% ๐Ÿ‡จ๐Ÿ‡ณ
U.S. 7% ๐Ÿ‡บ๐Ÿ‡ธ
India 7% ๐Ÿ‡ฎ๐Ÿ‡ณ
of global annual industrial final energy consumption

* Though China has the highest annual industrial emissions, much of the production from the emissions is exported. For example, in 2021 China was the largest exporter of metal, iron, and steel with almost 3x more exports than the next exporter (Italy) and over 7x more than the U.S.

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Decarbonization of Industrial Heat

TechnologyDescriptionEfficiencyTemperature Range
Heat pump

Transfers heat from one location to another using a refrigeration cycle and minimal external energy inputs

Uses: drying processes, steam supply

Very high, can be over 300%Low temperature (up to 165โ„ƒ)
Electrical resistance heating

Electrical current runs through a resistor converting energy to heat

Uses: plastic welding, drying and cutting, rubber processes, semiconductor manufacturing

Near 100%Medium temperature (165โ„ƒ - 1000โ„ƒ)
Induction

Heats a conductive material by subjecting it to a magnetic field that induces currents within the material, generating heat.

Uses: welding, melting, tempering metals (only heats electrically conductive materials)

90%High temperature (> 1000โ„ƒ)
Electric arcs

Electricity is run from an electrode through conductive material to another electrode 

Uses: steelmaking, welding, plasma cutting

40- 75%High temperature (> 1000โ„ƒ)
Dielectric heating

Rapidly oscillating electric field that makes polar molecules vibrate, creating thermal energy

Uses: food processing, textile drying (things that need to be heated fast)

70%Medium temperature (165โ„ƒ - 1000โ„ƒ)
Infrared heating

Contains an emitter that is heated and projects infrared radiation

Uses: drying paint/coatings, warming heat sensitive materials

85-95%Low - medium temperature (up to 500 โ„ƒ)
Lasers

Concentrated light energy to rapidly and precisely heat materials

Uses: cutting materials, welding, drilling

Up to 50% depending on typeHigh temperature (> 1000โ„ƒ)
Electron beams

Streams of high-energy electrons used to heat materials. Generated by accelerating electrons and focusing them onto a target material.

Uses: welding, additive manufacturing

> 95%High temperature (> 1000โ„ƒ)
Decarbonized hydrogen combustion

Green hydrogen (using electrolysis) or blue hydrogen (using carbon capture) can be burned to generate immense amounts of heat without carbon emissions

Uses: steel production, chemical manufacturing, refining

16% for green hydrogen (without waste heat recovery, at 1340โ„ƒ)High temperature (> 1000โ„ƒ)
Thermal batteries

Type of heat storage that can be activated anytime; stores heat in a heat-absorbing material in an insulated case. Can be connected to the grid or independent.

Uses: metal processing, glass, chemical processing, oil refining

95% round trip efficiencyMedium - high temperature (up to 1500โ„ƒ)

Policy and Economics

Policy mechanisms are essential to initiating industry decarbonization because they provide a regulatory framework and incentives that drive companies to adopt cleaner technologies and practices. Without such policies, market forces alone may be insufficient to overcome the high initial costs and risks associated with transitioning to low-carbon operations in industry.

Examples of Policy Mechanisms and U.S. Policies That Support Industry Decarbonization

Policy MechanismU.S. Example
Emissions standards on industrial boilers and other industrial equipmentNational Emission Standards for Hazardous Air Pollutants from the Environmental Protection Agency (EPA) related to institutional boilers and process heaters
Efficiency standards for industrial equipmentAppliance and Equipment Standards Program from the Department of Energy (DOE) sets minimum energy efficiency standards
Green government procurementEnvironmentally Preferable Purchasing Program from the EPA encourages the U.S. government to purchase products that meet certain standards and ecolabels. In 2022, the U.S. government purchased more than 8 million registered products
Financing policies such as green bank, rebates for electrified industrial equipment, subsidies for clean productionIn the Inflation Reduction Act, the Section 45X Advanced Manufacturing Production Tax Credit incentivizes certain technologies for clean industrial production. The DOE Loan Programs Office aims to support and grow new technologies that havenโ€™t found a commercial market
R&D support policiesThe U.S. Department of Energy Industrial Efficiency and Decarbonization Office provides investment across areas related to industrial decarbonization such as direct funding, support of national labs, conferences, etc.
Carbon pricingThe U.S. does not have a federal carbon tax, but there are programs such as Californiaโ€™s cap-and-trade system, which apply to industry. Several East Coast states formed the Regional Greenhouse Gas Initiative (RGGI) to price carbon, although currently only the electricity sector, not the industry sector, is included in RGGI

Visit our Energy Policy page for more information.


Drivers

  • Need for carbon reduction to address climate change
  • Many technologies have been developed for decarbonization
  • Government regulatory pressures such as emissions or efficiency standards
  • Government financial incentives such as those offered under the Inflation Reduction Act 
  • Increasing demand for green products by businesses and consumers

Barriers

  • Lack of requirement to decarbonize; in many places, there is no penalty for emitting CO2
  • Electricity is more expensive per unit energy than natural gas, even after adjusting for the fact that electricity is used more efficiently (with the exception of select technologies such as industrial heat pumps and thermal batteries)
  • Upfront capital costs to change technologies / swap out equipment
  • Technology is still being developed for some high heat processes

Climate Impact: High

High gradient
  • High emissions of CO2 and other GHGs from industrial processes

Environmental Impact: High

High gradient
  • Air pollution: NOx, SOx, VOCs
  • Water pollution, land degradation

Featured Lecture on
Decarbonizing the Industrial Sector

This is our Stanford Energy Seminar lecture on decarbonizing industry. We strongly encourage you to watch the full lecture to understand the importance of decarbonizing the industrial sector and opportunities that exist for reducing greenhouse gas emissions from major subsectors like iron and steel, chemicals, and cement. We also encourage you to review the readings and videos listed in the next section to help contextualize the lecture content.

Presented by: Jeffrey Rissman, Senior Director, Industry at Energy Innovation; Author of Zero-Carbon Industry: Transformative Technologies and Policies to Achieve Sustainable Prosperity
Recorded: February 26, 2024  Duration: 55 minutes

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Readings and Videos on
Industry Decarbonization

For a complete learning experience, we strongly encourage you to review the readings and videos below in addition to watching the Decarbonizing the Industrial Sector lecture.  

General

Steel

Chemicals

  • Living With Chemistry. Voyager. March 29, 2024. (4 pages)
    Explores the challenges to decarbonizing chemicals production and promising approaches that are emerging. 

Cement

Additional Resources About
Industry Decarbonization

Stanford University

 

Other Resources and Resources for Specific Topic Areas

Fast Facts Sources

* Rest of information is from the lecture video

More details available on request.
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