Industries in Depth

Achieving net-zero emissions by 2050 will rest on these 3 pillars

A worker throws quartz sand in an electric arc furnace in a steel factory of Store Steel in Store, Slovenia November 17, 2016.

Technologies such as electric arc furnaces can help hard-to-abate sectors to decarbonize Image: REUTERS/Srdjan Zivulovic

Shunichi Miyanaga
Chairman of the Board, Mitsubishi Heavy Industries
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SDG 12: Responsible Consumption and Production

This article is part of: World Economic Forum Annual Meeting
  • Net-zero emissions is possible - but far from simple.
  • Heavy industry and hard-to-abate sectors pose particular challenges.
  • Support from leaders and policy-makers in 3 areas will be crucial.

Net-zero CO2 emissions by 2050: what even a year ago seemed a distant vision is now becoming technically realistic - and possible.

But the path toward carbon neutrality is far from simple. A mix of approaches will be needed, including electrification, renewable energy and cleaner fossil fuels. It will depend on such localized characteristics as geography, levels of industrialization and other many societal needs.

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A particular challenge will be industry, which makes up 29% of final consumption and 42% of direct CO2 energy-related and process emissions. Heavy industries such as steel, cement and chemical production for products like plastics are considered “hard to abate” - either because many of their processes cannot be easily electrified, or because they use fossil fuels as raw materials.

The technologies to largely decarbonize these sectors do exist, but they are at various stages of development. As a result, technology on its own cannot deliver net-zero emissions. Support from policy-makers and incentives to generate demand for low-carbon or zero-carbon products will also be required.

Heavy industries are among the hardest to decarbonize
Heavy industries are among the hardest to decarbonize Image: Mitsubishi Heavy Industries / IEA World Energy Outlook 2019

Here are three areas that will be crucial.

1. Scaling up technology

Companies around the world are developing solutions to make net-zero emissions possible.

The success of offshore wind, the costs and electricity-generating capacity of which are now considered to be on a par with gas power plants, shows that renewables can be scaled up to compete with fossil fuels.

Even the issue of intermittency can be addressed, whether through battery storage or conversion to hydrogen – which can then be used as a low-carbon fuel in transport, power generation and industry.

In hard-to-abate sectors, technologies are also available to lower CO2 emissions. In steelmaking, cleaner electric arc furnaces can decarbonize the recycling of scrap metal. New low-carbon steel can be produced using natural gas or hydrogen instead of coal in the energy-hungry process of iron-ore reduction.

What remains of carbon-rich waste gases can be converted into synthetic fuels via carbon capture, utilization, and storage (CCUS). These can then be used in other carbon-challenged sectors, such as chemicals, to help reduce emissions.

In heating – which accounts for around 50% of total energy consumption – hydrogen could replace natural gas in existing distribution networks. Waste-to-energy applications, such as those that exploit heat produced from manufacturing processes for district heating and electricity, are already established here, and their role is expected to grow further.

Many of these low-carbon solutions, while technically proven, will need to be scaled up to make them more economically viable - but technology companies cannot be left to fight this battle on their own.

2. Policy changes

Policy changes have already been invaluable in helping reduce carbon emissions. Renewable energy technologies like wind turbines and solar PV would not have reached their current level of market maturity without global and regional legislative support.

To reach net-zero emissions, similar support for other carbon-abatement technologies is needed to aid the development of decarbonization solutions in areas such as heating and industrial processes.

Some progress is being made. Japan, for example, wants to become a 'hydrogen society', and has accordingly set targets around hydrogen production and usage. Globally, more than 50 countries are developing hydrogen policies and roadmaps.

In the US, tax incentives are encouraging a wave of new CCUS projects, with the majority aiming to capture CO2 emissions in the chemicals sector.

Europe, which has already reached its targets for renewable energy in the electricity mix, has now set its sights on decarbonizing heating, with a minimum annual target of 1.3% growth in renewable energy heating.

But more must be done. In some of the world’s biggest and fastest-growing economies, there needs to be legislative support for switching to lower-carbon energy sources. The Energy Transitions Commission has identified natural gas as a key transition fuel for rapidly reducing the industrial CO2 emissions of China and India.

No single policy solution will work for everyone when it comes to achieving net-zero emissions. And alongside regulatory and financial initiatives, it is also critical to stimulate demand so markets can be scaled and costs reduced.

3. Generating demand

Energy taxation and carbon pricing – through mechanisms like the EU’s Energy Trading System, for example – are becoming more common in some parts of the world. Both make it less attractive to generate greenhouse gases and more appealing to invest in abatement technology.

Public procurement also has a role to play by prioritizing low-carbon products in any of its buying decisions so as to generate demand – as well as setting an example.

At the same time, grassroots demand needs to be nurtured, by encouraging consumption of low-carbon products by the public.

Is that all?
Is that all? Image: Mitsubishi Heavy Industries / Energy Transitions Commission

The Energy Transition Commission suggests that decarbonization in hard-to-abate industries will only have a small impact on end consumer prices. Decarbonized steel would likely add no more than $180 to the price of a car. Zero-emissions plastics would bump up the price of a litre of soft drink by less than $0.01.

Only aviation may see higher increases, with ticket prices predicted to rise by 10% to 20% if the cost of biofuel and synthetic fuel remains higher than conventional jet fuel.

To build scale, the focus should first be on markets in which end users can absorb the extra cost.

An analogy might be the success of organic foods; while more expensive, organic produce gained momentum with an audience looking to live more healthily. Similarly, creating a ‘low carbon’ or ‘no carbon’ label might encourage consumers who are concerned about climate change to ‘trade up’.

Net-zero 2050 is within our grasp – but it will require a concerted effort to get there.

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Related topics:
Industries in DepthManufacturing and Value ChainsForum InstitutionalClimate ActionEnergy Transition
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