4 solutions to help reduce carbon emissions from industrial clusters

Countries representing 70% of the global economy have committed to net-zero emissions targets by 2050 – and major energy ecosystems such as industrial clusters will play a pivotal role in helping these countries meet their climate goals.

Industrial clusters are geographic areas encompassing co-located companies that represent either a single industry (chemical parks, for example) or multiple industries (such as steel and cement). Examples of large industrial clusters around the world include the Humber Cluster in the UK, Suzhou Industrial Park in China and the Port of Rotterdam in the Netherlands.

Accenture, in collaboration with the World Economic Forum, has developed a framework built around four key solutions to help reduce carbon emissions in industrial clusters:

1. Systemic efficiency and circularity

2. Direct electrification and renewable heat

3. Hydrogen

4. Carbon capture, utilization and storage (CCUS)

Adopting these solutions could result in a decline of up to 40% of European industrial carbon emissions by 2030 (up to 12% of overall European emissions). The key is approaching this through multi-stakeholder collaboration and in an integrated manner.

Energy efficiency and circularity are common industry themes – but we can push these concepts much further. For example, Meishan, a hub for logistics and high-tech industries in China, has set an ambitious target of carbon neutrality by around 2050. To achieve this and similar targets, multi-stage resource utilization will be a key area of focus. One example could involve recovering the cooling load from a liquified natural gas (LNG) terminal to support a freezer warehouse, and the subsequent recovery of this cooling to support a snow park.

The economics of clean electricity and the need to recover on past asset investments has limited the electrification of industrial processes. However, around half of industrial carbon emissions are derived from light or medium industries such as food processing or equipment manufacturing; these use low and medium-temperature processes that can be electrified using commercially available technology. The attractiveness of electrification is rising due to the falling cost of renewables, higher carbon pricing and shared infrastructure such as microgrids. For example, Suzhou Industrial Park in China has implemented an all-in-one microgrid solution that provides power, cooling and heating as required.

Hydrogen can help reduce carbon emissions in hard-to-abate sectors such as steel and chemicals. Applications include hydrogen as a feedstock for products and in chemical reactions as well as high value uses in certain forms of transport and power storage. Industrial clusters can create an internal market for hydrogen, where production and consumption are co-located. For example, the Spanish electricity company Iberdrola, in partnership with fertilizer manufacturer Fertiberia, will build one of the largest green hydrogen production plants in 2021. Iberdrola will supply solar PV electricity to power an electrolyzer that will provide green hydrogen, which will in turn be used in Fertiberia’s production plant, resulting in significant carbon emissions reductions.

Major CCUS hubs are emerging across the globe, providing alternatives for industries struggling to reduce carbon emissions. However, given the sizeable investments in transport and storage required to implement CCUS, such projects require a certain amount of scale to be feasible. Industrial clusters can provide this scale given the concentration of heavy industry and therefore the aggregation of demand. For example, the UK expects to capture and store up to 10 million tonnes of CO2 by 2030 via projects such as those at the Humber industrial cluster in the North of England, where an onshore pipeline is being developed to collect captured CO2 from multiple carbon abatement projects in the region. The captured CO2 will then be transported offshore and stored under the seabed of the North Sea.

Policy and regulatory support for measures such as reflective carbon prices and carbon border adjustment mechanisms will help improve the competitiveness of low carbon or carbon-neutral initiatives.

Government support may also need to include capital for large-scale infrastructure projects and new ways of working.

Beyond policy and financing, the adoption of low-carbon technologies in clusters can create wider system value benefits such as job creation and economic development, air quality improvements and subsequent human health benefits, as well as the creation of a digitally enabled modern integrated energy system that is more secure and resilient.

Companies in industrial clusters already have a long history of collaboration when it comes to sharing resources, challenges and solutions. But there is a new driving force for co-location: net-zero commitments at the national level.

The opportunity to reduce carbon emissions in industrial clusters is significant. The time to act is now. New partnerships, combined with new approaches to policy, financing and scaling of technologies will be key to accelerating the transition to a net-zero economy. These partnerships and approaches will be built on the pillars of greater multi-stakeholder collaboration and greater trust.

What are the next steps? Companies in new and existing industrial clusters will need to come together and align on common net-zero goals, followed by the development and implementation of clear roadmaps that set out how to achieve these targets. Putting in the effort now will help us to ensure a cleaner, greener and more prosperous future.