Energy Transition

Industrial clusters: 4 governance models to deliver net-zero goals

Industrial clusters can collaborate to accelerate transition to net-zero.

Industrial clusters can collaborate to accelerate transition to net zero. Image: Shutterstock

Joanna Kolomanska-Van Iperen
Lead, Energy, Materials Infrastructure Platform, World Economic Forum Geneva
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Transitioning Industrial Clusters Towards Net Zero

This article is part of: Centre for Energy and Materials

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  • Industrial clusters face many challenges working with a range of stakeholders to deliver net-zero targets.
  • A "fit for purpose" governance structure for each industrial cluster is required to reflect their unique circumstances and needs.
  • These four examples illustrate the key considerations and relevance of each model to its cluster.

Each industrial cluster faces unique challenges that reflect its partner dynamics, industry composition and regional or national policies. The constructive tension arising from balancing individual organizational targets and initiatives against the cluster’s net-zero ambitions and collective decarbonization solutions can lead to more productive partner dialogue and bring about creative solutions with increased accountability.

In addition to industry, utilities and other cluster ecosystem partners and government bodies can provide strategic influence in their role as policy-makers to align disparate interests and accelerate the path towards consensus, especially in the early stages of a cluster’s set-up.

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Further, a governance model that considers resource requirements (staffing, partner participation, funding etc.) but is allowed to evolve can powerfully shape the cluster’s path. To fully unlock the cluster’s potential, it is important to think and act collectively, versus individually and take a longer-term view beyond a single project to foster continued collaboration to unlock system value.

In our view, a governance model deserves careful thought, debate and discussion among the partners. The optimum governance model enhances the strengths of each cluster, tailored to the partners and wider cluster ecosystem.

We surveyed four governance models to illustrate the key considerations and relevance of each model to its cluster. The four models reference existing signatory clusters to the World Economic Forum’s Transitioning Industrial Clusters towards Net Zero initiative, in collaboration with Accenture and EPRI.

Figure 1: Four examples of cluster governance models.
Four examples of cluster governance models.

1. Capital project model: Andalusia Green Hydrogen Valley

The Andalusian Green Hydrogen Valley is led by CEPSA to unite private and public stakeholders to produce green hydrogen to decarbonize CEPSA’s domestic industrial activity, manufacturing and exporting decarbonized fuels for heavy transport. The cluster is implementing green hydrogen production at two 1GW energy parks in southern Spain, with backing at local, national government and European levels.

The corporate-led governance model references a capital project delivery approach, with CEPSA as the overall project developer providing internal resources and capabilities.

As cluster administrator, CEPSA leads bilateral outreach to ecosystem organizations including potential hydrogen offtakers such as the Port of Rotterdam. Furthermore, CEPSA proactively establishes working relationships with local municipalities that support the cluster’s development. CEPSA also actively engages local universities, contributing to training and future skills development. Private sector partners are selected with the aim of accelerating regional green hydrogen applications.

Figure 2: Andalusia Green Hydrogen Valley Governance Model.
Andalusia Green Hydrogen Valley Governance Model.

2. Foundation model: Jababeka Net Zero Industrial Cluster

Jababeka Industrial Estate is an established manufacturing hub and major contributor to Indonesia’s West Java economy. The cluster catalyzed net-zero transition action through private sector involvement, given increasing pressure on Jababeka’s transnational tenants’ ESG performance. Jababeka will build a “voice of industry” platform to drive industrial decarbonization and engagement with other stakeholders including key Indonesian government bodies and power producers, leveraging its role as developer, estate manager and utility provider of the industrial estate.

The cluster partners have set up a foundation, administrated by Jababeka to track local decarbonization efforts, develop and manage cluster-wide infrastructure and influence smaller companies’ net-zero transition operations. With over 2,000 tenants on the estate, many small and medium-size companies lack capabilities to navigate the net-zero challenges.

Figure 3: Jababeka Net Zero Industrial Cluster Governance.
Jababeka Net Zero Industrial Cluster Governance.

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3. Innovation platform model: Brightlands Circular Space

Brightlands Circular Space is rooted in the human capital agenda to upskill the regional workforce with circular skills and attract sufficient talent to achieve a climate-neutral chemical industry. The platform provides manufacturing equipment, lab and office space and support services to over 150 co-located corporates on the Brightlands Chemelot Campus in South Limburg, Netherlands. It also facilitates expertise development through public-private collaborations with regional businesses. The campus chairs the country’s National Campus Council of 10 leading Science & Innovation Parks, in coordination with the Ministry of Economic Affairs and Climate[1].

The comparatively flat innovation platform model provides flexibility for each sustainability initiative to tailor their individual project governance to the companies and R&D groups involved while building government engagement through cooperation with the regional talent office.

Figure 4: Brightlands Circular Space Governance.
Brightlands Circular Space Governance.

4. Non-profit model: National Capital Hydrogen Center

National Capital Hydrogen Center is positioned as the first climate initiative of Connected DMV, a non-profit supporting delivery of impactful social and economic initiatives for the tri-jurisdictional area of Washington DC, Maryland and Virginia.

The National Capital Hydrogen Center is accelerating the creation of a hydrogen ecosystem and fostering collaboration in support of the US government’s imperative to add hydrogen solutions to the country’s clean energy future.

Connected DMV’s steering committee represents over 70 members from major corporates, academia, regional community groups as well as state and local governments. The committee provides buy-in on Connected DMV’s initiatives to ensure alignment with organizational vision and values and emphasize regional economic and social uplift. Connected DMV’s operations rely on corporate funding and grants, rather than a traditional membership model. Being a non-profit allows Connected DMV to offer a neutral engagement platform that supports collaboration across multiple entities, while its regional focus allows the cluster to build a coalition of partners to develop real-world solutions for real-world challenges.

Figure 5: National Capital Hydrogen Center Governance.
National Capital Hydrogen Center Governance.

Choosing the right governance model

In summary, the best governance model for a cluster is one that is fit for purpose, given the cluster’s characteristics. Multiple aspects such as the depth of collaboration, inclusion of public and private actors, funding sources, and decision-making authority should be taken into consideration when choosing the right governance model.

In our next article we will explore examples of business models for projects being implemented by signatory clusters of our Transitioning Industrial Clusters initiative.

The World Economic Forum would like to acknowledge the following co-authors:

Olivia Infantes, Head of Hydrogen Regulation at CEPSA

Cyntia Hendrayani, Managing Director, Jababeka Infrastruktur

Lia Voermans, Managing Director at Brightlands Circular Space

Richard Moore, Vice President of Climate and Energy at Connected DMV

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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