Energy Transition

How to harness the collaborative potential of industrial clusters

Rapid decarbonization of industrial clusters will be critical in accelerating the path towards net-zero.

Rapid decarbonization of industrial clusters will be critical in accelerating the path towards net zero. Image: iStock.

Charles Pacini
Manager, Transforming Industrial Ecosystems, Industry Clusters, World Economic Forum
Oxana Saimo
Lead, Transitioning Industrial Clusters, World Economic Forum
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This article is part of: World Economic Forum Annual Meeting
  • Industrial clusters are geographic concentrations of co-located companies that provide opportunities for technology scale-up, sharing of risk/resources, aggregation, and optimization of energy demand.
  • With industry responsible for 30% of total global CO₂ emissions, industrial clusters will be a critical player in accelerating the path towards net zero.
  • A new Transitioning Industrial Clusters Annual Report highlights the experiences and perspectives of 20 industrial clusters within the initiative, that have developed comprehensive strategies to reach net zero while attaining their full economic and employment potential.

In the race against time, rapid decarbonization of industrial clusters is crucial to expedite the path to a net-zero future. Governments and companies increasingly prioritize industrial clusters and regional collaboration to advance energy transition infrastructure and investments.

Industrial clusters uniquely provide scale, risk-sharing, and demand aggregation, playing a pivotal role in deploying large-scale energy and transport infrastructure. Additionally, they serve as essential contributors to regional competitiveness, making noteworthy contributions to GDP growth and job creation.

While the concept of industrial clusters is well-established, the stark reality of notable deficiency in both governance and collaboration, cuts across geographic and industry boundaries.

Have you read?

A new Transitioning Industrial Clusters Annual Report highlights the experiences and perspectives of 20 industrial clusters within the initiative. Despite unique geographical, infrastructure, policy and sectoral challenges, these clusters have developed comprehensive strategies to reach net zero while attaining their full economic and employment potential.

The initiative focuses on four strategic pillars: partnerships, policy, finance and technology.

Partnerships: How to build trust between competing companies on the supply and demand side?

Encouraging competitive companies to align their efforts toward a shared goal – reducing carbon emissions, fostering job creation, and contributing to economic growth – is often a formidable challenge. Despite operating in proximity and confronting similar issues, companies in clusters frequently miss the opportunity for collaboration.

Over the past year, our signatory clusters have actively forged and extended partnerships with a diverse array of organizations, cultivating ecosystems around emerging decarbonization infrastructure and supply chains.

Home to Europe’s largest integrated chemical cluster, the Port of Antwerp-Bruges, is moving closer to the Final Investment Decision for the Kairos@C and Antwerp@C projects. These endeavours focus on establishing collaborative infrastructure for cross-border carbon transport and storage, while simultaneously propelling the growth of the low-carbon hydrogen value chain within the port.

“The Port of Antwerp-Bruges hosts Europe’s largest chemical cluster and supports the European Green Deal to become climate neutral by 2050,” said Jacques Vandermeiren, Chief Executive Officer, Port of Antwerp-Bruges. “The Transitioning Industrial Clusters initiative is a means to inspire and incentivize companies to share best practices in our common pursuit of staying well below 2°C.”

Policy: Have enabling policies been developed to accelerate net-zero industrial clusters?

In the US, the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) drive decarbonization within industrial clusters, boosting the deployment of hydrogen hubs across the country. The US Department of Energy has recently announced $7 billion to facilitate the establishment of seven clean hydrogen hubs nationwide. Among them, the H2Houston Hub and the Ohio Clean Hydrogen Hub Alliance, both part of the Transitioning Industrial Clusters initiative community, are expected to benefit from this funding.

Meanwhile, in Europe, the EU Green Deal sparks cross-border collaborations, building essential carbon and hydrogen infrastructure to fortify industries for a secure energy future.

Financing: What innovative options exist for financing?

Unlocking financing is crucial for industrial clusters to amplify their impact. Our global signatory clusters have achieved substantial milestones in the financial realm, mobilizing both public and private funds to drive cluster scaling and project development. In Europe, grants and state aid are actively supporting infrastructure implementation. Notably, Brightlands Circular Space secured €50 million to establish the world's inaugural industrial-scale circular plastics demonstration facility.

“With our focus on leading an impactful circular ecosystem for a future-oriented circular economy in Europe, it is of utmost importance that we foster competitive collaboration between the companies in our cluster as well as with other global clusters,” said Lia Voermans, Chair of Brightlands Circular Space, “We believe that this initiative provides a gateway to access the best practices and processes supporting industrial decarbonization.”

Technology: What is a logical decarbonization pathway that can apply to all clusters?

No single technology or decarbonization lever can abate all industrial emissions – it is necessary that a spectrum of technology levers, applied within a holistic value approach, work in tandem to optimize emissions reduction measures and deliver economic, social, and environmental value. Here are some concrete examples from our signatory industrial clusters:

  • Systemic efficiency and circularity: In Southeast Asia, Jababeka Industrial Cluster, Indonesia's largest industrial estate with over 1800 tenants, aims for net zero through shared low-carbon initiatives. The first step involves revamping the wastewater system into a low-carbon operation and converting residual waste into energy for industries, reducing energy demands and logistics-related emissions while easing the load on government landfills.
  • Direct electrification and renewable heat: In China, the Tianjin Economic-Technological Development Area (TEDA) has implemented a geothermal well heat supply project, resulting in a reduction of 5,000 tons CO₂ per year. The current solar PV power generation capacity stands at 556 MW and continues to expand.

“TEDA is committed to joining this initiative and actively participating in exchanges to learn from international, advanced industrial clusters,” said You Tiancheng, Chairman of the TEDA Administrative Commission. “By studying their experiences, TEDA aims to facilitate the acceleration of technological and managerial innovations in Chinese industrial parks. This, in turn, will expedite the transition of Chinese industrial clusters towards a future characterized by net-zero carbon emissions.”

Looking ahead

As of today, the initiative comprises 20 signatory clusters across 10 countries across four continents, with a CO₂e emissions reduction potential of 626 million tonnes – equivalent to Australia's annual emissions. These clusters play a vital role in the global economy, directly contributing $362 billion to the GDP and impacting the creation or protection of 3.4 million direct and indirect jobs.

In 2023, three new clusters joined the initiative: Tianjin Economic-Technological Development Area in China, DKarbonation in France, and Louisiana Future Energy Cluster in the US.

Despite the progress, further efforts are needed to accelerate the transition. To maintain momentum, key themes must be addressed to prevent bottlenecks in scaling climate, economic, and social impact:

  • How to bridge the talent gap in sustainability, low-carbon technologies, and novel facilities, e.g., through shared talent resources within clusters?
  • How can key ecosystem stakeholders, including port-anchored clusters, establish industry standards for new decarbonization infrastructure?
  • What needs to be done to streamline permitting and local regulatory requirements for accelerating project deployment?
  • How can we maximize the impact of public funding for seeding and catalysing net-zero energy and transport infrastructure deployment?
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