This article originally appeared in the State of Green Business 2021. You can download the entire report here.
The industrial sector is the backbone of the economy, producing the materials that build everything from cities to phones. It’s also a significant contributor to the climate crisis: Industrial processes — from the creation of raw materials to chemicals — are responsible for more emissions than any other sector, making up a third of greenhouse gas emissions globally.
Increasingly, the stars are aligning for industrial emissions to take center stage, for three key reasons: demand for clean solutions is growing; technologies are maturing; and the conditions for policy solutions are ripe.
The emissions associated with manufacturing and other heavy industries could broadly be divided into three categories: indirect energy (from purchased electricity and heat, responsible for about 44 percent of emissions); industrial processes (such as the use of chemicals that release greenhouse gases, 19 percent); and onsite combustion (37 percent, usually for heat processing).
All three are in urgent need of innovations and deployments, but the last of those three — combustion — has, until now, received the least attention.
Climate-conscious companies that depend on thermal processing — used to produce everything from food to ferrous metals — seek better solutions. Historically, these have been inadequate or unaffordable, but a new generation of technologies is promising to change that.
For example, in 2019 L’Oréal USA announced that 14 of its factories were "carbon neutral," and the beauty giant continues to look for renewable options for all of its thermal loads as part of its science-based targets. U.S. Steel Corporation had a goal to reduce its emission intensity by 20 percent by 2030, based on 2018 baseline levels. While a modest target, the commitment is an acknowledgment that the sector needs to make progress, as steel is one of the most emission-intensive sectors (together with cement and chemicals).
Companies are banding together to reach breakthroughs faster. In 2019, General Motors, Cargill, Mars and L’Oreal USA formed the Renewable Thermal Collaborative (RTC), and since have been joined by more than a dozen other large energy users. Modeled after the success of the Renewable Energy Buyers Alliance, which brought together large energy purchasers to accelerate the availability and affordability of renewable power, the RTC provides a space for companies to learn best practices to decarbonize manufacturing.
Climate-conscious companies that depend on thermal processing — used to produce everything from food to ferrous metals — seek better solutions.
"These companies and other institutions are trying to send a signal to the marketplace: If people can produce renewable thermal technology that is cost-effective, there are buyers out there that want them," said David Gardiner, a facilitator of the RTC, in an interview with GreenBiz.
Companies are also pushing for industrial decarbonization outside their four walls. Apple, for example, last year announced a carbon-neutrality target throughout its entire supply chain. As more organizations follow suit, corporations can leverage their market influence to help accelerate the deployment of cleaner industrial processes.
Finding renewable alternatives for industrial heat is a complicated business. Different applications require different working temperatures, which necessitate different solutions. Some applications — such as cooking, pressurizing and sterilization — require lower temperatures (150 to 250 degrees Fahrenheit), while chemical, concrete and steel processes require much higher temperatures (above 400 F).
Today, most process heating in the United States is fueled by natural gas, which can be plugged into many technologies and which already enjoys a robust infrastructure. Globally, coal meets the majority of thermal fuel demands for both steel and cement.
Renewable options, on the other hand, often require specialized equipment that is still early-stage and may require retraining or operational shifts, which add costs. While many consumer-facing brands want renewable options, most are price-sensitive and unwilling to pay a premium for these cleaner technologies, especially during a time of rock-bottom natural gas prices. Moreover, clean technologies are at different stages of innovation, feasibility and cost, all with their own constraints, including temperature, quality and flow rates.
Key pathways to decarbonize thermal energy include:
- Efficiency. An oldie but a goodie, the promise of deep efficiency still has not been fully realized. According to energy-efficiency expert Amory Lovins, whole-system redesign today can yield 30 to 60 percent of energy savings in retrofits and 40 to 90 percent savings in new construction.
- Electrification. While innovations are emerging quickly for applications ranging from roasting coffee to alloying steel, the technologies are expensive and require specific equipment. Still, costs are falling quickly and experts anticipate wide-scale adoption of electric appliances for industrial applications in the coming decade.
- Green hydrogen. The perennial "fuel of tomorrow," it has long tantalized experts, who envision that excess renewable power can be used to create hydrogen, which can be plugged into applications as easily as natural gas. However, because hydrogen molecules are much smaller than methane molecules, today’s natural gas infrastructure is too leaky to hold or transport hydrogen. Expect this to be in the R&D phase with limited deployment for onsite applications until midcentury.
- Biomethane. Capturing methane emissions from dairies, landfills and wastewater treatment facilities holds great promise. While seductive, the resulting fuel (sometimes called renewable natural gas, or RNG) has a limited supply (it could cover only 3 to 7 percent of natural gas used today) and issues with land use (large dairies impact surrounding, low-income communities). Meanwhile, natural gas utilities are overstating its potential to justify infrastructure investments, which runs the risk of slowing electrification of appliances that already have market-ready electric alternatives.
Additional technologies include solar thermal, geothermal, nuclear, cogeneration and carbon capture and storage. All have economic and technical tradeoffs, and with corporations and policymakers backing the transition, innovators have a lot to gain by cracking the renewable thermal energy code.
Robust policy support will be key to rapidly scaling the transition. Despite corporate commitments to decarbonize, emissions from heavy industry are on track to rise 0.4 percent annually through 2050 — at a time when they need to be dropping precipitously.
According to 30 leading experts on energy and policy, high-impact policies to decarbonize industry include carbon pricing, government support for R&D, industrial process emissions standards and energy-efficiency support.
It bodes well that decarbonization is seen as a boon for the economy.
The good news is many of these policies align with components of President Joe Biden’s climate plan, which include financial support for innovation and deployment, boosting markets through federal purchase requirements, and workforce training and education. The new administration also has placed a specific emphasis on industrial heat needed for steel, concrete and chemicals.
Policy also has an important role in supporting financing on these innovations. Given that new infrastructure development works on roughly 25-year cycles, policy direction now can help us avoid making climate-busting investments down the highway.
While time will tell if the Biden administration will realize all its goals, it bodes well that decarbonization is seen as a boon for the economy.
Rewiring America research shows how decarbonizing the economy can create around 25 million jobs in the United States alone. According to separate reports from Columbia University’s Center on Global Energy Policy and the Industrial Innovation Initiative (I3), a coalition of industry, NGO and public sector players dedicated to decarbonizing industry, investment in R&D for clean breakthroughs will stimulate jobs and economic growth. Meanwhile, Bill Gates’ Breakthrough Energy commissioned a report that crunched the numbers to show that the spillover economic gains from such an investment would be significant — all of which bodes well for political action.