Advanced Energy Technologies Can Enable Decarbonization of Hard-To-Abate Sectors
Harder-to-abate sectors in heavy industry and heavy-duty transportation have a viable path through technical and economic barriers, but need “vital and massive” electrification to succeed. This presents a significant opportunity for energy efficiency and renewable energy businesses.
In setting their climate change plans to avoid a 2℃ temperature increase , many governments have largely ignored sectors in heavy industry and heavy-duty transportation because they believe reducing CO2 emissions from these industries would not be technically feasible or would cost too much, even though these industries account for 30% of global CO2 emissions. While it is true greenhouse gas emissions from the industrial sector have declined over the last 20 years, they are projected to increase through mid-century, fueled by low prices for energy, particularly natural gas and natural gas liquids. However, the Energy Transitions Commission (ETC) – a coalition of business, finance, and civil society leaders from across the spectrum of energy producing and using industries – has authored a groundbreaking report that demonstrates governments and businesses have the tools to achieve net-zero CO2 emissions in these “hard-to-abate” sectors by 2050.
By focusing on building out a circular supply chain for raw materials, improving energy efficiency and deploying new clean energy technologies, the ETC presents a reasonable path forward “at a total cost of well less than 0.5% of global GDP” and minimal cost to end consumers. The ETC argues that heavy industry and heavy-duty transportation sectors need to pursue “vital and massive” electrification in order to realize net-zero emissions. Energy efficiency and renewable energy generation are the resources that can enable both mass electrification and decarbonization.
Energy efficiency gains can reduce emissions in the short-term and help developing countries improve performance of existing industrial assets that they may not be able to replace quickly. Maximizing energy efficiency gains would also reduce the amount of new generation needed to meet growing demand and help strengthen the reliability and resilience of an increasingly strained electric grid. The ETC estimates energy efficiency could improve by up to 20% in heavy industry and 35-40% in heavy-duty transportation sector.
However, efficiency gains can only meet so much of the increased demand mass electrification will create in the harder to abate sectors; new sources of generation will have to meet the remaining need. With mass electrification, electricity’s share of energy demand will rise from 20% to over 60% by 2060 across heavy industry. Thankfully, renewables are becoming increasingly cost competitive and can help meet this new need for electricity. The ETC estimates that within 15 years “it will be possible to run electricity systems in which 85-90% of power demand is met by a mix of wind and solar, combined with batteries for short-term back-up.”
While achieving net-zero CO2 emissions in these sectors will require substantial coordination between policymakers, investors and businesses, it also presents a tremendous opportunity for renewable energy and energy efficiency businesses to fill a need that until now has largely been ignored. According to McKinsey, total incremental capital investment from 2015 to 2050 could reach $5.5 to $8.4 trillion to decarbonize heavy industry.
You can read the ETC’s full report here: Mission Possible: Reaching Net-Zero Carbon Emissions from Harder-to-Abate Sectors by Mid-Century