The industrial world is still dependent on fossil fuels

By Anne-Laure de Chammard, Siemens Energy

In the race to avoid climate disasters, the focus is often on how to cut avoidable emissions, especially CO₂. But what about the places where emissions are difficult to avoid? These so-called hard-to-abate industries form a large part of our global emissions and reducing them is the key to a greener future.

Hard-to-abate industries include categories like steel, cement, and petrochemicals. Each uses carbon as an integral part of their process, and altogether this sector accounts for about 30% of the world’s greenhouse gas emissions.  For example, one of the main ingredients in cement, clinker, is made by heating limestone to extreme temperatures. The process releases carbon trapped in the stone, which combines with oxygen in the atmosphere to form CO₂. It’s an unavoidable part of the process.

The International Energy Agency’s Worlds Energy Outlook 2022 paints a dire picture: under its Stated Policies Scenario, where we continue with today’s announced policies, temperatures would rise by an average of 2.5°C. If we continue along this path, we won’t be able to contain global warming at 1.5°C.  Only by achieving net zero emissions by 2050 will warming be held to manageable levels. This means reducing emissions everywhere, including in industries, and requires $4 trillion in yearly investments.

While it may be tempting to write these hard-to-abate industries off as not feasible to decarbonize, our climate goals will not be met without them. We’re not on track to meet the Intergovernmental Panel on Climate Change (IPCC) targets. Emissions from energy combustion and industrial processes increased in 2021 – more than reversing the pandemic-related decline from the year before.  If we continue along this path, we will not be able to contain global warming at 1.5°C.

Even before the war in Ukraine upended the global energy market, the question of how to reduce emissions in the industry came with complex answers. The war has drastically changed the price of electricity and energy and global supply chains.

It is also the turning point for our energy systems. With the price of gas and electricity at historic highs, long-term structural changes to diversify our energy supply might help us speed up the energy transition. We’ve seen the first steps with the United States Inflation Reduction Act and the European Union’s Fit for 55 package.

So, how do we tackle hard-to-abate industries? The short answer is it’s not easy.

To start, we can focus on innovation, especially in areas where we can replace carbon-intensive materials with alternatives. For example, Siemens Energy is driving decarbonization with its state-of-the-art gas turbines. They are already capable of running on hydrogen mixes. By 2030, all our gas turbines will be 100 percent hydrogen ready.

The chemical industry will be a big beneficent of this hydrogen readiness. In Brazil, Siemens Energy is working with Braskem, one of the largest makers of thermoplastic polymers. Together, Siemens Energy and Braskem designed a plant that uses residual process gas with up to 60% hydrogen content, thanks to Siemens Energy’s state-of-the-art gas turbines. This way, Braskem can drastically reduce CO₂ emissions while producing materials.

There needs to be more than innovation on its own. To tackle the problem of hard-to-abate industry emissions, we must form alliances. If we continue working in silos, we might be able to individually reduce emissions in spots. Only by working together and sharing knowledge can we scale those innovations to where they can make a difference.

At Siemens Energy, we’ve co-initiated the Alliance for Industry Decarbonization, which unites 13 companies across industry sectors and the International Renewable Energy Agency.

Both efforts – technological innovations and alliances – will need a proper political framework. Government and industry need to work together to make these technologies available to everyone at an affordable price. 

This issue of energy security, which goes hand-in-hand with energy affordability and sustainability, is core to the energy transition. It starts with investments. Energy projects are incredibly capital-intensive and made with timescales of multiple decades.

Something simple like a transformer, for example, will stand for 30 or 40 years before being replaced. Companies will only make these long-term decisions if they are sure governments will support them for that long. That is why governments must provide direct investments or loans and remove regulations that disincentivize energy investments.

Affordability is the next big issue. One of the biggest obstacles in the energy transition is price. Green alternatives for making steel can double the cost of the material. For cement, greener options to clinker can increase the price threefold. Only by making these options economically viable will they be used at scale. By encouraging investment, governments can help industries bring these costs down.

Pricing also affected the electricity market this year more than in the past. The war in Ukraine caused electricity prices to spike, but it’s not the only cause: high material costs and carbon prices have pushed prices up for years. While this is causing problems in the market, it comes with a silver lining: cleaner, more efficient technologies, like green hydrogen, may become more competitive, giving industries an incentive to switch. So each project brings us a step closer.

Our 2030 targets are less than a decade away, so we need to achieve them using much of the same infrastructure we have now. The only way to meet our emission targets is by decarbonizing hard-to-abate industries. That means quick thinking and quicker action. If we manage that, one of the biggest challenges in our quest for a greener future can be solved.

November, 2022

Combined picture and video credits: Siemens Energy