Accelerating Decarbonization in the United States Technology, Policy, and Societal Dimensions (2024) / Chapter Skim
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10 Industrial Decarbonization
10 Industrial Decarbonization
Pages 525-589
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From page 525... ...
To achieve this goal, however, will require significant reduc tions in the GHG emissions associated with making products, the carbon intensity of 525 A00026 -- Accelerating Decarbonization in the United States_CH10.indd 525 4/13/24 10:33 AM
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, responding to customer requests by increasingly making lower-carbon products, and investing in companies developing innovative low-carbon technologies and products. The IIJA and IRA provide incentives for industrial emissions reductions over the next 5–10 years, but to be on pace with the GHG reductions needed to reach net-zero emissions by mid century, a significant increase is required in near-, mid-, and long-term investments.
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$4 Hydrogen Programs Clean Hydrogen Electrolysis Program: Demonstration Projects $3 Clean Hydrogen Manufacturing And Recycling: Clean Hydrogen Technology Recycling RD&D Regional Clean Hydrogen Hubs $2 CCUS Programs Carbon Capture Demonstration Projects Program Carbon Capture Large-Scale Pilot Projects $1 Carbon Capture Technology Program Carbon Utilization Program $0 Carbon Storage Commercialization Program FY 22 FY 23 FY 24 FY 25 FY 26 FIGURE 10-1 Summary of authorized and appropriated funding for industrial programs in the IIJA and IRA. NOTES: Program funding is shown distributed equally across the program years.
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From page 528... ...
While the IIJA has support for increasing generation of clean electricity and infrastruc ture, it contains little direct support for industrial electrification. The relatively low levels of funding for energy efficiency and electrification in industry are major gaps considering that these decarbonization pillars are most amenable to early action and impact owing to their relatively low costs, capital requirements, and infrastructure needs (DOE 2022a)
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As noted earlier, support for energy and materials efficiency and electrification are remaining opportunities. Additional discrepancies between the emissions reductions estimates could result from the different baseline years used -- 2005 for the Rhodium Group analysis and 2015 for the DOE Roadmap analysis.
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FIGURE 10-2 Potential emissions reductions in the DOE Industrial Decarbonization Roadmap's "net-zero" scenario from the application of four decarbonization pillars: energy efficiency (light pink) ; electrification and low-carbon fuels, feedstocks, and energy sources (green)
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. Recognizing this, one of DOE's Energy Earthshot Initiatives™ is for process heat and targets 85 percent GHG emissions reductions in industrial heat technologies by 2035 (DOE-EERE n.d.)
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. Support in the IRA for the Advanced Industrial Tech nologies Deployment Program provides a start, but far greater support and focus from DOE, industry, and others is needed for step-change increases in innovation, which can help integrate decarbonization pillars and yield further emissions reductions.
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However, the low ambition for reductions and lack of support for early action represent a lost opportunity and an increased risk of failure to achieve 2050 net-zero targets. To accelerate industrial emissions reductions, near-term pathways (e.g., energy and materials efficiency, electrification, and low-carbon fuels substitutions)
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Initiate performance-based carbon intensity targets for major product families (e.g., steel and cement) and connect them with low-carbon product procurement and Buy Clean provisions.
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A summary of opportunities for GHG emissions reductions by industry subsector and decarbonization pillar is provided in Table 10-3. 3 While this report focuses on U.S.
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Many of these alternatives are already used; however, concerns still exist regarding their energy efficiency and safety. For example, the flammability of hydrocar bons and toxicity of ammonia call for risk assessment analyses with possible use limitations (EC 2020)
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TABLE 10-3 Opportunities for GHG Emissions Reduction by Industry Subsector and Decarbonization Pillar Decarbonization Pillar Industry Energy and Materials Low-Carbon Energy Demand for Subsector Efficiency Beneficial Electrification Sources and Feedstocks Mitigation Options Low-Carbon Products Chemicals • Efficiency • Clean electricity for • Clean hydrogen for • Carbon capture • Industry accepted improvements in process heat and ammonia, methanol, • Conversion of CO2 and standards and separations, across hydrogen production and ethylene other waste gases into benchmarking for processes, systems, • Use of variable energy syntheses valuable products reducing product and entire facilities from off-site, and use • Biomass as feedstock • Incorporation of carbon intensity • Materials recycling directly on site for chemical synthesis CO2 directly into • Shared databases of A00026 -- Accelerating Decarbonization in the United States_CH10.indd 537 across facilities and • Low-carbon process precursors and end parameters used in supply chains heat from nuclear, products LCAs, standards, and • Improvements to clean electricity, solar benchmarking catalyst conversion thermal, hydrogen, yields and biomass Refining • Efficiency • Clean electricity for • Low-carbon process • Carbon capture • Standards and improvements for hydrogen production heat from nuclear, • Use of captured CO2 benchmarking for distillations and • Clean electricity clean electricity, solar for low-carbon fuels product carbon separations to replace steam thermal, hydrogen, production intensity • Process conversion generation capacity and biomass efficiency improvements continued 537 4/13/24 10:33 AM
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538 TABLE 10-3 Continued Decarbonization Pillar Industry Energy and Materials Low-Carbon Energy Demand for Subsector Efficiency Beneficial Electrification Sources and Feedstocks Mitigation Options Low-Carbon Products Iron and Steela • Waste heat recovery • Electrification of • Replacement of coal/ • Carbon capture • Buy Clean initiative • Blast furnace process heating petroleum coke with • Use of captured CO2 • Standards and optimization pathways where viable natural gas, biomass, for chemical/fuels benchmarking for • Predictive • Direct electrolysis of biogas, or hydrogen production product carbon maintenance, iron • Use of hydrogen as intensity improved process reductant in DRI-EAF control A00026 -- Accelerating Decarbonization in the United States_CH10.indd 538 • Systems energy efficiency improvements Cement • Waste heat recovery • Direct and indirect • Replacement of coal/ • Capture of process- • Buy Clean initiative • High-efficiency clinker calcination with petroleum coke with related CO2 emissions • Standards and cooling and grinding electric heating natural gas, biomass, or • CO2 use in concrete benchmarking for • Efficiency hydrogen product carbon improvements for • Use of supplementary intensity multistage preheater/ cementitious materials precalciner kilns and alternative binding materials • Use of biological routes to cement and concrete a Note that there are different solution sets for decarbonizing BF-BOFs and EAFs given their different feedstocks used, process constraints, and product markets. SOURCES: Data from DOE (2022c)
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is the most cost-effective option for reducing energy use and GHG emissions in the near term, as it is low cost; often provides multiple energy and non-energy benefits; and has low technical, integration, and adoption hurdles. EE can also lower the energy and resource demand for production facilities prior to imple mentation of more costly transformative technologies, which decreases economic hurdles and risk.
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. As the industrial sector continues to improve its energy efficiency, recovering the estimated 20–50 percent of industrial energy input lost as waste heat will become increasingly important (DOE-EERE 2017)
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Although these hurdles will be lower for certain application areas like low- to medium-temperature process heat, the capital cost to deliver clean electricity reliably, at the right voltage, and with 24/7 availability will be a challenge. Collaboration, negotiation, and support are needed to integrate electrical infrastructure both outside and inside the fenceline of industrial facilities; this will include addressing the cost of busbars, substations, and transformers; determining who pays for and maintains electricity generation and storage infrastructure; and negotiating an appropriate valuation of energy storage resources.
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The current cost and availability of low-carbon hydrogen represent substantial barriers to reducing indus trial emissions from processes that use hydrogen, as discussed further in the section "Challenges for Using Hydrogen to Decarbonize Industry" below. Hydrogen can be used in industry to replace fossil feedstocks -- for example, as the reductant in iron/steel production in place of coal or in combination with captured CO2 to synthesize hydrocarbons -- or fossil fuel combustion -- for example, by pro viding a source of high-temperature process heat or fueling furnaces for petroleum refining.
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Together, these total about 0.7 Gt/y of biomass. 6 While the specific value can vary depending on technology, hydrogen blending of up to 38 percent by volume into natural gas has been demonstrated without extensive equipment retrofits (Tisheva 2023)
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. In the industrial sector, the current primary use of biomass is as a source of process heat.
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Biomass in appropriate forms can be used to displace the three energy sources commonly used in industry: solid fuels (e.g., petcoke) , fuel oils, and fossil-derived natural gas.
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of hydro gen is higher than that of natural gas, and NOx production is an exponential function of temperature. As a result, if combustion occurs at stoichiometric fuel/air ratios, as in older high-NOx technologies, then hydrogen combustion can lead to significant increases in NOx production relative to natural gas.
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Trade-offs in reduction of the co-pollutants versus project costs, complexity, and installation time may also occur. One example of a low-carbon technology with potential co-pollutant reductions is steam crackers, which produce ethylene and hydrogen by heating ethane with natural gas until its chemical bonds break apart.
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. Because electric crackers could avoid natural gas combustion, co-pollutant emissions could also be reduced.
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, focuses on these chal lenges of reducing GHG emissions and virgin material consumption, increasing second ary material consumption, and ensuring use of waste in processes (Dyck et al.
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Other Low-Carbon Energy Sources Additional opportunities to use low-carbon energy sources in industry include solar thermal for industrial process heat (IPH) and nuclear energy for IPH and other industrial applications.
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. Mitigation Options GHG emissions from the industrial sector will likely remain above the levels needed to reach net zero even with aggressive pursuit of the decarbonization pillars, owing to unavoidable process emissions and the high costs and technical complexity of some decarbonization solutions.
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Numerous stakeholders -- including investors, customers, supply chain partners, and non-governmental organizations -- are calling for manufacturing to make materi als with lower carbon intensity (i.e., low embodied carbon materials)
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. For the latter, the move toward codes and standards in building materials will help improve clarity on product carbon intensity and business case (Srinivasan et al.
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. It should also assess the carbon impact across supply chains and develop labeling programs so that consumers can clearly evaluate the life-cycle carbon intensity of products.
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. For example, given their lower complexity, cost sensitivity, and strong market-pull from customer demand, light industry and SMMs may see benefits from early application of low-carbon technol ogies in some cases (e.g., industrial heat pumps for low–moderate temperature process heat)
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Looking across all of industry, the GHG emissions reduction potential of light indus try is large, representing 39 percent of the total potential emissions reductions in the sector (Figure 10-6; Worrell and Boyd 2022a)
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While major manufacturers, strongly represented by heavy industry, use vast quantities of energy and emit large volumes of GHGs, there are also a vast number of SMMs. The SMM category includes companies that transform, combine, or customize products from earlier supply chain partners into intermediate or finished products.
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A lower ratio decreases the economic hurdles for adopting technologies like industrial heat pumps (IHPs) ; in regions where the electricity/natural gas price ratio is below 3.5, simple pay backs for IHPs can be less than 2 years (Rightor et al.
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exist, however, and policy incentives could help accelerate adoption of IHPs and other electric technologies. Incentives that reduce the cost of capital or electric rates would be instrumental in locations where the electricity/natural gas price ratio is higher.
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. Hydrogen leaks are much more difficult to prevent than natural gas leaks because of the 10 For hydrogen generated via SMR with carbon capture to qualify as "low carbon" (≤2 kg CO2e per kg H2 at the site of production, per IIJA §40315)
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The carbon inten sity associated with hydrogen generation affects the extent of emissions reductions achieved by incorporating hydrogen in chemical or industrial processes. For example, CO2 emissions from methanol production would be higher if current grid-based electricity were used to make hydrogen than if traditional production methods were used; not until the grid is nearly fully decarbonized would net emissions decrease (DOE 2022c)
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Voluntary commitments from end users, aggregation of demand by market players (perhaps inspired by bulk purchases) and potentially by governmental off-takers, and the development of standards for nomenclature, life-cycle procedures for evaluating hydrogen's carbon intensity, and energy efficiency could also help improve market confidence.
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More generally, energy-intensive industries depend on integrated infrastructure, which today delivers power and natural gas and has overlays with transportation of raw ma terials and finished products. These industries are interconnected by a complex system of supply chain logistics to plan, implement, control, and optimize the movement of 564 A00026 -- Accelerating Decarbonization in the United States_CH10.indd 564 4/13/24 10:33 AM
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Limited personnel/ • Expand support, decrease hurdles/ • Support energy managers at resources transaction friction company or cohort, energy assessments • Incentivize project implementation Combined waste • Develop programs to reduce waste • Incentivize waste reduction high, but for • Accumulate and transform, reuse • Incentivize collection, reuse, and individual company where possible transformation of waste it can be low • Give tax breaks to companies that collect/transform waste Limited capacity • Provide information on • Provide decarbonization roadmaps to consider/pursue decarbonization pathways tailored to SMMs/communicate decarbonization • Simplify solution options • Involve SMMs in pilots/demos of • Consider working with third-party transformative technologies aggregators to reach, collaborate • Incentivize low-carbon technology with, and serve SMMs choices that are commercial today • Provide support to SMMs for implementation of low-carbon technology • Expand leverage with current utility providers to reach SMMs Limited access • Ensure that SMM access needs are • Consider SMM needs in to emerging considered in planning infrastructure planning (build low-carbon experience at clusters) infrastructure • Provide grants to build connections where efficient Lack of • Work with associations and others to • Work across jurisdictional levels to standardization develop/deploy standards develop/convey standards SOURCES: Data from DOE (2022c)
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. Under standing the choices and new dependencies of clean energy and low-carbon product scenarios will require modeling to minimize constraints and avoid suboptimal solutions.
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Decarbonization of light industry (e.g., durable goods, food and textile processing, and even mining and non-ferrous metal production) is likely to rely primarily on elec trification and efficiency improvements (SDSN 2020)
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. Additionally, DOE requires applicants to the Regional Clean Hydrogen Hub funding opportunity to submit a 568 A00026 -- Accelerating Decarbonization in the United States_CH10.indd 568 4/13/24 10:33 AM
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. The Center for Energy Workforce Development, a consortium of 120 energy companies, provides resources and training to support clean energy careers in diverse, equitable, and inclusive workplaces (CEWD 2023)
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. DOE's Energy Storage Grand Challenge Roadmap provides recommendations for enhancing workforce development and emphasizes the need for evaluations to measure success, starting by analyzing the existing (baseline)
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The industry coordinated with Westinghouse and General Electric to figure out solutions -- in essence, emerging electric utilities were working directly with manufacturers to fine-tune and innovate, which ultimately gave them new electricity customers. 571 A00026 -- Accelerating Decarbonization in the United States_CH10.indd 571 4/13/24 10:33 AM
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This typology of climate policy approaches illustrates the range of possible approaches in a policy maker's toolbox, from regu latory approaches such as performance standards to market-based approaches such as carbon taxation. Countries that have embarked on decarbonization pathways have used a variety of policy mixes, including fiscal tools such as feed in tariffs or production tax credits, market-based tools such as emissions trading, and regulatory tools such as performance standards to achieve their objectives.
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The "Informative" category in Figure 10-8 is represented in the IRA and the IIJA to some extent by labeling programs connected with the market-based approaches. For example, connected with the Buy Clean programs, there are provisions to initiate labeling the carbon intensity of products, backed up by environmen tal product declarations, which would inform customers.
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The confidence in metrics, transparency, and simplicity for relating numbers to customers is at an early stage, and there are numerous opportunities for future policy development. The "Diplomatic" category in Figure 10-8 has received heightened visibility ow ing to discussions about developing global trade policy that seeks to address the carbon intensity of products, national competitiveness, and trade imbalances.
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With achievement of cost parity for transformative technologies and incumbent technologies prior to introducing regulations, the risk of driving manufacturing offshore and the hurdles to a cascade of adoption can be minimized. Continued development and understanding of when and where regulations can be used to spur reductions (in the last portion of GHG emissions)
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To drive emissions to net zero in industry, Congress should task the Department of Commerce and the Department of Energy to work with a variety of stakeholders to establish declining carbon intensity benchmarks for major product families. Congress should require the Environmental Protection Agency to create a tradable performance standard for domestically produced and imported products based on these benchmarks, starting with products where there is alignment with current initiatives (e.g., Buy Clean provisions start with iron and steel, and cement in building and construction markets)
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• Industry gas (GHG) Transparent Cost-Competitive and industrial reductions Analysis and Process and Waste companies Reporting Heat Solutions for Adaptive Management Tightened Targets for the Buildings and Industrial Sectors and a Backstop for the Transport Sector Research, Development, and Demonstration Needs 10-2: Invest Congress and DOE • Buildings • GHG reductions A Broadened in Energy • Industry Policy Portfolio and Materials • Finance Tightened Targets Efficiency • Non-federal for the Buildings and Industrial actors and Industrial Electrification • Transportation Sectors and a Backstop for the Transport Sector Research, Development, and Demonstration Needs continued 577 A00026 -- Accelerating Decarbonization in the United States_CH10.indd 577 4/13/24 10:33 AM
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, Tightened Targets Emissions and engineering for the Buildings companies and Industrial Sectors and a Backstop for the Transport Sector Research, Development, and Demonstration Needs 10-5: Use Mass- Regulatory • Industry • GHG reductions Rigorous and Based Rather Than and permitting • Electricity • Health Transparent Concentration- organizations • Transportation Analysis and Based NOx Reporting Standards for Adaptive Management 578 A00026 -- Accelerating Decarbonization in the United States_CH10.indd 578 4/13/24 10:33 AM
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, National • Non-federal Transparent Carbon Intensity Institute of actors Analysis and of Industrial Standards and Reporting Products Technology (NIST) , for Adaptive and other relevant Management agencies Tightened Targets for the Buildings and Industrial Sectors and a Backstop for the Transport Sector Research, Development, and Demonstration Needs 10-7: Establish Congress, DOE, • Buildings • GHG reductions A Broadened a Program Department of • Transportation Policy Portfolio Connecting Commerce (DOC)
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Objective(s) Categories Short-Form Implementing Addressed by Addressed by Addressed by Recommendation Recommendation Recommendation Recommendation Recommendation 10-8: Develop Congress, DOE, • Industry • Employment Building the Effective Workforce labor associations, • Non-federal Needed Workforce Development NGOs, industry actors and Capacity Programs for leaders, and Industry academia 10-9: Implement Congress, DOE, • Industry • GHG reductions A Broadened a Product- DOC, and EPA • Finance Policy Portfolio Based Tradable Tightened Targets Performance for the Buildings Standard for and Industrial Domestic Sectors and a Manufacturing Backstop for the and Foreign Trade Transport Sector REFERENCES Abdullah, Z., R
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2022b. Carbon Capture, Transport, and Storage: Supply Chain Deep Dive Assessment.
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2023a. Department of Energy FY 2024 Congressional Justification: Energy Efficiency and Renewable Energy, Electric ity, Nuclear Energy, Fossil Energy and Carbon Management.
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2021. "Global Warming Consequences of Replacing Natural Gas with Hydrogen in the Domestic Energy Sectors of Future Low-Carbon Economies in the United Kingdom and the United States of America." International Journal of Hydrogen Energy 46(58)
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2022. Energy Efficiency 2022.
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2022. A Turning Point for US Climate Progress: Assessing the Climate and Clean Energy Provisions in the Inflation Reduction Act.
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2019. "Halfway There: Energy Efficiency Can Cut Energy Use and Greenhouse Gas Emissions in Half by 2050." Report U1907.
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2017. "Carbon Capture and Utiliza tion in the Industrial Sector." Environmental Science and Technology 51(19)
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2022. "The Road to Industrial Buy-In for Embodied Carbon Building Standards." In 2022 ACEEE Summer Study on Energy Efficiency in Buildings.
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2022b. "Industrial Decarbonization Options: Light Industry." Presentation to the National Academies' Committee on Accelerating Decarbonization in the United States, online, February 8.
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