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Industrial decarbonization is essential for addressing climate crisis, report shows

With industry accounting for more than one-fourth of U.S. greenhouse gas emissions, its decarbonization is essential for combating climate change, according to a report released today that shows energy efficiency is a key way to slash these industrial emissions.

Decarbonizing industry by midcentury will require a transformation in what we make and how we make it. Doing it right could not only reduce emissions, but also protect the United States’ 20 million (predominantly well-paying) industry jobs. As the report explains, we will need a multi-faceted approach that emphasizes energy efficiency but also includes electrification, low-carbon fuels, and carbon capture, utilization, and storage (CCUS).

This research, the first in a series of ACEEE reports on the topic, is part of ACEEE’s Industrial Decarbonization Initiative. For more than a year, we have led a coalition to lay the groundwork for decarbonization (or carbon removal) by convening NGOs, labor, and industry stakeholders. We have identified priorities for policymakers, including longer-term research, development, and demonstration (RD&D) work and shorter-term stimulus measures, such as teams of experts to do energy audits of the 500 largest U.S. industrial facilities.

“We simply cannot fight climate change without reducing industrial emissions. That is why we are so committed to this issue,” says Neal Elliott, report co-author and ACEEE’s senior director of research. “Industry is a very complex sector of the U.S. economy, and its decarbonization will be challenging and complex as a result. But energy efficiency offers a clear path forward, and at the same time, it can also boost U.S. competitiveness, reduce costs, and create jobs."

Our efforts reflect growing international interest. With 27 other organizations, we co-authored a new Applied Energy journal article on the technologies and policies needed to decarbonize industry worldwide, especially three top GHG emitting sectors: cement, iron and steel, and chemicals.

Industrial emissions are massive

Decarbonizing industry is particularly important, because emissions from U.S. industry are projected to grow more than those from any other end-use sector through 2050.

“A less emission-intense electricity grid is needed, but by itself, the grid will not sufficiently reduce industrial emissions,” says Andrew Whitlock, the report’s lead author and an ACEEE research analyst. He says we should focus on manufacturing, which accounts for the bulk of U.S. industrial emissions and has economy-wide impacts.

In the United States, industry — fueled mostly by petroleum and natural gas — accounts for 28% of all energy-related emissions. Globally, it accounts for slightly more (one-third) of GHG emissions, largely because developing economies such as India rely more on carbon-intensive cement for construction than the United States does.

Although U.S. manufacturing has dramatically reduced its energy and carbon intensity over the past three decades, big opportunities still lie ahead.

Energy efficiency should be a primary strategy. It can cut industrial emissions 15% today through relatively simple and inexpensive modifications to industrial buildings, equipment, and operations. We can start right away by focusing on strategic energy management, smart manufacturing, and efficient equipment including pumps, fans, and compressors. In the longer term, we can improve industrial processes that are now the subject of RD&D.

We can cut industrial emissions in other ways, too. Some processes can be electrified in the near term. We can generate energy onsite with renewable sources such as solar and wind or with combined heat and power technologies using waste and biofuels. For industrial processes that require high temperatures, we can use low-carbon energy sources such as hydrogen, and for those that are particularly difficult to decarbonize — such as iron smelting and lime calcination — we may need new technologies or CCUS to abate remaining emissions.

Supply chains will also be critical. All along a supply chain, greenhouse gases are emitted as goods are produced, distributed, used, reused, and disposed of. Because manufacturers are both consumers and producers, they have enormous potential to reduce GHG emissions if they shift to using low-carbon materials and creating more efficient products. Manufacturers and other companies can set emission reduction targets and use their purchasing power to drive demand for low-carbon materials and goods.

Decarbonization requires partnerships

“Industry and government must work together to create pathways for success. As technologies move from pilots to commercial scale, both public and private capital will be needed,” says Ed Rightor, report co-author and director of ACEEE’s Industrial Program. Without government support, he says, manufacturers may be hesitant to invest in large capital projects due to high upfront costs, long life spans of equipment, and concerns about risk.

The Department of Energy’s Advanced Manufacturing Office, for example, can help. It can fund research on reducing carbon intensity in industrial processes and products, support pilot projects, and help address technical issues that arise during commercialization of new technologies. The federal government can also set energy efficiency standards for industrial equipment, set procurement standards for low-carbon products, and address potential regulatory hurdles.

We recommend U.S. policymakers take these steps:

  • Prioritize industrial decarbonization efforts by relevant federal agencies such as DOE, the National Institute of Standards and Technology, Department of Defense, and the Environmental Protection Agency.
  • Spur technological innovation and commercialization by increasing coordination and cost sharing among federal agencies, national labs, universities, and private industry.
  • Develop a strong workforce that develops and deploys new low-carbon technologies and processes.
  • Create a market for low-carbon technologies and goods through voluntary labeling programs, incentives, standardized tools, and market signals.

We need to accelerate industrial decarbonization now, unleashing American ingenuity as we fight climate change and build a prosperous, resilient future for everyone.

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