Sustainably meeting the world’s energy needs is the defining challenge of the twenty-first century. The Center on Global Energy Policy (CGEP) at Columbia University’s School of International and Public Affairs advances actionable solutions to this challenge through research, dialogue, and education. We operate at the intersection of geopolitics, climate, and the economy on the understanding that energy is at the heart of each. The Center on Global Energy Policy book series furthers this mission by offering readers accessible and policy-relevant books, grounded in the highest standards of research and analysis.
Michael D. Tusiani with Anne-Marie Johnson, From Black Gold to Frozen Gas: How Qatar Became an Energy Superpower
Mark L. Clifford, Let There Be Light: How Electricity Made Modern Hong Kong
Johannes Urpelainen, Energy and Environment in India: The Politics of a Chronic Crisis
Agathe Demarais, Backfire: How Sanctions Reshape the World Against U.S. Interests
David R. Mares, Resource Nationalism and Energy Policy: Venezuela in Context
Ibrahim AlMuhanna, Oil Leaders: An Insider’s Account of Four Decades of Saudi Arabia and OPEC’s Global Energy Policy
Amy Myers Jaffe, Energy’s Digital Future: Harnessing Innovation for American Resilience and National Security
Jim Krane, Energy Kingdoms: Oil and Political Survival in the Persian Gulf
Richard Nephew, The Art of Sanctions: A View from the Field
Daniel Raimi, The Fracking Debate: The Risks, Benefits, and Uncertainties of the Shale Revolution
Robert McNally, Crude Volatility: The History and the Future of Boom-Bust Oil Prices
For a complete list of books in the series, please see the Columbia University Press website.
ZERO-CARBON INDUSTRY
TRANSFORMATIVE TECHNOLOGIES AND POLICIES TO ACHIEVE SUSTAINABLE PROSPERITY
LC record available at https://lccn.loc.gov/2023035821
A Columbia University Press E-book
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Cover design: Jeffrey Rissman
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FOR CASSIE
AND OUR CHILDREN’S
CHILDREN’S CHILDREN
11 R&D, DISCLOSURE, LABELING, AND CIRCULAR ECONOMY POLICIES 12 EQUITY AND HUMAN DEVELOPMENT
CONCLUSION: A ROADMAP TO CLEAN INDUSTRY
List of Abbreviations
Acknowledgments
Notes
Index
INTRODUCTION
What Is Zero-Carbon Industry?
Worldwide, there is growing agreement that eliminating human-caused greenhouse gas emissions is essential to securing a livable climate for humanity and can be achieved in the 2050–2070 time frame. China, the world’s largest emitter, has committed to achieving net zero by 2060. The European Union, United States, and dozens of other countries have set 2050 targets.1 There is greater optimism about the possibility of rapid emissions cuts than ever before, driven by plunging prices of clean energy technologies and the identification of policy pathways that will achieve economic growth and create jobs through smart decarbonization investments.
Global industry is at the heart of this transition. Industry is responsible for roughly one-third of human-caused greenhouse gas emissions, including emissions associated with electricity and steam purchased by industry (figure 0.1), so efficiently and cost-effectively reducing industrial emissions is crucial. Though industry is a major emitter, it is also at the core of developing low-carbon solutions: manufacturers produce technologies such as solar panels, wind turbines, clean vehicles, and energy-efficient buildings. Therefore, industry must transition to zero-carbon processes while continuing to supply transformational technologies and infrastructure to all sectors of the economy.
FIGURE 0.1 Global Greenhouse Gas Emissions by Sector and Emissions Type in 2019 Emissions from generating purchased electricity or heat (i.e., steam) are assigned to the purchasing sector. In this book, the industry sector includes all manufacturing and construction activities. Emissions from transporting input materials or finished products are part of transportation, not industry. Industry does not include agricultural operations or emissions associated with waste (e.g., landfills and water treatment plants). It also excludes fugitive emissions (methane leaks), which predominantly come from wells and natural gas distribution networks.
Sources: Climate Watch, “Historical GHG Emissions,” accessed May 22, 2023, https://www.climatewatchdata.org/ghg-emissions; U.S. Energy Information Administration, “International Energy Outlook,” September 24, 2019, https://www.eia.gov/outlooks/archive/ieo19/
There is widespread awareness of techniques to eliminate greenhouse gas emissions from most nonindustrial sectors.
• Transportation: Electric vehicles and urban planning that facilitates walking, biking, and transit are making great headway in reducing transportation emissions. More than fifty countries have announced plans to ban the sale of new fossil-fuel-powered cars.2 Worldwide, electric vehicles’ share of new sales is expected to exceed 20 percent by 2030, and it will reach 33 percent in that year if countries enact policies to meet their existing pledges.3
• Buildings: Smart thermostats, improved insulation, LED lighting, heat pumps, and rooftop solar panels are beginning to dramatically cut energy use and emissions from buildings. For instance, in 2020, California became the first U.S. state to require solar panels on almost all newly built homes. California homes built in 2020 with solar use an average of 53 percent less energy than those built in 2016 without solar.4
• Electricity generation: Renewable energy, now cheaper than fossil power in much of the world, is helping to decarbonize the electric grid. Renewables
made up 82 percent of newly installed capacity worldwide in 2020.5 Interconnecting larger areas using transmission lines, instituting demand response programs, and deploying energy storage can manage variability and enable renewables to supply a very high share of total electricity.
In contrast, the techniques to decarbonize industry are less well understood, and policies to accelerate industrial decarbonization are not as common or ambitious as policies targeting other sectors. Policy makers are often hesitant to regulate industry for two reasons. First, industry is complex. Industrial firms produce millions of products using a wide variety of production processes. Industrial greenhouse gas emissions are not just from burning fuels but also include “process emissions,” by-products of manufacturing processes. This complexity is seen as an impediment to understanding which policies would be effective and avoid unintended consequences. Second, policy makers are cautious about requirements that might have adverse impacts on domestic firms’ competitiveness. Industry is a source of high-quality jobs. Policy makers do not wish to cause industries to move to other political jurisdictions to escape regulation, an effect called “leakage” (see chapter 9).
Fortunately, the challenge is not as great as it seems, for three key reasons. First, industrial emissions predominantly come from a few specific industries, so a large share of emissions abatement can be achieved by improving a small subset of all companies and industrial processes. The three highest-emitting industries— iron and steel, chemicals, and nonmetallic minerals (primarily cement)—account for 59 percent of all industrial emissions worldwide, and the top ten industries account for 84 percent (figure 0.2).
FIGURE 0.2 Global Greenhouse Gas Emissions by Industry and Emissions Type in 2019 Process emissions (CO2 and non-CO2) are greenhouse gases from industrial activities other than burning fuel for energy “Chemicals” includes basic chemicals and chemical products such as fertilizers, plastic resins, and synthetic fibers Cement makes up the majority of the “Nonmetallic minerals” category, but this category also includes ceramics (such as brick and tile), lime, glass, and other products “Food and tobacco” includes the processing, cooking, and packaging of food, beverage, and tobacco products, not agricultural operations Emissions from agriculture, from waste (landfills, water treatment), and fugitive emissions (methane leakage from oil and gas systems, coal mines, etc ) are not included here but are shown in figure 0 1
Sources: International Energy Agency, “World Energy Balances Data Service,” updated April 2023, https://www.iea.org/data-and-statistics/data-product/world-energy-balances; Johannes Gütschow, Louise Jeffery, Robert Gieseke, and Annika Günther, “The PRIMAP-Hist National Historical Emissions Time Series (1850–2017),” v. 2.1, GFZ Data Services, 2019, https://doi.org/10.5880/PIK.2019.018; U.S. Environmental Protection Agency, Global Non-CO2 Greenhouse Gas Emission Projections & Mitigation Potential: 2015–2050 (report no. EPA-430-R-19-010, U.S. Environmental Protection Agency (EPA), Washington, D.C., October 2019), https://www.epa.gov/sites/default/files/2020-05/documents/epa_nonco2_greenhouse_gases_rpt-epa430r19010.pdf; EPA, “GHG Emission Factors Hub,” updated April 3, 2023, https://www.epa.gov/climateleadership/ghg-emission-factors-hub; EPA, “GHGRP Refineries Sector Industrial Profile,” updated November 18, 2022, https://www.epa.gov/ghgreporting/ghgrp-refineries-sector-industrial-
profile; and Joint Global Change Research Institute, “GCAM 5.1.2,” October 15, 2018, https://zenodo.org/record/1463256
Second, industrial emissions are concentrated geographically. China alone accounts for 45 percent of the world’s industrial greenhouse gas emissions, while the top ten countries together account for 75 percent (figure 0.3). This means that policy decisions made in just ten countries govern three-quarters of the world’s industrial emissions. Even that understates the importance of decisions made in these geographies because policy can help accelerate research and development (R&D) progress and drive down technology costs, benefiting the entire globe. Additionally, if these regions transition to clean manufacturing, they may impose policies requiring that imported materials and products be produced in a sustainable way, to level the playing field for their domestic manufacturers. Improving economics of clean production combined with supply chain requirements can spread decarbonization far beyond the borders of the countries that enact industrial decarbonization policies. Therefore, advocates for industrial decarbonization need not make the case independently in hundreds of countries: helping a few, key countries transition to clean industry will go a long way toward helping the entire world achieve zero-carbon industry
FIGURE 0.3 Industrial Greenhouse Gas Emissions by Country in 2019 Values include direct emissions from fuel combustion by industry, industrial process emissions (of all greenhouse gases), and emissions from generating electricity and heat purchased by industry. CIS = Commonwealth of Independent States.
Sources: Climate Watch, “Historical GHG Emissions,” accessed May 22, 2023, https://www.climatewatchdata.org/ghg-emissions; International Energy Agency, “World Energy Balances Data Service,” updated April 2023, https://www.iea.org/data-and-statistics/data-product/world-energy-balances
Third, certain technologies and technical approaches are broadly applicable and can reduce emissions from almost every industry. Energy and carbon management technologies such as energy efficiency, electrification, hydrogen and other renewable fuels, and carbon capture cut across many industries. So do strategies to reduce the need for industrial materials and products while providing equivalent or better services: material efficiency, material substitution, and circular economy measures (such as product longevity, repairability, and recycling). The existence of powerful approaches that work across industry lines helps cut through the complexity of the industry sector and enables policy makers to design supportive policies without possessing deep knowledge of every manufacturing process in every industry.
In short, eliminating greenhouse gases from global industry is very achievable in a time frame compatible with countries’ net-zero pledges. Well-designed, ambitious policies and investments in existing and new technologies will be crucial to get there.
WHAT YOU WILL FIND IN THIS BOOK
Zero-Carbon Industry is the definitive guide to understanding emissions from the global industry sector, the technologies that can cost-effectively decarbonize industry, and the policy framework that can commercialize these technologies and deliver them at scale.
Chapters 1 through 3 are devoted to the three highest-emitting industries: iron and steel, chemicals, and cement. They illustrate where and how these industries make their products and why today’s manufacturing processes emit greenhouse gases. They also cover exciting new technologies that are poised to transform these industries and enable them to manufacture products in a sustainable way
Chapters 4 through 8 describe cross-cutting technologies that will be critical for decarbonizing global industry These include energy and material efficiency; circular economy measures such as product longevity, remanufacturing, and recycling; direct electrification of industrial heat; green hydrogen and other renewable fuels; and carbon capture, use, and storage. These technologies are useful across all industries, including the three profiled in the earlier chapters. Many industries have energy needs that can be met using cross-cutting technologies rather than requiring technology specific to that industry For instance, 55 percent of global industrial energy use consists of fuels burned inside
industrial facilities (figure 0.4), generally to create steam or provide heat to an industrial process. Multiple industries can use the same technologies to generate the heat they require.
FIGURE 0 4 Global Industrial Energy Use in 2019 Direct combustion of fuels accounts for over half of industrial energy use Fossil fuels used as feedstocks (i e , reactants involved in the production of nonfuel products such as fertilizer, plastics, and asphalt) account for another 21 percent
Source: International Energy Agency, “World Energy Balances Data Service,” updated April 2023, https://www.iea.org/data-and-statistics/data-product/world-energy-balances
Technologies are only part of the picture. Enacting the right policies can make investment in cleaner industrial processes more profitable and dramatically accelerate emissions reductions. Chapters 9 through 11 explain how these policies work and highlight critical design considerations that can enable the policies accomplish their goals while avoiding loopholes and pitfalls. Powerful financial policies include carbon pricing, green banks and lending mechanisms, subsidies, tax credits, and equipment fees and rebates Equally important are nonfinancial policies such as energy efficiency and emissions standards, green public procurement programs, support for R&D, emissions disclosure and labeling, and policies to support circular economy (such as standards governing repairability or recyclability).
Chapter 12 considers how policy makers can ensure that the transition to sustainable, clean industry promotes equity and human development worldwide. Done well, this transition can reduce income inequality, protect public health,
strengthen vulnerable communities, and foster a growing economy that minimizes unemployment and inflation.
Finally, the conclusion distills the insights from earlier chapters into a roadmap to clean industry, which divides the industrial transition into three phases and explains the key goals and actions that countries should take in each phase.
There are commercialized technologies that can greatly reduce industrial greenhouse gas emissions, and clear R&D pathways exist to eliminate remaining greenhouse gas emissions and achieve zero-carbon industry in the 2050–2070 time frame. A straightforward set of government policies is necessary to ensure the research gets done and the technologies are deployed at scale. This transition will provide enduring economic strength, secure a livable future climate, and achieve lasting prosperity for generations to come.
I THE LARGEST GREENHOUSE
GAS-EMITTING
INDUSTRIES
1
IRON AND STEEL
Steel is one of the most important manufactured materials, familiar in daily life and used in products such as vehicles, high-rise buildings, wind turbines, and appliances. Annual steel production was 1.87 billion metric tons in 2019, having grown at an average annual rate of 3.6 percent per year from 2015 to 2019.1 Over half the world’s steel production goes into buildings and infrastructure (such as bridges and pipelines), 21 percent goes to equipment and appliances, 17 percent to vehicles, and 10 percent to various other metal products and packaging (figure 1.1).
FIGURE 1.1 Global Steel Production by End Use in 2019 “Other products” includes packaging
Sources: World Steel Association, “2020 World Steel in Figures” (Brussels, Belgium, April 30, 2020), https://worldsteel.org/wp-content/uploads/2020-World-Steel-in-Figures.pdf; Jonathan M. Cullen, Julian M. Allwood, and Margarita D. Bambach, “Mapping the Global Flow of Steel: From Steelmaking to End-Use
Steel has many desirable properties, such as an excellent strength-to-weight ratio and low cost due to technologically mature production processes and abundant deposits of iron ore in many parts of the world. Steel is produced in different grades, from corrosion-resistant stainless steels to hardened, highcarbon steels used to make tools. While in some instances steel can be replaced with materials such as timber (discussed in chapter 5), steel is used for so many purposes, in such large quantities, and at such low cost that it will remain a critical material for the production of goods and infrastructure for the foreseeable future.
Iron and steel are closely related materials. Iron is a metallic chemical element (Fe) but can also refer to cast iron, an alloy that contains over 2 percent carbon content.2 Steel consists of iron alloyed with no more than 2 percent carbon (usually 0.25 percent or below) and sometimes other metals, depending on the grade of steel. For instance, the most common grade of stainless steel, grade 304, includes 18–20 percent chromium and 8–10.5 percent nickel to confer corrosion resistance.3
Iron was commonly used in final products before the advent of inexpensive steel production processes in the nineteenth century, but today, steel has largely replaced iron in end uses. Of the primary (nonrecycled) iron produced each year, 98 percent is used to make steel, and the rest goes into cast iron products such as cookware and certain machinery components.4 (Including primary and recycled iron and steel, end products consist of 95 percent steel and 5 percent cast iron.)
Steel production is heavily concentrated in mainland China, which is responsible for 53 percent of global production (figure 1.2). Only 10.4 percent of Chinese steel is produced via electrical processes, one of the lowest percentages in the world. Therefore, it is hard to overstate China’s importance when considering approaches to decarbonize steelmaking. The next-largest steel producers are the European Union, India, Japan, the United States, and South Korea, which together produce 23 percent of the world’s steel.
FIGURE 1 2 Steel Production by Region and Process in 2019 Electrical processes include electric arc furnaces and induction furnaces Nonelectrical processes include blast furnaces, basic oxygen furnaces, and open-hearth furnaces CIS = Commonwealth of Independent States
Source: World Steel Association, “2020 World Steel in Figures” (Brussels, Belgium, April 30, 2020), https://worldsteel.org/wp-content/uploads/2020-World-Steel-in-Figures.pdf
Steel production is energy-intensive due to the large amount of hightemperature heat required to smelt iron ore and melt metals. Roughly 8 percent of the world’s final energy use goes toward making steel.5 Therefore, understanding current steelmaking processes is important for identifying technological decarbonization opportunities that target the largest drivers of energy use.
CURRENT STEELMAKING PROCESSES
Steel is often divided into two types: primary steel (from iron ore) and secondary steel (from ferrous scrap metal, i.e., recycled steel). In practice, the line between these types is blurry, because sometimes scrap is mixed with primary iron when making primary steel, and sometimes primary iron is mixed with scrap when making secondary steel. However, the overall distinction is useful because different technologies are generally used in primary versus secondary production routes.
Steelmaking processes can be broadly divided into three stages.6
• Creation of input materials. For primary steel, this includes coke, lime, and iron ore, which is usually sintered (fused) or pelletized. For secondary steel, this includes lime and scrap.
• Smelting of iron ore to produce iron (only for primary steel).
• Creation of steel from primary iron or scrap.
Different technologies can be used at each stage (figure 1.3).
FIGURE 1 3 Processes and Material Flows in Iron and Steelmaking Energy and flux inputs are shown only for the four main furnace types Percentages (in gray boxes) indicate the share of iron or steel made via each technological route in 2019
Sources: World Steel Association, “2020 World Steel in Figures” (Brussels, Belgium, April 30, 2020), https://worldsteel.org/wp-content/uploads/2020-World-Steel-in-Figures.pdf; Jonathan M. Cullen, Julian M. Allwood, and Margarita D. Bambach, “Mapping the Global Flow of Steel: From Steelmaking to End-Use Goods,” Environmental Science & Technology 46, no. 24 (2012): 13048–55, https://doi.org/10.1021/es302433p; International Energy Agency, Iron and Steel Technology Roadmap (technology report, IEA, Paris, October 8, 2020), https://www.iea.org/reports/iron-and-steel-technologyroadmap; Zhiyuan Fan and S. Julio Friedmann, “Low-Carbon Production of Iron and Steel: Technology Options, Economic Assessment, and Policy,” Joule 5, no. 4 (2021): 829–62, https://doi.org/10.1016/j.joule.2021.02.018; and Lockwood Greene Technologies, Ironmaking Process Alternatives Screening Study, Volume I: Summary Report (report, U.S. Department of Energy, October 2000), https://www.energy.gov/sites/prod/files/2013/11/f4/ironmaking_process.pdf.
STEP 1: RAW MATERIAL PREPARATION
The raw materials of steelmaking are processed iron ore, lime, coke, and ferrous scrap.
IRON ORE PROCESSING
All steel initially comes from iron ore, a mixture of minerals including oxidized, iron-containing compounds, the most common of which are magnetite (Fe3O4) and hematite (Fe2O3).7 Some mines produce ore with a high concentration of iron oxides. This ore can be crushed and sintered into small pieces (referred to as “sinter”) that are suitable for use in a blast furnace. Other mines produce ore with a lower iron oxide concentration. The iron compounds must be concentrated, such as by grinding them into a fine powder and using density differences or magnets to separate out the iron-containing minerals. The resulting powder is then formed into small, spherical pellets that are suitable for use in a blast furnace.8 Both sintering and pelletizing involve high temperatures in a furnace, typically fueled by coke or coal.
Some mines produce iron ore “lumps” with high concentrations of iron oxides and physical dimensions that are suitable for use in a blast furnace without sintering or pelletizing.9
LIMEMAKING
“Lime” can refer to any of several oxidized calcium compounds. The types of lime used in ironmaking and steelmaking are calcium oxide, or “quicklime” (CaO), and dolomitic quicklime (CaO·MgO). Lime is used as a flux, a substance added to furnaces to remove impurities such as silicon, phosphorus, and manganese.10 The lime and impurities form a byproduct, called slag, that is separated from the metal and sold commercially. The main use of slag is as a granular base material or aggregate in construction,11 though it can also be used as an ingredient in cement-making.
Producing lime involves calcining, or heating limestone (calcium carbonate, CaCO3) to produce carbon dioxide (CO2) and quicklime (CaO). In a blast furnace, limestone is added along with iron ore and coke, and the heat of the blast furnace converts the limestone to quicklime.12 In contrast, in basic oxygen and electric arc furnaces, limestone is first heated in a kiln to produce quicklime, and quicklime is added to the furnace.13 Lime is not used in direct reduced iron furnaces.14
The production of lime is central to the cement industry and only a minor contributor to the steel industry’s emissions, so the calcining process and technology options for its decarbonization are covered in chapter 3.
COKING
Coke is a porous gray fuel that is composed of mostly pure carbon. It is obtained from specific grades of coal, known as “metallurgical coal” or “coking coal.” The coal is heated to 1100°C in a coke oven without oxygen to vaporize volatile impurities (without combusting the coal itself).15
Coke is added to a blast furnace to produce carbon monoxide (CO), which chemically reduces (removes oxygen from) iron ore to make pig iron. To a degree, pulverized or granulated coal can be substituted for coke, limited by the need to have sufficiently porous furnace contents to allow hot gases to reach all the materials in the furnace.16
Electrical technologies could decarbonize the heat required to produce coke (chapter 6), but the emissions from using coke to make pig iron cannot be avoided except via carbon capture (chapter 8). Therefore, the most promising routes to eliminate greenhouse gas emissions from steelmaking, to be discussed later, involve avoiding the use of coke entirely.
SCRAP SEPARATION
Scrap iron and steel are the main inputs in the production of secondary steel. Some scrap consists of leftover steel from the production of raw steel products, such as steel plates, rods, tubes, and wire—this is called “forming scrap” and
