I was fortunate to attend part of the 9th Clean Energy Ministerial (CEM) meeting in Copenhagen and participate in a panel focussed on the steps required to decarbonise the industrial sector. It is good to see that the CEM is bringing much needed focus to this area, given that industrial emissions make up about a fifth of global energy system emissions, without including process CO2, such as from the cement industry.
Shell recently released the Sky scenario, which tackles the challenge of meeting the goals of the Paris Agreement. In Sky, as power sector emissions decline with natural gas replacing coal and rapid deployment of renewables, industrial emissions become increasingly important. By 2040 in Sky, when global emissions have declined by nearly 20%, heavy industry emissions have actually increased. This is the result of continued development and urbanization which increases the demand for materials such as cement, ferrous and non-ferrous metals and a broad range of chemicals.
The solution for industry in Sky, which aligns with the discussions held in Copenhagen, includes a number of different directions, all of which require significant action. In Sky, the shift in industry required for net-zero emissions follows an incremental path, largely driven by the progressive implementation of government carbon-pricing systems and the ratcheting up of the resultant price that occurs as governments respond to the Paris Agreement. The transformation is profound and follows three distinct routes:
- Efficiency improves continuously, with most industrial processes approaching thermodynamic and mechanical efficiency limits by the 2050s.
- Some processes shift towards electricity, particularly for light industry, where electricity use doubles from 2020 to 2040. Hydrogen also emerges as an important fuel for light industry by 2050 as natural gas use declines. But a similar change for heavy industry doesn’t emerge until after 2050, with hydrogen, biomass, and electricity substituting for natural gas and some coal use.
- Coal remains important in the metallurgical sector and some other processes right through the century, but with government-implemented carbon prices rising, carbon capture and storage (CCS) emerges as the solution.
Industry also benefits from an increased focus on the circular economy, which sees large-scale recycling expand throughout the century, to the extent that some resource extraction declines as a result.
For heavy industry, which was the focus of discussions in Copenhagen, the Sky decarbonisation pathway is illustrated below.
Although electricity and biomass use grow in Sky, the first major change is the application of CCS from the late 2020s, just a decade away. In the 2030s some 500 major heavy industry CCS projects emerge (1 million tonnes stored CO2 per annum per project), with that rate of uptake more than doubling into the 2040s. By the time net-zero emissions is achieved globally for the energy system, over 2.5 Gt of CO2 is being captured and stored from energy use in heavy industry. In addition, there will be further use of CCS capturing CO2 from limestone calcining in the cement industry.
After 2050, hydrogen emerges as an alternative energy source for heavy industry and its growth eventually begins to reduce the need for CCS, which declines from the mid-2070s. Today the use of hydrogen in heavy industry is in the earliest stages of development, with a pilot plant proposed for hydrogen based iron ore smelting in Sweden. Given progress to date, it is unlikely that this technology will emerge at scale prior to mid-century. Large facilities may exist by then, but probably not numerous enough to make a material difference to emissions.
With electrification of some sectors, along with hydrogen use in others, fossil fuel use in heavy industry falls rapidly in Sky from the early 2050s. By 2100, heavy industry emissions have fallen from a peak of 4.6 Gt per year in 2040, to less than a tenth of that. Remaining emissions are offset by atmospheric drawdown via BECCS.
As was highlighted in the Copenhagen meeting, for such a pathway to succeed, much needs to be put in place throughout the 2020s. CCS in industry must be catalysed, process technologies using electricity and hydrogen require research, development and commercialisation and a more aggressive focus on efficiency needs to be encouraged and incentivised.
And to kick-start that process in earnest, the Clean Energy Ministerial offered an opportunity to announce a fresh initiative aimed at boosting the progress on CCS. The Carbon Capture, Utilization, and Storage (CCUS) Initiative will focus on strengthening the framework for building collaborative partnerships on CCUS between the public and private sectors. It will also bolster and complement existing CCUS efforts led by the Carbon Sequestration Leadership Forum, the International Energy Agency (IEA), the IEA’s Greenhouse Gas R&D Programme, Mission Innovation, and the Global CCS Institute. Led by the United States, Norway, and Saudi Arabia, other international partners that have joined this initiative include Canada, China, Japan, Mexico, Netherlands, United Arab Emirates, and the United Kingdom; as well as the European Commission.
Note: Scenarios are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Please read the full cautionary note in www.shell.com/skyscenario.
Interesting as ever to read your thoughts David. Having banged my head against CCS for a number of years I observe that many of the problems encountered trying to deploy CCS in the power sectors are there, with more besides, in industry. While the issue of zero-marginal cost RES isn’t there in industry, the industrial sector shares in power sectors lack of interest and expertise in storage, high capital investment, relatively low margins and long asset life. There is also (more so in some sectors than others) the challenge of trade exposure, which makes it difficult to deploy CCS bit by bit, plant by plant, in the same way you may be able to in power. As plant A with CCS is most likely directly competing with plant B without it (and the associated costs). While CCS could well play a vital role in decarbonising industry it won’t emerge without frameworks that encourage and reward investment in an uneven international policy landscape and the provision of infrastructure.
I observe that right now CCUS and H2 are getting much more attention that ‘pure’ CCS.
My personal view is that industrial decarbonisation will look like power decarbonisation – there will be technologies that work well in particular locations and circumstances. In Sweden with an excess of REs this may well be H2, in other areas in will be biomass, in other CCUS, CCS and perhaps ultimately radical breakthroughs like electrolysis.. it will look like the IEA power decarbonisation wedges.
In the meantime industry most facilitate best practice sharing, and encourage all plants to operate as efficiently as the best do now, if we can do that we buy some time to develop and deploy breakthrough solutions.