Changing climate, changing priorities: the transition to a low-carbon economy (Part 1)
Carbon dioxide (CO2), methane, and chlorofluorocarbons are known as greenhouse gases (GHG) as they absorb radiant heat in the atmosphere. Over millennia, the earth evolved to naturally keep the carbon cycle in balance through respiration (oxidation) of CO2 to produce biomass through photosynthesis (reduction). Industrialization, urbanization, and digitization have put tremendous demand on our energy requirements.
Cutting the carbon
April 22, 2016 (Earth Day), 174 countries signed the Paris Agreement, pledging to limit the global temperature rise to 1.5°C by reducing CO2 emissions to net zero by 2050. Since then, many emission-intensive companies have publicly announced their commitments to become carbon-neutral by 2050 and support organizations such as the Carbon Disclosure Project and the Taskforce on Climate-related Financial Disclosures.
Industry accounts for almost 30% of global GHG emissions, mostly as CO2. Over the past 30 years, GHG emissions from buildings, power and transportation have continued to increase at a rate of 0.9% per year, however the industrial sector has outpaced this by more than a factor of two. Cement and steel alone account for nearly 40% of industrial emissions. Feed materials that are intrinsic to these processes account for 45% of GHG emitted, with the balance associated with predominantly process heat requirements. Reducing industrial emissions therefore requires extensive process changes and/or equipment redesign. Long story short, cutting the carbon isn’t easy.
Decarbonizing industry is challenging due to the inherent complexity and integration of these processes. Industrial assets are built for service lives in excess of fifty years and therefore changing a process requires capital-intensive retrofits. Furthermore, the cost of decarbonizing price sensitive commodities impacts margins if consumers are not willing to pick up the cost. More and more people are becoming aware of carbon-conscious products however, and some manufacturers are beginning to respond. Take, for example, Apple’s partnership with Alcoa and Rio Tinto to produce carbon-free aluminium via the ELYSIS™ process, and Microsoft’s commitment to be carbon-negative by 2030.
Transition leads to transformation
Transforming the energy system requires significant changes and technological progress across four main areas:
- Improved material and energy efficiency
- Widespread use of renewables
- Use of alternative fuels (i.e., fuel switching)
- Implementation of carbon capture, utilization, and storage (CCUS)
In hard-to-abate industrial sectors, we must universally employ four main decarbonization pathways to achieve net zero carbon emissions by 2050:
- Direct electrification of processes, equipment, and vehicles
- Hydrogen use as a heat source and a reductant
- Biomass use as a heat source and a reductant
- Carbon capture at source or direct air capture
In the mining sector, specific priorities include switching fuels, such as using natural gas, biofuels, or hydrogen instead of diesel and heavy oils; fleet electrification, including heavy and light duty vehicles; as well as eliminating fugitive emissions in coal mining. In smelting and refining, priorities include optimization of furnace operation, heat recovery from off-gases and slags, switching to hydrogen and biomass for heat and reductants instead of traditional coal or coke, electrification of process heating, using inert electrodes as reductants, and CCUS. There’s no silver bullet―the final mix will be a hybrid of these priorities that varies not only by geographical region and industry, but also by operational site. What may work at one facility may not be practicable or have the same impact at another.
“There’s no silver bullet―the final mix will be a hybrid of these priorities that varies not only by geographical region and industry, but also by operational site. What may work at one facility may not be practicable or have the same impact at another.”
The drivers for abatement of industrial sectors is increasingly driven by investors’ response to the climate crisis. Without transparent reporting of emissions and clear plans for decarbonization, companies risk losing access to capital for projects. With many green investment firms looking to finance cleantech and climate change solutions, and large asset managers making investment decisions with environmental sustainability at the core, this trend will continue to intensify, creating huge opportunities for leaders in the race to limit carbon emissions.
This is Part 1 of a two-part blog. Watch for Part 2 coming soon!
To read Hatch's statement on climate change and sustainability, click here.