Pathways to Commercial Liftoff

The pathway to:
Industrial Decarbonization Commercial Liftoff

The U.S. industrial sector makes products and materials that Americans rely upon and many of these products are also essential materials for a clean-energy transition.

Example products include: Steel and aluminum for automobiles and renewable energy generation, cement and concrete for buildings and infrastructure, pulp and paper for packaged goods, glass for windows and containers, and chemicals for fertilizers, pharmaceuticals, and plastics. At the same time, a decarbonized economy will require approaches that address the production emissions associated with industrial processes. U.S. industrials are a significant contributor to emissions, accounting for 23% of total U.S. CO2e emissions (GWP100) in 2021, as well as other health-harming emissions, including nitrogen oxides (NOx), sulfur oxides (SOx), and carbon monoxide (CO).1, 2, i This Industrial Decarbonization Liftoff report provides an overview of the pathways to decarbonization across eight industrial sectors of focus: chemicals, refining, iron & steel, food & beverage processing, pulp & paper, cement, aluminum, and glass.ii The energy and process-related emissions from these eight industrial sectors of focus, accounted for 14% of domestic emissions totaling ~880 MT CO2e in 2021.3, iii, iv, v

These carbon-intensive industrial sectors are facing a critical inflection point, and society is focused on accelerating deep decarbonization.

If the U.S. transport and power sectors decarbonize in line with administration targets and limited abatement occurs in industrials, the share of emissions from all U.S. industrials could rise to 27% of total U.S. CO2e emissions by

Broader U.S. industry progress toward deep decarbonization is at risk of lagging other countries and domestic net-zero targets, although the journey is nuanced by sector.4  Today, industry mostly focuses on a subset of deployable technologies requiring limited investment or process changes, which if fully adopted, would only address ~10% of emissions studied

However, in some sectors, this narrative is changing due to:

Congressional support from the Bipartisan Infrastructure Law (BIL)5, and the Inflation Reduction Act6 (IRA).

Customers and other stakeholders increasingly expect companies to address climate change (e.g., low carbon steel demand from auto manufacturers).
Some companies are making bold decarbonization moves.

Willing U.S. industry participants could utilize the momentum of the present moment to accelerate the commercialization of decarbonization technologies, respond to rising global demand for clean industrial commodities, and establish the U.S. as a global leader in industrial decarbonization.

The Liftoff report finds that by 2030, up to 40% of studied emissions7 could be abated with existing net-positive decarbonization levers or external factors.8

Figure 1: Net-positive levers and external factors could abate 30–40% of emissions by 2030. | 1. Current ranges consider how abatement potential might evolve if the abatement cost curve is higher or lower than anticipated. Abatement potential ranges are based on high and low scenarios for abatement cost. Ranges are not meant to represent a statistical accounting of confidence intervals but instead depict uncertainty in the cost estimates range for decarbonization levers. | 2. Heat, electricity, and process emissions for industrial sectors of focus (defined in text) | 3. Modeled emissions abatement in 2030 that is attributable to external factors, including grid decarbonization and changes in demand. | 4. Modeled emissions abatement associated with net-positive levers ($100/t or that require further R&D | 7. Assumes the Biden Administration’s target of zero emissions from the grid in 2035 and applies goals for transport decarbonization and plastics recycling for this analytical exercise. The entire bar is shaded to indicate uncertainty around factors external to industrial facilities.
Across the Industrial Sectors studied, ~27% of chemicals, ~14% of refining, and ~32% of cement emissions could be abated with net-positive decarbonization levers. Detailed list of levers and cost estimates are included in the modelling appendix of the report. Overall, our analysis estimates that the capital expenditure alone – not including R&D or operating expense changes – to reach net zero by 2050 could require $700–1,100B of potential capital expenditure.9

Finally, the Pathway to Commercial Liftoff scenario for industrial decarbonization relies on technologies along the Research, Development, Demonstration, and Deployment (RDD&D) continuum with near-term opportunities for deployable technologies across all sectors studied.

Figure 2: Opportunities to implement deployable levers exist across all sectors | 1. Ethanol dehydration | 2. Fluid Catalytic Cracker (FCC) | 3. Steam Methane Reformer (SMR) | 4. Blast Furnace – Basic Oxygen Furnace (BF-BOF) | 5. Natural Gas – Direct Reduced Iron / Hot Briquetted Iron (NG-DRI/HBI); Refers to the substitution of natural gas as a reductant in place of coal | 6. Electric Arc Furnace (EAF) | 7. Geopolymers | 8. E.g., absorption chillers, ejector refrigeration, deep waste energy and water recovery, alternative protein manufacturing | 9. Refers to electrolytic hydrogen use in traditional processes | 10. While substitution of limestone and fly ash are deployed today, other clinker substitutes are more nascent. See the following sources for additional detail: a.) U.S. Department of Energy – Office of Energy Efficiency and Renewable Energy. (n.d.). Industrial Efficiency and Decarbonization Office (IEDO) FY23 Multi-Topic FOA. B.) Novel cements. Cembureau. (2018, September 28). | 11. Mechanical recycling is widely deployed, while chemical/ advanced recycling is more nascent. Additional details can be found in the Chemicals and Refining Liftoff report.

To achieve Liftoff and stay on our path to net-zero, there are key actions for technologies in each stage of commercialization:

Figure 3: Liftoff pathway across industrial sectors is split across technologies with varying technology readiness levels (TRL) / adoption readiness levels (ARL) and can be enabled through policy, infrastructure, and supply chains | 1. Indicative timeline presented for R&D, FOAK, liftoff, and scale. Actual timelines will vary by technology based on technological maturity and barriers to adoption.

Here, “Liftoff” represents the point where solutions become largely self-sustaining markets that do not depend on significant levels of public capital and instead attract private capital with a wide range of risk.

An accelerated pathway to commercial liftoff faces seven major, commercial challenges across all decarbonization levers:

High delivered cost of technology

Challenging economics with long payback periods and a subsequent lack of first-of-a-kind (FOAK) build-out for high-abatement levers with lower TRL and/or ARL (e.g., high-temperature heat electrification, alternative chemistries for cement production), even after IRA incentives.

High complexity to adopt

Operational roadblocks delaying implementation of decarbonization retrofits, such as alignment of decarbonization investments to asset downtime windows. ​

Limited high-TRL technologies

Overreliance on a small portfolio of technologies with relatively low ARLs (e.g., dilute-stream CCS).

Lack of enabling infrastructure

Nascent ecosystem of value chain partners and lack of enabling infrastructure (e.g., carbon dioxide and hydrogen pipelines). ​

Capital flow challenges

Capital formation challenges due to relatively lower ROI, higher volume of capital needed, perceived risks of retrofits and lower-ARL, low-carbon assets resulting in higher cost of capital, and more favorable risk-adjusted return of sustaining existing assets. ​

Limited demand maturity

Limited short-term decarbonization ambitions prompted, at least in part, by limited (to date) regulator actions and/or demand-side pull for low-carbon products.

Community perception

Inconsistent public acceptance due to environmental and human health risks, environmental justice, and labor concerns. ​

In partnership with other federal agencies, the Department of Energy (DOE) has the mission, authorities, and funding to begin to address these decarbonization challenges and help implement solutions in concert with the private sector. DOE recently launched a new crosscutting website to consolidate relevant Industrial Technology resources.

Finally, DOE is committed to working with communities, labor unions, and the private sector to build a 21st-century industrial base that meets the country’s climate, economic, and environmental justice imperatives.

Industrial decarbonization is a vital opportunity to transform industrial systems and focus on energy and environmental justice. While carbon-intensive industrial sectors are facing a critical inflection point and society is focused on accelerating deep decarbonization, this is a unique moment that neither American industry nor DOE can allow to pass. The DOE has been given unprecedented tools by the BIL and IRA to act on these challenges.

The time is now.

The U.S. Department of Energy, in partnership with other federal, state, and local agencies, has tools to address challenges to commercial liftoff and is committed to working with communities and the private sector to build the nation’s clean energy infrastructure in a way that meets the country’s climate, economic, and environmental justice imperatives.

Want to learn more?

Explore Other Industrial Decarbonization Reports

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Chemicals & Refining Decarbonization​

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