AN Iyourndustry’s Guide phoneto pillsClimate Actioncar houseindirectly emit CO2 ACKNOWLEDGEMENTS

Grateful thanks to the Children’s Investment Fund Foundation for supporting our work on indutrial climate action.

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Bellona Europa is the Brussels-based branch of the Norwegian Bellona Foundation, an independent non-profit organisation working on the environmental, climate and social issues of our time. We aim to identify, promote and help implement realisable solutions for the protection of nature, the environment and health. To achieve these goals, Bellona continues to work with – and against – relevant actors and stakeholders both nationally, and internationally.

OUR ORGANISATION Bellona was founded in 1986 in Oslo, Norway, as an environmental action group. Still headquartered in Oslo, we have since expanded with offices in Brussels, Murmansk and St. Petersburg. Our team consists of about 65 employees with diverse professional backgrounds in communication, engineering, ecology, economics, geosciences, law, physics, and political and social sciences.

SOLUTION-ORIENTED APPROACH Our solution-oriented approach to climate issues follows the evaluation of existing options, assessment of associated challenges and promotion of identified solutions. Supported by the breadth of knowledge and skills of our experts, Bellona follows a holistic, trans-sectoral approach to assess the economics, climate impacts and technical feasibility of possible climate options.

COMMUNICATION AND COOPERATION The challenges of climate action are complex and involve multiple influential actors and stakeholders; from national and supranational governments, to internationally operating billion-dollar companies, and the people living in respective regions and countries. To ensure collective action takes place and in the interest of society and the climate, it is crucial to retain open channels of communication. Bellona does not shy away from, and indeed seeks, the exchange with polluting industries, as well as civil society, academia and governments. We believe that the process of finding solutions to pollution from industries that are currently essential to our economy and the standard of living needs to involve them. Bellona is engaged on several platforms, where we aim to initiate discussion and fuel debate to identify the realisable climate solutions we need. We work jointly with scientific institutions on several European research projects, and follow close relationships with fellow climate NGOs across the globe.

FUNDING Bellona’s work is largely funded by philanthropic organisations and participation in Horizon 2020 research projects. Authors: Dr. Jan-Justus Andreas Ana Šerdoner Keith Whiriskey

Contributors: Jonas Helseth Theo Mitchell Olav Øye Mark Preston Aragones

Design and layout: Ana Šerdoner CHAPTER 1 summary: We have a problem ...... 6 Reality vs. Paris...... 7 The Sources of our Problem...... 8 Electricity: Important, but not a silver bullet...... 10 Industrial Emissions in Europe...... 12 Cement...... 12 Steel...... 14 Chemicals...... 16 Too Valuable not to Decarbonise...... 18 Enabling a Just Transition, not Just a Transition...... 20 1 A Web of Jobs and Supply Chains...... 22 License to Emit...... 24 Risky Business...... 25 Endnotes...... 28 1 CHAPTER 2 summary: A Diversity of Options, A Lack of Solutions...... 2 No barriers to zero-emission industry...... 3 Reducing, Reinventing and Replacing...... 4 What does reinvention look like?...... 8 Can we fix everything with electricity?...... 10 How long must we wait for a low-carbon electricity grid?...... 12 How much electricity do we plan to produce and consume?...... 13 Electricity use in society and industry...... 14 Limitations of reinventing industry with electrification...... 16 2 Endnotes...... 18

CHAPTER 3 summary: The Dawn of a New Industry...... 2 Many options, few solutions...... 3 CCS in Industry...... 4 How it works...... 4 Why it works for the climate...... 6 How to do it right...... 8 3.1.Managing CO2: Opportunities and Traps...... 9 New opportunities...... 10 Not every use of CO2 is climate action...... 12 3.2. Creating CO2 Networks...... 15 Making Europe Climate-Proof...... 16 It’s up to Industry to break Inertia...... 18 Moving European CO2 infrastructure down the cost curve...... 19 3 Incentivising and Financing a European CO2 Network...... 21 Low carbon worlds for a low carbon world...... 22 Endnotes...... 24

CHAPTER 4 summary: A Farewell to Inaction...... 2 Scandinavia...... 4 Norway...... 5 Next steps...... 5 Sweden...... 6 The Netherlands...... 8 Next steps...... 10 Germany...... 12

The European CO2 Network...... 16 4 Endnotes...... 17 EXECUTIVE SUMMARY The 2015 Paris Agreement set the target for countries to keep global surface temperature increases to well below 2°C compared to pre- industrial times. Since then, very little has happened considering As the transformation of the energy system continues and new the magnitude of the task at hand, which requires the effective technology options are developed and brought to maturity, measures cessation of emissions from all human activity by mid-century. The that can provide effective and deep emission reductions to industry

industrial sector has so far been largely excluded from climate processes are needed today. The capturing of CO2 emissions from 1discussions, and shielded from the requirements to implement industrial clusters and their transport and permanent offshore effective action. Already contributing a fifth of EU emissions, the storage in deep geological formations (CCS) constitutes an essential industry’s share of total emission is likely to increase further as part of the solution. It complements limitations of feasibility, scale, the energy and mobility transitions continue. This places the sector costs and time associated with other climate tools. It is a three-step in a precarious situation. Currently, industry is able to stay out process that depends on the availability of a CO2 transport3 and of the public spotlight, and hides behind difficult-to-abate and storage infrastructure. Yet, no single industrial site or even sector even “unavoidable” process emissions that do not benefit from a can be expected to develop the entire system themselves for gradually cleaner European power supply. Yet there can be no reasons of cost, associated financial risk, as well as the required

unavoidable emissions in a post-Paris world, nor space for pseudo technical expertise. Developing a shared CO2 transport and storage climate measures that some industry sectors present to greenwash infrastructure that is open to all industries and expandable to their products. Postponing real climate measures far into the future other regions reduces costs and strengthens the regional industry will leave industry vulnerable when the (public) climate changes. base. Implementing this system is dependent on financing that Today, the sector continues to claim it is too big, too important, too can come directly from industry but also from instruments at a valuable, and in too much global competition to be able to do regional, national and European level, including the Innovation more than it currently does, which is not enough. Immediate action Fund and the Connecting Europe Facility (CEF). As some programs in reducing industry emissions is needed to prevent worsening are either ending soon or still need to be made fit for purpose,

environmental, political and economic repercussions that will time is of the essence. Overall, establishing a CO2 network for arise as the world slithers towards a well beyond 2°C climate. Europe’s industry today is a no-regrets option that overcomes

the notion of ‘unavoidable’ CO2 and enables industry to deeply decarbonise, thereby protecting jobs and welfare, and ensuring governments are able to fulfil their obligations under binding Energy intensive industries have multiple potential options that international targets. when combined can reduce and even eliminate emissions. No single technology or action represents a silver bullet and all effective solutions are needed to reach net-zero emissions. Several current developments in Europe could make a shared CO2 Considerations of the industry’s location, the available resources, network a reality in the near future. Norway has been pioneering energy consumption and competing energy uses must all be CCS technology for decades and has the largest offshore storage taken into account when planning a realistic pathway for industry reserves in Europe. The country is currently developing the world’s decarbonisation. Comprehensive climate action in the sector needs first shared CO2 storage infrastructure for two domestic point sources, 2to be threefold: (1)The use and waste of products needs to be a cement plant and a waste-to-energy incinerator. In light of the reduced. Current rates of recycling and upcycling can still be comparably low amounts of Norway’s own industry emissions, the improved, bearing in mind their technical limits. (2) Replacing true potential of this infrastructure will only be attained when it is traditional with alternative products, such as sustainable wood shared with other major emission sources in Europe. At4 the same for cement, is able to reduce the need for new materials. Many time, the Netherlands is assessing its own CO2 network to enable a replacement options however suffer from issues such as scale of deep decarbonisation of its industry in time to reach the country’s availability and performance. It is also important to be mindful 2030 and 2050 targets. As the Port of Rotterdam is seeking to of unintended consequences, both in the creation of new sources become the crucial CO transit hub for the region, Dutch actions of CO emissions and in overexploiting or over-relying on limited 2 2 have the potential to kick-off similar plans in adjacent regions. alternative materials. (3) This is why parallel to these measures, This represents a major opportunity for Europe’s largest industrial existing manufacturing processes also need to be reinvented through region, North Rhine Westphalia in Germany, which has the chance electrification and/or carbon capture and storage (CCS). Due to to start its own capture projects via ship access the Dutch CO2 the limits of electrification, certain process emissions still need to network. Accomplishing the Norwegian and Dutch plans while be addressed. CCS thereby becomes an essential component for also involving Germany would provide a strong showcase industry emissions, and is ready for implementation today. of pan-European cooperation and climate action, and would catapult Europe’s industry to the forefront of the next, green, industrial revolution. We have a problem

SUMMARY The 2015 Paris Agreement set the target for countries to keep global surface temperature increases to well below 2°C compared to pre-industrial times. Since then, very little has happened considering the magnitude of the task at hand, which requires the effective cessation of emissions from all human activity by mid-century. The industrial sector has so far been largely excluded from climate discussions, and shielded from the requirements to implement effective action. Already contributing a fifth of EU emissions, the industry’s share of total emission is likely to increase further as the energy and mobility transitions continue. This places the sector in a precarious situation. Currently, industry is able to stay out of the public spotlight, and hides behind difficult-to-abate and even “unavoidable” process emissions that do not benefit from a gradually cleaning European power generation. Yet there can be no unavoidable emissions in a post-Paris world, nor space for pseudo climate measures that some industry sectors present to greenwash their products. Postponing real climate measures far into the future will leave industry vulnerable when the (public) climate changes. Today, the sector continues to claim it is too big, too important, too valuable, and too much in global competition to be able to do more than it currently does, which is not enough. Immediate action in reducing industry emissions is needed to prevent worsening environmental, political and economic repercussions that will arise as the world slithers towards a well beyond 2°C climate.

This report focuses on issues not comprehensively addressed in other studies. As scenarios on the important climate measures of circularity and demand-side adjustments in energy intensive industries are being covered in a growing number of studies, they are not discussed in this report. In light of general uncertainty over developments in the future, this report focuses particularly on

supply-side measures that are feasible today and on the development of a CO2 transport and storage network for northern Europe. Chapter 1: We Have a Problem REALITY VS. THE PARIS AGREEMENT After several failed attempts at achieving agreement on As the need for action is growing, our time to act is shrinking. collective global action to tackle the growing threat of climate To achieve the Paris goals and not slip into an ever-increasing change, the 2015 Paris Climate Agreement finally saw almost warming of the planet, every aspect of human life needs to 200 countries commit themselves to limit the warming of effectively cease emitting CO as soon as possible. Already, the global surface temperatures to 2°Celsius compared to 2 every additional tonne of CO released into the atmosphere pre-industrial times. Hailed as the starting shot to overcome 2 may need to be removed in the future in order to prevent continuous climate inaction, in truth, the Paris agreement is the worst climate change implications from becoming reality. likely the final shot to do so. Yet – as a rule of nature – it is much easier and cheaper to Yet the hoped-for increased action following the Paris prevent emissions at a concentrated source point than to filter agreement has so far failed to materialise. Global emissions it out of the atmosphere. As such, the priority should be to continue to increase and at current rates the carbon budget stop emitting in the first place as opposed to capturing difuse to keep warming at 2°C will be exhausted by 2036 [1]. The CO2 from the atmosphere. As every sector of the economy current action and promised national contributions (NDC) has an obligation to deeply decarbonise, each needs to accumulate to a world of 3-4°C warming rather than ‘well- have the effective solutions available to do so. below 2°C’. The difference between the two worlds is between the possible loss of tropical reefs and the loss of entire coastal cities and island states; ranging from increasing likelihood of “Despite every action taken, the billions of severe weather events and permanent droughts in Europe, dollars invested in research, the nonbinding forests in the Arctic and large parts of China, India and the treaties, the investments in renewable energy, American Southwest turning into inhospitable deserts. Not the only number that counts, the total quantity to mention the deteriorating societal implications caused by famine, vast streams of climate refugees and wars over of global greenhouse gas emitted per year, water and resources, as well as runaway global warming has continued its inexorable rise” [5]. ever intensifying the outlined effects [2, 3, 4].

~

Figure 1: Over the past few decades, the pace of emitting greenhouse gases has hastened substantially. We now only have about a quarter of our carbon budget left before we cross the 2oC mark.

7 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem THE SOURCES OF OUR PROBLEM

CO2 emissions come from many different sources. From the food we eat to the homes we live in, almost every aspect of our lives includes emitting greenhouse gases to the atmosphere. In Europe,

4.45 billion tonnes of CO2 are released every year, with the average European adding 24 kg of CO2 into the atmosphere every day [6, 7]. The pie charts below show these emissions broken down into sectors and the progress of solutions for reducing emissions in each of them.

TRANSPORT – 20% MARINE AND AVIATION The electrification of transport has an important role in cutting emissions, For short range trips in marine transport, electrification is a viable option for reducing emissions [19]. The ports oil imports and air pollution. The deployment of electric vehicles is gaining of Rotterdam, Gothenburg, Kiel, Lübeck, Oslo, and Bergen already provide shore power for electric and hybrid momentum, with a record-high of new electric car registrations [8], the city vessels [20]. Already in 2018, fully electric vessels will operate from the ports of Amsterdam, and Rotterdam of Berlin ordering their first 15 electric buses for 2019 [9], and technological [21, 22]. In 2019, Norwegian Color Line and Ulstein Verft will launch the world’s biggest hybrid vessel, able to developments increasing range and safety of the vehicles [10]. Rapidly improving transport 1900 passengers and 500 cars. For long distance travel, recent solutions include the use of alternative battery technology has helped in the development of electrification solutions fuels without a carbon content, such as Hydrogen [23] and Ammonia [24]. Alternative carbon based fuels – for heavy duty transport, with the first trucks already having 800km range per potentially from seaweed [25] – will still be needed for aviation, where electrification may only be an option charge [11]. An increasing number of cities, including Paris, Copenhagen and for short-haul flights [26]. Hamburg, are set to ban polluting internal combustion engines within their city limits by as soon as 2020 [12].

INDUSTRY The conversation about industrial emissions is just getting underway. While there are various options that claim to address the problem, only few have RESIDENTIAL – 13% the potential to live up to the challenge. While many technological solutions are needed to address all Increasing efficiency standards for buildings have industry emissions, the actual CO2 reductions depend enabled the deployment of a variety of technologies on each option’s potential scale, resource-use intensity that have helped tackle emissions from the residential and knock-on effects on other decarbonisation sector. Efficient construction practices, appliances and pathways. heating and cooling systems already contribute to significant reductions in the sector [13]. The increased use of technologies such as heat pumps also enables an In 2050, industry could end up increased use of renewable electricity in homes [14]. In being the largest emitting sector. the EU alone, more than half of the 210 million buildings will be in need of renewal within the coming years [15]. In absolute numbers, the climate impact of European

industry (857 MtCO2) is already greater than the impact from all of Europe’s coal power plants put

together (775 MtCO2) [27]. Industries will become increasingly exposed to climate change politics as

other sectors modernise. As industrial CO2 sources grow as a percentage of total remaining emissions, scrutiny on why they emit so much and how this climate damage can be halted will only increase. Figure 3: With no mitigation, EIIs are the largest contributing sector to emissions in Europe. Figure 2: CO2 emissions per sector (EEA, 2017)

ENERGY SUPPLY – 30% AGRICULTURE Decarbonisation solutions for the energy supply sector have become a synonym When it comes to climate, the strategy for agriculture seems focused on solutions that lack the scale needed for climate action. Renewables have shown their potential with rapid deployment to achieve deep reductions. Even though the shift to sustainable agriculture seems to be underway, the major throughout Europe and globally: wind and solar PV have had annual average concerns relate more to other environmental factors such as biodiversity impacts, sustainable farming practices growth rates of 21% and 43% respectively between 2000 and 2016 [16]. In and waste management [29, 30]. While all of these will have a minor effect on the GHG emissions of the sector 2016, global investment in renewables totalled more than investment in coal, [31], significant reductions will require a complete change in the food system, both in consumption and production gas and nuclear energy combined [17]. In parallel, countries have committed patterns. to phasing out coal electricity generation. The Netherlands, France, Italy, the UK, Portugal, Finland, Sweden, Norway all plan to shut down their last coal So far, agriculture has been shielded from having to undergo such massive transformations, particularly in Europe power plants by 2030 or earlier [18]. [32]. Their licence to operate in the same way is not only supported politically, but also by large subsidies, adding up to 52.0 billion€ in 2016 alone [33]. With global goals aiming at increased production [34], it is unlikely that there will be a significant change in the overall emissions of the sector. 8 9 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem

ELECTRICITY: IMPORTANT, BUT NOT A Norway: Renewable electricity is not enough

SILVER BULLET Focusing on reducing emissions in the power sector is an

Industry, agriculture and aviation are the climate outliers still source of CO2. It is foreseeable that without new production important and fundamental step. But it is not enough. Even lacking tangible decarbonisation technologies. Industries will technologies and replacement materials, industrial sectors though Norway is ahead of many EU countries by already become increasingly exposed to climate change politics as will be responsible for half or more of Europe’s remaining generating effectively all of its electricity from other sectors modernise, and simply cutting CO2 emissions CO2 emissions. at the edges will not be sufficient. Forecasting into a future low-carbon sources, it still has a similar CO2 When climate change impacts become more pronounced and that lacks climate solutions for industrial production paints footprint per person as Poland – even without global temperatures continue to rise in the coming years – who a worrying image both for the climate and the continued will still stand by and accept the unreformed local polluting including Norway’s major oil and gas industry social acceptability of industry. industry parked at their doorstep. The current defence [37]. Most of these emissions come from its As more and more electricity comes from renewables, direct of some industrialists - who XXclaim their CO emissions 2 economic activity, industries and the transport electrification of processes means they will take an increasing are “unavoidable” and their businesses too important - is share in final energy use. People replace their diesel and commercially unsustainable. Will these sectors be forced sector, although Norway also has the world’s petrol cars with electric ones, their heat generation will be to shut down or will local solutions be available to make largest market for electric cars [38]. electrified and as consumption patterns change, CO2 emissions European industry compatible with deep CO2 reduction? As the country continues to struggle to will drop. In this world, industrial emissions grow in proportion meet its 40% GHG reduction targets to total emissions, sooner or later becoming the biggest for 2030, the Norwegian case shows the limits of clean energy and the challenging task ahead of addressing more hard-to-abate sectors.

98%of electricity production in Norway comes from renewable energy sources [35]

Nevertheless, the country ranks

nd 32in emissions per capita globally [36]

10 11 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem

INDUSTRIAL EMISSIONS IN EUROPE INPUTS Sectors such as Steel, Cement and Chemicals all require a variety of different technologies to Limestone is the major resource required when making cements. A common grey radically improve their climate performance. In order to shrink their climate impact, we need coloured rock that is formed naturally from ancient shells of sea creatures, limestone contains calcium that when processed becomes a cementitious material. As a result, to understand where their emissions come from. The following sections describe the workings cement factories are generally located close to a limestone quarry. The second major of cement, iron & steel and chemical industries that contribute the most to their greenhouse gas input is energy required in the limestone conversion process. In Europe this energy footprint. comes primarily from waste, natural gas or, in some cases, coal. Other inputs include clays, blastfurnace slag and natural pozzolanic materials. CEMENT PROCESS The production and use of cement is responsible for Based on a cement plant with modern technology and Calcium is a key ingredient in cement manufacture. Limestone contains a chemical bond approximately 5% of global greenhouse gas emissions, equipment the production of a tonne of cement results in between calcium and carbon. To extract the calcium, the carbon must be separated. To with some estimations setting the total to be closer to 8% of 0.65 to 0.92 tonnes of CO . Of this ~60% of the CO 2 2 achieve this limestone is crushed and heated to high temperatures (1,450°C) in a kiln. total emissions [39]. This is greater than the climate impact comes from the calcination process, while the rest (~40%) is The heating process separates the limestone into calcium with the carbon converted of air travel, though one could argue that building homes produced during the use of fossil fuels [41]. to CO . This source of CO is known as a process emission and would be produced and dams is less frivolous than intercontinental travel [40]. 2 2 In Germany, clinker production, the primary component even if no fossil fuel were to be used in the heating process. At the same time, the calcium is also mixed with other ingredients such as clay to produce clinker. In a final CO2 emissions from the cement industry in Europe peaked in of cement, is amounted to 32 million tonnes produced in step, this clinker is ground to a powder added with different active ingredients to 2007 with 173.6 Mt CO2, approximately equivalent to the 2014 [42]. There are approximately 356 cement production climate impact of the Netherlands [41]. installations in Europe [43] achieve the desired properties to produce cement.

OUTPUTS Cement is used in construction to make concrete as well as mortar and to secure infrastructure by binding the building blocks. Concrete is the second most consumed material in the world after water. Concrete is used in almost all residential and commercial construction types, for example making up 3.6% of the total cost of a single detached wood frame house or 9.8% of a cast concrete frame multi dwelling building [44]. Although a variety of low energy construction methods exist, the cement sector argues that the use of concrete in buildings can add to “thermal mass” increasing structural thermal energy storage and flexibility by offsetting peaks in electricity demand [45]. The intensity of concrete use in the electricity supply sector is anticipated to increase. Decentralised low carbon electricity generation, particularly in the form of on- and offshore wind generation, will require concrete for stabilising foundations. Large public works and infrastructure with long service horizons can be concrete intensive. Dams for electricity, irrigation and potable water, coastal flood defences, drainage systems and transport infrastructure have traditionally been dependent on concrete as a core constituent. Figure 5: While around 40% of the emissions from the cement industry come from the burning of fuels in the process, the majority of emissions occur due to the heating and processing of the raw materials.

12 13 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem INPUTS There are two predominant ways to produce steel. New steel made from iron ore is produced in a blast furnace-basic oxygen furnace (BF-BOF). Steel can be recycled via the electric arc furnace (EAF) route. The production of high quality new steel requires iron ore. The natural ore is rich in iron combined with oxygen. In Europe, coking coal, a form of high quality coal also known as metallurgical coal, is used simultaneously as a source of heating energy and also IRON AND STEEL takes part in the chemical reaction to produce steel. The steel sector is a large user of coal; in Germany, approximately 1/3 of coal is used in steel manufacturing [49].

The global iron and steel industry accounts for approximately economies, has seen global CO2 emissions from steel increase PROCESS A typical European BOF steel mill produces approximately 7 million tonnes of steel 5% of total global CO2 emissions. On average, 1.9 tonnes steadily [46]. The EU is the second largest producer of steel of CO2 are emitted for every tonne of steel produced. About in the world after China. Its output is over 177 million tonnes per year; making them among the largest industrial complexes on the continent each requiring many millions of tonnes of inputs at a single site. 2.8MtCO2 per year are solely related to energy use in the of steel a year, with approximately 500 production sites iron and steel sector, about 8% of total energy related throughout the EU accounting for 11% of global output. Even When producing new steel, the process must separate high quality iron from raw iron emissions [46]. though about 50% of European steel is produced from scrap ore via a chemical reaction. After the inputs are prepared, coal is passed through recycling [47], the growing demand and time lag of steel Over 1.3 billion tons of steel are manufactured and used large coking ovens at 1,100oC to drive off impurities. These impurities, in the form of a accumulation in society will keep the production from virgin every year. Demand for steel, particularly in developing fossil gas, are used for heating and power generation at an integrated steel site. The materials going for a long time [48]. preparation of the materials going into the blast furnace, coking and sintering, already

produces CO2 from burning fuel to generate the heat need to process the materials. Coke, iron ore and limestone are fed into a large blast furnace; at very high temperature of about 1,650° C, the iron is separated from the ore to produce liquid iron. Once fired up, a blast furnace typically runs continuously for six to 10 years. An unexpected shut down and cooling can irreparably damage a blast furnace. The

CO2 emissions from the blast furnace come from both the heat generation and the forming of iron in the furnace. The liquid iron must then be upgraded to make high quality steel. At high temperatures, oxygen is blown through the liquid metal, reducing the carbon content to make steel. The BOF is, along with the sintering, coking and blast furnace, one of the main sources of emissions from the steel making process. OUTPUTS Steel-making is closely linked to many downstream industries such as automotive, construction, electronics, and mechanical and electrical engineering. Steel is also used in renewable electricity infrastructure, such as wind generation. Even though over half of the steel is being recycled already, the high quality materials still need to be produced from virgin materials. According to some estimates, unchanged applications of steel and long lifetimes will necessitate around 50% of the steel in 2050 to still be produced from new materials [48]. Even if this demand would be drastically reduced, new production would still be needed due to the long lifetime and accumulation of steel in society [48]. Figure 5: The steel making process creates emissions both during the preparation of materials and iron and steelmaking. Globally, steel demand is expected to exceed scrap availability, with CO2 intensive primary steel making up the shortfall. The Indian government plans to more than double production capacity by 2030 as it pursues a massive infrastructure programme [50]. The growing demand and long lifetime an obstacle for higher recycling rates: some products can only use a limited amount of scrap due to a requirement for high quality steel. In other words, the more scrap is being used, the less control there is over the properties over the material due to the impurities in the scrap. Even if abundant scrap is available, only a limited amount of it can be used to form the higher steel quality required for several products [51]

14 15 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem

INPUTS A large share of the chemical industry depends on virgin fossil feedstock for both the energy consumed during the production process and raw materials. Virtually all new CHEMICALS plastic (well above 90%) is produced from fossil fuels [58, 59], mostly natural gas and naphtha, a product of oil refining. The global production of these new materials alone is responsible for around 400 million tonnes of GHG emissions in 2012 [18]. If the current growth of production continues, plastics (not including other chemicals) The chemical sector is one of the biggest industries in the The German chemical industry is the fourth largest in the will make up 15% of the global annual carbon emissions in 2050. Emissions from the world and is by far the largest industrial user of energy world [20]: with a share of 28.7% of the total industry sales incineration of plastics could reach 4.2 Gt [60]. [52]. Globally, it accounts for 10% of the total energy in the EU, it is by far the biggest player in the European demand [53]. chemical industry [55]. Most of the plastics made today are produced from two industrial chemicals derived from natural gas and naphtha: ethylene and propylene (types of olefins) [58]. The In the UK, the energy demand of the chemical sector surpasses Since the chemical industry produces a wide variety of production often clusters around natural gas sources, which is the most widely used the demand of mineral production and basic metal production products, the figure below focuses on the production of the fossil resource in the production of plastics. combined [54]. most widely used carbon-based chemical – ethylene [56]. Ethylene is the building block of polymers, which make up This high demand for energy, combined with an extensive some of the most widely used products in the world, both in use of fossil raw materials, makes the chemical sector one industries and in private households, namely plastics. In 2016, of the biggest emitters on the planet [53]. Germany alone exported 13 million tons of plastics [57]. PROCESS Ethylene is the most widely used building block of the chemical industry, with a global consumption of 133 million tonnes a year [61]. The production of olefins, a category of chemicals that includes ethylene, is by far the most energy-demanding sub-sector in the chemical industry, both in fuel and feedstock demand [54]. The production of ethylene and other olefins, also known as the cracking process, is highly energy intensive. The inputs, which can include naphtha, ethane (natural gas) or ethanol, don’t have a significant impact on the overall environmental footprint of the product [61]. The ethylene is then combined with catalysts in specific conditions to form long chains of ethylene molecules called polymers; the raw material for all plastic products. During this process, large amounts of electric energy and heat are used to achieve the wanted reaction of the chemicals [62]. Processing the raw material to a form needed for the product (plastification) also requires a high volume of electric power for thermal energy [63].

OUTPUTS In comparison to steel and cement, most chemical products have a significantly shorter lifespan. Products such as the ones made from plastics are usually not designed for long-term use and are incinerated or recycled; even if they are given a new form, it only takes one cycle for them to degrade substantially and to become unsuitable for further recycling [64]. In Europe, only the packaging produced from plastic generated 15.4 million tonnes Figure 6: One of the most important production chains in the chemical industry, the production of polymers, uses a vast amount of oil as a raw material. Along with the energy intensive production that uses gas and crude oil, the products themselves emit CO2 when they are incinerated waste [18]. Most of this waste ended up in the waste management chain, either in or decomposed. incinerators or landfills across Europe. As those materials degrade, the emissions from the initial fossil feedstock end up in the atmosphere. Per tonne of plastic burnt,

about 2.7 tCO2 are emitted [60].

16 17 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem

TOO VALUABLE NOT TO DECARBONISE As the notion of ‘pre-industrial’ temperature levels already suggests, the industry plays a central Improving energy efficiency of buildings will generate role in rising emissions and therefore climate change. Indeed, the majority of developments of thousands of jobs in the construction sector and the past century that allowed for the contemporary way of life are hugely CO2 intensive. Giving save millions of Euro in energy costs [78]. up these gained comforts and lifestyles is not only an unpopular option, but would entail far- reaching economic repercussions. Machinery, transport equipment, The industrial sector represents the foundation of Europe’s global emissions, as there is no guarantee that the now and chemicals account for almost economic growth and welfare by generating about a quarter imported products have been manufactured carbon-free. 60% of EU exports, worth 1.1 of the EU’s GDP, and providing 50 million jobs. In other words, On the contrary, this exodus is likely fuelled by less stringent every fifth job in the EU is industry related [65]. carbon requirements elsewhere leading to what is known as trillion € [79]. In Germany, the three most polluting industries – chemicals, carbon leakage. cement and steel – emit almost 137 MtCO2 per year [66]. This In fact, demand for products such as steel, chemicals, and number is equivalent to more than half of Germany’s entire cement is unlikely to disappear. Industry generates coal power emissions [67]. The German chemical industry Cement, for example, is a fundamental feedstock of a quarter of the EU’s GDP [65]. alone provides almost 450 thousand jobs and produces a development and infrastructure projects, as well as essential turnover of over 188 billion € [68]. for extensive downstream use. A European deindustrialisation due to mounting climate pressures to reach net zero would result in an immense loss One in five jobs of jobs, threatening livelihoods and the standard of living, as Across Europe, the lime and cement sectors well as further macro-economic ramifications, including trade (lime is the essential ingredient in making in the EU is industry related. imbalances and resulting economic vulnerabilities. cement) generate over 72 thousand direct jobs, and another 365 thousand indirectly just About 9 thousand jobs and a turnover of related to cement production [73]. about 3.8 billion € depend on the elimination

of each 1 million tonnes of CO2 that the Over 305 thousand of these jobs relate to the production of Chemical industry currently emits [68, 7]. concrete that is supplied primarily to the construction sector which itself generates about 9% of European GDP and accounts for 18 million jobs [74, 73]. In Germany, industry The case of the UK is a good example here, as the country clusters associated directly with cement production provide underwent stark deindustrialisation since the 1980s [69]. As 80 thousand jobs [75]. a result, the UK depends largely on imports of manufactured products, resulting in a total current account deficit of over US$ The looming shifts in economic activity if climate inaction is 91 billion [70]. This number already includes the UK’s surplus continued would also reduce government revenues significantly, in services, meaning the actual trade deficit of manufactured as portions of wage, corporate and turnover tax money are goods is even higher. This point is particularly significant set to be lost, paired with the danger of rising social welfare for Germany, whose economy depends on a vast industrial costs as unemployment rates increase. Together, in 2017 these export sector that currently generates the world’s largest three tax sources provided about half of total German tax trade surplus, with an account surplus of US$ 296 billion revenues, or about 330 billion € [76]. are polluting industries that lie at the base of our (ibid.). However, the German export economy relies heavily An additional knock-on (or rather -out) effect is likely to be economies and societies. Letting them get away with (to 42%) on processed steel and metals that are worth some on European research. Innovation is fundamentally driven, and no plan should not be an option. 506 billion € [71, 68]. Without an industry sector, European often financed, by businesses. With over US$ 200 billion in economies would increasingly rely on services, making them 2015, Europe boasts the largest R&D expenditures worldwide vulnerable to volatilities on the market and developments [77]. Yet even if research and development continues in beyond their sphere of influence [72]. Europe, it would either remain shelved in its ivory towers or An exodus of industries due to the failure to implement timely monetised in industries abroad. Europe would then import decarbonisation solutions would therefore hit the German the products of its own innovation. economy hard, and, moreover would not necessarily reduce 18 19 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem

ENABLING A JUST TRANSITION, NOT JUST A TRANSITION

Historically, the burning of fossil fuels has correlated with economic growth; the more CO2 was emitted, the higher human living standards became. Undermining the economy and the standard of living through climate action is politically and socially unfeasible. Labour unions and governments are therefore promoting a Just Transition to achieve sustainability and climate targets while maintaining jobs and livelihoods.

In comparison, cement, chemicals and steel together account for over half a million direct jobs and are largely irreplaceable The concept is currently pushed forward almost exclusively ingredients to essential products [68]. As in relation to ongoing coal power phase outs, yet Europe such, unlike coal, these industries cannot be needs to begin a Just Transition for its industry to ensure that sustainability and climate targets can be achieved without replaced as part of a Just Transition and endangering employment and welfare. simply ‘phased-out’. To harmonise and expand Europe’s just transition in coal, In Germany, the transition for coal is set to continue for the EU established the ‘EU Platform for Coal Regions in decades, meaning a complete coal phase-out is highly unlikely Transition’ in 2017. For coal, the Just Transition involves a in the near future [82]. Being bad news for climate mitigation, ‘retrain, shut-down and clean-up’ approach that includes the the German example depicts the difficulty of implementing re-use of mines as, for example, tourist attractions. However, climate change measures, where they directly affect jobs this is a highly expensive process that costs as much as 300 and livelihoods. to 400,000 € per long-term job created [80]. The Just Transition, therefore, needs to evolve beyond its current shape and form to achieve its goal of maintaining It is important to note that this Just Transition jobs and economic growth in Germany’s industries, while reducing emissions and meeting climate goals. For Germany’s addresses a sector with about twenty- industries, retraining and turning factories into tourist sites thousand remaining direct jobs [81]. will simply not be enough to replace the economic and societal values these industries currently generate. Similarly, implementing solutions cannot be a decade-long transition, which in light of the current inaction would result in an unjust Figure 7: In comparison to the energy intensive industries in Germany, the coke and petroleum sector is relatively small. Such an intersection deindustrialisation of Germany. between high employment, welfare and high emissions calls for a just and carefully planned transition to a low carbon economy.

20 21 An Industry’s Guide to Climate Action Chapter 1: We Have a Problem

A WEB OF JOBS AND SUPPLY CHAINS Energy intensive industries manufacture products for an entire web of downstream sectors. Achieving the Just Transition in energy intensive industries should be imperative, as it links a employees broad web of industries and supply chains that are at the core of European economies.

Materials such as steel, cement or polymers, make up Ultimately, it makes up the innovative and complex products various products that form a considerable part of European Europe is exporting, such as machinery and transport economies. As every product created in one of the energy equipment [83]. The downstream industries themselves state intensive industries travels down the supply chain, it grows that European steel is and will remain an integral part of both in value and complexity. their supply chains [84].

Steel-making is closely linked to many downstream industries such as automotive, construction, electronics, and mechanical and electrical engineering. [85]

‘’The chemicals industry is one of Europe’s largest manufacturing sectors. As an ‘enabling industry’, it plays a pivotal role in providing innovative materials and technological solutions to support Europe’s industrial competitiveness.’’ [86]

‘’Cement products are essential for construction and civil engineering, while lime is irreplaceable for the steel industry, as well as construction materials, paints, plastics, and employees rubber.’’ [87]

employees The following graph illustrates such interconnections with the In addition to economic output, these industries employ a example of the steel industry in Germany; steel and metal vast number of people in the country, making it even more processing, cement, chemicals and plastic production are important for their entire supply chain to remain sustainable. all connected to some of the largest and most profitable Making their products zero carbon will be imperative to industries in the country. Machinery, automotive and chemicals avoid unexpected closures, job losses and other volatilities products are the products Germany exports the most [88]. in the future. Figure 8: The German steel industry, just as other energy intensive industries, is connected to numerous supply chains that are vital parts of the economy.

22 23 An Industry’s Guide to Climate Action

A LICENSE TO EMIT Sustained economic growth and the Paris targets are impossible to reach unless the current idleness and deliberate deception via pseudo climate measures is overcome. Industry emissions need real solutions. Greenwashing or ignoring the issue completely are not in the short, medium or long-term interest of anyone. Threatening with their exodus, industries receive expansive Implementing real, effective measures now, in a planned climate concession from governments, as politicians also collective fashion, will be less costly than when the pressures fear unions’ and workers’ worries could cost them elections. of climate change increase. Costs for climate options are only Through effective lobbying, industry emissions are given a set to increase the longer we wait to implement real solutions. pass in current debates that are often limited to the power, Today, when climate action is required, the industry continues heat and increasingly transport and agricultural sector. to claim it is too big, too important, too valuable, and in too At the same time, when climate measures for industry are much global competition to be able to do more than it currently mentioned, these often oversell their actual mitigation does – which is not enough. Rather than protect industries potential. from the effects of climate measures without simultaneously forcing companies to develop solutions, governments need Yet backing ineffective solutions that are sold as having to take off the gloves and begin an honest and constructive a positive climate effect through accounting tricks prevent discussion with commercial actors to develop and enable companies from using that money for effective action, appropriate climate action. squandering the limited chances that remain to keep warming below 2°C.

“It is about a right balance between jobs and environment. Energy-intensive industries shall not suffer from a restructured EU Emission Trading System.” Sigmar Gabriel [89]

Picture credit: Bundesregierung.de (2018)

“Damages from storms, flooding, and heat waves are already costing local economies billions of dollars. With the oceans rising and the climate changing,… the costs of inaction are easy to understand in dollars and cents—and impossible to ignore.” Michael R. Bloomberg [90] Picture credit: NY Times (2018)

24 Chapter 1: We Have a Problem

RISKY BUSINESS In the past few decades, policies have changed drastically to respond to growing environmental, health and economic concerns. Over the course of a decade, hydrofluorocarbons were phased out to prevent damage to the ozone layer. Within the last few decades, coal production has been labelled a sunset industry as plants close down across Europe. As the effects of climate change are becoming more intense by the season, maintaining policies that allow for unaltered industrial emissions is a risky, short-term investment.

Playing jobs against the environment is unsustainable and Fundamentally, any decision on climate change needs to risks both. Statements on the need to protect industries from be weighed against the potential consequences of inaction. climate policies are commonplace, and the result of the current Compensatory litigation cases against companies and climate policy that primarily incurs costs onto emitters, without governments are rising as scientists are increasingly able providing effective incentives and frameworks for industries to attribute regional effects to global emission levels. More to implement change. dramatic future environmental, political and economic repercussions will arise as the world slithers towards a well The consequence is increased production costs without the beyond 2°C climate. If the current attitude of riding out the means to deploy effective solutions. problem continues – which is not just connived, but the creation Decisions are always based on the consideration of risk. The of industry lobbying and politicians – one can predict severe risk of the consequences of action and inaction, and the risk consequences emerging in the not-so-distant future. of choosing one action over another.

Some of the more recent fraudulent attempts of climate mitigation have come from the automotive industry.

Picture credit: Federal Trade Commission (2016)

25 An Industry’s Guide to Climate Action

Renewable Energy Policies begin Europe’s electricity transition Last coal powerplant closes in Belgium, phaseouts planned across Europe Athens, Brussels, Madrid, Mexico City, Paris, Rome ban diesel cars from cities Ireland, France, Netherlands, Norway, UK ban sale of internal combustion engine cars

Figure 9: According to the new IPCC report, the difference between 1.5oC and 2oC, let alone 4oC warming is dramatic.

SOCIETY Implementing effective low-carbon measures in the industry supports the fundamental interests of unions and employees. Unions represent the interest of their workers, which means their continued, long-term employment. To achieve this, they need an industry fit for the zero-emission future. Their immediate role should be to remind politicians of who they serve (i.e. the people), and push them towards climate action that ensures a sustainable, low-carbon economy.

CLIMATE Industries are needed to achieve a zero-emission world. Their products, from wind farms, to batteries and dams, need to be low-carbon. Being a sunset away from the end of the European industrial sector is not a good option – products would continue to be needed and therefore imported, while Europe loses its capital for action. Instead, let’s pioneer green industries in Europe. POLITICS If politicians truly value the jobs and the benefits industries currently provide to society and the economy, a more long-term perspective is required. Particularly local governments in industry regions have to be vigilant and pro-active in finding ways to offer companies the solutions that safeguard their continued existence in a below 2°C world. Politicians and political parties need to prevent a legacy as the ones who failed to facilitate a truly Just Transition for the industry and thereby bear the responsibility for a deindustrialised Europe and a worsened climate. 26 Chapter 1: We Have a Problem

Scenario Past industry policy Consequent market Evolution of assets Public perception Risks developments trends 4-6oC Protected by politics, Industry bans Complete Seen as crucial Excessive actually fought devaluation, assets contributors to climate unpredictability of against effective Loss of access to are stranded after problems extreme climate Industry climate action market investments were effects and political/ Vilified, on par with made in climate societal responses fossil fuel companies Shut downs incompatible products Rapid, unstructured Potentially violent ‘Phase out’ action against sites and leadership 3-4oC Some action, left Selective product Product-bans leave Public outcry against Political knee-jerk difficult to reduce bans assets stranded polluters as climate reaction to avoid emissions for ‘future effects increase slipping into >4°C solutions’ that never Customer boycotts Investors withdraw came to fruition financing Industry as key High cost for required Strikes following remaining emitter actions Exodus emitting wage cuts after receives brunt of industry sites falling profit margins public & political Increasing and growing pressure unforeseeable Backed ineffective, uncertainty environmental events unfeasible “climate” technologies with Competition from short-term profit that alternative products, used up funding for and companies with real solutions effective climate action

2oC Industries Pioneers in low- Assets appreciation Decarbonised Normal continued implemented effective carbon products through climate Industries not in market risks action and approach have gained largest compatible negative public focus carbon neutrality market share technologies Environmental risks Public supports zero- largely mitigated Minor losses to Return on initial emission goods (see alternative low climate investments ‘fair trade’, ‘organic’). carbon products and through market to production levels, leadership due to efficiency and recycling

Figure 10: Unless they act now, implications of the different climate change mitigation scenarios on the various stakeholders could be severe.

‘‘The science of climate change was settled. The world was ready to act. Almost nothing stood in our way - except ourselves.‘‘ Nathaniel Rich, NY Times [93]

Even after decades of climate change agreements and negotiations, the only thing still standing in our way is ourselves. The following chapters will explore how we can remove this barrier and create a sustainable plan of climate action, suitable for the planet, people and economies.

This chapter, first in the line of four, established and analysed the major challenges of energy intensive industries in the wake of climate change. While understanding the issue is a crucial piece of the puzzle, it is only a start. The next part of this report will therefore focus on the options the industries are facing and their potentials and limitations.

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[92] Destatis, “Bruttoinlandsprodukt 2016 Fur Deutschland,” Januar 2017. [Online]. Available: https://www. [42] USGS, “2014 Minerals Yearbook Germany,” USGS, 2014. destatis.de/DE/PresseService/Presse/Pressekonferenzen/2017/BIP2016/Pressebroschuere_BIP2016. [43] DG Growth, “Cement and Lime,” 2017. [Online]. Available: https://ec.europa.eu/growth/sectors/ pdf?__blob=publicationFile. raw-materials/industries/non-metals/cement-lime_en . [93] Rich, Nathaniel. 2018. Losing Earth: The Decade We Almost Stopped Climate Change. The New York [44] J. Rootzén and F. Johnsson, “Managing the costs of CO2 abatement in the cement industery,” Times. https://www.nytimes.com/interactive/2018/08/01/magazine/climate-change-losing-earth.html Climate Policy, 2016. [45] 3E, “Structural thermal energy storage in heavy weight buildings – analysis and recommendations to provide flexibility to the electricity grid,” CEMBUREAU - The European Cement Association ASBL, Brussels, 2016. [46] International Energy Agency, “Energy Technology Perspectives 2016,” 2016. [Online]. Available: https://www.iea.org/publications/freepublications/publication/EnergyTechnologyPerspectives2016_ ExecutiveSummary_EnglishVersion.pdf. [47] ESTEP, “ Resource Efficiency for the European steel industry,” 2011. [Online]. Available: https://www. eesc.europa.eu/sites/default/files/resources/docs/lamberterie.pdf . [48] J. Morfeldt, W. Nijs and S. Silveira, “The impact of climate targets on future steel production e an analysis based on a global energy system model,” Journal of Cleaner Production, pp. 469-482, 2015. [49] EURACOAL, “Country profiles: Germany,” 2017. [Online]. Available: https://euracoal.eu/info/ country-profiles/germany/. [50] M. Pooler, “Growth in steel demand forecast to slow next year,” 2017. [Online]. Available: https:// www.ft.com/content/3593c38a-b27a-11e7-a398-73d59db9e399 . your phone pills2car houseindirectly emit CO2 A Diversity of Options, A Lack of Solutions

SUMMARY While energy intensive industries (EIIs) have several options to tackle their emissions, no single technology or action represents a silver bullet and all effective solutions are needed to reach net-zero. Location, resources, energy consumption and competing energy uses must all be taken into account when planning a climate change mitigation strategy. • Replacing high-emitting products with sustainable materials Replacing traditional with alternative products, such as sustainable wood for cement, is a viable option to reduce the need for new materials. • Reducing the use of materials The use and waste of products needs to be reduced. Current rates of recycling and upcycling can still be improved, bearing in mind their technical limits. • Reinventing the manufacturing process Existing manufacture processes also need to be reinvented to be zero carbon through electrification and/or carbon capture and storage (CCS). Due to the limitations of electrification, particularly where CCS thereby becomes an essential component for reducing industrial emissions, and is ready for implementation today. Chapter 2: Diversity of Options, Lack of Solutions

NO BARRIERS TO ZERO EMISSION INDUSTRY Growing global population and swelling cities along Energy intensive industries have multiple potential options that, with the irrigation, transport, energy and communication when combined, can reduce and even eliminate emissions. infrastructure required to support them will unavoidably No single technology or action represents a silver bullet and require an expansion to the built environment. In Europe, a all effective solutions are needed to reach net-zero. Each huge comprehensive renovation of the building stock is just emission reduction strategy requires actions across the value beginning. Increasing the energy efficiency of European chain; moderating the resources and energy input, new clean cities will cut energy requirements and CO2 emission but will production technologies, alternative replacement materials, require resource inputs, such as heat insulation materials. In improving the efficiency of product use in society and ever addition, the increasing pace of deployment of renewable stricter end of life separation and recycling [1]. To make energy will require steel, cement and chemical inputs for big cuts in industrial CO2 emissions we must reduce waste, electricity generation, transmission and storage. replace materials with cleaner alternatives and reinvent manufacturing processes. In building a low carbon society it is There is no technological barrier to zero carbon industries, imperative that the raw materials themselves however not every option for reducing emissions in industry are low carbon. will be a practical solution. Considerations of the industry’s location, the available resources, energy consumption and competing energy uses must all be taken into account when planning a realisable pathway for industry decarbonisation.

“It’s a photo that I wish didn’t exist but now that it does I want everyone to see it. It serves as an allegory for the current and future state of our oceans.” Justin Hofman, photographer

Not only do our consumption patterns harm the climate, but also damage already vulnerable ecosystems, such as the ones found in the oceans.

Photo credit: Justin Hofman National Geographic A small estuary seahorse (Hippocampus kuda) with a cotton swab, drifting in the polluted waters near Sumbara Island, Indonesia 3 An Industry’s Guide to Climate Action Chapter 2: Diversity of Options, Lack of Solutions

REDUCING, REINVENTING AND REPLACING

Design CO2 separation and capture into the heart of the process (e.g. Hisarna steel making process)

Alternative cementitious materials and reactive Renewable industrial wastes can energy used Construction in wood supplement traditional directly or for may take the place Avoid CO emissions cements. the prodcution 2 of cement and steel in some by using fuels with New building practices of H circumstances, reducing 2 no carbon content High quality sorting and and construction codes CO capture recycling of materials at the need for new cement 2 can avoid the overuse production and transport the end of their use can of products like cement to a permanent reduce the need and steel CO2 store for new production

REINVENT REDUCE REPLACE

Reinventing industrial processes requires vast amounts of low Reducing the use of industrial products can cut the Using alternative products can avoid or reduce need for new production and overall emissions. cost renewable electricity and/or a shared CO2 transport and the need for familiar materials and subsequent

storage network. CO2 emissions. However, the scale of availability and performance are critical considerations Changing how we manufacture the base building block materials when replacing materials with alternatives.

of our society can cut CO2 emissions from cement, steel and chemical production by as much as 90%.

4 5 An Industry’s Guide to Climate Action Chapter 2: Diversity of Options, Lack of Solutions

Reinvent the manufacturing process REDUCING, REINVENTING AND Changing how we manufacture the base building block materials of our society can radically reduce our climate

impact. Technologies exist to cut CO2 emissions from cement, REPLACING steel and chemical production by 90%. Reinventing the manufacturing processes of traditional industries divides into two major groups, to either avoid the Reducing use and waste of industrial Replace the product with an alternative use of carbon and thereby CO2 emissions or to design CO2 products Industrial products are produced and consumed in massive separation, capture and permanent storage into the heart of the process. Reducing the use of industrial products like steel can cut the quantities, hence their huge role in CO2 emissions. Using need for new production and overall emission. In turn high alternative products can avoid or reduce the need for familiar materials and potentially CO emissions. quality sorting and recycling of materials at the end of their 2 Reinventing industrial process to be zero use can further reduce the need for new production. For example, construction with wood may take the place of carbon requires either very large amounts of cement in some circumstances, reducing the need for new Obvious first steps such as reducing the use of plastics, low cost renewable electricity to replace all especially single use materials, can avoid their production cement production. In addition, alternative cementitious materials and reactive industrial wastes can supplement fossil energy, and/or a shared CO transport and related CO2 emission in the first place. Manufacturers 2 can limit waste through improving design and production. traditional cements. and storage network. For example, reducing material use can lower the weight of Scale of availability and performance are critical products such as vehicles. This will be required to improve considerations when replacing materials with alternatives. efficiency and in the move to battery electric drive trains. Industrial products are produced at an industrial scale, with New building practices and construction codes can avoid the many substitute materials limited in supply. Replacing just overuse of products like cement and steel. 25% of globally used cement of 6.5 billion m3 with timber Reducing, replacing and reinventing steel Moving from current rates of recycling to upcycling, where would require total global forest cover to increase by about Growing population, increased urbanisation, decentralised energy production and the resources are not reused to make inferior products but 14%, 1.5 times the land size of India. While timber can act rising living standards around the world will require steel. With rapidly increased as carbon sink for as long as the building exists, in addition reused in high quality manufacturing, will require advances recycling and supply of alternative products demand for steel could plateau in our in both production and end of life separation. Products to the questionable sustainability of forestry at this scale the should be designed with material recycling considerations, emissions from chemical treatment for fire-proofing of such generation. avoiding material cross contamination. Consumers will need to timber would also need to be considered [2]. Today global steel production is 1, 691.2 million tonnes, with Europe contributing improve separation of products and buildings that need to be It is important to be mindful of unintended consequences, 10% [3]. With 318 727 direct employees [4], the European steel sector is foundational replaced. For example, separation of contamination metals both in the creation of new sources of CO2 emissions in new such as copper from steel is a requirement for improving the supply chains and in overexploiting or over-relying on limited to higher value added sectors in manufacturing and construction. Holding the largest quality of material recycling. alternative materials. trade surplus in the world, half of Germany’s exports are dependent on processed steel and metals that are worth some 506 billion € [5]. Reducing and replacing steel

use can aid in cutting CO2. In Europe, recycling of steel already makes up 40% of production [6]. Recycled steel is generally of a lower quality and may not be suitable for high value- added manufacturing. This downcycling of resources is primarily due to mixing with other metals such as copper. Continued European export of high value goods will require local high-quality steel production. The Energy Transition Commission estimates that with expansion of steel reuse, recycle and substitution that primary steel production could be stabilised at current levels.

6 7 An Industry’s Guide to Climate Action

WHAT DOES REINVENTION LOOK LIKE? When producing steel, the process must separate high quality iron from raw iron ore via chemical reaction. Two new ways of making steel described below show the potential of industrial process reinvention to drastically cut emissions while preserving local jobs, investments and established supply chains.

HIsarna, a new steel making process developed by Tata Hydrogen can be used in the manufacturing of steel, Steel in the Netherlands reduces the complexity of steel avoiding the use of carbon. In this process hydrogen reacts production while allowing for lower quality inputs to be with iron ore to produce pure iron. Avoiding the use of

used. The process avoids the need for coking and sinter carbon is effective at deeply reducing CO2 emissions, but plants reducing capital cost and energy use. Increased the process is reliant on the availably of large volumes of resource efficiency avoids the production of fossil waste low carbon hydrogen. This hydrogen can be produced via gases that would otherwise be burnt and emitted, and renewable electricity or from natural gas conversion fitted reduces initial coal input by up to 20% and coking coal with CCS. Electricity use in producing enough hydrogen for completely. Most importantly for climate, the new HIsarna a steel plant would be equivalent to an average nuclear

process results in a concentrated high purity CO2 stream of power station. Producing clean hydrogen from fossil gas

above 95%. When combined with CO2 capture, transport requires CO2 transport and storage to be available [8].

and storage, over 80% cuts in CO2 emissions are possible Both HIsarna and Hydrogen steel production are greenfield [7]. If Biomass is used, which has been tested successfully or brown field developments, requiring new build or very in 2018, even negative emissions are possible. extensive alteration to existing plants. Refitting of other emissions reduction technologies to existing plants is also

possible. For example, CO2 capture has been demonstrated at traditional steel manufacturing, with the first commercial steel mill with CCS operating in Abu Dhabi since 2016,

capturing 0.8 MtCO2 per year.

Figure 2: An illustration of how HIsarna steel making process works. Unlike standard steel making, the inputs do not go through pre- processing - the steel making process is simplified and streamlined, making it more efficient.

Table 1 gives an overview of the steel manufacturing methods that are able to significantly reduce process emissions in steel manufacturing. The methods are compared according to the various considerations needed for their real-world deployment.

8 Chapter 2: Diversity of Options, Lack of Solutions

Elec Steel manufacture HIsarna + CCS DRI (direct reduced iron) + DRI + H2 Hydrogen CCS method H2 used to manufacture CO2 captured at low cost steel. directly from HIsarna blast Hydrogen used to manufac- furnace. Highly concentrated ture steel. Hydrogen man- Hydrogen manufactured

CO2 (85%, goal 95%) ufactured from natural gas with electricity with CCS

CO2 reduction 80% + 80% + 80% + (dependent on share of CO2 in electricity generation) Steel production cost Conservative estimate at 130% -180% 180% [9] <100% compared to con- ventional BF route, optimistic <80%; Plus cost CCS, though cheaper with HIsarna than BF route Fuel Low quality coals / biomass Natural Gas Electricity Additional climate Through addition of sustain- Large scale low carbon hy- Avoids use of fossil re- system benefits able biomass, potential to drogen production advances source produce carbon negative hydrogen economy steel

Scale (in CO2 stored or ~ 10 Mt CO2 stored per ~ 9 Mt CO2 stored per annum 40 TWh per annum, equiv- TWh used) annum. alent to all electricity use in greater London [9]

Technology maturity HIsarna in pilot testing. Demo H2 DRI has been commercial- Economically viable in a planned for early 2020s ly deployed (CIRCORED) few decades; first pilot

[10], Hydrogen via CCS is in with H2 from electricity operation planned in the 2020s (HYBRIT) [11]

Precondition to de- Accessible CO2 transport and Accessible CO2 transport and Very large scale zero ployment storage network storage network carbon electricity with high security of supply

Full scale deployment From 2030 From 2030 From 2040s; Deployment time horizon schedule dependent on the availability of zero carbon electricity

Other considerations CO2 transport and storage not deployed. Establishing and At current EU electricity Elec expanding CO2 network will take time. Not all areas will CO2 intensity H2 would have access to CO2 storage. increase emissions Table 1 Comparing the cost, requirements and benefits of two new low carbon steel manufacture processes. Scale of steel production an average steel manufacture facility (7.5 million tonnes of steel per annum)

The emission reductions of some reinvention methods mentioned mature and available at scale. It is important to note that this in Table 1 will depend heavily on the access to vast amounts process would not have such a positive climate effect without of low cost renewable electricity. While industry players are the availability of, and access to, a CO2 transport and storage already looking into producing their steel with renewable infrastructure. Without it, some innovative methods would hydrogen, they also admit that in most cases such a shift is be limited to efficiency improvements without significantly still decades away [12]. Reducing the iron ore with hydrogen reducing the emissions of the steelmaking industry. produced with CCS is an alternative that is technologically

9 An Industry’s Guide to Climate Action Chapter 2: Diversity of Options, Lack of Solutions

CAN WE FIX EVERYTHING WITH ELECTRICITY? Electricity, although ubiquitous and However, as with the rest of Europe the primary energy Electricity is one part of our daily energy usage. In terms of final energy consumption, of the growing cleaner, is today only a moderate consumption of the country is still largely reliant on oil and energy that used in homes, businesses, transport and industry, electricity only accounts for around natural gas [15]. As a result, even with clean electricity part of our energy use landscape [13]. one fifth, or 20% of the total. That means that other energy uses such direct use of oil in transport, Norway remains a CO2 intensive country with emissions per gas and solid fuel for heating make up the majority of final energy use. person equivalent to Germany. Norway is a country where electricity is almost entirely generated by zero-carbon renewable hydropower (96%) It is crucial for reducing total emissions to increase the

[14]. Using electricity in Norway emits almost no CO2. overall low carbon electricity production, its share in final energy consumption, while simultaneously reducing that consumption in heating, transport and industry through efficiency improvements. OIL Oil is the single largest component of final energy consumption. With the majority of this used in private road transport, road freight and aviation. In 2015, a year of low oil prices, total spending on crude oil imports in the EU was 187 billion € [16]. Electrification of transport has a significant advantage in cutting both oil dependencies and emissions. Electric vehicles outstrip the efficiency of their oil driven counterparts by 3 to 1, meaning that for ever unit of electricity used by battery electric cars, 3 units of liquid transport fuel will be avoided.

GAS We use as much natural gas as a share of our total energy use as we use electricity. Gas is used in seasonal heating of homes and year-round in industrial processes. Direct use of electricity for heating will not reduce overall final energy consumption. However, the use of electricity to power high efficiency heat-pumps can displace Figure 3: Final energy consumption by fuel type, EU 28 (EEA, 2014) [28] Figure 4: Electricity production by fuel type Figure 5: Renewable electricity production by fuel type some gas use and in turn reduce total energy demand. In Germany, the figure is about the same: in 2017, renewables contributed to 33.1% of gross electricity production while the ELECTRICITY Depending on the application, the use of share of renewables in electricity consumption was 36.1% Currently, electricity within the EU grids supplying the homes, carbon intensive grid electricity may not [18]. The current average CO intensity of the European offices and industries of the 28 member states is still produced 2 electricity grid is 276g CO /kWh, with German electricity reduce emissions, but significantly increase predominantly by burning of fossil fuels. Increasing efforts 2 generation considerably more carbon intensive at 425g to integrate renewable energy sources into the grid have emissions. CO /kWh [19]. With the current electricity mix, less CO been very successful, with 30% of the electricity consumed 2 2 would be emitted from the direct use of fossil natural gas in Europe coming from renewable sources [17]. thermal (185g CO2/kWh ) in heating than the use of direct use of electricity in a simple resistive heater. 10 11 An Industry’s Guide to Climate Action

How long must we wait for a low-carbon electricity grid? The German Energiewende has led the way globally on the the electricity grid, will be essential. rapid expansion of renewable electricity generation. As a The electricity supply systems will need to evolve to increase result, the CO2 intensity of German electricity has dropped flexibility in both electricity production, consumption and by 23% from 1990 levels. According to the official plans storage to make the most of variable renewable supply [21]. of the German government, the share of renewables in This greater flexibility is commonly known as a “smart grid” electricity will be at least 80% in 2050. and will see dynamic pricing of electricity, new markets for In its 80% emission reduction scenario, the Federation of energy storage and benefits for consumers that can adapt German Industries (BDI) estimates that the added capacity electricity consumption in line with renewable electricity of both wind and PV needs to amount to 240GW by 2050 production. to achieve 90% share of RES by 2050 in Germany to Renewable electricity is produced where the renewable electrify primarily the transport sector and residential heat, resource is present (windy and sunny areas), thus electricity while process heat in industry would remain completely fossil networks will be just as important to deliver this electricity based [20]. to the cities and industry where it can directly be put to use

To also electrify industry heat processes, and achieve a 95% and also reduce CO2 emissions. emission reduction, an additional 100TWh of renewable A larger more integrated European electricity system, where electricity would have to be generated by 2050. electricity is easily imported and exported between member On the journey to a fully or predominantly states will increase the resilience of renewable electricity grids [22]. The German grid infrastructure plan foresees low carbon renewable electricity grid, up to 4,000 additional kilometres of transmission lines by adaptions to the electricity market and an 2030 [23]. expansion of the electricity transition network,

By 2050, Germany is planning to increase the renewable share in its final Renewable electricity 2014 2020 2050 energy consumption to 60%. Share in electricity 27.4% 35% 80% consumption Share in final energy 13.5% 18% 60% consumption Table 2: Quantitative targets for integrating renewable energy into the German economy.

Along with the increase in renewable generation capacities, Germany plans Energy efficiency 2014 2020 2050 to keep the demand steady by using the electricity in more efficient applications. Electricity consumption -4.6% -10% -25%

Primary energy consumption -8.7% -20% -50%

Table 3: Quantitative targets for energy efficiency improvements in Germany. [25]

12 Chapter 2: Diversity of Options, Lack of Solutions

How much electricity do we plan to produce and consume? We have seen that European electricity generation is not yet and the efficiency gains, electricity use is planned to rise low carbon but is greening over time. As currently planned, only by approximately 4% from 2015 to 2050 [24]. The the transition to green our existing electricity production will German Federal Ministry for Economic Affairs and Energy likely take a generation, reaching a predominantly renewable even emphasises the need for a reduction in energy demand grid by 2050. in all sectors [24]. No European government currently plans a renewable electricity system several times larger than the The current German Energiewende plan, an important part of current one. which is the switch to renewable electricity, does not foresee a sharp increase in electricity demand by 2050. In fact, the Overall, general planning has been about main principles of the transition to renewable electricity assume that the generated electricity will be used more stabilising or even reducing overall electricity efficiently through improvements in machinery and products, demand rather than increasing it. which will cause a drop in overall electricity demand [24]. In the future we will have low carbon electricity, but supply The range of projected added capacity varies from one will not be unlimited and current actions indicate supply will analysis to another, but no projections assume electricity be roughly equivalent to current electricity generation. generation several magnitudes greater than the current total electricity production. Even though there are variations depending on the scenarios

According to the new IRENA REmap scenario, the EU could almost fully (94%) decarbonise its electricity production by 2050.

Achieving an entirely renewable electricity grid by 2050 is possible and should be one of the main climate targets for EU member states.

13 An Industry’s Guide to Climate Action Chapter 2: Diversity of Options, Lack of Solutions

ELECTRICITY USE IN SOCIETY AND

For the cement industry, heat processes currently fuelled by fossil INDUSTRY fuels could be electrified in the future. The would avoid combustion and reduce emissions by as much as 40% if we assume the electricity Direct and indirect electrification of process and raw materials is an option increasingly touted is zero carbon. as the sole tool for the decarbonisation of industry sector [26]. Crucial for this approach is the However, the emission reduction potential is limited, as about 60% availability of vast amounts of low carbon renewable electricity. Below, we look at the scale of of process emissions unrelated to heat would remain. current electricity production and use, and examples of the future electricity requirements that Converting all current cement production in Europe would lead to a comparatively moderate increase in electricity demand, equivalent would need to be met if we rely on electrification. Germany, as Europe’s largest economy is to the electricity consumption of Poland. used as a case study. A method for the electrification of the steel industry entails the use of hydrogen. The hydrogen required could be produced through the electrolysis of water [31]. The scale of hydrogen and thus ELECTRIC TRANSPORT electricity required for an average European steel mill is very large, at approximately 40TWh [32]. This is equivalent to all the electricity used in greater London, a city of nine million people and a gross value added of 450 billion € [33]. CEMENT As the process is dependent on hydrogen, it is necessary for all the used electricity to be low carbon. Using carbon intensive electricity TRANSPORT in the production of hydrogen would greatly increase emission, not Today transport is only a small user of electricity. The vast reduce them [34]. Only in “stranded renewable” situations where majority of trucks and cars burn fossil fuels, with only a renewable electricity could not practically be fed into the grid, small but growing fleet of battery electric cars currently on would hydrogen production give more climate benefit than using our roads. Today, most of the electricity in transport is used STEEL the electricity directly [35]. A proposed hydrogen steel factory in Austria is said to require half to drive trains, trams and metros. The Deutsche Bahn (DB) TOTAL EU ELECTRICITY USE is the single largest consumer of electricity in Germany; the country’s total current electricity. The project is planned to be approximately 11 billion kWh per year, equivalent to the operational in 2045, a generation away as low carbon electricity electricity consumption of over 3.1 million households. [29] on the scale required will not be available until then at the earliest. Manufacturing all primary steel in Europe via the renewable hydrogen route would be a significant addition for electricity planners to manage, with the steel sector requiring as much electricity as all of Germany uses today.

HOUSEHOLDS AND SERVICES or about all the electricity consumed CHEMICALS From everyday life we see the use of electricity in our home in Ireland (25TWh) [27] and commercial settings. Electrification of lighting, heating, air Figure 6:The current, or the most part carbon intensive EU electricity conditioning, refrigeration, communications and entertainment. The European chemicals sector is a major user of electricity today (190TWh), the closest grid, supplies various sectors [28] All aspects of our daily lives from our homes to our offices comparison being the electricity consumption of all of Spain [36]. The chemical industry is have been deeply electrified. The total use of electricity in highly dependent on fossil fuels as the core feedstock to make products such as plastics. households and in commercial service is evenly split. Replacing these fossil raw materials with materials manufactured with electricity is theoretically INDUSTRY possible but will again require vast amounts of electricity. The process requires the manufacture The industrial sectors are the largest single user of electricity of hydrogen via electrolysis. This process requires low carbon electricity to be climatically effective [34]. CO can be reacted with this hydrogen to build the basic building blocks in Europe. In this sense, European industries are already highly 2 of organic chemistry. The CO2 must be sustainable sourced, since using CO2 of fossil origin electrified, consuming more than a third of all electricity on undermines much of the potential climate gains. Collectively this process is sometimes referred the continent. German industry consumption is above the to as Carbon Capture and Utilisation or CCU [37]. European average, consuming almost half (47%) of total Cefic, the European Chemical Industry Council and DECHEMA, the German society for Chemical German electricity, almost double that of all households Engineering, estimate that converting the European chemicals sector to be based on electricity combined [30]. Despite the existing large use of electricity in would require 4,900 TWh, almost 10 times the electricity demand of Germany, and more

industry, direct CO2 emissions from production plants persist. than all the electricity used in Europe today [38]. The inefficiencies of the electrification process would increase overall energy use in the sector 3 ½ times, from 5,059 PJ today to 17,640 PJ in 2050 [36]. Whether the electrification of the chemicals sector reduces or

increases emissions will be highly dependent on the CO2 intensity of the electricity used and

the source of the CO2 used as a carbon feedstock. 14 15 An Industry’s Guide to Climate Action

LIMITATIONS OF REINVENTING INDUSTRY WITH ELECTRIFICATION While electrification certainly has an important role to play in reducing industrial emissions, our analysis shows that solely relying on it is a great risk to take. If all of these industries choose electrification as their main mitigation effort, they would need more than 5 500 TWh of entirely renewable, low cost electricity. In comparison to 974 TWh of renewable electricity produced in Europe in 2017 [39], this estimate seems to be beyond all reality.

Currently, the most efficient emission reductions with electricity electricity would result in a carbon footprint 3.5 times larger come from using it directly in sectors such as transport and than that of fossil diesel [41]. This number does not yet include heating. Devices capable of using the most of the renewable the additional footprint dependent on the carbon source that electricity provided have a much greater climate impact differs significantly between carbon from industry sources than complex production processes incurring immense losses and biogenic ones or the air. of electricity along the way. Prioritising uses in vehicles with To prevent this unfavourable effect, industries would need to electric motors for transport and efficient heat pumps in follow the renewable power to wherever it may be available. heating allows for bigger reductions in emissions in comparison That would imply either a relocation of European industries to the full-carbon alternatives. Apart from having efficient to places with stranded renewable electricity, or the import electrification solutions readily available, these two sectors of massive amounts of renewables to Europe [42], neither are a priority for electrification because of the significant of which are realistic decarbonisation options. Betting on potential fossil fuel displacement [40]. such a strategy would risk unpredictable consequences, compromising Europe’s energy security and industry base. In a nutshell, prioritising efficient uses of the Using electricity to decarbonise energy intensive industries also falls short of addressing one of the key challenges of valuable renewable resources we have will industrial decarbonisation: process emissions. The latter mostly enable us to reach climate targets on time. occur due to the basic raw materials needed for manufactured products and not the fossil fuels being burned in the process. In addition to efficiency, timing indirect uses of renewable Consequently, electricity has a physical limit to decarbonising electricity together with a clean electricity grid is crucial for Europe’s manufacturing industries. their climate footprint. The limitations of electrification clearly show that there is a According to the German Federal Ministry for the Environment need for a mixed strategy for the reinvention of the way (BMU), producing synthetic fuels with current German grid we produce the building blocks of our society. “False hopes are worse than no hope at all: They undermine the prospect of developing real solutions.”

Nathaniel Rich Losing Earth, NY Times

16 Chapter 2: Diversity of Options, Lack of Solutions

We need an additional

Renewable electricity produced in the EU amounted to *

TWh TWh

in 2017.

to decarbonise the process industries with electricity alone.

*The cumulative amount of electricity needed for the decarbonisation of cement, steel and chemicals, as given in Figure 6 and based on reports done by the respective industries.

UNIONS Placing all bets on a decarbonisation strategy which relies heavily on resources not native to Europe is a great risk for the employees of energy intensive industries. Having to relocate production facilities to locations with abundant renewable electricity would imply thousands of lost jobs in big European industrial clusters such as North Rhine Westphalia or the Port of Rotterdam.

POLITICS Supporting large scale electrification policies for energy intensive industries would present a direct threat to Europe securing its own energy supply. The scale of the electrification needed for European industries would surpass European renewable electricity production by far, and would hence require an extensive import of electricity. Yet, arranging such large scale trade in renewable electricity (or on the other hand, a relocation of European industries) would be politically difficult. In addition, it would prevent that same renewable electricity from being used directly in local communities (e.g. in North Africa), where it could be put to much more efficient use.

INDUSTRY While electrification will have a significant role to play in industrial roadmaps, relying only on this option will not deliver the emission reductions needed. Vast demands for electricity and technical limitations of supply of renewables will constrain the scale at which electrification will be available to industry. Solely focusing on this route of decarbonisation could end up costing plenty of stranded investments and jobs.

This chapter, second in the line of four, examined the options energy intensive industries have to reduce their climate footpring. The analysis shows that the recipe for reducing emissions depends heavily on the resources available, energy consumption and knock-on effects on other decarbonisation strategies. While establishing the limits of some options is necessary, it alone does not lead to a constructive conversation. The next part of this report will focus on starting industrial decarbonisation now, not in 2050. Chapter three will discuss scalable solutions which can lead to significant emission reductions and can be deployed in the near term future. 17 The figures in this report were made using vector icons from Gettyimages and Thinkstockphotos databases.

[1] ECF, 20 June 2018. [Online]. Available: https://europeanclimate.org/industrial-transformation-2050- ecfs-new-flagship-project-helps-to-deliver-a-thriving-industry-in-a-net-zero-emissions-europe-by-2050/. [2] C. Oliver, N. Nassar, B. R. Lippke and J. McCarter, “Carbon, Fossil Fuel, and Biodiversity Mitigation With Wood and Forests,” Journal of Sustainable Forestry, vol. 33, no. 3, pp. 248-275, 2013. [3] W. S. 24 January 2018. [Online]. Available: https://www.worldsteel.org/media-centre/press- releases/2018/World-crude-steel-output-increases-by-5.3--in-2017.html. [4] Eurofer, “European Steel in Figures 2017,” 2017. [Online]. Available: http://www.eurofer.org/ News&Events/PublicationsLinksList/201705-SteelFigures.pdf. [5] OEC, 2018. [Online]. Available: https://atlas.media.mit.edu/en/profile/country/deu/. [6] B. o. I. R. 2018. [Online]. Available: http://www.bir.org/industry/ferrous-metals/. [7] T. S. 2018. [Online]. Available: https://www.tatasteel.nl/nl/innovatie/HIsarna. [8] V. 31 January 2018. [Online]. Available: https://europa.eu/sinapse/webservices/ dsp_export_attachement.cfm?CMTY_ID=0C46BEEC-C689-9F80-54C7DD45358D29FB&OBJECT_ ID=80BB405C-DA08-56D3-800BC46FC9A6F350&DOC_ID=604E51C2-BF68-0811- 55466D1CB8DE995D&type=CMTY_CAL. [9] Rechberger, “Hydrogen electrical path,,” in European Steel: The Wind of Change, Brussels , 2018. [10] Nuber, Eichberger and Rollinger, “Circored fine ore direct reduction,” stahl u. eisen, vol. 126, no. 4, 2006. [11] HYBRIT, “HYBRIT Summary of findings from HYBRIT Pre-Feasibility Study 2016–2017,” SSAB, LKAB and Vattenfall, 2017. [12] M. M. 2017. [Online]. Available: https://agmetalminer.com/2017/02/13/hydrogen-to-replace- coking-coal-in-the-reduction-of-iron-ore-in-steelmaking-maybe-one-day/. [13] EEA, 11 January 2017. [Online]. Available: https://www.eea.europa.eu/data-and-maps/indicators/ final-energy-consumption-by-sector-9/assessment-1. [14] SSB, “Electricity,” 2017. [Online]. Available: https://www.ssb.no/en/energi-og-industri/statistikker/ elektrisitet/aar. [15] N. E. R. 2018. [Online]. Available: http://www.nordicenergy.org/figure/a-third-renewable-half-co2- free-but-oil-still-the-largest-energy-source/an-electrified-energy-system/. [16] Camecon, “A Study on Oil Dependency in the EU,” Cambridge econometrics, Cambridge, 2016. [17] EEA, “Gross electricity production by fuel,” 5 May 2018. [Online]. Available: http://www.eea.europa. eu/data-and-maps/explore-interactive-maps/renewable-energy-in-europe-2017. [18] A. E. “Die Energiewende im Stromsektor: Stand der Dinge 2017,” 2018. [19] EEA, “Overview of electricity production and use in Europe IND-353-en,” 2017. [Online]. Available: https://www.eea.europa.eu/data-and-maps/indicators/overview-of-the-electricity-production-2/ assessment. [20] B. &. P. “Klimapfade für Deutschland,” The Boston Consulting Group und Prognos, 2018. [21] A. E. 2018. [Online]. Available: https://www.agora-energiewende.de/en/topics/electricity- production/. [22] G. A. C. o. t. E. “Pathways towards a 100 %,” 2011. [Online]. Available: http://www. umweltrat.de/SharedDocs/Downloads/EN/02_Special_Reports/2011_01__Pathways_Chapter10_ ProvisionalTranslation.pdf?__blob=publicationFile. [23] Netz, “Network Development Plan 2030,” 2018. [Online]. Available: https://www. netzentwicklungsplan.de/de/netzentwicklungsplaene/netzentwicklungsplan-2030-2019. [24] B. “Discussion Paper - Electricity 2030,” 2016. [Online]. Available: https://www.bmwi.de/Redaktion/ EN/Publikationen/discussion-paper-electricity-2030.pdf?__blob=publicationFile&v=5. [25] BETD, “Press Fact Sheet: The German Energy Transition,” 2016. [26] Ausfelder , “Sektorkopplung - Untersuchungen und Überlegungen zur Entwicklung eines integrierten Energiesystems,” acatech, Berlin, 2017. [27] EUROSTAT, “Electricity consumption and trade, GWh, 2015,” 2015. [Online]. Available: http:// ec.europa.eu/eurostat/statistics-explained/index.php/File:Electricity_consumption_and_trade,_ GWh,_2015_new.png. [28] EEA, “Final energy consumption of electricity by sector,” 2017. [Online]. Available: https://www.eea. europa.eu/data-and-maps/indicators/final-energy-consumption-by-sector-9/assessment-1. [29] GIZ, “Renewables in Rail Transport: Approaches and Examples,” 2014. [Online]. Available: http:// www.sutp.org/files/contents/documents/resources/F_Reading-Lists/GIZ_SUTP_RL_Renewables-in-Rail- Transport_EN.pdf. [30] K. Appunn, “Germany’s energy consumption and power mix in charts,” 2018. [Online]. Available: https://www.cleanenergywire.org/factsheets/germanys-energy-consumption-and-power-mix-charts. [31] RS, “Options for producing low-carbon hydrogen at scale,” The Royal Socuety, London, 2018. [32] K1MET, “Energy in Future Steelmaking,” EU Seminar “European Steel: The Wind of Change”, Brussels, 2018. [33] london.gov, “Electricity Consumption, Borough,” 2018. [Online]. Available: https://data.london.gov.uk/ dataset/electricity-consumption-borough. [34] IEA, “Small-scale Reformers for Stationary Hydrogen Production with Minimum CO2- emissions,” IEA, 2005. [35] Edwards, Hass, Larive, Lonza, Maas and Rickeard, “WELL-TO-WHEELS Report Version 4.a JEC WELL- TO-WHEELS ANALYSIS,” JRC, Luxembourg, 2014. [36] CEFIC, “European chemistry for growth; Unlocking a competitive, low carbon and energy efficient future,” Cefic, 2013. [37] Abanades, Rubin, Mazzotti and Herzog, “On the climate change mitigation potential of CO2 conversion to fuels,” Energy & Environmental Science, p. Issue 12, 2017. [38] DECHEMA, “Low carbon energy and feedstock for the European chemical industry,” DECHEMA, 2017. [39] S. and A. E. , “The European Power Sector in 2017: State of Affairs and Review of Current Developments,” 2018. [40] W. E. “Renewable Power for All: A Call for an Environmentally Beneficial Electrification and Multi- Sectoral Integration,” 2017. [41] B. “Renewable fuels of non-biological origin in transport decarbonisation,” 11 July 2018. [Online]. Available: https://www.transportenvironment.org/sites/te/files/Renewable%20fuels%20of%20non- biological%20origin%20in%20transport%20decarbonisation%2C%20Thomas%20Weber_0.pdf. [42] ETC, “Electricity and hydrogen based fuels: Consultation paper,” Energy Transitions Commission, 2018. [43] Bundesnetzagentur, “Bedarfsermittlung 2017-2030: Bestätigung Netzentwicklungsplan Strom,” 2017. [Online]. Available: https://data.netzausbau.de/2030/NEP/NEP_2017-2030_Bestaetigung.pdf. don’t 3panic wecan fix it THE DAWN OF A NEW INDUSTRY

SUMMARY As the transformation of the energy system continues and new technology options are developed and brought to maturity, measures that can provide effective and deep emission reductions to industry processes are needed today.

• The capturing of CO2 emissions from industrial clusters and their transport and permanent offshore storage in deep geological formations (CCS) constitutes an essential part of the solution • It complements limitations of feasibility, scale, costs and time associated with other climate tools.

It is a three-step process that depends on the availability of a CO2 transport and storage infrastructure. Yet, no single industrial site or even sector can be expected to develop the entire system themselves due to high cost, associated financial risk and the required technical expertise.

Developing a shared CO2 transport and storage infrastructure that is open to all industries and expandable to other regions reduces costs and strengthens the regional industry base. The implementation of this system is dependent on financing that can come directly from industry but also from instruments at a regional, national and European level, including the Innovation Fund and the Connecting Europe Facility (CEF). As some programs are either ending soon or still need to be made fit for purpose, time is of the essence.

Overall, establishing a CO2 network for Europe’s industry today is a no-regrets option that

overcomes the notion of ‘unavoidable’ CO2 and enables industry to deeply decarbonise. By doing so, it protects jobs and welfare and ensures governments are able to fulfil their obligations under binding international targets. Chapter 3: The Dawn of a New Industry

MANY OPTIONS, FEW SOLUTIONS

While options for the decarbonisation of the industry are Limiting today’s industrial climate action to the above many, solutions are few. Electrification, recycling and upcycling, mentioned tools will not be enough to reach net zero-emissions as well as the use of alternative materials in production by mid-century and thereby avoid the most dramatic effects processes and as final products all help reduce industry of climate change. emissions. What is needed is an option that is ready to be implemented While each of these measures is needed, each and that can provide effective emission reductions as the transformation of the energy system continues and new is limited through issues of scale, cost, effective technology options are developed and brought to maturity. CO2 reductions and temporal availability, To ensure that carbon neutrality in Europe’s industry is and even after implementing all of them, emissions will remain achieved by mid-century, the capturing of CO2 emissions in many industry processes. from industry clusters and their transport and permanent As demand for products is increasing with global population storage (read: in perpetuity) in deep geological formations levels and rising living standards, industry emissions are set to (CCS) constitutes an essential part of the solution. become the primary source of CO2 within the next decades. CCS complements limitations of feasibility, scale, costs and time associated with other climate action tools.

‘‘The receiver containing the gas became itself much heated - very sensibly more so than the other - and on being removed, it was many times as long in cooling. An atmosphere of that gas would give to our earth a high temperature; /.../ if the air mixed with it a larger proportion than at present, an increased temperature /.../ must have necessarily resulted.’’ The discovery of the greenhouse gas effect by Eunice Newton Foot, an American scientist, inventor and women’s rights campaigner (American Journal of Science and Arts 1856)

3 An Industry’s Guide to Climate Action Chapter 3: The Dawn of a New Industry CCS IN INDUSTRY Transporting CO2 Storing CO2

CO2 is liquefied and transported via truck, train, barge, ship Deep underground CO2 storage takes place in porous and and/or pipeline. permeable rock layers at a depth of several thousand metres. HOW IT WORKS The CO eventually binds with the surrounding salty water Most people are familiar with CO2 as an ingredient in fizzy 2 drinks. CO is already being transported across Europe by molecules and remains stored between impermeable layers HIsarna Steelmaking 2 companies such as the German Linde AG. There are flexible of rock for thousands of years. Innovative production processes have been developed in the transport options from capture sites to transport hubs, including steel industry. The HIsarna ironmaking process removes the The storage sites are located beneath a non-permeable trucks, barges or ships [3]. Since most of Europe’s emitters need for climate intensive coke and sintering in steel making. barrier-rock that prevents the CO from expanding upwards This makes HIsarna both a more energy efficient production Capturing CO2 are clustered in industrial hubs close to major transport 2 process and provides a high purity CO waste stream. CO rather than sideways. The potential for CO2 storage is greatest 2 2 waterways, ships and river barges are an efficient and Established capture technologies for industry sites include in offshore saline aquifers and depleted oil and gas fields. can be captured more easily and therefore cheaper [2]. flexible way of transporting CO from the emissions source When combined with CCS, HIsarna can reduce emissions by pre-, post-, and the oxyfuel combustion. Generally, 2 CO is injected in the pores and gaps of the rock. Effectively, in industries where the CO is more concentrated it is to offshore storage sites [4]. These transport choices may also 2 80% compared to normal steel making processes. Efficiency 2 this represents a return of carbon into formations from where improvements are crucial for European industry to make better be applied in the first phase of deploying CCS to ensure a easier and cheaper to isolate and store it. European carbon-intensive fossil fuels had been extracted before. use of resources and minimise energy requirements. Through pilot projects and new ways of manufacturing continue to lower cost and commercial risk of kick-off CCS projects [5]. HIsarna costs for CCS are drastically reduced, enabling the Since 1996, an annual one million tonnes of CO have been improve the efficiency and effectiveness of capturing CO For instance, linking up industrial sites along the river Meuse 2 steel mill to fully decarbonise effectively and efficiently. 2 stored in the Sleipner field under the North sea in Norway emissions from industrial sources. New innovative industrial and Rhine to the Port of Rotterdam’s CO infrastructure via 2 [8]. Since 2008, another 4 million tonnes of have been stored processes build CO separation and capture into the heart barges could still allow the transport of millions of tons of LEILAC Cement 2 at Norway’s Snøhvit CCS project [9]. of industrial manufacturing, cutting costs and increasing CO2 per year. Depending on the size of the river, barges European energy intensive industries have already leapfrogged efficiency. have a tonnage of up to 3,000 t and can operate in convoys. other parts of the world in creating such optimised processes. For the Rhine this means 45 convoys, consisting of six barges Recent assessments of Sleipner, The cement industry has developed a production process that and operating year-round can deliver 35 MtCO per year results in a high purity CO stream when the main raw material 2 2 the longest running industrial-scale in cement making, limestone, is being processed [1]. The LEILAC from Düsseldorf to Rotterdam [6]. project (short for Low Emissions Intensity Lime & Cement) enables storage project have shown that From a CO2 hub, pipelines are the most scalable option to link the separation of gases in such a way that the CO coming 2 up with storage sites. Just as gas transporting ships, existing the CO has stayed trapped in from cement production is pure enough to be easily captured, 2 transported and stored. This efficient way of cement making offshore natural gas pipelines can be re-used to transport the storage reservoir, meaning no ensures that an industry where emissions cannot be reduced CO2, and potentially onshore pipelines if conditions are met through direct electrification alone has the option (and no excuse [7]. In other words, stranded natural gas infrastructure that CO2 has leaked nor has its injection not) to capture and store their remaining CO at a low cost. 2 becomes obsolete as renewables take over power generation fractured the cap rock [10, 11].

can help reduce CO2 in other sectors.

Figure 1: An illustration of a CCS capture on an industrial point source, transport and off-shore storage chain. 4 5 An Industry’s Guide to Climate Action Chapter 3: The Dawn of a New Industry

WHY IT WORKS FOR THE CLIMATE

During the last major Ice Age, the global surface temperature was only between 2 to 4°C degrees cooler than during the 19th century [12]. Yet, all of northern and central Europe was covered under a kilometre-thick ice sheet. The last time the world was 3°C warmer, during the Pliocene three million years ago, beech trees grew in Antarctica and the sea levels were 25 metres higher [13].

Humans have been releasing CO2 from the geological sphere much faster than the natural process of the carbon and geological cycles can return it. Simultaneous large-scale While the precise consequences of such a warming are deforestation has caused the natural ability of capturing unknown, one can imagine children born today will live CO2 to decline. The atmospheric CO2 concentration has through a world of drastically changing coastlines, flooded consequently increased from 280 parts per million (ppm) cities, and growing deserts, a world where natural ecosystems around the year 1800 to about 408ppm in 2018 [18].This that support human civilisation are pushed beyond their increase has already resulted in a global surface temperature ability to adapt [14]. increase of over 1.1°C. CO is the key greenhouse gas (GHG) that contributes to 2 The world as an ecosystem is able to rebalance itself over the warming of the planet. GHGs prevent some of the heat the course of millions of years. In the meantime, as global originating from the sun to be reemitted back into space. surface temperatures rise, the planet will be increasingly The higher the amount of GHGs in the atmosphere, the more inhospitable for a variety of living organisms – including heat is trapped, increasing the global surface temperature humans. and thereby altering the world’s climate [15].

CO2 occurs naturally and is part of the carbon cycle in which CCS buys humanity time and industry a plants absorb it from the air to grow. The carbon cycle is part functional climate transition. of a larger cycle that includes the geological sphere, where CCS can bridge the boundary between the atmosphere previously captured atmospheric CO is stored underground 2 and the geosphere, and thereby help achieve a more rapid [16]. return of CO2 from resources that are still consumed in many Over millions of years organic matter (i.e. dead plants) industries and whose products are crucial to implement other form into limestone, coal, oil and gas. These fossil fuels are climate technologies, such as an enormous expansion of wind important energy sources for our current industrialised society, power [19]. yet their extraction and burning releases eons of trapped Arriving at a carbon free world is possible in the future. carbon back into the atmosphere [17]. Considering the short timeframe we have left to prevent irreversible global warming, CCS helps stabilise a warming atmosphere by stopping industry emissions to be dumped into the air.

6 7 An Industry’s Guide to Climate Action

HOW TO DO IT RIGHT

Carbon capture and storage, as any other climate technology, needs to deliver its environmental goals. As with any implementation of new processes, there needs to be a set of sustainability criteria ensuring that CCS is done right to reach its full climate change mitigation potential.

Planning changes to avoid closures Careful planning is needed to minimise effects on industrial processes: interruption during construction and production, corrosion, wear and tear costs etc. Some short-term disturbances are inevitable for the industries if they seek to avoid a more permanent discontinuation of operations in the future.

Complementing efficiency improvements Where possible, pairing CCS with more efficient manufacturing processes such as LEILAC and HIsarna can minimise energy demand and costs. The goal of CCS is to complement efficiency improvements in energy intensive industries, not deter them.

Lowering energy penalties Processes such as HIsarna and LEILAC are capable of both increasing manufacturing efficiency and

producing a very pure stream of CO2. By implementing such innovative manufacturing processes,

European industries can capture the CO2 without having the conventional added energy usage burden

that comes with capturing CO2 from mixed gas streams. Additionally, when compared to options such as most carbon capture and utilization (CCU) technologies, CCS will always have a significantly lower energy requirement.

Ensuring safety In order to meet concerns on the safety of the storage, all of the storage sites must be properly assessed, selected and monitored both during the injection and after it. Prioritising Europe’s vast offshore storage

capacity will keep CO2 storage activities distant from population centres.

Keeping the CO2 out of the atmosphere

Since keeping the CO2 away from the atmosphere permanently will be crucial to realise the climate

mitigation potential of the technology, other options that use CO2 to release it back into the atmosphere should not be regarded as climate mitigation solutions.

Working together to bring CCS down the cost curve Just like for any other climate action strategy, in order to work CCS must be a joint effort. Coordination and collective regional action can overcome risks and generate a business case for each link of the value chain. Finally, CCS cannot become a one-stop shop for all industrial emissions. On the contrary, it is complementary to technologies such as recycling, alternative resource use, electrification and efficiency increases. All of these climate action technologies need to be developed in parallel, rather than inhibiting each other’s development. 8 don’tChapter 3: The Dawn of a New Industry MANAGING CO : 3.12 panicOPPORTUNITIES AND TRAPS wecan fix9 it An Industry’s Guide to Climate Action

CO2 TRANSPORT AND STORAGE CAN GIVE US NEW OPPORTUNITIES

Hydrogen

The origin of H2 matters In Germany, renewables make up 31.2% of total electricity production. In 2016, 3.7 TWh of renewable generation was curtailed [21]. Using this curtailed electricity to produce hydrogen would displace only 0.33% of German natural gas Although natural gas is around half as climate damaging as demand [22]. It is important to note that producing hydrogen coal, it is still not close to being a climate friendly energy through electrolysis with Germany’s electricity mix that still includes gas and coal power plants, would significantly source. Globally, one fifth of all CO2 emissions from fossil fuels are from natural gas. In the Netherlands burning gas increase emissions [23]. releases more CO2 than either coal or oil [20]. CO2 transport Improving the grid through greater interconnection and smart and storage networks can reduce the climate impact of natural grids further reduces curtailment in the future, leading to a gas and support a more rapid transition to a zero-carbon more efficient direct use of electricity where needed. hydrogen energy system. Globally, the bulk of hydrogen (96%) is produced from fossil sources, the majority from natural gas, which is not Hydrogen is well placed to replace CO2 low carbon as the CO2 produced in the process is rarely intensive natural gas, aiding decarbonisation captured and stored [24, 25]. Producing hydrogen in of heating, industry and long-range transport. combination with CCS allows for large scale low carbon Manufacturing hydrogen from electricity is dependent on hydrogen to be produced year-round independent of local the availability of low carbon and low-cost electricity. The renewable generation [26]. Hydrogen produced in this way speed of the scaling up of hydrogen production will be can supplement and accelerate development of hydrogen dictated by the speed of the renewable electricity that can from renewable electricity sources. Both hydrogen sources be directed to the manufacture of hydrogen. Yet in Europe, can aid co-developing hydrogen transport infrastructure, only few areas have the share of renewables required to supplying the same hydrogen market and growing the share produce hydrogen at scale. of hydrogen as a clean energy source, while reducing the use of carbon intensive fuels. Low carbon hydrogen is already produced in combination

with CO2 storage at the Valero Port Arthur Refinery, Texas,

USA where 1 MtCO2 is captured and prevented from entering the atmosphere every year [27].

10 Chapter 3: The Dawn of a New Industry

CO2 removal

The combination of biomass and CO2 storage can produce carbon negative products, such as heat, electricity and industrial products. It is important that any biomass used for In addition to halting CO2 emissions from energy, transport and industry, limiting warming to below 2oC with a high energy or heat, with or without CCS, needs to be sustainably sourced. If this sustainability is ensured, the use of biomass degree of success will require CO2 to be removed from the atmosphere [14]. alone can allow for some CO2 emissions mitigation, but the use of biomass with CO storage can enhance the mitigation, The reliance of IPCC models on carbon negative technologies 2 clearly shows just how steep the reductions in our emissions delivering carbon dioxide removal [31]. Some regions already use biomass at scale to heat and power cities. need to be to actually solve the climate crisis. CO2 removal can be done in a variety of ways, such as the planting In Sweden and Finland 32 and 40 million tonnes of CO2 from of forests, changing of agricultural practices and through biomass are emitted to the atmosphere every year [32]. the permanent geological storage of CO [28]. For any 2 The use of sustainable biomass with carbon negative technique to be effective, the CO2 must be permanently locked away from the atmosphere. subsequent emission of CO2 to the atmosphere

Accesses to CO2 transport and storage allows for CO2 to should be seen as a climactically wasteful captured and stored directly from the air or from a biogenic practice, underutilising the climate potential source; both routes remove CO from the atmosphere if the 2 of a scarce and valuable renewable resource. biomass sourcing is sustainable. Capturing CO2 directly from the air is energy intensive and also requires low carbon Indeed, a major concern is that increased use of biomass in electricity to be climate effective [29]. The cost of separating industry and energy can also result in negative biodiversity and climate impacts. However, using biomass in the industry CO2 from air is also anticipated to remain far higher than capturing emissions directly from concentrated industrial sector where CCS is needed already, reduces costs and sources [30]. valorises negative emissions through a net negative industry product. For energy generation, renewable energy sources should be the preferred option due to greater efficiency and issues of sustainability.

11 An Industry’s Guide to Climate Action Chapter 3: The Dawn of a New Industry

NOT EVERY USE OF CO2 IS CLIMATE ACTION

Although frequently discussed simultaneously, due to its similarity to CCS in name and abbreviation,

Carbon Capture and Utilisation (CCU) refers to the use of CO2 in various processes and products, whose climate impact varies significantly depending on the final product and the origin of CO2.

CCU thereby rarely achieves the same climate benefit as climate change mitigation, the point of which is to keep the storage of CO2 [33]. The two reasons for this are 1: Nearly CO2 away from the atmosphere [35]. always and immediately (months) all the CO2 ends up in CCU products with the longest storage ability – such as the atmosphere leading to increased warming, and 2: the mineralisation –offer a relatively small market in comparison electricity requirements are massive, particularly when it to our huge annual emission of CO2. For other CCU processes comes to fuels and chemicals. that readily re-emit CO2, no carbon from industrial (or other These limitations mean that realistic deployment is distant and fossil sources) can be used to reach the carbon neutrality will directly compete with much more efficient (climactically needed to deliver the Paris Climate Agreement. Here, only and in practice) direct electrification of transport, heating biogenic sources and direct air capture should provide the and industrial processes. CO2. In addition, a carbon neutral CCU process depends on Due to its inefficient process, the associated high demand 100% carbon free electricity. for renewable electricity and consequent costs, as well as its limited utility in actually decarbonising industry processes, CCU CCU as a CO2 sink: Mineralisation will not play a major role in facilitating a net-zero emission future by mid-century. Without appropriate sustainability Ex-situ mineralisation is the mining of reactive minerals to criteria and life-cycle analyses of CCU products in place, CCU be combined with CO2 at its source. The reactive minerals, can in fact lead to a prolonged dependence on fossil fuels such as olivine, are the primary resource input. Under ideal in Europe’s electricity generation. It may thereby undermine circumstances CO2 may react with wollastonite, a naturally the development and deployment of technologies that use occurring mineral. For every 1 tonne of CO2 absorbed some electricity directly, e.g. electric mobility that would be much 7 tonnes of wollastonite must be mined and processed. For more effective at avoiding fossil extraction. large-scale CO2 mineralisation of, for example, 2 million tonnes, about 14 million tonnes of minerals are needed to Using CO2 might be a strategy for replacing react, resulting in over 16 million tonnes of reactant that will fossil feedstocks, but in most cases, it is not a need to be disposed of [36]. The real-world testing of this climate change mitigation tool. is at a very small scale in lab sized reactors and has a low technology readiness. The largest potential reactors are on the CCU’s attractiveness derives mostly from substituting fossil scale of 100 thousand tonnes of CO per year. This involves fuels as carbon sources and energy carriers. Most CCU 2 a pressure reactor drilled to about 1km depth into the earth. products re-emit the CO into the atmosphere [34]. This 2 Here CO and olivine are mixed at a high head pressure from point in time differs from a mere hours after production, to 2 the km of material to be fed in from the top [37, 38]. days, or years. This is a significant make or break factor in Figure 5: Most CCU routes do not have significant potential to permanently keep CO2 molecules out of the atmosphere.

12 13 An Industry’s Guide to Climate Action

Most CCU requires The power to gas (PtG) process is based on hydrogen from

electrolysis and the adding of CO2 to create synthetic gas. By electricity, and lots of it using only ‘excess’ renewable electricity, PtG is said to act as

The process of turning the waste product CO2 into a valuable an energy storage. However, ‘excess’ renewable electricity is feedstock requires the use of large quantities of electricity. only a phenomenon of the current underdeveloped European Depending on the grid mix, CCU can therefore have a power grid and, to reiterate, hydrogen produced with negative climate effect. Overburdening the electricity curtailed electricity would only displace 0.33% of German production prematurely to fuel large-scale CCU can also natural gas demand, an already negligible amount, which prolong fossil fuel dependence in the power sector. would only shrink further with the additional inefficiencies of CO synthesis [22]. Indeed, due to the highly inefficient For CO to Fuels / CO to chemicals, abundant zero carbon 2 2 2 process, PtG is extremely costly with severe energy losses electricity is the major resource requirement. Under favourable compared to the direct use of electricity [40]. To reduce assumptions, the use of 1 tonne of CO in the formation of 2 costs, electrolysis and methanisation need to run at full-load methanol (used as fuel or chemical feedstock) requires some hours, further undermining any idea of only using ‘excess’ 6.5 MWh of zero carbon electricity. Using 2 MtCO would 2 renewable electricity [40]. need 13,000 GWh of zero carbon electricity (11% of all Dutch electricity generation). The alternative path for using PtG for energy storage is through importing large quantities from faraway places with Using grid mix electricity would therefore multiply emissions. stranded renewable electricity to reduce costs and allow All of this used CO will end up in the atmosphere when 2 for full-load hours. Yet, the production of synthetic gas and the fuel is used, and next to all will be emitted with current fuels in regions, such as the Middle East and Northern Africa disposal of plastic. Manufacturing a synthetic diesel fuel (MENA) or Australia defeats PtG’s potential to use CO that car companies such as Audi promote would double the 2 from Europe’s industries [41, 40, 42]. Furthermore, to create electricity requirement [39]. electricity storage, synthetic gas would have to be actually CCU is neither capable of boosting the stored, i.e. prevented from entering the grid where it simply energy transition, nor of decarbonising competes against renewable electricity and is immediately used rather than saved for times when no wind and sun is industry. generating power. Establishing major underground storage CCU is also promoted as an essential energy carrier in sites for a highly combustible gas close to demand centres support of the renewable energy transition. bears its own risks [43].

Figure 6: By far the biggest resource used in the manufacture of products using CO2, especially hydrocarbons, is electricity. 14 don’tChapter 3: The Dawn of a New Industry Creating CO networks panic3.22 wecan fix15 it An Industry’s Guide to Climate Action

MAKING EUROPE CLIMATE PROOF

The creation of a common European CO2 network is effective for climate protection, strengthens the regional industry base, and promotes trade and growth. As climate requirements of zero emissions become more pronounced, industries and regions with access to a CCS system gain a competitive edge in a low-carbon market and over regions lacking the respective infrastructure.

A European CO2 transport and storage network generates climate proof industry regions that can withstand growing political and financial pressures associated with the rising climate concerns of the 21st century.

"They have to deliver it to the gate, we do the rest”

Allard Castelein, CEO of the Port of Rotterdam Authority [45]

Photo credit: Port of Rotterdam

Industry sites linked to a CO2 transport and storage Furthermore, countries without a major industrial base, but infrastructure benefit from increased range of decarbonisation with significant storage potential, such as Norway, will benefit options that help secure their assets against growing political economically. A recent study suggested that establishing a uncertainties and financial risks. Regions in which these European CCS industry in Norway could generate up to industries are located are more able to retain existing jobs 40,000 related jobs in 2030, and up to 90,000 by 2050 [46]. and their economic basis. Such climate proof regions are likely By helping to achieve the climate target and maintaining to become attractive for companies seeking to invest and jobs and livelihoods, CCS systems ensure a ‘Just Transition expand their production sites; the creation of a CO2 network of Europe’s industry. helps to ensure continued employment, income and growth. For industrial countries, such as Germany, CCS represents a crucial component to protect the climate as well as almost half a million direct jobs in the German cement, chemical and steel industry, plus jobs and income in dependent industries downstream.

16 Chapter 3: The Dawn of a New Industry

CO2 networks are a public good In the early 19th century, London planned to expand its sewage system, yet faced widespread public opposition. Particularly wealthier people, living uphill, did not see why a general sewage system was needed and hence did not want to pay to improve the property of private individuals ‘downhill’. In fact, sewage was not seen as a public good, and so the government initially considered it improper to use public money. It took several cholera epidemics, thousands of deaths, and the ‘Great Stink’ of 1858 for London to finally modernise and upgrade its sewage system, at last stopping the unchecked dumping of human waste into the river Thames.

“[The principle] was of diverting the cause of the mischief to a locality where it can do no mischief.”

Sir Joseph Bazalgette, Civil Engineer who upgraded London’s sewage network and brought an end to the cholera outbreaks [44]

Photo credit: Wikicommons

Just as it is no longer acceptable to toss sewage onto the The same way households only need to sort their garbage street, an accesible CO2 transport and storage system will and place it outside their homes to be collected, so industries prevent us from dumping climate damaging CO2 into our should only need to capture their residual CO2 emissions shared atmosphere. and inject them into a provided transport and storage CCS is a three-step process that depends on the availability infrastructure. of an adequate CO2 transport and storage infrastructure. A shared CO2 network provides a public service by taking Similar to waste management, this infrastructure needs to care of harmful emissions associated with goods widely ensure that CO2 is picked up and safely taken care of. used by society; from concrete that is the foundation to our No single industrial site or even sector can reasonably be infrastructure, houses and wind farms, to steel and metals expected to develop the entire system themselves for reasons that are the backbone of society’s tools, technology, and of cost, associated financial risk, as well as the required modes of transportation, as well as chemicals, such as paint, technical expertise. plastics and pharmaceuticals.

17 An Industry’s Guide to Climate Action

IT’S UP TO INDUSTRY TO BREAK INERTIA

If industries and regions want to establish a CO2 network that provides them with the means to deeply decarbonise, secure their assets, and retain jobs and economic activity, the current inertia of industry and politics needs to be overcome.

Despite being one of the largest emitters of CO2, industries Nevertheless, few governments and civil organisations actually have been largely shielded from real climate action. Effective have a strategy for the industry’s deep decarbonisation. lobbying and concerns over global competition and potential At the same time, companies aware of the looming climate job losses have prevailed over the provision of clear targets pressures and associated commercial risks do not receive the and incentives for effective measures that would hold industries necessary regulatory and financial support to begin avoiding accountable to their role in anthropogenic climate change or capturing their CO2, let alone any access to CO2 storage. and provide them with the means to deeply decarbonise. The deep decarbonisation of Europe’s industry needs clear The current inaction by politicians to enforce, and companies long-term goals and respective support mechanisms that to demand support for the decarbonisation of industry reduce risks of investments in climate measures, including undermines the Paris agreement and threatens the future capture technologies and the CO2 infrastructure. Industries of the climate and Europe’s economy alike. deciding to reduce their emissions should be rewarded Concerned with the perceived and real costs and limitations rather than face a competitive disadvantage. Similar to the of decarbonising industry, emissions from employment, energy renewable energy transition, CCS technology requires public- private partnerships in which the government establishes and CO2 intensive industrial processes are too often described as ‘unavoidable’. This notion has resulted in a sense of a supportive financial framework, assumes some of the exceptionalism for the industry that sees itself exempt from investment risks, and provides a market for the final good until implementing climate measures. Yet, there are no unavoidable its commerciality is established; in this case, a zero-emission final industrial product. In doing so, Europe’s industry stands CO2 emissions in a post-Paris, zero-emission economy. to gain a competitive edge in a zero-carbon future, as it already has in renewable energy generation. Others are already moving ahead Norway Norway is moving forward on two capture projects, a cement plant and a waste to energy incinerator, linked up via ship and pipeline to a storage site several kilometres off the coast of Norway. This project is set to be the corner stone of the country’s long-term plan to decarbonise its economy and expand its storage infrastructure with the possibility and aim to link up with other countries [54]. Sweden Norway’s neighbour Sweden seeks to be carbon neutral by 2045. Sweden’s climate roadmap from 2018 therefore calls for a concrete CCS strategy for the Swedish cement production [55], as well as the steel sector to reach its targets [56]. Joining the Norwegian effort would be beneficial for both nations, and the world’s climate. The UK The UK's Clean Growth Strategy requires CCS at scale by 2030, which has already led to the planning of six large-scale projects [57]. Existing pipeline and well infrastructures are currently assessed for re-use [58]. The USA

Across the Atlantic, the USA increased already existing tax incentives for companies to store CO2 rather than release it to the air from US$ 10 to US$ 50/tCO2 in 2018 [59]. The Netherlands

The Netherlands plans to store several million tonnes of CO2 per year by 2030. The Port of Rotterdam – host of multiple energy intensive industries in the country - has already begun preparing to do its part in reaching the targets, focusing on the development of strategic infrastructure to serve the port. This includes a backbone CO2 pipeline to provide access to offshore CO2 storage, and extra capacity to expand and scale over time. Rotterdam effectively seeks to become the

CO2 transport and storage hub of the region. 18 Chapter 3: The Dawn of a New Industry

MOVING EUROPEAN CO2 INFRASTRUCTURE DOWN THE COST CURVE

A CO2 network is to be developed across national borders Costs for CO2 networks are reduced the more industry sites and various industry branches due to the differing geographic capture their process emissions and share the transport locations of industry clusters and CO2 storage sites. The and storage infrastructure. For CCS, this means focusing creation of an industrial CO2 infrastructure therefore requires on regional industry clusters and creating CO2 transit hubs. collective European action. Through cooperation, risks are lowered for each party The implementation of CCS does not have to involved and shared benefits are increased. and should not be a national, solo effort. The pooling and sharing of resources is the As there is ample offshore storage available across Northern most cost effective and efficient way to ensure Europe, countries may choose to develop their own full CCS European industries can deeply decarbonise. chain or begin a CO2 network by sharing with countries with Once a CO2 network is established, smaller CO2 point sources more mature CO2 storage development. As the infrastructure can gain access to the CCS system more easily. These ‘smaller’ is established, expanding becomes easier, growing to provide point sources, such as waste incinerators, still make significant decarbonisation for more sectors in more areas. Through contributions to climate change. A typical waste-to-energy cooperation, total offshore storage potential in the North incinerator, for example, still produces over 37% of CO2/ Sea and Norwegian Sea of about 202 billion tonnes of CO2 MWh compared to a typical coal power plant [50]. would not be a limiting factor of CCS in halting warming to 2oC and below.

CO2 Capture Costs [53]

Sector Process Cost per tCO2 abated in €/ton Iron and steel Blast Furnace 53 (30-79) Hot Blast Stove, power/steam plant 71 (71-85) Cokes oven 83 (83-92) Aluminium Aluminium smelter 15 Chemicals Ethylene oxide 15 Hydrogen (ammonia/methanol) 34 (18-43) Ethylene/propylene 71 Process heaters/cogeneration (CHP) 101 Gas treatment Gas treatment 12 Pulp and Paper Power process 67 (34-69) Cement Pre-calcination 37 (21-50) Complete installation 61 (35-111)

Table 1: CO2 capture costs for various energy intensive industries

Implementing CCS in Europe’s industry would raise the price Zero-emission certificates similar to existing Fair Trade and of the final good, such as a car built with carbon neutral Organic (Bio) seals can help raise awareness and supply a steel or a house built with zero-emission cement by a mere 1 growing market of an environmentally and climate-aware percent without reducing the quality of the product [51, 52]. populace, while helping to prevent a runaway climate change before it is too late. 19 An Industry’s Guide to Climate Action

Coordination and implementation

The decoupling of the capturing from the transport and storage of CO2 creates counter-party risks. Industries are unwilling to begin capturing their emissions at scale without certainty that this CO2 will be picked up, transported and stored. Simultaneously, CO2 infrastructure operators require assurances that CO2 will indeed be delivered, and their services remunerated. Varying timeframes need to be aligned; for example, efforts for the identification and development of new storage facilities need to take place on average 5-10 years prior to CO2 capture.

Creating a CO2 network requires a coordinating body that allocators of market risks and liabilities between the public manages the interests of the involved actors by planning, timing and private sectors. They can act under a regional, national and investing in infrastructure, coordinating development, and and supranational statute to plan and execute the delivery assuming responsibility and commercial risk. of CO2 network development.

These Market Maker institutions can become the delivery The implementation of a CO2 network follows a consecutive framework for a European CO2 infrastructure, and the two-stage business model:

The first pre-commercial phase is about the creation of a

CO2 market and the transport and storage infrastructure. Development costs have to be covered. Through tenders/

auctions and contracts for difference, costs for CO2 storage and remuneration levels can be identified. In most cases, state authorities would establish market maker institutions to manage and implement the necessary tasks, develop a market for CCS and carbon neutral goods, and assume risks. In the medium- to long-term, these institutions can be 1 partially privatised or even dissolved.

The second phase rests on private entities in a liberalised market framework in which public financial and regulatory support is largely obsolete. Individual companies make decisions on business models, risk allocation and the potential

extensions to the CO2 network. The state withdraws to a mere moderating role to prevent monopolies from arising and to establish mechanisms that render CCS a tenable business

option. Robust CO2 pricing, a premium on low-carbon products 2 or storage incentives can achieve this, as seen in the US.

20 Chapter 3: The Dawn of a New Industry

INCENTIVISING AND FINANCING A EUROPEAN

CO2 NETWORK While low-hanging fruit climate measures, such as efficiency The ETS alone is neither able to deliver the improvements, have taken place over the past decades necessary climate action on time, nor cost and resulted in industrial emission reductions, such measures were implemented primarily because they made immediate effectively. commercial sense. Any widespread future climate action Relying solely on the ETS to drive effective climate action puts needs to do the same. an excessive financial burden on Europe’s industry. It would postpone the decision on CCS until the 2030s, which means Costs for CCS depend on the CO purity of the emission waste 2 there will not be a CO infrastructure ready until 2040. In the stream, capture technologies and distance between source 2 meantime, a rising ETS price solely incurs higher production point and storage site. Breakthrough technologies in both costs that may result in the exodus of Europe’s industrial base. steel and cement could generate price levels of about US$

20/tCO2, similar to the chemical industry that on average In addition to clear political frameworks, benefits from purer CO waste streams. Full chain costs are 2 financial incentives need to be identified, likely to range around 50 €/tCO2 depending on the above factors [53, 60]. used and created. CCS is technologically mature, yet not commercial. Technical However, it is not expedient to wait for a higher price for studies on potential storage sites, their subsequent development allowances in the European Emissions Trading System (ETS) and continued monitoring, as well as the identification of to make capturing CO less expensive than emitting it into 2 transport routes paired with the provision of transport solutions the air. Even if the necessary price levels are reached and, need to be financed. The creation of a CO2 infrastructure against current experiences, remain stable for a foreseeable relies on financial support from public and private sources. time, the industry will already need a solution at hand, not begin investing in improved technology options and planning an infrastructure that will take several years to be developed.

Figure 6: European Instruments Can Aid CO2 Capture, Transport and Storage 21 An Industry’s Guide to Climate Action

Industry contributions are important sources of funding and At an EU level, some funding mechanisms, in accordance with some companies are already investing in the development their criteria, could be used to support the development of of capture technologies. CO2 storage, the deployment of strategic CO2 infrastructure Additional financial instruments exist on a regional, national for industrial clusters and hubs, and partially covering of the and European level, such as revenues of the European cost for capturing CO2 through a market maker institution. Emissions Unit Allowance trade of the ETS. As a European Pioneering CCS projects that lay the foundation for a European cross-regional project, a CO2 transport network is eligible CO2 network need to be able to access the available funding for financial support as a Projects of Common Interest (PCI) mechanisms; however, many are either ending soon or still under the Connecting Europe Facility (CEF). A potentially need to be made fit for purpose before their immediate created Just Transition Fund should also extend to support launch. If this rapidly closing timeframe is missed another job saving climate action in industry sectors. decade may be lost until new opportunities arise .

LOW CARBON GOODS FOR A LOW CARBON WORLD

As a CCS market is established, commercial Government incentives can also soften price increases through, deployment will follow. for example, reduced VAT rates on low-carbon goods. A useful tool in this regard would be the extension of the The creation of a market for zero-emission goods is not an Ecolabel that has so far focused on energy performance, to insurmountable obstacle. Transferring the additional cost of also indicate the emission intensity of a product. an environmentally superior and climate neutral good onto A zero-emission certificate for industry products down the the consumer is done frequently, as with renewable electricity value-chain, similar to existing Fair Trade or Forest Stewardship and organic food products. Council (FSC) seals, can help raise public awareness and Green Public Procurement can help the creation of a market supply a growing market of an environmentally and climate- for low carbon goods, as governments at all levels give aware populace. weight to environmental and emission considerations when In the long-term, bans for uncertified products can phase out evaluating offers for public-funded infrastructure, buildings polluting goods on Europe’s market. and transport systems [61].

Sedimentary basin

Figure 7: CO2 storage potential, in bill.tons (Acatech, CCU und CCS- Bausteine fuer den Klimaschutz in der Industrie, 2018)

22 Chapter 3: The Dawn of a New Industry

Establishing a European CCS network benefits the industry, unions, governments and the environment by mitigating the worst effects of climate change.

Avoiding stagnation in emission reductions CCS provides a feasible path for industry to deeply decarbonise its processes. It thereby protects already made investments and existing assets, from which value is currently realised, and where growing value and products need to be generated in the future.

Keeping jobs With CCS as a corner stone of a just transition for industries, labour unions ensure that jobs in heavy industry and dependent sectors remain in Europe even under increasingly strict climate obligations. It safeguards the welfare of Europe’s workers.

Meeting targets Governments at a local and national level are able to fulfil their obligations under binding international targets and towards their constituents by protecting their health, their jobs, and the environment and climate.

Dealing with ‘unavoidable’ emissions

By supporting a shared CO2 network, the civil society ensures that no industry emissions are considered ‘unavoidable’ and forces industry to deeply decarbonise. With no excuses left, industry decarbonisation will not be delayed further.

Enabling significant reductions Emission levels continue to grow globally with only sluggish reductions even in the energy sector, despite already having solutions readily available. Establishing CCS for industries allows for deep emissions reductions over the coming decade in a sector that has pushed climate measures into the distant future, using their integral process emissions and dependence on a

fully decarbonised electricity supply as a pretext for inaction. A shared CO2 infrastructure thereby changes the conversation on what is possible. Whether or not other effective decarbonisation options emerge in the future, Europe will not regret having actually begun reducing emissions through CCS today. Preventing runaway climate change and building

the foundation for its transition towards a low carbon economy, CO2 networks open up new opportunities for other climate measures and drive innovation in industry decarbonisation.

While the exact amount of ‘residual’ CO2 needed to be stored can and should be subject to debate, what is clear, however, is that these emissions will be too significant to be ignored.

This chapter, third in the line of four, discussed how managing industrial emissions with carbon capture and storage can help achieve climate goals. Without the discussion on significant reductions in process emissions, climate action in industry comes to a standstill. By discussing CCS as a vital part of the climate change mitigation strategy, this report aims to steer the conversation away from concepts such as ‘unavoidable emissions’ and point to options that are in line with the worlds climate targets. Accordingly, the next part of this report will estimate the potential for a regional implementation of CO2 capture, transport and storage networks.

23 An Industry’s Guide to Climate Action

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SUMMARY

Several current developments in Europe could make a shared CO2 network a reality in the near future. Norway has been a pioneer of the CCS technology for decades and has the largest offshore storage reserves in Europe. The country is currently developing the world’s

first shared CO2 storage infrastructure for two domestic point sources, a cement plant and a waste-to-energy incinerator. In light of the comparably low amounts of Norway’s own industrial emissions, the true potential of this infrastructure will only be attained when it is shared with other major emission sources in Europe.

At the same time, the Netherlands is assessing its own CO2 network to enable a deep decarbonisation of its industry in time to reach the country’s 2030 and 2050 targets. As

the Port of Rotterdam is seeking to become the crucial CO2 transit hub for the region, Dutch actions have the potential to kick-off similar plans in adjacent regions. This represents a major opportunity for Europe’s largest industrial region, North Rhine-Westphalia in Germany, which

has the chance to start its own capture projects and access the Dutch CO2 network via the major waterways in the region. Accomplishing the Norwegian and Dutch plans while involving Germany would provide a strong showcase of pan-European cooperation and climate action, and would catapult Europe’s industry to the forefront of the next, green, industrial revolution.

2 An Industry’s Guide to Climate Action Chapter 4: A Farewell to Inaction

SCANDINAVIA Norway In the longer term, the availability of CO2 networks allows for the deployment of more diverse CO capture techniques and even entirely new ways of making products that rely on CO Norway has been a pioneer in CCS technology for decades, This is likely to become a game changer for countries with 2 2 and has proven that through the appropriate sustainability little or no available CO2 storage at home. transport and storage. The first required step is now being considered in Norway, a shared CO2 requirements and measures, the storage of CO2 underground network with two diverse industrial capture projects showcasing where CCS can dramatically in saline aquifers and gas deposits is safe and successful in CCS enjoys a wide consensus among Norway’s main trade reduce emissions and allow neighbours such as Sweden and Denmark to join and reach their abating CO2. The offshore storage potential of 113 billion unions, the trade associations for land-based industry, the oil own climate goals. tonnes, advanced geological understanding and an existing and gas association, politicians, and environmental NGOs. infrastructure can be used to place Norway as leading CO2 The support of this ‘CCS coalition’ for state investment in Stockholm, Gothenburg and Oslo all have district storage service provider to Europe and technology exporter heating systems connected to waste incineration CCS is particularly visible in high-stakes political processes globally. [3]. One example is politics in the run-up and aftermath of plants. Currently, these systems all emit CO2 and represent large point sources in the region. By Norway’s government has stated an ambition to moving the adoption of Norway’s state budget for 2018. In a rare

connecting these plants to a CO2 transport and the so-called full-scale CCS project forward, albeit with show of unity, the organisations made coordinated advocacy storage network, cities like Oslo could reach their reservations and postponement of decisions. The project for full-scale CO capture, transport and storage. At public climate targets 2 seeks to establish a shared CO2 transport and storage hearings, CCS was among their top priorities for the 2018 infrastructure, connected to currently two pilot projects: a state budget. cement plant in Brevik, and a waste-to-energy incinerator in Oslo. Government ministers have stated that international Building on the expertise available to move towards a interest will impact on the political support for the project [1]. net-zero economy Equinor (formerly Statoil), Shell and Total have teamed The Norwegian process industry will need about up to jointly develop a storage site. The offshore oil and The Norcem cement plant, one of two Norwegian gas producers and supply industry can use their skills and projects currently undergoing a front-end 9.2 MtCO stored annually by 2050 [2]. knowledge in compressors, pipelines, storage tanks, platforms, engineering design study, plans to transport its 2 wells, subsea applications, and monitoring equipment that CO2 via ship to a shared storage site off the Developing the world’s first shared CO2 storage west coast of Norway. When they capture and will be needed for all parts of the CO2 value chain [3]. store their emissions, the cement product will be infrastructure Moreover, in a European economy facing increasingly stringent low-carbon. Norway’s planned CO2 storage site will be designed to climate targets, the Norwegian gas producers have a self- receive CO2 from multiple sources. Until now, each of the interest in decarbonising natural gas. As fossil gas is phased world’s existing CO2 storage sites are connected to one single out, Norway’s role in Europe will be forced to change from source of CO2. The Norwegian model will allow industrial high-carbon gas peddler to low-carbon hydrogen supplier. emitters to focus on the capture of CO2, while they can leave the transport and storage to others. Next steps

Creating a market for low carbon products Making CO2 infrastructure available to Europe Shared storage site Low carbon products and services such as cement, steel or As the Norwegian CCS project is underway, its full potential Oslo district heating are likely to have higher upfront costs; at will only be reached and the returns on investment will only Norcem Øra industry least in the medium term, pending drastic increases in the be highest when it is connected to European industries that cement cluster Stockholm plant price of CO2 quotas under the EU’s Emissions Trading System. require CCS to decarbonise. Developed with an eye to

More stringent criteria in public procurement tenders can help expansion, Norway’s CO2 transport and storage network is create a market for climate friendly products. To name one the foundation to enable CCS in countries such as Sweden example: Norway’s public sector alone buys goods, services and Germany. The Norwegian government should act quickly Gothenburg and construction work for about 500 billion NOK (52 billion to invite governments and companies to join efforts for a In 1996, the Sleipner field became the first dedicated geological storage €) annually [4]. Governments have market power to initiate carbon neutral European economy. a shift from high to low carbon products. site for CO2 in the world and has since prevented over 17 million tonnes of

CO2 from polluting the atmosphere.

Potential projects Ongoing projects Storage fields 3 4 An Industry’s Guide to Climate Action Chapter 4: A Farewell to Inaction

Sweden The structural integrity of the tallest building in What is needed are cost estimates, development Scandinavia, the Turning Torso, depends entirely timelines and contractual modalities. This will on a steel exoskeleton and a concrete core. Sweden seeks to become carbon neutral by 2045 [5]. Several Swedish officials and politicians have identified cooperation expedite a real conversation about terms and with Norway on a CO2 transport and storage infrastructure modalities for Swedish companies to join an to be beneficial to both countries, and sensible commercially. effective decarbonisation route. After having published a series of roadmaps for emissions reduction in a broad range of industry sectors [6], Sweden’s Using EU funding to aid the Swedish national climate national climate coordinator has pointed to CCS as one of strategy five key political measures that need to be addressed [7]. Strategic investments are required for a climate neutral Supported by a The Swedish government recently commissioned a study on Sweden to be achievable by 2045. To access EU funds Sweden steel exoskeleton negative emissions. CCS will be part of the study, which will be requires achievable national industrial decarbonisation done by January 2020 at the latest [8]. These developments weighing 820 tons projects. indicate that Sweden is serious about developing a zero emission society and economy. The upcoming Innovation Fund and the Connecting Europe Facility (CEF) have the potential to support Swedish CO There is already a handful of potential CO2 capture projects. 2 In the Gothenburg area, the refinery Preem has initiated capture, transport and storage development. The Innovation Fund could support CO capture from cement, district heating a study of options for CO2 capture [9]. Stockholm’s district 2 heating system, which runs largely on local waste biomass, or other industries. CEF funding can support CO2 transport has also signalled interest in CCS. In addition, the cement infrastructure such as pipelines and shipping terminals, a industry has pointed to CCS as an essential technology for good fit for developing transport links to North Sea and Norwegian CO storage sites. A concrete column reducing CO2 emissions [10]. 2 Timing is essential. Project development needs to take into supported by a pile Growing interest in pursuing CCS cooperation with Norway account the funding schemes’ timelines and vice versa. To foundation, at the But for such discussions to move from non-committal talk to be in competition for these funds Swedish projects must corner of each floor action, Norway’s offer of CO2 infrastructure needs to provide rapidly mature, complete feasibility planning and develop more commercial predictability and clarity for Swedish CO2 a framework for national support. More mature projects emitters. with lower engineering and political risk are better placed to receive EU funding.

“Norway and Sweden are A central core neighbours. It is therefore made from concrete - the buildings main especially efficient and support structure important to work together on such large-scale projects”

Elisabeth Undén, Gothenburg Environmental Party [11] Bodolus et al. 2016, TURNING TORSO: ARCH631 Structural Case Study Image credit: Santiago Calatrava

5 6 An Industry’s Guide to Climate Action Chapter 4: A Farewell to Inaction

THE NETHERLANDS In 2015, a Dutch court made a decision in a landmark ruling The Value that the government of the Netherlands has a constitutional The ambitious climate agreement and the acknowledgement duty to protect its citizens from the impacts of climate change, of the need for CCS allows the Netherlands to live up to Dutch CO2 Infrastructure benefits the entire economy and allows breakthrough technologies to be brought to market, accelerating the transition towards a 21st century zero-emission economy. and therefore ordered more ambitious action to cut carbon its reputation as a forward thinking climate leader and emissions. aficionado for cutting-edge technology solutions. Even if CCS The Netherlands have hence set a minimum 49% emission is replaced in some sectors through a closed cycle circular reduction target for 2030 compared to 1990 levels and a economy in the future, this is likely to take multiple decades 95% target for 2050 [12]. In the 2017 Coalition Agreement, to realise, although suggested by the draft agreement to be Re-use of depleted Offshore Natural the Netherlands acknowledged the need for CCS at large the “short term” goal [13]. Until then, the Dutch government Linked up to the Dutch CO2 network, Gas Fields and connected infrastructure the Magnum Project uses CCS to the scale in its industry to fulfil this obligation. According to will have protected its citizens and the climate from millions

provides low-cost and safe CO2 storage reforming of natural gas into hydrogen the draft of the Dutch Climate Agreement from July 2018, of tonnes of harmful CO2 emissions by deploying CCS. solution, returning carbon to the deep as a zero-emission transition technology to industry is to reduce emissions by over 14 MtCO by 2030 underground. a hydrogen economy and energy system 2 – the largest proportional reduction required by any sector – until renewable energy can increasingly Through the creation of a CO2 network, the Netherlands take over the hydrogen production. – potentially half of which through CCS. To achieve this goal, is providing industries not just with the tools to deeply investments in innovation and infrastructure of up to 20 billion decarbonise but also with the obligation to do so. As the Waste to Energy Incinerators across the € are needed [13]. myth of ‘unavoidable emissions’ is overcome, this obligation Netherlands emit about 3 MtCO2 per year is spread even beyond its borders. Dutch industries benefit [31]. Linked to the CO network, these emission 2 from the means to effectively reduce emissions, lowering source points can even generate negative The Cost emissions since a portion of waste is biogenic. Overall costs to realise the Dutch industry CCS plans vary climate risks and protecting jobs. New jobs are created as depending on capture technologies and the scale of the part of the CO2 network operation and from potentially transport and storage infrastructure. Capture costs range growing and relocating industry sites.

between 10 €/tCO2 to over 100 €/tCO2 depending on technology and purity of the waste stream. The greater For highly industrialised and emitting regions such as the overall ambition to deploy CCS, the cheaper onshore Rotterdam, CCS is a major requirement to protect its future existence. Rotterdam is host to many energy intensive industries transport becomes per tCO2 due to more industry clusters sharing the network. However, costs associated with higher and a nucleus of emissions with a share of about 20% of injection rates and the expansion of offshore transport and total Dutch CO2. Efforts already focus on the development of strategic CO infrastructure to serve the port. A backbone storage wells means that the overall cost per tCO2 remains 2 HIsarna Steel Technology is currently tested CO pipeline will provide the Port access to offshore CO and developed at Tata Steel Netherlands. As largely the same across ambition scenarios that also account 2 2 a breakthrough technology in line with Dutch for the re-use of some existing infrastructure at around 9 storage and extra capacity to expand over time. Through decarbonisation plans, the connection to the its geographic location, the Port is likely to become a key €/tCO2 [14]. Dutch CO network will lead to the world’s first 2 CO2 hub for Central-Western Europe. zero-emission steel production.

Medium Minimum Medium New built High

CO2 abated (Mt) 476 654 654 964 Chemelot, the country’s major Mothballing* 133 216 120 474 chemical industry cluster, as well as industry sites in North Rhine Injection 1 499 2 740 4 154 3 382 Westphalia and the Liege area Offshore Transport 740 764 764 1 404 are targeted under the Port of Rotterdam’s third expansion Onshore Transport 366 366 366 376 phase. Onshore compression 1 490 2 072 2 072 3 072 Total Cost in million € 4 229 6 158 7 477 8 707 The Port of Rotterdam plans to act as the cen- €/tCO2 8,9 9,4 11 9,0 tral Dutch CO2 hub with a backbone transport infrastructure servicing the port. As Europe’s *costs during transition period of largest port, the creation of the Dutch CO 2 natural gas infrastructure before infrastructure will serve as a global example. re-used for CO2 transport Potential projects Table 1: Netherlands Transport and Storage Cost Calculations by 2030 [14] Ongoing projects

7 8 An Industry’s Guide to Climate Action Chapter 4: A Farewell to Inaction

Next steps

Making full use of the market maker With the transport and storage system up and running, While, for most applications, the capturing of CO2 is the Rhine and Meuse to North Rhine Westphalia, Chemelot The Dutch government needs to capitalise on the vast industry sites are finally provided with the means to most expensive part of CCS per unit of CO2 abated, and Liege are the basis for a first stage of expansion. Not expertise of its state-owned companies. The Port of Rotterdam deeply decarbonise and need to begin capturing their many industries are already investing in improving capture only does a parallel international focus next to the national Authority manages the world’s third busiest and Europe’s CO2 independently. Employing the already planned tender technologies to increase efficiency and drive down costs. one towards expanding the infrastructure to Europe boost largest port, which seeks to serve as the transhipment hub of mechanism to find the most cost-efficient investments ensures Although additional R&D funding can help fine-tune existing the business case of the Dutch CCS project, it also opens CCS projects are economic and drives industry investments and new capture technologies, the crucial investments that the door for financial support from the European level. CO2 captured from industry plants. Gasunie, which operates the country’s 12,000+ km of gas pipelines, is well-placed to into innovation [13]. are needed to set-off large-scale CCS in the Netherlands Under the Innovation Fund and Connecting Europe Facility are the creation and operation of the CO transport and (CEF), infrastructural Projects of Common Interest (PCI) are run the transportation network of CO2 by, for example, re- Complementing other climate action measures 2 storage infrastructure. eligible to financial support. CO hubs servicing transboundary using offshore natural gas pipelines to the storage facilities, Any financial support at the national level needs to be 2 emissions sources, pipelines, and CO transit infrastructure where EBN, with its decades of experience in the subsurface specifically designed and dedicated to CCS and should not Expanding to European industry clusters 2 can all benefit from European support. For the Netherlands exploration, extraction and storage of gas and oil on behalf compete with other climate measures, such as renewables. The goal of the Dutch CO2 infrastructure needs to be its to increase its chances of gaining access to European moneys, of the Dutch state, can now ensure the safe storage of CO2. Dividing the implementation and operation of the different expansion to neighbouring European industry clusters. current projects need to be planned and implemented with Jointly, they embody the Dutch Market Maker, coordinating stages along the CCS value chain allows for the use of Rotterdam’s proximity to Antwerp and river links via the an eye on European partners. and operating a shared CO2 infrastructure for CCS in the targeted finance instruments for capture and infrastructural Netherlands. aspects.

Image credit: Port of Rotterdam Image credit: Jarno Gonzalez Zarraonandia

Every arm of the Maeslant’s storm surge Barrier is made of 6 800 tons of steel. The ball The Eastern Scheldt storm surge barrier, the longest dam in the Delta Works, is based on shaped ‘joints’, also made out of steel, each weighing 680 tons (Structurae 2018). With so massive concrete pillars, each weighing 18 000 tons (Deltawerken.com 2018). much material, the barrier is heavier than the Eiffel tower.

9 10 An Industry’s Guide to Climate Action

GERMANY Germany seeks to reduce emissions by 55% in 2030 and by 80-95% in 2050 compared to 1990. Although immediate targets are even more ambitious than those of the Netherlands, ambition alone is not enough. A debate on industry decarbonisation or even CCS has largely been side-lined in Germany, with some new impetus emerging from studies by the German Industry Association (BDI) and Acatech in 2018 [16, 17]. Without meeting the challenge represented through its set targets and providing the means to achieve them, Germany will miss its 2030 and 2050 targets and breach its commitments under the Paris Agreement.

This failure will come after the German government has To bring domestic emissions in line with the requirements already given up on reaching its 2020 targets. To put the under Paris, and therefore reach the upper end of the 95% current gap between ambition and action into relation: the target, industry needs to reduce current emission levels of estimated overshoot of Germany’s 2020 emission target is about 180 MtCO2 to 14 MtCO2 by 2050 [18]. A recent more than double the amount the Netherlands needs to abate BDI study showed that this target is impossible to reach over the next decade to reach its 2030 target [28, 29, 30]. without CCS – or significant deindustrialisation. They also Germany’s industry is its economic backbone as well as a found that settling for a lower reduction level to avoid the major source of CO emissions; nowhere more so than in North implementation of CCS will also be more expensive per t/ 2 CO abated than with CCS [16]. Rhine Westphalia (NRW). Both Germany’s economic wealth 2 and its ability to achieve the Paris climate targets depend To make CCS available as a tool to deeply on providing NRW and other Länder with an effective and decarbonise the industry, Germany needs to Just Transition for its industries. develop a clear policy framework and targets to increase the incentive for industries to act and invest. Germany’s industry has to stop using global competitiveness

and notions of ‘unavoidable’ CO2 emissions as excuses from real climate action. Any such notion is incompatible with the Paris Agreement. Instead, industry actors need to approach local and central governments and ask for support. In 2018, the Federal Ministry for the Environment (BMU) announced to fund 50% of the development costs for technologies aimed at reducing industry emissions [19]. Additional funding measures are required, as well as a general policy strategy which ensures that employing measures to deeply reduce emissions is rewarded, while inaction is punished. Policy tools, such as eco labelling, carbon contracts for difference, advance disposal fees, and tax instruments (e.g. reduced VAT rates) can play an important role in preparation of a market for low carbon goods and a zero-emission economy [20]. Developing pioneering CCS projects One or more CCS projects at industrial scale can showcase the technology at sites in need of CCS to reduce emissions to zero. Through flexible transport options of truck, barge or ship, initial capital expenditures can be minimised with a

long-term view to easily expand the CO2 transport network to neighbouring industry sites, including waste incinerators currently contributing about 11 MtCO per year [21]. Figure 1: The emissions of North Rhine Wesphalia surpass the 2 GHG footprints of most EU member states (Klimaschutz NRW 2014). 11 Chapter 4: A Farewell to Inaction

Joining forces with neighbouring countries to create shared Details of the plan need to cover the respective project site(s), offshore CO2 storage involved actors, and overall timeframe, as well as the target

As in the Netherlands, onshore storage of CO2 is not an amount of CO2 to be sequestered. option for Germany. Yet, through its access to the North Sea, With respective transport requirements and clear development

Germany can store its industry CO2 in shared facilities with stages set, overall project costs should be clearly identified. Norway and the Netherlands.Germany’s industry clusters are Infrastructural costs, such as transnational shipping terminals mostly located close to the country’s many major transport for CO2 storage, may be eligible for financial support as waterways that allow for a flexible transport of captured Projects of Common Interest (PCI) under the Connecting Europe

CO2 to Hubs on the shores of the North Sea. Facility (CEF). EU funds and corporation with neighbouring Ensuring financial support by developing a defined plan states would allow Germany to put the essential infrastructure Such a plan should be presented jointly by government and in place to make Germany’s economy compatible with a industry. low-carbon world.

Making the problem is twice as expensive as solving it.

NORD STREAM 2

CO2 TRANSPORT AND STORAGE 8-9.5 NETWORK bn € 4.1-4.2 bn €

Investments made for Nord Stream 2 to import Investments needed for entire network 3 an additional 55 billion m of gas to Europe each to transport 60 MtCO2/year from the

year; the equivalent of 106 MtCO2/year solely German industry via pipeline or ship through its use in power generation, ignoring for offshore storage [22]. further GHG emissions from flaring and leakage [23, 24, 25]. 12 An Industry’s Guide to Climate Action

The biggest point sources in the region are located next to major waterways in

Germany. The CO2 from those sources can be transported via ship through the Mitteland channel and stored in the North sea.

Some of the CO2 can also be transported through the Netherlands, to another industrial hub close by, Rotterdam. By tapping into the developing projects in the neighbourhood, North Rhine Westphalia could share infrastructure and, consequently, costs of climate change mitingation.

North Rhine Westphalia is the most polluting region in all of Europe. With emissions higher than most EU member states combined and thousands of jobs relying on its industrial hotspots, the region is bound to come up with a comprehensive plan for lowering its emissions in the coming years.

Steel cluster Chemicals cluster Cement cluster 13 Chapter 4: A Farewell to Inaction

Protecting jobs with transnational CO2 transport infrastructure In addition to the industries that are able to fully decarbonise Pioneering Project Example and thrive in future low-carbon products markets, economic HeidelbergCement (HC) is already at the forefront of benefits from the creation of a CO network can also 2 developing new capture technologies for the cement industry support structurally disadvantaged regions. For example, at its Norcem plant in Norway, and Lixhe plant in Belgium. Bremerhaven is well located to become an important CO 2 Such breakthrough inventions will see industry CCS costs drop hub by linking up to industry sites via barges through the in the future. Several sites in Germany would lend themselves Weser and the connected Mittellandkanal. Also the port to become domestic showcases, providing an example of of Emden has the potential to become an important trans- how to implement industry CCS in Germany. shipment place for captured CO2, particularly since the nearby offshore Norpipe, connected to Norway’s Sleipner Three exemplary cement plants, one in Lower Saxony and field, and the two Europipes that deliver Norwegian natural two in NRW, jointly produce about 1.6 million tonnes of gas to Germany can likely be re-used to deliver German CO2 per year, of which approximately 900,000 tonnes are process emissions [26]. Unable to be abated without CCS, it industry CO2 to Norwegian storage sites in the future. would require over 4,046 km2 of new forest to offset these emissions, an area four times the size of Berlin [27]. While afforestation is an important climate tool, its limits should make alternative measures a priority where possible. Eliminating these cement emissions via the CCS route can be achieved through a mere 2-3 barges per cement plant and is the equivalent of taking 200,000 passenger cars off the road. Located at the Mittellandkanal, two to three barges can

transport the annual process emissions of 300,000 tCO2 of the Hannover cement plant via the Weser to Bremerhaven. As the other two cement plants in NRW do not have direct

access to any transport water ways, the CO2 would first have to transported via truck to the port of Hamm. From there,

another 6 barges could ship their 600,000 tonnes of CO2 for storage through the Port of Rotterdam (via the Rhine) or the Port of Emden (via the Dortmund-Ems Kanal). By providing the transport network for pioneering projects, the government showcases that CCS is an effective solution, and provides industry with the means to decarbonise.

Figure 2: German targets for emission reductions, in mtCO2

14 An Industry’s Guide to Climate Action

THE EUROPEAN CO2 NETWORK

Potential projects Ongoing projects Storage sites

CO2 transport routes

This chapter, last in the line of four, analysed specific national cases for a CO2 transport and storage network. The favourable geographical position of the examined set of countries, along with their mammoth emissions, makes them perfect candidates for the development of such a network. Without it, they will remain the biggest emitting regions on the continent.

15 Chapter 4: A Farewell to Inaction

The figures in this report were made using vector icons from Gettyimages and Thinkstockphotos databases.

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