In Focus: Hard to Abate Sectors

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Heavy industry – such as cement, chemicals and steel – and heavy transport – including long distance road transport, shipping and aviation – are together responsible for 30% of total global emissions. This proportion is likely to increase in the coming years, as other parts of the economy decarbonise. These sectors are sometimes referred to as “hard to abate” because the costs of cutting emissions are high and progress to reduce emissions has been slow.

These hard to abate sectors have received relatively little attention compared with the focus on energy efficiency measures, green electricity as well as the need to reduce demand for carbon intensive products and innovate business models. Even greenhouse gas removal technologies have recently started to gain attention. A recent WRI report tracking progress towards a climate turning point in 2020, emphasises that rapid and scaled up action in hard to abate areas is vital if we are to keep global warming below 1.5°C above preindustrial levels.

However, some alternative emissions-reducing innovations are starting to emerge, and leading companies have begun to take positive steps to address this challenge.

Fuelling Long Distance Trucks with Hydrogen

Although there is much attention given to electric vehicles, zero carbon hydrogen and fuel cell technology offers an alternative that is better suited to long distances, allows quick refuelling and does not emit carbon dioxide at source. These properties could give hydrogen-based trucks the edge over battery electric trucks for long-distance freight. Nikola, Toyota and Hyundai have all announced hydrogen fuelled trucks recently, although competition with battery electric trucks remains fierce.

In the context of the uncertainty that this competition can bring, collaboration can be an effective way for companies to establish how to act. The WBCSD, Smart Freight Center and We Mean Business coalition seek to address this through their collaborative project on Transforming Heavy Transport. This initiative aims to unify businesses around the challenge of reducing emissions by bringing together multinationals, aligning their corporate strategies, and addressing key gaps for lowering emissions.

Collaborative initiatives are emerging in other hard to abate value chains also. For instance, BSR’s Clean Cargo initiative focuses on the environmental impacts of cargo shipping. And WBSCD’s below50 campaign – that counts companies such as ArcelorMittal, SkyNRG and Audi as members – is concentrating on growing a market for sustainable biofuels.

Committing to Power Ships Using Ammonia

Ammonia, produced via zero-carbon hydrogen, is a potential solution for long-distance shipping, a sector that is seeking fuels that can be used with existing engines. A new consortium of ammonia producer Yara, C-Job Naval Architects, Proton Ventures and Future Proof Shipping (FPS) has launched a major 2-year investigation into the feasibility of ammonia as a fuel.

The shipping sector is an area from which others can learn. The International Maritime Organisation’s recent greenhouse gas strategy emphasised a need for carbon-free liquid fuels including ammonia – and importantly accounted for one of just two milestones identified by the WRI as ‘on track’ to achieve a 2020 climate turning point, although the paper also notes that improved, transparent data collection will also be key to progress in the sector. The WRI called for other sectors, especially heavy industries, to similarly create roadmaps and increase the level of data disclosed around their performance.

The shipping sector similarly demonstrates the importance of commitments with Maersk recently announcing a commitment to reach carbon neutrality by 2050 – in part to retain customers of the likes of Walmart and Unilever. Stretching emissions targets are an important way that companies can publicly demonstrate their commitment to climate change – and beyond just the shipping sector, to date 184 companies across all sectors have set science based targets approved by the Science Based Targets Initiative to reduce their emissions in line with international climate agreements.

Heavy Industry and Cutting Emissions from Cement Production

The manufacture of cement, steel, ethylene (used to produce plastics) and ammonia accounts for 50% of industry’s global carbon dioxide emissions according to a recent McKinsey analysis. And of these emissions, 45% are from the processing of raw materials into products and a further 35% come from the burning of fuels to generate high temperatures. Innovations are needed across all heavy industries to reduce these emissions however cement, as one of the world’s most consumed resources, provides an example.

To reduce the emissions associated with processing the raw materials of cement production, Dalmia Bharat Cement has altered the chemical process by reducing their input of ‘Portland clinker’. This, alongside other efforts, explains how their cement has the lowest carbon footprint in the world, according to the Carbon Disclosure Project. The company is also partnering with others across the industry through the Climate Group and Alliance to Save Energy’s EP100 initiative, that identifies ways they can continue to use energy more productively.

Meanwhile, zero-carbon biomass or biogas can replace fossil fuels in cement kilns to help reduce emissions from generating heat for the process – with only minor alterations needed to the kiln. IEA estimates suggest that the use of biomass in global cement productions needs to increase from 6% in 2016 to 18% by 2030 to meet the goals of the Paris Agreement. Lafarge and other companies are using waste products like rice husks and coffee husks.

Investing in Future-Proofed, Green Businesses

In addition to taking some of the steps outlined above due to peer and customer pressure, heavy industries are also likely to start responding to investor scrutiny. For example, the Institutional Investors Group on Climate Change recently published a report entitled, “Investor Expectations of Steel Companies” to support informed dialogue between investors, such as those involved in the Climate Action 100+ initiative, and companies. The report lays out investor expectations around governance processes, action across the value chain, and enhanced disclosure. Similar engagement in other sectors has led to significant new commitments from companies such as Glencore and Shell.

Supporting Critical Enablers of a Low Carbon Future

Whether your business is in shipping, cement production or perhaps reliant on hard to abate businesses in one way or another, through a combination of innovative technology, collaboration, producing roadmaps, disclosing data, setting stretching targets and responding to investor demands, emission reductions can start to be achieved. Companies of all types must recognise and support the development of an enabling policy environment and market. Companies should consider setting an internal carbon price and ensure that their policy engagement aligns with the pace of change and innovation we need to transition to a sustainable, low carbon future.

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