Climate Group heavy industry position

How to use this paper

·        Knowledge – to know where we stand on topics within the system.

·        Communications – to be able to communicate this in our tone of voice to others.

·        Project building and fundraising – to base all our new projects and bids in the current science.

 

The heavy industry system 

• The term “industry” is broad and means different things in different contexts. However, when we talk about “industry” as a source of greenhouse gas emissions, this usually relates to economic activity associated with the processing of raw materials and manufacture of goods. Approximately 24% of total GHG emissions come from direct industrial emissions, second only to the energy supply sector with 34%. 

• The most significant subset of industrial emissions come from “heavy industry”. Heavy industry refers to high-temperature, emissions-intensive sectors that process raw materials to produce basic materials such as iron and steel, cement, chemicals and non-ferrous metals (such as aluminium). By contrast, “light industry” refers to smaller-scale and less emissions-intensive manufacturing of consumer goods. 

• Heavy industry accounts for 65% of industrial greenhouse gas emissions and close to 16% of total emissions.When referring to Climate Group’s work in this system, always be sure to use the term “heavy industry”. 

• The United Nations predicts that 68% of the world population will live in cities by 2050. 230 billion square metres of new construction is due to be built over the next 40 years – which is equivalent to a city the size of Paris built every single week. This significant growth in homes and infrastructure means that demand for industrial materials, especially steel and concrete, is high and will only get higher 

• Steelmaking alone accounts for 7% of global annual carbon emissions. As urban areas and populations around the world continue to grow, so will the demand for steel. 

• Concrete is the second most used substance in the world (second only to water) and concrete production contributes to 8% of global annual carbon emissions. Demand for concrete is significant and rapidly increasing; over 19,000 bathtubs of concrete are poured every 10 seconds. Emissions from cement, the binding agent that holds concrete together, were recently revealed to have doubled in 20 years

 

Climate Group in the heavy industry system 

• Climate Group heavy industry system work currently focuses on steel and concrete. Taken together, these are responsible for as much as 15% of global annual carbon emissions. 

• We explicitly focus on concrete rather than just cement. Although the majority of emissions associated with concrete come from cement production, Climate Group focuses broadly on concrete rather than just cement. This is to maximise all the opportunities to cut carbon emissions in the production of concrete.

 

Embodied carbon emissions 

·       Addressing embodied carbon emissions is key to decarbonising supply chains and the heavy industry system at large. Embodied carbon emissions are the carbon dioxide (CO₂) emissions associated with materials and construction processes within the whole lifecycle of a building or infrastructure project. It includes emissions produced during the manufacturing of building materials, the transport of those materials to the job site, and the construction practices used. 

• Embodied carbon emissions can represent a significant amount of the total emissions associated with the production of a material and its incorporation in a product, vehicle, vessel, building or infrastructure projects. 

• Embodied carbon emissions aren’t being addressed to the same degree as operational carbon emissions. Governments must work with business to develop, adopt, and promote consistent methodologies for measuring and reporting on embodied carbon emissions across material supply chains and sectors. 

• For steel, this work should build on existing approaches to address operational carbon emissions and formulate standardised lifecycle assessment of projects, products, and assets. Policymakers should develop guidelines and regulations that address the embodied carbon of new buildings, vehicles or vessels. Powerfully, regulations would only need to address the embodied carbon of steel used in a few key sectors, to fast track the creation of a low emission steel market.

 

Driving the development of low-carbon industrial materials 

Steel 

• Around 71% of steel produced today comes from an iron-ore-based method. This typically uses a blast furnace at temperatures of around 1,500°C in which carbon, usually coal, is used to remove oxygen and impurities from the ore to make pig iron. The latter is then turned into steel via a basic oxygen furnace whereby oxygen is blown onto the liquid iron to burn unwanted elements. The other 29%is made using high proportions of scrap steel in an Electric Arc Furnaces (EAF), which use an electrical current to melt the scrap steel. This is on average 25%less carbon-intensive than the other method. 

• We must evaluate and implement the best available retrofit technologies and upgrade options for existing steel plants as well as the transition of blast furnaces to alternative steelmaking approaches. This includes the use of direct reduced iron in EAFs and restricting new unabated blast furnaces without net zero retrofit-ready requirements being approved. 

• We’re already starting to see steelmakers capturing domestic and international market share for low emission steel by decarbonising their production processes. It’s essential that such progress is supported by ensuring that higher emission alternatives don’t undercut markets. 

• Careful consideration must be given to the regulatory, fiscal and trade policy instruments, including on carbon pricing, that can underpin such support. We need concerted multilateral action to create favourable conditions for the production of low-emission and net zero steel worldwide. 

Concrete 

• Concrete, a mix of cement, gravel, sand, and water, is a final consumer product. Cement binds together the gravel, sand, and water to make concrete. 

• The conventional chemical process used to make Portland cement- the type of cement most widely used to produce concrete- is very energy intensive, emitting significant levels of CO2 in the process. By limiting or excluding Portland cement as an ingredient, we can control the level of carbon emissions associated with concrete. 

• We need to invest in research and development to find cement alternatives and opportunities for low-carbon concrete production. 

• For concrete, there cannot be a one-size-fits-all solution. In contrast to steel (an internationally traded commodity), the production of concrete is much more localised than steel, with around 80% of production coming from SMEs. Therefore, the pathway for decarbonisation must become more regionally focussed.

 

Global standards and definitions 

·       Demand for low-emissions industrial materials is rapidly increasing. We need global alignment on what qualifies as low emission for each material to avoid confusion, which holds back progress and hinders collective action on decarbonisation. 

• We need clear, consistent use of common language and terms of reference, across the value chain and between jurisdictions, on what is defined as a low emission and net zero material. We need alignment on the definition of ‘low(er) embodied carbon’, ‘near-zero’, ‘net zero’, ‘responsible’, and ‘green’ steel and concrete, amongst other emerging terms. 

·       To ensure credibility these need to be backed by clear climate-science, aligned with a just global transition, and independently verifiable international standards or certification. 

·       For steel, ResponsibleSteel is in the latter stages of finalising an appropriate framework for these definitions and standards. This will establish, and importantly, verify what is considered low emission and net zero steel. It also sets the minimum level for the embodied carbon of steel that should be met in all projects going forward.

 

Public procurement 

• Public procurement can make up to 20% of local and national demand for steel. For cement, the key component in concrete, this figure is even higher: about half of the cement used globally is procured by the public sector. 

• One of the most powerful market creation tools for policymakers is to mandate the use of low emission, near zero, and ultimately net zero steel in all public projects and tenders. Governments should set and implement specific near-term 2030 and end-state 2050 targets for public procurement of industrial materials.

 

Industrial energy use 

• The industry system accounted for 38% of total global final energy use in 2020. This represents a 1% average annual increase in energy consumption from 2010 to 2019 (with a small decline in 2020 due to lower industrial activity in some regions during the height of the COVID-19 crisis). This growth in energy consumption over the past decade has been driven largely by rising production in energy-intensive industries (i.e. chemicals, iron and steel, cement, pulp and paper and aluminium). 

• Countries, states, cities, and businesses must increase the supply and use of renewables now – by 2030 we must see at least 60% global renewables share in electricity generation. The latest IPCC report makes clear that in all modelled pathways for 1.5^oC, by 2050 almost all electricity must be supplied by zero or low-carbon sources such as renewables.

 

Hydrogen 

• Please see the Climate Group energy system paper.

 

Carbon capture and storage 

• Please see the Climate Group energy system paper.

 

Gas 

• Please see the Climate Group energy system paper.

 

Circularity in design and material use 

• Beyond transitioning production processes to lower carbon technologies, effective decarbonisation of the heavy industry system requires the efficient use of materials in the first place. 

• Globally, 80 – 90% of steel is recycled to produce secondary steel. However, we still need to increase the quantity and quality of steel that’s recycled back into the supply. Preparing secondary steel is three times less carbon intensive than producing primary steel from iron ore. 

• There are a range of policy measures that governments can take to facilitate the recycling and reuse of steel, including:

  • Introducing incentives to include disassembly and deconstruction plans into the design phase of construction projects

  • Assessing construction regulation and building codes to extend the lifetime of steel intensive assets

  • Creating dedicated investment and incentives to improve collection, sorting and separation techniques

  • Ensuring good quality and quantity of scrap for re-use and recycling, via appropriate carbon accounting systems

  • Building capacity through training and the promotion of knowledge sharing

  • Encourage material circularity within green public procurement strategies.

• Aspects of circularity also exist across the concrete sector. For instance, fly ash, a waste material from electricity generation, and slag from steelmaking have long been used in the concrete mix to replace Portland cement. This is not, however, a long-term solution; as these heavily polluting industries seek to decarbonise their own emissions, these materials will reduce and increasingly be at a premium.

 

UK proof points: Cumbria coal mine 

• The government must not approve the new coal mine in Cumbria – but should demonstrate the UK’s genuine commitment to meeting its net zero target, and work to support the steel sector transition. 

• The steel sector is frustrated at being used as a justification for the mine’s approval. Influential steel industry figures, such as Chris McDonald, chief executive of the Materials Processing Institute, have spoken about the Cumbria coal mine and said it’s not needed to support the UK steel industry.

See the timetable of the Ambassadors’ Day, 19 January 2023

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