About I3: Paving the Way for Industrial Sector Decarbonization by Midcentury

View of oil refinery factory at dusk.

The Industrial Innovation Initiative (I3) is an ambitious and diverse coalition that aims to drive emissions reductions and economic investment in key US industrial sectors. I3 values a stable climate, a safe and healthy environment, thriving livelihoods for American workers, and a strong US economy. Therefore, I3 supports policies that will put American industry on a path to net-zero emissions, retain and create high-wage jobs, and advance technology leadership and economic competitiveness. 

Key takeaways:

  • I3 is meeting the unique challenge of industrial decarbonization by bringing together a diverse array of stakeholders to achieve net-zero emissions by midcentury and maintain a strong US economy.
  • Capitalizing on the needs of the moment, I3 first released eight recommendations for economic recovery during the COVID-19 pandemic in 2020. Since then, I3 has produced several letters of support for policies before Congress and created a Federal and State Policy Blueprint to decarbonize industry by 2050.
  • With the 2021 Blueprint completed, I3 is focused on education, advocacy, and research to support the implementation of policy priorities and technology deployment.

The Challenge

For the US to achieve midcentury climate goals, every sector of the economy will need to reduce greenhouse gas emissions significantly over the next decade. Decarbonizing the industrial sector is as uniquely challenging as it is important. Industry is the third-highest emitting sector, behind electricity and transportation—and emissions are only rising. The sector is also incredibly diverse, precluding simple one-size-fits-all solutions. Nevertheless, we rely on industry to produce countless materials central to our everyday lives, from concrete and steel to chemicals and paper. The industrial sector is also a crucial economic driver and significant jobs provider, especially in America’s Midcontinent and Gulf Coast states, where we see the greatest concentration of industrial activity. This is why climate solutions must support—not hinder—the industries they decarbonize.

This challenge brought together a group of industry leaders, policy experts, state energy officials, and industrial decarbonization stakeholders in the spring of 2020, under the banner I3 —the Industrial Innovation Initiative.

Our Solution

When the unexpected and unprecedented circumstances of COVID-19 put economic recovery and prosperity front and center for American industry and workers, I3 responded with eight priority recommendations to Congress. The recommendations outlined near-term policy solutions that would also sustain long-term investment in industrial decarbonization. These recommendations were distinct in their potential to drive economic activity, preserve and create well-paying jobs, be implemented quickly, and garner broad bipartisan support.

Since the release of the recommendations, I3 has advanced policy and technology solutions critical to accelerating industrial decarbonization. Through legislative advocacy, I3 has supported actionable policies, such as:

  • enactment of targeted carbon management provisions including enhancements to the 45Q tax credit, support for the bipartisan Storing CO2 and Lowering Emissions (SCALE) Act, and renewal and expansion of the 48C investment tax credit;
  • increased access to US Department of Energy (DOE) Loan Programs Office Title 17 loan guarantees to drive investment in innovative industrial technologies; and
  • federal policy mechanisms to support a US low- and zero-carbon hydrogen economy at scale.

Drawing on analyses conducted during I3’s initial research process, participants created a suite of consensus recommendations in the form of a Federal and State Policy Blueprint in the fall of 2021. What makes the Blueprint unique is that it was created with the diversity of processes within and among industries in mind. I3 advocates for policy and market strategies that, when mixed and matched depending on the sector and facility, can put the US industry on a path toward deep decarbonization. These solutions include:

  • Economywide implementation of carbon management—carbon capture, removal, transport, utilization, and geologic storage;
  • Production, transport, distribution, and use of low- and zero-carbon hydrogen as a fuel and chemical feedstock;
  • Procurement that enables government to lead by example to build markets for lower-carbon technologies;
  • Electrification of direct emissions, particularly processes using low- and medium-temperature heat;
  • Energy efficiency to reduce emissions, lower production costs, reduce risks, and increase competitiveness; and
  • Applying innovative approaches to increase collaboration among industrial facilities, build markets for new innovations, and examine specific place-based needs to enable industrial decarbonization by midcentury.

The recommendations aim to put American industry on a path to net-zero emissions, high-wage job retention and creation, technology leadership, and economic competitiveness. The Blueprint reflects a consensus of 21 I3 participants from across labor, power, industry, and environmental NGOs—a notable accomplishment in climate and energy policy.

Looking Ahead

I3 is developing a state and regional advocacy structure to complement existing federal work. With this structure in place, I3 can foster progress on implementing policies and actions which advance industrial decarbonization. With the passage of the Infrastructure Investment and Jobs Act, new funding and policy opportunities will allow the US to provide critical near-term investments toward industrial decarbonization at the federal, regional, and state levels.

Going forward, I3 will continue to draw on the strength of its diverse group of stakeholders. I3 will organize and coordinate joint education and advocacy efforts supporting the implementation of policy priorities.

The table below lays out the policies put forward by the Industrial Innovation Initiative to date. These policies advance I3’s mission of incentivizing investment in low-carbon technologies, processes, products, and markets within the industrial sector and prioritizing key areas for long-term emissions reductions:

Economywide implementation of carbon management—carbon capture, removal, transport, utilization, and geologic storage

  • Enhance the federal 45Q tax credit
  • Reform and expand other federal incentives
  • Responsibly accelerate the buildout of carbon dioxide transport and storage infrastructure
  • Increase federal investment in RDD&D
  • Target jobs and environmental benefits toward affected communities
  • Clarify state regulatory policies and planning
  • Tailor state financial incentives
  • Foster state-level market development
  • Eliminate 45Q tax credit eligibility thresholds for industrial facilities and carbon utilization projects that deter technology innovation and emissions reductions
  • Lower the cost of investing in new production lines for designated clean technologies by renewing and expanding the Section 48C Advanced Manufacturing Tax Credit Program
  • Authorize funds for a temporarily expanded DOE cost-share program for commercial-scale technology demonstrations, front-end engineering and design studies, and saline geologic storage sites

Production, transport, distribution, and use of low- and zero-carbon hydrogen as a fuel and chemical feedstock

  • Provide hydrogen tax credits
  • Develop hydrogen hubs
  • Scale hydrogen transport and storage infrastructure
  • Ensure additional financing mechanisms for hydrogen
  • Fund RDD&D for hydrogen
  • Strengthen and modernize electricity grids
  • Include hydrogen in state sustainability plans and legislation
  • Facilitate permitting for production, transport, and storage
  • Offer financial incentives for low- and zero- carbon hydrogen production and use

Procurement that enables government to lead by example to build markets for lower-carbon technologies

  • Support information and disclosure policies
  • Establish procurement bonus policies
  • Develop public sector procurement standards
  • Develop a high achiever’s program to increase ambition through public procurement
  • Expand industrial efficiency block grant funding

Electrification of direct emissions, particularly processes using low- and medium-temperature heat

  • Provide incentives for RDD&D
  • Provide financial incentives such as tax credits or grants for deployment
  • Offer workforce training programs
  • Improve federal permitting procedures
  • Work with utilities and their regulators to facilitate pathways to electrification
  • Provide financial incentives such as state tax credits or grants for deployment
  • Implement workforce training programs at the state level
  • Improve state permitting procedures

Energy efficiency to reduce emissions, lower production costs, reduce risks, and increase competitiveness

  • Expand strategic energy management programs
  • Assist facilities in conducting energy assessments
  • Support RDD&D for emerging technologies
  • Expand state block grants to support industrial efficiency
  • Provide federal tax credits
  • Implement state workforce training programs
  • Expand block grant funding for states to support industrial efficiency, with increased funds for states that establish programs that help build market demand for low-carbon products
  • Enhance technical assistance for the deployment of commercially available industrial decarbonization technologies through DOE’s Better Buildings, Better Plants Initiative

Innovative approaches to increase collaboration and build markets for new innovations

  • Employ competitive grantmaking for clean industrial hubs
  • Spur market innovation with competitions and challenges
  • Fund and support RDD&D for innovative technologies
  • Establish a state task force on industrial decarbonization
  • Allow a direct pay option for energy efficiency, clean energy, and industrial tax credits that help reduce industrial carbon emissions
  • Enhance financial support for early-stage deployment of clean industrial technologies by removing barriers to the Title 17 DOE loan guarantee program, and revise eligibility criteria to include key industrial technologies
  • Augment investment in research, development, and pre-commercial demonstration of innovative industrial emissions reduction technologies

Keep up-to-date with I3 news by signing up for our monthly newsletter.

Kate Sullivan, Grace Olson & Gabrielle Habeeb
Kate Sullivan, Grace Olson & Gabrielle Habeeb

Industrial Innovation Initiative, Great Plains Institute