On October 27, 2022, the Industrial Innovation Initiative (I3) organized an event in New Orleans, Louisiana, setting industrial innovation against the backdrop of an unprecedented year of investment in climate and clean energy. I3 members were joined by a select group of local business leaders and observers ranging from refineries and labor unions, to think tanks and policy advocacy organizations, for a series of presentations and conversations centered on the latest developments in state, federal, and market-based policies to accelerate industrial decarbonization.
The event opened with a keynote presentation describing the Department of Energy’s (DOE) work to advance industrial decarbonization through new initiatives and internal alignment. Discussion then moved to the market forces necessary to meet a growing supply of low-carbon products, followed by an update on what participating I3 organizations are doing in the common area of industrial decarbonization. For the final portion of the event, members were joined by state officials and local business leaders from Louisiana to discuss moving industrial decarbonization forward at the state level. The summary below provides key takeaways from these discussions.
Keynote Address: Federal Levers for Industrial Decarbonization
The event opened with a keynote presentation from Jeremiah Baumann, Chief of Staff at the Department of Energy’s Office of the Undersecretary for Infrastructure. Mr. Bauman described the importance of decarbonizing US industry and manufacturing as a climate and economic imperative, stressing the importance of intra-agency coordination, equity, and community engagement. Mr. Baumann also highlighted the interplay between research, development, demonstration, and deployment, as the Department works to stand up its strategic vision for industrial decarbonization. Before concluding his presentation, Mr. Bauman emphasized the open invitation to join DOE’s growing Clean Energy Corps dedicated to deploying the next-generation clean energy technology.
- To support decarbonization DOE has organized its offices not by technology, but by strategy. The Under Secretary for Science and Innovation houses many of the Research and Development offices at DOE including AMO and EERE, while the Undersecretary for Infrastructure contains offices dedicated to demonstration and deployment, such as the OCED, LPO, and the newly established office of Manufacturing and Energy Supply Chains.
- Several DOE initiatives have been announced to advance industrial decarbonization. This includes an Industrial Decarbonization Roadmap, Industrial Heat Shot, a new Industrial Efficiency and Decarbonization Office in AMO, and various funding mechanisms afforded through Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) which collectively equate to about $30.5 billion in industrial decarbonization demonstration and deployment investments.
- Community and stakeholder engagement is vital to project success, and DOE is integrating those considerations into its planning. Community Benefit Plans are now a requirement across BIL and IRA applications and aim to address eight environmental justice criteria equating to 20 percent of a project proposal’s technical merit.
Market Forces to Drive Industrial Decarbonization
Following the morning Keynote, the discussion turned to markets. While BIL and IRA give manufacturers and energy providers the tools to transform industrial production, it will be up to consumers to continue to drive demand for low-carbon products and producers to reassess what is possible given the new drivers and incentives on the table. Moderated by Scott Shell, Associate Director of Industry at the ClimateWorks Foundation, a panel of experts highlighted opportunities for US industry to benefit from an incentive-based approach to beneficial innovation and deep decarbonization as seen in Congress’ passage of IRA this past summer and considering the international and subnational forces already at play.
Chris Kardish, an Industrial Fellow at the Center for Climate and Clean Energy Solutions opened the discussion by examining two key aspects of international and federal markets: incentives for clean industrial heat and Carbon Border Adjustment Mechanisms. Virgilio Barrera, Director of Government and Public Affairs at Holcim US then provided a producer’s perspective on building the market for cleaner construction products, particularly focused on the production of low-carbon cement and concrete. Finally, Charlie Martin, a Policy Advisor at the BlueGreen Alliance presented an update on Federal and State efforts to advance Buy Clean policies across the US.
- While IRA excels in incentives to decarbonize industrial heat, the provisions to drive demand and support industrial electrification fall short. Tax credits likely to help boost supply and bring down costs of various renewable thermal fuels, but they are limited in terms of driving demand and changes directly at industrial facilities.
- Carbon Border Adjustment Mechanisms are on the rise in Europe and gaining popularity as a concept in the US absent a carbon price or other binding domestic standards. It remains to be seen whether bipartisan interest in a US border adjustment will translate into law.
- Ensuring demand for cleaner products will be vital to preserving US competitiveness in the international market. China far outproduces any other country in cement production and has the potential to overwhelm the US domestic market with higher volumes of cement created using lower standards unless clearly defined procurement standards are in place. Such standards are needed to support domestic demand for cleaner industrial products like cement and concrete.
- State and Federal action on Buy Clean is promoting the use of industrial materials with lower embodied emissions across the US economy. Last year, President Biden signed Executive Order 14057 launching a Buy Clean Initiative and corresponding Task Force to drive lower-carbon standards in federal purchasing. Meanwhile, states have been leading on Buy Clean since 2007, with state-level policies starting in California and since advancing to Washington, Minnesota, Colorado, and Oregon.
Louisiana’s Leadership on Industrial Decarbonization
The third and final discussion brought together a cross-section of state officials, I3 stakeholders, and Baton Rouge area business leaders for an engaging discussion on industrial decarbonization in Louisiana.
Moderated by Secretary Thomas Harris of the Louisiana Department of Natural Resources, roundtable guests addressed key themes and priorities to advance a robust, comprehensive state policy agenda that builds on the passage of recent federal policies. Roundtable guests included: Lindsay Cooper, Climate Initiatives Manager at the Louisiana Governor’s Office, Brad Lambert, Deputy Secretary of Louisiana Economic Development, Adam Knapp, CEO of the Baton Rouge Area Chamber, Phillip May, President and CEO of Entergy Louisiana, LLC, and Wendell Hibdon, Director of Energy and Infrastructure for the United Association of Plumbers and Pipefitters.
- As the only state in the Gulf Coast with a Climate Plan, Louisiana has set an example for other heavily industrialized states looking to cut their carbon emissions. Accelerating deployment by convening and supporting industry leaders, leading strategic planning to corral facilities and resources, and ensuring intentional investment will be key as the state takes action to implement its robust decarbonization plan.
- Economywide deployment of industrial decarbonization technologies and infrastructure presents a regional economic and job opportunity. In Louisiana, Baton Rouge Area companies have made commitments of nearly $20 billion in the past 2 years toward clean energy development, with $5-8 billion more in the pipeline. Ensuring an equitable and informed approach to reducing greenhouse gas emissions across the industrial sectors will also require retaining and expanding a high-wage jobs base.
- It will take the combined and coordinated efforts of the public and private sectors to decarbonize the economy of any state. As Louisiana’s process revealed, time and thorough planning must be matched by a collaborative decarbonization process. Supporting cooperation among industrial sectors, utilities, labor unions, and other key stakeholders can help build markets for low-carbon industrial products and technologies while considering specific place-based needs.
The US has reached a pivotal moment for industrial policy and investment, but continuous, coordinated action at all levels of government, industry, and civil society is required to take full advantage of what this moment has to offer. The Industrial Innovation Initiative is proud to serve as a bridge for information and dialogue between key decision-makers and industry, power, labor, and environmental stakeholders working toward the rapid and durable advancement of the solutions needed to cut emissions from industrial sectors. Keep up to date with I3 news by signing up for our monthly newsletter. For more information on I3 or to get involved, contact Gabrielle Habeeb at firstname.lastname@example.org.