The Context

Challenges and Opportunities for Industrial Sector Emissions Reductions

The United States and other nations have set targets for a net-zero carbon global economy by 2050. In accordance with international modeling from bodies such as the United Nation’s Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), being on track to meet that target would require reducing greenhouse gas emissions by 50 percent by 2030.

The industrial sector contributes 30 percent of all U.S. greenhouse gas emissions on an end-use basis, and 23 percent of all direct emissions, or about one gigaton of carbon dioxide equivalent (Gt CO2e), excluding emissions from forestry and other land uses. As the figure below shows, CO2 emissions from the industrial sector have remained around one gigaton since 1980. If CO2 emissions from the electricity required for the industrial sector are also included, the industrial sector emits 34 percent of total US emissions.1Source: EPA’s green house gas reporting program data set In the near term, the US industrial sector needs to take action to be on track towards meeting these midcentury goals.

US Industrial Sector CO2e emissions, 1980-2019
A graph of US industrial sector emissions, 1980-2019
Source: Figure authored by GPI based on US EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2019 (April 2021).

While some other sectors of the economy have clear roadmaps to meeting 2030 and 2050 goals, the industrial sector poses a unique challenge to decarbonization due to its diversity of subsectors and products, the high temperature requirements for many production processes, and the innate release of green house gasses as part of chemical reactions in some industrial production processes. Additionally, even within subsectors, facilities can vary greatly. The figure below shows the wide range for facility specific emissions within several subsectors key to the Midcontinent.

Annual Facility Emissions by Sector (2019)
Source: GPI analysis based on US EPA, Greenhouse Gas Reporting Program (October 2021).

I3 is focusing on several solutions that can decarbonize across multiple subsectors, however, each sector will ultimately have to determine how emissions reduction targets can best be achieved across diverse facility and equipment configurations.

Building a robust, decarbonized industrial sector

With industrial emissions projected to rise in the coming years, I3 is building on opportunities to advance commercial deployment of established and emerging decarbonization technologies while preserving and growing US industry and its high-wage job and tax base.

There is a unique opportunity for US industry to become a global leader in technology investment and adoption, and for stakeholders to engage in the policy process to ensure that the transition to net zero is equitable and does not endanger the competitiveness of US industries and the communities they support. This is particularly important in the industrial sector, where many products are energy-intensive and trade exposed, meaning they are vulnerable to offshoring in non-regulated jurisdictions unless policies are established to prevent this.

Given the challenges to decarbonization within the industrial sector, research, design, development, and deployment (RDD&D) is needed for many industrial decarbonization opportunities to reach economic viability to achieve industry-wide deployment. If deployment at key facilities can demonstrate a 10 percent reduction for the industrial sector by 2030, then achieving net-zero emissions by 2050 would require a reduction of around 40.5 MtCO2e per year. Initial reductions will likely be less expensive investments compared to the technologies needed to achieve the final emissions reductions to reach net zero, such as carbon removal. Delaying the deployment of decarbonization solutions will also require more negative emissions technologies in the long term.

A potential decarbonization pathway for the industrial sector
A potential decarbonization pathway for the industrial sector
Source: Great Plains Institute and World Resources Institute (October 2021), based on US EPA,
Inventory of U.S. Greenhouse Gas Emissions and Sinks (April 2021).

The table below shows the number of facilities in key subsectors that would need to participate in net-zero decarbonization investments to achieve 10 percent, 25 percent, and 50 percent emissions reductions based on average facility emissions. Alternatively, a 10 percent emissions reduction at each facility, rather than full decarbonization at just a subset of facilities, could achieve the same sector-wide result.

Number of participating facilities required to achieve 10%, 25%, and 50% emissions reduction; by sector, based on average facility emissions

# of Facilities Participating to Achieve Emission Reduction of

Ammonia (Fertilizer)3714
Gas Processing41103206
Iron and Steel184692
Metals and Minerals3177155
Pulp and Paper2256112
Source: GPI analysis based on US EPA, Greenhouse Gas Reporting Program (2020).

Creating economies of scale

Deploying solutions to address decarbonization opportunities across sectors

While the industrial sector is complex and each industry and facility has unique challenges and opportunities, I3 has identified several cross-cutting solutions and a suite of supportive policies to advance industrial decarbonization.

  • Energy efficiency can reduce emissions in the short term while also lowering manufacturing costs/risk and increasing competitiveness. It could also benefit other emission reduction mechanisms by making them more technically viable and/or cost-effective.
  • Carbon management (carbon capture, removal, transport, beneficial utilization and geologic storage) of industrial emissions offers the best solution for mitigating and reducing process emissions which represent roughly 30 percent of industrial emissions. There are currently 1,517 facilities that are eligible for the federal 45Q tax credit. 2GPI analysis based on EPA FLIGHT data (2019) – also cited in this GPI white paper
  • Hydrogen provides an alternative fuel source for industries that require high heat of combustion, provides seasonal energy storage, and allows for multiple low- and zero-carbon production methods.
  • Electrification can be a useful emission mitigation option, particularly for processes that require low and medium temperatures or where decarbonized electricity prices are minimal and low-carbon fuel costs are high.
  • Procurement policies for low-carbon products will help increase deployment of new market-ready technologies through incentives or requirements for the public sector.
  • Innovative approaches can help increase collaboration among industrial facilities, build a market for new innovations, and examine specific place-based needs to enable industrial decarbonization by midcentury.
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