Editing IPCC:AR6/WGIII/TS (section)

=== TS.5.5 Industry ===

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The industry chapter focuses on new developments since AR5 and emphasises the role of the energy-intensive and emissions-intensive basic materials industries in strategies for reaching net zero emissions. The Paris Agreement, the SDGs and the COVID-19 pandemic provide a new context for the evolution of industry and mitigation of industry greenhouse gas (GHG) emissions ( ''high confidence'' ). {11.1.1}

'''Net zero CO''' 2 '''industrial-sector emissions are possible but challenging (''' '''''high confidence''''' ''').''' Energy efficiency will continue to be important. Reduced materials demand, material efficiency, and circular economy solutions can reduce the need for primary production. Primary production options include switching to new processes that use low-to-zero GHG energy carriers and feedstocks (e.g., electricity, hydrogen, biofuels, and carbon dioxide capture and utilisation (CCU) to provide carbon feedstocks). Carbon capture and storage (CCS) will be required to mitigate remaining CO 2 emissions {11.3} . These options require substantial scaling up of electricity, hydrogen, recycling, CO ''2'' , and other infrastructure, as well as phase-out or conversion of existing industrial plants. While improvements in the GHG intensities of major basic materials have nearly stagnated over the last 30 years, analysis of historical technology shifts and newly available technologies indicate these intensities can be significantly reduced by mid-century. {11.2, 11.3, 11.4}

'''Industry-sector emissions have been growing faster since 2000 than emissions in any other sector, driven by increased basic materials extraction and production (''' '''''high confidence''''' ''').''' GHG emissions attributed to the industrial sector originate from fuel combustion, process emissions, product use and waste, which jointly accounted for 14.1 GtCO 2 -eq or 24% of all direct anthropogenic emissions in 2019, second behind the energy supply sector. Industry is a leading GHG emitter – 20 GtCO 2 -eq or 34% of global emissions in 2019 – if indirect emissions from power and heat generation are included. The share of emissions originating from direct fuel combustion is decreasing and was 7 GtCO 2 -eq, 50% of direct industrial emissions in 2019. {11.2.2}

'''Global material intensity – the in-use stock of manufactured capital in tonnes per unit of GDP – is increasing (''' '''''high confidence''''' ''').''' In-use stock of manufactured capital per capita has been growing faster than GDP per capita since 2000. Total global in-use stock of manufactured capital grew by 3.4% yr ''–1'' in 2000–2019. At the same time, per-capita material stocks in several developed countries have stopped growing, showing a decoupling from GDP per capita. {11.2.1, 11.3.1}

'''The demand for plastic has been growing most strongly since 1970 (''' '''''high confidence''''' ''').''' The current &gt;99% reliance on fossil feedstock, very low recycling, and high emissions from petrochemical processes is a challenge for reaching net zero emissions. At the same time, plastics are important for reducing emissions elsewhere, for example, light-weighting vehicles. There are as yet no shared visions for fossil-free plastics, but several possibilities. {11.4.1.3}

'''Scenario analyses show that significant reductions in global GHG emissions and even close to net zero emissions from GHG intensive industry (e.g., steel, plastics, ammonia, and cement) can be achieved by 2050 by deploying multiple available and emerging options (''' '''''medium confidence''''' ''').''' Significant reductions in industry emissions require a reorientation from the historic focus on important but incremental improvements (e.g., energy efficiency) to transformational changes in energy and feedstock sourcing, materials efficiency, and more circular material flows. {11.3, 11.4}

'''Key mitigation options such as materials efficiency, circular material flows and emerging primary processes, are not well represented in climate change scenario modelling and integrated assessment models (IAMs), albeit with some progress in recent years (''' '''''high confidence''''' ''').''' The character of these interventions (e.g., appearing in many forms across complex value chains, making cost estimates difficult) combined with the limited data on new fossil-free primary processes help explain why they are less represented in models than, for example, CCS. As a result, overall mitigation costs and the need for CCS may be overestimated. {11.4.2.1}

'''Electrification is emerging as a key mitigation option for industry (''' '''''high confidence''''' ''').''' Using electricity directly, or indirectly via hydrogen from electrolysis for high temperature and chemical feedstock requirements, offers many options to reduce emissions. It also can provide substantial grid-balancing services, for example, through electrolysis and storage of hydrogen for chemical process use or demand response. (Box TS.9) {11.3.5}

'''Carbon is a key building block in organic chemicals, fuels and materials and will remain important (''' '''''high confidence''''' ''').''' In order to reach net zero CO 2 emissions for the carbon needed in society (e.g., plastics, wood, aviation fuels, solvents, etc.), it is important to close the use loops for carbon and carbon dioxide through increased circularity with mechanical and chemical recycling, more efficient use of biomass feedstock with addition of low-GHG hydrogen to increase product yields (e.g., for biomethane and methanol), and potentially direct air capture of CO 2 as a new carbon source. {11.3, 11.4.1}

'''Production costs for very low to zero emissions basic materials may be high but the cost for final consumers and the general economy will be low (''' '''''medium confidence''''' ''').''' Costs and emissions reductions potential in industry, and especially heavy industry, are highly contingent on innovation, commercialisation, and market-uptake policies. Technologies exist to take all industry sectors to very low or zero emissions, but require five to fifteen years of intensive innovation, commercialisation, and policy to ensure uptake. Mitigation costs are in the rough range of USD50–150 tCO ''2'' -eq ''–'' 1 , with wide variation within and outside this band. This affects competitiveness and requires supporting policy. Although production cost increases can be significant, they translate to very small increases in the costs for final products, typically less than a few percent depending on product, assumptions, and system boundaries. (Figure TS.17) {11.4.1.5}

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'''Figure TS.17''' ''': Potentials and costs for zero-carbon mitigation options for industry and basic materials.''' CIEl – carbon intensity of electricity for indirect emissions; EE – energy efficiency; ME – material efficiency; Circularity – material flows (clinker substituted by coal fly ash, blast furnace slag or other by-products and waste, steel scrap, plastic recycling, etc.); FeedCI – feedstock carbon intensity (hydrogen, biomass, novel cement, natural clinker substitutes); FSW+El – fuel switch and processes electrification with low-carbon electricity. Ranges for mitigation options are shown based on bottom-up studies for grouped technologies packages, not for single technologies. In circles, contribution to mitigation from technologies based on their readiness are shown for 2050 (2040) and 2070. Direct emissions include fuel combustion and process emissions. Indirect emissions include emissions attributed to consumed electricity and purchased heat. For basic chemicals, only methanol, ammonia and high-value chemicals are considered. Total for industry does not include emissions from waste. Negative mitigation costs for some options such as Circularity are not reflected. {Figure 11.13}

'''Several technological options exist for very low to zero emissions steel, but their uptake will require integrated material efficiency, recycling, and production decarbonisation policies (''' '''''high confidence''''' ''').''' Material efficiency can potentially reduce steel demand by up to 40% based on design for less steel use, long life, reuse, constructability, and low-contamination recycling. Secondary production through high-quality recycling must be maximised. Production decarbonisation will also be required, starting with the retrofitting of existing facilities for partial fuel switching (e.g., to biomass or hydrogen), CCU and CCS, followed by very low and zero emissions production based on high-capture CCS or direct hydrogen, or electrolytic iron-ore reduction followed by an electric arc furnace. {11.3.2, 11.4.1.1}

'''Several current and emerging options can significantly reduce cement and concrete emissions. Producer, user, and regulator education, as well as innovation and commercialisation policy are needed (''' '''''medium confidence''''' ''').''' Cement and concrete are currently overused because they are inexpensive, durable, and ubiquitous, and consumption decisions typically do not give weight to their production emissions. Basic material efficiency efforts to use only well-made concrete thoughtfully and only where needed (e.g., using right-sized, prefabricated components) could reduce emissions by 24–50% through lower demand for clinker. Cementitious material substitution with various materials (e.g., ground limestone and calcined clays) can reduce process calcination emissions by up to 50% and occasionally much more. Until a very low GHG emissions alternative binder to Portland cement is commercialised – which is not anticipated in the near to mid-term – CCS will be essential for eliminating the limestone calcination process emissions for making clinker, which currently represent 60% of GHG emissions in best-available technology plants. {11.3.2, 11.3.6, 11.4.1.2}

'''While several technological options exist for decarbonising the main industrial feedstock chemicals and their derivatives, the costs vary widely (''' '''''high confidence''''' ''').''' Fossil fuel-based feedstocks are inexpensive and still without carbon pricing, and their biomass- and electricity-based replacements are expected to be more expensive. The chemical industry consumes large amounts of hydrogen, ammonia, methanol, carbon monoxide, ethylene, propylene, benzene, toluene, and mixed xylenes and aromatics from fossil feedstock, and from these basic chemicals produces tens of thousands of derivative end-use chemicals. Hydrogen, biogenic or air-capture carbon, and collected plastic waste for the primary feedstocks can greatly reduce total emissions. Biogenic carbon feedstock is expected to be limited due to competing land uses. {11.4.1}

'''Light industry and manufacturing can be largely decarbonised through switching to low-GHG fuels (e.g., biofuels and hydrogen) and electricity (e.g., for electrothermal heating and heat pumps) (''' '''''high confidence''''' ''').''' Most of these technologies are already mature, for example for low-temperature heat, but a major challenge is the current low cost of fossil CH 4 and coal relative to low- and zero-GHG electricity, hydrogen, and biofuels. {11.4.1}

'''The pulp and paper industry has significant biogenic carbon emissions but relatively small fossil carbon emissions. Pulp mills have access to biomass residues and by-products and in paper mills the use of process heat at low to medium temperatures allows for electrification (''' '''''high confidence''''' ''').''' Competition for feedstock will increase if wood substitutes for building materials and petrochemicals feedstock. The pulp and paper industry can also be a source of biogenic carbon dioxide, carbon for organic chemicals feedstock, and for CDR using CCS. {11.4.1}

'''The geographical distribution of renewable resources has implications for industry (''' '''''medium confidence''''' ''').''' The potential for zero-emission electricity and low-cost hydrogen from electrolysis powered by solar and wind, or hydrogen from other very low emission sources, may reshape where currently energy- and emissions-intensive basic materials production is located, how value chains are organised, trade patterns, and what gets transported in international shipping. Regions with bountiful solar and wind resources, or low fugitive CH 4 co-located with CCS geology, may become exporters of hydrogen or hydrogen carriers such as methanol and ammonia, or home to the production of iron and steel, organic platform chemicals, and other energy-intensive basic materials. {11.2, 11.4, Box 11.1}

'''The level of policy maturity and experience varies widely across the mitigation options (''' '''''high confidence''''' ''').''' Energy efficiency is a well-established policy field with decades of experience from voluntary and negotiated agreements, regulations, energy auditing and demand-side management (DSM) programmes. In contrast, materials demand management and efficiency are not well understood and addressed from a policy perspective. Barriers to recycling that policy could address are often specific to the different material loops (e.g., copper contamination for steel and lack of technologies or poor economics for plastics) or waste-management systems. For electrification and fuel switching the focus has so far been mainly on innovation and developing technical supply-side solutions rather than creating market demand. {11.5.2, 11.6}

'''Industry has so far largely been sheltered from the impacts of climate policy and carbon pricing due to concerns about carbon leakage''' [[#footnote-007|26]] '''and reducing competitiveness (''' '''''high confidence''''' ''').''' New approaches to industrial development policy are emerging for a transition to net zero GHG emissions. The transition requires a clear direction towards net zero, technology development, market demand for low-carbon materials and products, governance capacity and learning, socially inclusive phase-out plans, as well as international coordination of climate and trade policies (see also TS.6.5). It requires comprehensive and sequential industrial policy strategies leading to immediate action as well as preparedness for future decarbonisation, governance at different levels (from international to local) and integration with other policy domains. {11.6}

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