Editing IPCC:AR6/WGIII/Chapter-11 (section)

==== 11.4.1.5 Overview of Estimates of Specific Mitigation Potential and Abatement Costs of Key Technologies and Processes for Main Industry Sectors ====

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Climate-policy-related literature focusing on deep industrial emission reductions has expanded rapidly since AR5. An increasing body of research proposes deep decarbonisation pathways for energy-intensive industries (Figure 11.13). [[#Bataille--2018a|Bataille et al. (2018a)]] address the question of whether it is possible to reduce GHG emissions to very low, zero, or negative levels, and identifies preliminary technological and policy elements that may allow the transition, including the use of policy to drive technological innovation and uptake. [[#Material%20Economics--2019|Material Economics (2019)]] , the [[#IEA--2019b|IEA (2019b)]] , the [[#Energy%20Transitions%20Commission--2018|Energy Transitions Commission (2018)]] and Climate Action Tracker (CAT; 2020) take steps to identify pathways integrating energy efficiency, material efficiency, circular economy and innovative technologies options to cut GHG emissions across basic materials and value chains. The key conclusion is that net zero CO 2 emissions from the largest sources (steel, plastics, ammonia, and cement) could be achieved by 2050 by deploying already available multiple options packaged in different ways ( [[#Davis--2018|Davis et al. 2018]] ; Material Economics 2019; [[#UKCCC--2019b|UKCCC 2019b]] ). The studies assume that for those technologies that have a kind of breakthrough technology status further technological development and significant cost reduction can be expected.

Table 11.3, modified from [[#Bataille--2020a|Bataille (2020a)]] and built from [[#McMillan--2016|McMillan et al. (2016)]] ; [[#Bazzanella--2017|Bazzanella and Ausfelder (2017)]] ; [[#Philibert--2017a|Philibert (2017a)]] ; [[#Wesseling--2017|Wesseling et al. (2017)]] ; [[#Axelson--2018|Axelson et al. (2018)]] ; [[#Bataille--2018a|Bataille et al. (2018a)]] [[#Davis--2018|Davis et al. (2018)]] ; [[#Energy%20Transitions%20Commission--2018|Energy Transitions Commission (2018)]] ; IEA (2019f, 2020c); [[#Material%20Economics--2019|Material Economics (2019)]] ; and [[#UKCCC--2019b|UKCCC (2019b)]] , presents carbon intensities that could be achieved by implementing mitigation options in major basic material industries, mitigation potential, estimates for mitigation costs, TRL and potential year of market introduction (Figure 11.13).

Table 11.3 acknowledges that for many carbon-intensive products a large variety of novel processes, inputs and practices capable of providing very deep emission reductions are already available and emerging. However, their application is subject to different economic and structural limitations, therefore in the scenarios assuming deep decarbonisation by 2050–2060 different technological mixes can be observed ( [[#11.4.2|Section 11.4.2]] ).

While deep GHG emissions reduction potential is assessed for various regions, assessment of associated costs is limited to only a few regions; nevertheless those analyses may be illustrative at the global scale. [[#UKCCC--2019b|UKCCC (2019b)]] provides costs assessments for different industrial subsectors (Table 11.3) for the UK. They provide three ranges: core, more ambitious, and when energy and material efficiency are limited. The core options range from 2–85 GBP2019 tCO 2 -eq –1 (e.g., reduction in GHG emissions by about 50% by 2050 applying energy efficiency (EE), ''ME'' , CCS, biomass and electrification). The more ambitious options are estimated at 32–119 GBP2019 tCO 2 -eq –1 (e.g., 90% emissions reduction via widespread deployment of hydrogen, electrification or bioenergy for stationary industrial heat/combustion). Finally, costs range from 33–299 GBP tCO 2 -eq –1 when energy and material efficiency are limited.

In [[#Material%20Economics--2019|Material Economics (2019)]] , costs are provided for separate technologies and subsectors, and also by pathways, each including new industrial processes, circular economy and CCS components in different proportions, allowing for the transition to net zero industrial emission in the EU by 2050. That means that the study provides information about the three main mid- to long-term options which could enable a wide abatement of GHG emissions. Given different electricity-price scenarios, average abatement costs associated with the circular economy-dominated pathway are: 12–75 EUR2019 tCO 2 -eq –1 ; for the carbon capture-dominated pathway 79 EUR2019 tCO 2 -eq –1 ; and for the new processes-dominated scenario 91 EUR2019 tCO 2 -eq –1 . Consequently, net-zero-emission pathways are about 3–25% costlier compared to the baseline ( [[#Material%20Economics--2019|Material Economics 2019]] ). According to the [[#Energy%20Transitions%20Commission--2018|Energy Transitions Commission (2018)]] , cement decarbonisation would cost on average USD110–130 tCO 2 –1 depending on the cost scenario. [[#Rootzén--2016|Rootzén and Johnsson (2016)]] state that CO 2 avoidance costs for the cement industry vary from 25 to 110 EUR tCO 2 –1 , depending on the capture option considered and on the assumptions made with respect to the different cost items involved. According to the [[#Energy%20Transitions%20Commission--2018|Energy Transitions Commission (2018)]] , steel can be decarbonised on average at USD60 tCO 2 –1 , with highly varying costs depending on low-carbon electricity prices.

For customers of final products, information on the potential impact of supply-side decarbonisation on final prices may be more useful than that of CO 2 abatement costs. A different approach has been developed to assess the costs of mitigation by estimating the potential impacts of supply-side decarbonisation on final product prices. [[#Material%20Economics--2019|Material Economics (2019)]] shows that with deep decarbonisation, depending on the pathway, steel costs grow by 20–30%; plastics by 20–45%; ammonia by 15–60%; and cement (not concrete) by 70–115%. While these are large and problematic cost increases for material producers working with low margins in a competitive market, final end-use product price increases are far less, for example, a car becomes 0.5% more expensive, supported by both [[#Rootzén--2016|Rootzén and Johnsson (2016)]] and the [[#Energy%20Transitions%20Commission--2018|Energy Transitions Commission (2018)]] . For comparison, [[#Rootzén--2017|Rootzén and Johnsson (2017)]] found that decarbonising cement-making, while doubling the cost of cement, would add &lt;1% to the costs of a residential building; the [[#Energy%20Transitions%20Commission--2018|Energy Transitions Commission (2018)]] found concrete would be 10–30% more expensive, adding USD15,000 or 3% to the price of a house including land value. Finally, the [[#IEA--2020a|IEA (2020a)]] estimated the impact on end-use prices are rather small, even in a net zero scenario; they find price increases of 0.2% for a car and 0.6% for a house, based on higher costs for steel and cement respectively.

Thus, the price impact scales down going across the value chain and might be acceptable for a significant share of customers. However, it has to be reflected that the cumulative price increase could be more significant if several different zero-carbon materials (e.g., steel, plastics and aluminium) in the production process of a certain product have to be combined, indicating the importance of material efficiency being applied along with production decarbonisation.

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