Editing IPCC:AR6/WGII/Chapter-18 (section)

==== 18.3.1.4 Industrial Systems ====

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Industrial emissions have been growing faster since 2000 compared with emissions in any other sector, driven by increased extraction and production of basic materials ( [[#Crippa--2019|Crippa et al., 2019]] ; [[#IEA--2019|IEA, 2019]] ) ( ''very high confidence'' ). About one-third of the total emissions are contributed by the industry sector, if indirect emissions from energy use are considered ( [[#Crippa--2019|Crippa et al., 2019]] ). The COVID-19 pandemic has caused a significant decrease in demand for fuels, oil, coal, gas and nuclear energy ( [[#IEA--2020|IEA, 2020]] ). However, there is concern that the rebound in the crisis will reverse this trend ( [[#IEA--2020|IEA, 2020]] ). Accordingly, the literature suggests a combined set of measures is beneficial for facilitation a transition of industrial systems in support of CRD. This includes (i) dematerialisation and decarbonisation of industrial systems, (ii) establishment of supportive governance, policies and regulations, and (iii) implementation of enabling corporate strategies.

Decarbonisation and dematerialisation strategies have been proposed as key drivers for the transition of industrial systems (Fischedick et al., 2014; [[#Worrell--2016|Worrell et al., 2016]] ). The former involves limiting carbon emissions from industrial processes ( [[#IEA--2017|IEA, 2017]] ; [[#Hildingsson--2019|Hildingsson et al., 2019]] ), while the latter involves improving material efficiency, developing circular economies, raw material demand management, environmentally friendly product and process innovations, and environmentally friendly supply chain management ( [[#Worrell--2016|Worrell et al., 2016]] ; [[#Petrides--2018|Petrides et al., 2018]] ).

Recent modelling suggests that stocks of manufactured capital, including buildings, infrastructure, machinery and equipment, stabilise as countries develop and decouple from GDP ( ''high agreement'' , ''medium evidence'' ). For instance, [[#Bleischwitz--2018|Bleischwitz et al. (2018)]] confirmed the occurrence of a saturation effect for materials in four energy-intensive sectors (steel, cement, aluminum and copper) in five industrialised countries (Germany, Japan, the UK, the USA and China). High growth in the supply of materials may still drive global demand for new products in the coming years for developing countries that are still far from saturation levels. Therefore, accelerating industrial transitions to drive the decoupling of industrial emissions from economic growth and facilitate broader transformation in industrial systems can be one component of CRD.

Continued transitions in the industrial sector will be contingent on technological innovation. Although technologies exist to drive emissions in industrial sectors to very low or zero emissions, they require 5–15 years of innovation, commercialisation and intensive policies to ensure uptake ( [[#Åhman--2017|Åhman et al., 2017]] ) ( ''high agreement'' , ''medium evidence'' ). For instance, several options exist to reduce GHG emissions related to steel production process including increasing the share of the secondary route ( [[#Pauliuk--2013|Pauliuk et al., 2013]] ), hydrogen-based direct reduced iron ( [[#Vogl--2018|Vogl et al., 2018]] ), aqueous electrolysis rout ( [[#Cavaliere--2019|Cavaliere, 2019]] ) and plasma process ( [[#Quader--2016|Quader et al., 2016]] ).

Industrial transitions are also contingent upon consumer behaviour in terms of preferences for, and rates of, consumption of industrial products. Sustainable consumption can play an important role in sustainable production ( [[#Allwood--2013|Allwood et al., 2013]] ; [[#Allwood--2019|Allwood et al., 2019]] ). This suggests feedbacks between industrial production and consumption in driving industrial transitions. For example, sustainable consumption could be triggered and/or enabled through sustainable production processes that provide more sustainable options to consumers as well as public or private promotional campaigns that promote those options. Meanwhile, demand from consumers for more sustainable options could help to drive the expansion of markets and innovation among industrial producers to meet that demand. However, some have argued that such promotional campaigns that target consumers do little to incentivize sustainable development and climate action ( [[#Farrell--2015|Farrell, 2015]] ; [[#Grydehøj--2017|Grydehøj and Kelman, 2017]] ).

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