Editing IPCC:AR6/SR15/Chapter-2 (section)

==== 2.4.3.1 Industry ====

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The industry sector is the largest end-use sector, both in terms of final energy demand and GHG emissions. Its direct CO <sub>2</sub> emissions currently account for about 25% of total energy-related and process CO <sub>2</sub> emissions, and emissions have increased at an average annual rate of 3.4% between 2000 and 2014, significantly faster than total CO <sub>2</sub> emissions (Hoesly et al., 2018) <sup>[[#fn:r405|405]]</sup> . In addition to emissions from the combustion of fossil fuels, non-energy uses of fossil fuels in the petrochemical industry and metal smelting, as well as non-fossil fuel process emissions (e.g., from cement production) contribute a small amount (~5%) to the sector’s CO <sub>2</sub> emissions inventory. Material industries are particularly energy and emissions intensive: together, the steel, non-ferrous metals, chemicals, non-metallic minerals, and pulp and paper industries accounted for close to 66% of final energy demand and 72% of direct industry-sector emissions in 2014 (IEA, 2017a) <sup>[[#fn:r406|406]]</sup> . In terms of end-uses, the bulk of energy in manufacturing industries is required for process heating and steam generation, while most electricity (but smaller shares of total final energy) is used for mechanical work (Banerjee et al., 2012; IEA, 2017a) <sup>[[#fn:r407|407]]</sup> .

As shown in Figure 2.21, a major share of the additional emission reductions required for 1.5°C-overshoot pathways compared to those in 2°C-consistent pathways comes from industry. Final energy, CO <sub>2</sub> emissions, and carbon intensity are consistent in IAM and sectoral studies, but in IAM-1.5°C-overshoot pathways the share of electricity is higher than IEA-B2DS (40% vs. 25%) and hydrogen is also considered to have a share of about 5% versus 0%. In 2050, final energy is increased by 30% and 5% compared with the 2010 level (red dotted line) for 1.5°C-overshoot and 2°C-consistent pathways, respectively, but CO <sub>2</sub> emissions are decreased by 80% and 50% and carbon intensity by 80% and 60%, respectively. This additional decarbonization is brought by switching to low-carbon fuels and CCS deployment.

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'''Figure 2.21'''

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Comparison of (a) final energy, (b) direct CO <sub>2 </sub> emissions, (c) carbon intensity, (d) electricity and biomass consumption in the industry sector between IAM and sectoral studies.
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[[File:cbcf8b9105f0dd74c21060f4c715586f Figure-2.21-1024x953.jpg]]

The label 1.5DS combines both high and low overshoot 1.5°C-consistent pathways. Section 2.1 for descriptions. The squares and circles indicate the IAM archetype pathways and diamonds the data of sectoral scenarios. The red dotted line indicates the 2010 level. H2DS = Higher-2°C, L2DS = Lower-2°C, 1.5DS-H = 1.5°C-high-OS, 1.5DS-L = 1.5°C-low-OS. The label 1.5DS combines both high and low overshoot 1.5°C-consistent pathways. Section 2.1 for descriptions.

Original Creation for this Report using IAMC 1.5°C Scenario Data hosted by IIASA

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Broadly speaking, the industry sector’s mitigation measures can be categorized in terms of the following five strategies: (i) reducing demand, (ii) energy efficiency, (iii) increasing electrification of energy demand, (iv) reducing the carbon content of non-electric fuels, and (v) deploying innovative processes and application of CCS. IEA ETP estimates the relative contribution of different measures for CO <sub>2</sub> emission reduction in their B2DS scenario compared with their reference scenario in 2050 as follows: energy efficiency 42%, innovative process and CCS 37%, switching to low-carbon fuels and feedstocks 13% and material efficiency (include efficient production and use to contribute to demand reduction) 8%. The remainder of this section delves more deeply into the potential mitigation contributions of these strategies as well as their limitations.

Reduction in the use of industrial materials, while delivering similar services, or improving the quality of products could help to reduce energy demand and overall system-level CO <sub>2</sub> emissions. Strategies include using materials more intensively, extending product lifetimes, increasing recycling, and increasing inter-industry material synergies, such as clinker substitution in cement production (Allwood et al., 2013; IEA, 2017a) <sup>[[#fn:r408|408]]</sup> . Related to material efficiency, use of fossil-fuel feedstocks could shift to lower-carbon feedstocks, such as from oil to natural gas and biomass, and end-uses could shift to more sustainable materials, such as biomass-based materials, reducing the demand for energy-intensive materials (IEA, 2017a) <sup>[[#fn:r409|409]]</sup> .

Reaping energy efficiency potentials hinges critically on advanced management practices, such as energy management systems, in industrial facilities as well as targeted policies to accelerate adoption of the best available technology (see Section 2.5). Although excess energy, usually as waste heat, is inevitable, recovering and reusing this waste heat under economically and technically viable conditions benefits the overall energy system. Furthermore, demand-side management strategies could modulate the level of industrial activity in line with the availability of resources in the power system. This could imply a shift away from peak demand and as power supply decarbonizes, this demand-shaping potential could shift some load to times with high portions of low-carbon electricity generation (IEA, 2017a) <sup>[[#fn:r410|410]]</sup> .

In the industry sector, energy demand increases more than 40% between 2010 and 2050 in baseline scenarios. However, in the 1.5°C-overshoot and 2°C-consistent pathways from IAMs, the increase is only 30% and 5%, respectively (Figure 2.21). These energy-demand reductions encompass both efficiency improvements in production and reductions in material demand, as most IAMs do not discern these two factors.

CO <sub>2</sub> emissions from industry increase by 30% in 2050 compared to 2010 in baseline scenarios. By contrast, these emissions are reduced by 80% and 50% relative to 2010 levels in 1.5°C-overshoot and 2°C-consistent pathways from IAMs, respectively (Figure 2.21). By mid-century, CO <sub>2</sub> emissions per unit of electricity are projected to decrease to near zero in both sets of pathways (see Figure 2.20). An accelerated electrification of the industry sector thus becomes an increasingly powerful mitigation option. In the IAM pathways, the share of electricity increases up to 30% by 2050 in 1.5°C-overshoot pathways (Figure 2.21) from 20% in 2010. Some industrial fuel uses are substantially more difficult to electrify than others, and electrification would have other effects on the process, including impacts on plant design, cost and available process integration options (IEA, 2017a) <sup>[[#fn:r411|411]]</sup> . <sup>[[#fn:7|7]]</sup>

In 1.5°C-overshoot pathways, the carbon intensity of non-electric fuels consumed by industry decreases to 16 gCO <sub>2</sub> MJ <sup>−1</sup> by 2050, compared to 25 gCO <sub>2</sub> MJ <sup>−1</sup> in 2°C-consistent pathways. Considerable carbon intensity reductions are already achieved by 2030, largely via a rapid phase-out of coal. Biomass becomes an increasingly important energy carrier in the industry sector in deep-decarbonization pathways, but primarily in the longer term (in 2050, biomass accounts for only 10% of final energy consumption even in 1.5°C-overshoot pathways). In addition, hydrogen plays a considerable role as a substitute for fossil-based non-electric energy demands in some pathways.

Without major deployment of new sustainability-oriented low-carbon industrial processes, the 1.5°C-overshoot target is difficult to achieve. Bringing such technologies and processes to commercial deployment requires significant investment in research and development. Some examples of innovative low-carbon process routes include: new steelmaking processes such as upgraded smelt reduction and upgraded direct reduced iron, inert anodes for aluminium smelting, and full oxy-fuelling kilns for clinker production in cement manufacturing (IEA, 2017a) <sup>[[#fn:r412|412]]</sup> .

CCS plays a major role in decarbonizing the industry sector in the context of 1.5°C and 2°C pathways, especially in industries with higher process emissions, such as cement, iron and steel industries. In 1.5°C-overshoot pathways, CCS in industry reaches 3 GtCO <sub>2</sub> yr <sup>−1</sup> by 2050, albeit with strong variations across pathways. Given the projected long-lead times and need for technological innovation, early scale-up of industry-sector CCS is essential to achieving the stringent temperature target. Development and demonstration of such projects has been slow, however. Currently, only two large-scale industrial CCS projects outside of oil and gas processing are in operation (Global CCS Institute, 2016) <sup>[[#fn:r413|413]]</sup> . The estimated current cost <sup>[[#fn:8|8]]</sup> of CO <sub>2</sub> avoided (in USD2015) ranges from $20–27 tCO <sub>2</sub> <sup>−1</sup> for gas processing and bio-ethanol production, and $60–138 tCO <sub>2</sub> <sup>−1</sup> for fossil fuel-fired power generation up to $104–188 tCO <sub>2</sub> <sup>−1</sup> for cement production (Irlam, 2017) <sup>[[#fn:r414|414]]</sup> .

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