Industrial Decarbonization Is Coming To A State Near You

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Industrial decarbonization is in the news. This week the US government announced $6 billion in grants that makers of metal, paper, and glass can use to cut planet-warming emissions. The Biden-Harris administration is framing these grants as a key opportunity to transform the US industrial sector and strengthen domestic manufacturing.

All told, this portion of the Investing in America agenda is proving to be the single largest industrial decarbonization investment in US history. It is calculated to drive $20+ billion in total investment to revitalize manufacturing communities. With new manufacturing comes more and better paying union jobs.

The US Department of Energy (DOE) announced 33 projects across more than 20 states so as begin the arduous process of industrial decarbonization. These are particularly energy-intensive industries that need significant reductions in industrial greenhouse gas (GHG) emissions. The projects will help accelerate the commercial scale demonstration of emerging industrial decarbonization technologies crucial to meeting the Biden-Harris administration’s climate and domestic manufacturing goals.

The Need for Industrial Decarbonization

The Paris agreement, ratified by 196 parties in response to the climate conference held in Paris in 2015, came into force with the aim of maintaining the global temperature increase under 2 °C since the period of pre-industrialization.

Finding ways to decarbonize industry is a relatively new phenomenon, as prior to the Paris Agreement less stringent emissions requirements were a trade-off in recognition of industrial technical challenges to abatement. Yet manufacturing is the foundation of the global economy; it converts raw materials to products that are central to everyday life. Over the last few decades, considerable amounts of CO2 have been released into the atmosphere as a result of electricity generation, cement and steel manufacture, oil and gas refineries, and the use of fossil fuels.

The situation became out-of-control.

The industrial sector accounts for 38% and 25% of global final energy consumption and direct CO2 emissions, respectively, and the industrial sector contributes nearly one-third of US GHG emissions. Yet decarbonization of industrial clusters is crucial for climate change mitigation and net zero policy goals. The sector has been long been characterized as “hard to abate” and has faced numerous technical and commercial barriers to decarbonization, including long investment cycles, high energy use, low profit margins, and trade exposure.

Typically, energy-intensive sectors co-locate close to geographically anchored resources such as transport and hydrocarbon infrastructures. This geographical concentration allows for the development of a skilled local workforce, specialized supply chains, and application of knowledge networks to develop among clustered firms.

Authors of a 2023 article in Sustainability Science argue that industrial decarbonization is not solely a technical challenge. “The industrial transition is a sociotechnical process,” they say, “made up of multiple co-evolving elements, which incorporates markets, value chains, infrastructures, policies, and social practices.”

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The Biden-Harris Grants for Industrial Decarbonization

Green industrial policy can advance climate goals and cooperation, but can also present challenges to deepening climate cooperation and reducing GHG emissions. It has been historically difficult for disadvantaged communities to engage proactively with the green industrial agenda in order to support regional industrial economic regeneration.

Each of the new US industrial decarbonization projects is expected to develop and ultimately implement a comprehensive Community Benefits Plan that ensures meaningful community and labor engagement. Nearly 80% of the projects are located in a disadvantaged community, as defined by the administration’s Justice40 Initiative, offering a significant opportunity to invest in good jobs and clean air in communities that have experienced years of divestment. Applicants were required to describe how their proposals would provide the greatest benefit to the greatest number of people in a facility’s location, recognizing the opportunity this funding provides to address pollution for those disproportionately affected by industrial sector emissions and begin remediating existing social, economic, and health burdens.

Looking forward, the more ambitious GHG targets get, the more achieving these goals depends on the adoption of green industrial policies. As MIT researchers point out, industrial policy has long been used to achieve policy goals, such as reducing regional disparities in economic development and advancing environmental protection. In domestic politics, the content and contexts of green industrial policy raises questions about the complex interactions of how social policy and macroeconomic policy can and should be tied to climate goals.

Since industry is a heterogeneous sector, it requires solutions tailored to specific processes and sub-sectors, which makes it hard to prioritize a single approach to deep decarbonization. An overview of selected Biden-Harris administration projects broken down by industry include chemicals and refining, cement and concrete, iron and steel, aluminum and metals, food and beverage, glass, process heat, and pulp and paper.

The projects will focus on the highest emitting industries where decarbonization technologies will have the most profound effects. Together, the projects are expected to reduce the equivalent of more than 14 million metric tons of carbon dioxide (CO2) emissions each year. Many of the projects will deploy new emissions-reducing technologies that have the potential for sector-wide adoption and transformation. Long held fears about the fragility of clean energy startups don’t seem to pervade sectors like steel-making, which have a long record of testing successes.

Funding for these projects includes $489 million from the Bipartisan Infrastructure Law and $5.47 billion from the Inflation Reduction Act. The projects are part of the Industrial Demonstrations Program, managed by DOE’s Office of Clean Energy Demonstrations (OCED).

To kickstart ongoing engagement around these projects, OCED will hold a series of national and regional virtual briefings to provide information on the selected projects, introduce OCED’s approach to clean energy demonstrations, and provide opportunities for industry and communities to engage further on specific projects of interest. Before funding is issued, DOE and the selected applicants will undergo a negotiation process, and DOE may cancel negotiations and rescind the selection for any reason during that time. Lead applicants also may change during the award negotiations process.

If awarded, OCED will evaluate these projects through a phased approach to project management that includes “go/no-go” decision points between each project phase where DOE reviews and evaluates implementation progress, including community benefits.

Funded projects will cut carbon emissions by an average of 77%. We’ll be writing about some of the demonstration projects over the next several days.

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