How to decarbonise in a hard-to-abate sector?

For the first time in recent years, the Net Zero Industry Tracker shows that overall, hard-to-abate sectors are reducing emissions. The favourable trend shows promise with increased use of low-carbon power, improved energy efficiencies and greater use of recycled materials helping the shift forward. However, these industries still account for nearly 40% of global greenhouse gases. Under a business-as-usual scenario, it’s anticipated that emissions from these sectors will grow by more than 50% from now until 2050.

Some industries have an easier decarbonisation journey due to the availability of cleaner existing technologies and lower costs. Compounding the challenge is how greenhouses gases released by hard-to-abate sectors can remain in the atmosphere longer – from a few to thousands of years. Also, operational processes typically require high volumes of energy which are heavily reliant on fossil fuel combustion, and emissions often produced as a byproduct of chemical reactions.

Reducing overall consumption to improve efficiency is crucial. Resource use of any kind, whether it is from energy or water, produces emissions and these indirect emissions are problematic. While electrification offers a step forward, unless the electricity source is renewable, organisations will only achieve a minor reduction in emissions. In the meantime, industries must identify and highlight any inefficient processes and strive to curb them wherever possible. Addressing energy inefficiencies can yield significant short-term gains and lay the groundwork for more profound, long-term transformations, especially when combined with direct use of renewable energy and enhanced electrification efforts. Although energy emissions only represent a subset of the total industrial emissions, they represent an achievable goal that can be worked towards while the more complex process emissions continue to be explored.

Outside the World Economic Forum’s recommendations for organisations to focus on collaboration, electrification and circularity efforts, below are actionable insights you can apply to continue moving the hard-to-abate sector needle in the right direction.

1. Focus on a mix of short-term wins, while investing in longer term goals and more transformational strategies. Devote resources to large, complex decarbonisation projects while focusing on near-term opportunities that bring you closer to the end goals. For example, investing in renewable energy infrastructure while pursuing ongoing energy efficiency programs. Consider what’s available to your business across financing mechanisms such as green bonds, public-private partnerships, climate funds and carbon pricing.

Slicing up your decarbonisation strategy into achievable components will help you adopt a more practical approach while working on bigger, flagship-style solutions.

2. Invest in a technology portfolio. Digital innovation can fast-track positive outcomes. Emerging technologies across carbon capture, utilisation and storage, biofuels, new production pathways for materials, hydrogen and its derivatives can all be considered in your plans. Start with considering what technologies you already have available and go from there to establish new systems and platforms that support long-term transition efforts. To select ideal digital partner organisations, conduct a needs gap assessment to identify the additional capabilities and expertise required to accelerate achieving your net zero goals.

3. Identify your ecosystem. Decarbonisation cannot be achieved in silos. Organisations must adopt a collective approach to drive low carbon operations and processes. Internally that means breaking down traditional silos and encouraging cross-functional cooperation. Collaboration extends to encompass like-minded partnerships with industry peers, government, industrial hubs, even competitors. Industry alliances and collaborative initiatives enable shared standards, best practices and frameworks.

4. Digitise, manage and track. Forget the spreadsheets. Your Scope 1, 2 and 3 emissions reporting needs to be digitalised. In the long run, performance will not only be measured by dollars and cents. Companies that can accurately and repeatedly report on their progress to decarbonisation will be bankable and future-ready. As the world gets closer to that reality, there is also greater scrutiny surrounding emissions, their origin, calculation and aggregation. Industrial bodies need to step in and help define clear carbon thresholds and promote best practices. Leverage digital data to track metrics, map supply chains and integrate renewables into manufacturing.

5. Identify integrated solutions. Explore which low carbon alternatives for scaling are most cost effective and also provide greater diversification across domestic and export customer bases. Execution plans that combine multiple low carbon energy customer sets are likely to provide the best opportunities for early market entry. It will take a combination of solutions underscored by social buy-in, equitable policies, workforce upskilling and supporting communities. Consider harnessing AI and simulation tools to break down increasingly complex scenarios and support smarter decision-making.

Intertwined in these steps is the call for pooling thinking, best practices and resources, desperately needed to drive industry forward. Creating forums and collaboration opportunities are crucial for carving out a clear path to net zero. It’s not a lack of investment, it’s the lack of green alternatives and cohesion.

In addition to taking the above organisational-level actions, the International Renewable Energy Agency (IRENA) cites a combination of intentional industry solutions are needed on a sector-wide level to lower industrial energy consumption by 2050. Some of these include:

• Implementing circular economy practices and structural changes to improve energy efficiency.
• Increasing the share of direct electrification via renewable sources. This includes implementing heat pumps for low-temperature industrial heat needs.
• Utilising solar thermal, geothermal, biofuels and bio-feedstocks for medium- and high-temperature heat requirements, as well as for chemical feedstocks.
• Growing the use of hydrogen and synthetic fuels and feedstocks in industry.
• Implementing carbon dioxide removal and carbon capture and storage measures, including those coupled with bioenergy (BECCS). This approach is essential for addressing emissions that cannot be mitigated by other means.

Organisations seeking long-term stability, adaptation and resilience, and those wanting to perform in an increasingly complex environment need to decarbonise. Evaluating your risks and implementing actions to address operations, practices, products and services is critical regardless of your industry. Hard-to-abate sectors require more significant diversification and changes across the supply chain to edge closer to targets. Reframe the conversation from a set of problems to solve and costs to outlay into one about investment, opportunity and future-proofing.