Carbon contracts for difference, public procurement, certification and near-zero-materials mandates can help drive hydrogen use in the G7’s industrial sector, according to the IEA.

These policies should be supported with R&D development funding, public-private partnerships and backing for pilot demonstration projects, the IEA says in a report on decarbonising industry, titled Achieving Net Zero Heavy Industry Sectors in G7 Members.

On a wider policy level, the move towards carbon pricing is a key factor that will help industry decarbonise. In the near-term, this is likely to be enabled by domestic or regional carbon markets that are eventually linked and protected by carbon border adjustment mechanisms, or by carbon taxes or tradeable carbon performance standards.

“The overarching driver of change for the industry transition lies in setting long-term plans and establishing a clear, strong, predictable long-term policy signal for emission reductions early on,” says the report.

“We welcome the report… especially its recommendations regarding the suitable policies and financing mechanisms” G7 ministers

“This is critical for industry planning and decision-making given the long lifetimes of industrial assets and helps provide confidence that high-cost, high-risk innovation efforts on near-zero-emission industry technologies will pay off.”

While policies are vital to enable transformational technological change, more short-term strategies are also needed to reduce emissions from existing assets.

Energy performance schemes can encourage industrial plants to improve their operational efficiency and adopt energy saving add-ons such as waste-heat recovery.

Some countries should also consider cap-and-trade schemes for energy savings certificates, the IEA says.

Not just a transition

An important aspect of overall transition planning will be ensuring a just transition for workers and communities, according to the report.

Governments will need to develop strategies, implement training programmes and, in some cases, provide funding support to affected communities.

“In the industry sector, this may include training workers to operate new technologies within industrial plants or to work in new areas, for example operating carbon transport and storage networks, and increased work related to material efficiency and the circular economy,” says the report.

Definitions

Defining what is meant by near-zero-emission steel, cement and chemicals production will also be vital in helping industries and their customers understand what is needed to achieve decarbonisation.

The IEA report proposes thresholds for near-zero-emission materials production that are consistent with the IEA’s net-zero-by-2050 scenario.

G7 members should consider forming an international industry decarbonisation alliance as well as financing a portfolio of demonstration projects for low-carbon technologies in the steel, cement and chemicals production sectors, the report concludes.

A group of G7 ministers welcomed the report in a statement following a meeting last week.

“We welcome the report… especially its recommendations regarding the suitable policies and financing mechanisms on the pathway to near-zero industry production and the suggested principles of common and practicable definitions of near-zero-emission materials production,” says the statement.

The ministerial meeting was led by Germany’s minister for economic affairs and climate protection, Robert Habeck, and environment minister Steffi Lemke.

The G7 ministers committed to the goal of achieving predominantly decarbonised electricity sectors by 2035, as suggested in a separate IEA report on the topic last October.

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Author: Tom Young