Mar 16, 2021

Decarbonisation can save heavy industry €200 billion a year

Dominic Ellis
3 min
Accenture's Energising Industry report warns public-private collaboration will be a critical success factor in Europe
Accenture's Energising Industry report warns public-private collaboration will be a critical success factor in Europe...

Heavy industrial companies in Europe could generate more than €200 billion euros annually in net value through decarbonization by 2030, according to Accenture’s new Energizing Industry report.

But it warns creating an effective pathway will require co-ordination between public and private sectors across a raft of areas, such as precise and robust carbon price mechanisms, European product carbon-labelling standard and an emissions framework.

With industrials representing 20 percent of EU emissions and about 25 percent of final energy consumption, they are a key enabler of the energy transition and decarbonization. However, the need to deliver a required 33% decrease in CO2 emissions by 2030 is daunting (see main image), and puts unprecedented pressure on industrials, which will drive new levels of convergence.

Götz Erhardt, a senior managing director at Accenture who leads the Resources industries group in Germany, Austria and Switzerland, said industrial decarbonization in Europe is a major opportunity for both energy producers and industrial energy customers. 

"But while they are capable of driving transformational change and redefining business models, they need support from the public sector, given the investments required and the uncertainty of the pace and scope of technological innovation," he said.

"Successful industrial decarbonization requires a multi-faceted approach with the public and private sectors working in coordination to ensure Europe retains its competitive advantage.”

While future prices for CO2 emissions and green electricity remain uncertain, the research predicts the annual net value of industrial decarbonization will more than double between 2020 and 2030.

However, new technological innovations are expected to emerge, which could lead to growth in value continuing over time. Most transformative solutions, including electrification technologies and the process of capturing waste CO2, known as carbon capture, are not yet financially attractive compared to unabated natural gas, prompting many companies to focus on increasing efficiency in industrial processes.

“Industrial companies across Europe are struggling with uncertainty around the fragmented regulatory environment, infrastructure challenges, the development of key technologies and their pricing,” said Erhardt.

“That’s why decarbonization efforts are not progressing fast enough, despite the potential for innovation and value creation. However, public and financial support is at an all-time high, and, as key enablers of the energy transition, European industrial companies need to reimagine their operations at a faster pace."

Hydrogen is the most promising technology

The report shows that firms are already taking action – 40% of investments during the past five years were linked to decarbonization, including investments in renewables, hydrogen, intelligent cloud and energy distribution.

Even so, an evaluation of all global CO2 patent filings since 2013 revealed that the growth of new technologies or applications for the mitigation of or adaptation to climate change may be slowing. Instead, patents are increasingly focused on cost advantages and scale, indicating technological maturity.

Accenture analysis reveals European industrial firms are still investing in some new areas. Chemical companies are spending heavily on 3D printing, biofuels, hydrogen and battery technology; energy companies are more focused on platform ecosystems, cloud technologies and renewable energy; and mining, metals and building materials companies are concentrating larger investments in energy distribution and chemicals, such as hydrogen.

For heavy industry, the report suggests hydrogen could significantly reduce emissions in operations, as it could partially replace conventional fuels. 

The total net value of hydrogen adoption is forecast to increase from around €20-100 billion annually between 2020 and 2040. As a comparison, switching to natural gas would follow a decreasing trend, from generating €11 billion in total net value in 2020 to €6 billion in 2040.

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Jul 29, 2021

Carbon dioxide removal revenues worth £2bn a year by 2030

Dominic Ellis
4 min
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades says the UK's National Infrastructure Commission

Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission

Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.

The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.

The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture. 

It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.  

The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020. 

Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.

The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.

While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.

Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.

Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse. 

"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.

“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.” 

The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets. 

Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.  

Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."

McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:

  • Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
  • Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
  • Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
  • Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
  • The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere

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