McKin­sey and Com­pany

CEO Magazine North America - - CONTENTS -

In­dus­try’s toll on the en­vi­ron­ment.

fo­cus of our re­port. Abat­ing CO2 emis­sions in th­ese fo­cus sec­tors is more dif­fi­cult than it is in most oth­ers for four tech­ni­cal rea­sons (Ex­hibit 1). First, the 45% of CO2 emis­sions from th­ese sec­tors that re­sult from feed­stocks can­not be abated by a change in fu­els, only by changes to pro­cesses. Sec­ond, 35% of emis­sions from th­ese sec­tors come from burn­ing fos­sil fu­els to gen­er­ate high-tem­per­a­ture heat (in the fo­cus sec­tors, process tem­per­a­tures can reach from 700 de­grees Cel­sius to more than 1,600.)panied by changes to other parts of the process. Fi­nally, pro­duc­tion fa­cil­i­ties have long life cy­cles, typ­i­cally ex­ceed­ing 50 years with reg­u­lar main­te­nance. Chang­ing pro­cesses at ex­ist­ing sites re­quires costly re­builds or retrofits.

Eco­nomic fac­tors add to the chal­lenge of abat­ing emis­sions. Am­mo­nia, ce­ment, eth­yl­ene,

and steel are com­modi­ties, so cost is the de­ci­sive con­sid­er­a­tion in pur­chase de­ci­sions. Com­pa­nies that in­crease their costs by adopt­ing low-emis­sion pro­cesses and tech­nolo­gies will find them­selves at a price dis­ad­van­tage to ri­vals that do not.

OP­TIONS FOR IN­DUS­TRIAL DE­CAR­BONIZA­TION

De­spite the chal­lenges de­scribed above, com­pa­nies in the four fo­cus sec­tors could bring their CO2 emis­sions close to zero with a com­bi­na­tion of ap­proaches. The most promis­ing are en­ergy-ef­fi­ciency im­prove­ments, the elec­tri­fi­ca­tion of heat, the use of hy­dro­gen made with zero-car­bon elec­tric­ity as a feed­stock or fuel, the use of

“The most im­por­tant fac­tors are the avail­abil­ity and cost of low­car­bon en­ergy source, as ze­ro­car­bon re­new­able elec­tric­ity and sus­tain­ably pro­duced biomass.”

biomass as a feed­stock or fuel, and car­bon cap­ture and stor­age (CCS) or us­age (CCU). The op­ti­mum mix of de­car­boniza­tion op­tions will vary from fa­cil­ity to fa­cil­ity, even within the same sec­tor, be­cause lo­cal fac­tors de­ter­mine which ones are most prac­ti­cal or eco­nom­i­cal. Com­pa­nies must eval­u­ate their op­tions on a site-spe­cific ba­sis by closely ex­am­in­ing th­ese fac­tors.

The most im­por­tant fac­tors are the avail­abil­ity and cost of low-car­bon en­ergy sources—specif­i­cally, zero-car­bon re­new­able elec­tric­ity and sus­tain­ably pro­duced biomass. Ac­cess to stor­age ca­pac­ity for cap­tured CO2, along with pub­lic and reg­u­la­tory sup­port for car­bon stor­age, will af­fect the pos­si­bil­ity of im­ple­ment­ing CCS. The re­gional-growth out­look for the four fo­cus sec­tors mat­ters, too, be­cause cer­tain de­car­boniza­tion op­tions are cost ef­fec­tive for ex­ist­ing (brown­field) in­dus­trial fa­cil­i­ties while oth­ers are more eco­nom­i­cal for newly built (green­field) fa­cil­i­ties.

* Arnout de Pee is a part­ner in Am­s­ter­dam; Dickon Pin­ner is a Se­nior Part­ner in San Francisco; Occo Roelof­sen is a part­ner in Am­s­ter­dam; Ken Somers is a part­ner in An­twerp; Eve­line Speel­man is a con­sul­tant and Maaike Wit­teveen is a con­sul­tant con­trib­uted to the de­vel­op­ment of this pa­per..

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