McKinsey and Company
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..