INDUSTRY’S TOLL ON THE ENVIRONMENT
Cutting industry’s carbon emissions will require significant investment, as well as a coordinated effort by businesses, governments, and other stakeholders.
The industrial sector is a vital source of wealth, prosperity, and social value on a global scale. Industrial companies produce about one-quarter of global GDP and employment, and they make products and materials that are integral to our daily lives. Yet their activities, like those of most businesses, also take a toll on the environment. Roughly 28% of global greenhouse-gas (GHG) emissions came from industry in 2014. Unless industry can lower its emissions, the world will struggle to reach the GHG reduction targets of 80% to 95% that governments set under the Paris Agreement of 2015. Lowering industrial GHG emissions won’t be easy, but it is possible. A new report from McKinsey, Decarbonization of industrial sectors: The next frontier, finds that ammonia, cement, ethylene, and steel companies can reduce their carbon-dioxide (CO2) emissions to almost zero with energy-efficiency improvements, the electric production of heat, the use of hydrogen and biomass as feedstock or fuel, and carbon capture. The decarbonization of these sectors will cost between $11 trillion and $21 trillion through 2050 and will require accelerating the build-out of renewable-energy capacity, to provide four to nine times as much clean power as industry would need in the absence of any effort to reduce emissions.
THE CHALLENGE OF CO2 EMISSIONS
The vast majority of industry’s GHG emissions (some 90%) consists of CO2. Half of industry’s CO2 emissions result from the manufacture of the four industrial commodities—ammonia, cement, ethylene, and steel—that are the