Decarbonizing Hard-to-Abate Industries

Photo by Kateryna Babaieva

As net-zero targets draw closer, ‘hard-to-abate’ industries present considerable challenges to corporations and governments alike. Notable industries are steel, cement, chemicals, aviation, and shipping, which significantly contribute to greenhouse gas emissions, making their decarbonization essential for reaching net zero. Though there is an urgent need to decarbonize them, the processes that create these emissions are hard to change and innovate. The goods created by these industries are also essential for mobility, construction, and other development needs, so it is unlikely that they can be reduced in scale.

What Makes a Sector ‘Hard to Abate’?

While many sectors can lean on electrification and energy efficiency to cut emissions, hard-to-abate industries cannot. These sectors are defined by a unique combination of factors that limit the effectiveness of conventional decarbonization techniques.

1. Process-Related Emissions Are Intrinsic to Output: In various heavy industries, emissions are not solely a result of fossil fuel combustion for energy but are fundamentally linked to the production processes themselves. Therefore, transitioning to 100% renewable energy does not fully eliminate these emissions. It necessitates the development of new chemical pathways or the implementation of carbon capture technologies.

• Cement: The production of clinker, which is the primary component of cement, generates CO₂ due to the calcination of limestone. This process accounts for nearly 60% of total emissions in cement manufacturing, independent of the energy sources utilized.
• Chemicals: In the production of ammonia or methanol, emissions arise from the conversion of feedstocks, which is an inherent aspect of the chemical transformation process.

2. Extreme Temperature and Pressure Requirements: Many hard-to-abate industrial processes necessitate highly energy-intensive conditions that present significant challenges for electrification. The complexity of transitioning these processes to electric power often results in inefficiencies. Alternative solutions, such as hydrogen and concentrated solar thermal energy, are being explored; however, they have not yet achieved widespread viability.

• Steelmaking: The blast furnace-basic oxygen furnace (BF-BOF) process requires temperatures exceeding 1,500°C, which are typically achieved through the use of coke, a coal derivative.
• Glass, Ceramics, and Refining: These industries also demand high-grade heat that is challenging to produce using traditional electric systems or low-temperature renewable energy sources.

3. Energy Density Needs and Long-Distance Operations: Certain sectors, particularly transportation and logistics, necessitate the use of energy-dense fuels that provide high power-to-weight ratios and extended endurance. These sectors are likely to rely on synthetic fuels, biofuels, or green hydrogen-derived alternatives such as ammonia or methanol, though these alternatives are currently not produced at scale or at competitive prices. Currently, these fuels cost 3x-5x more than their fossil counterparts.

• Aviation: Current battery technology is inadequate for long-haul flights, primarily due to weight constraints. Jet fuel (kerosene) offers an energy density of approximately 12,000 Wh/kg, in contrast to lithium-ion batteries, which currently deliver only 200–300 Wh/kg.
• Shipping: Cargo vessels are often required to operate for extended periods, sometimes weeks, without refueling. The electrification of these vessels is not feasible given the limitations associated with range and battery size.

4. Capital-Intensive, Long-Lifecycle Assets: Hard-to-abate industries typically operate with infrastructure that is expensive to replace and designed to last decades. Even if clean technologies exist, the financial and logistical burden of transitioning existing assets is prohibitive without strong economic incentives or policy mandates.

• Refineries, cement kilns, blast furnaces: These assets represent billions in investment and are often only replaced every 20–40 years.
• Retrofitting: It’s costly, time-consuming, and may not always be feasible depending on the facility’s age or layout and technical complexity.

5. Fragmented Supply Chains and Global Operations: Industries like steel, shipping, and chemicals operate across borders with multiple actors in the value chain. Harmonizing emissions standards, incentivizing green procurement, and coordinating transitions across nations and suppliers is complex and slow-moving.

• Steel: One country may mine the ore, another might process it, and a third might manufacture final products.
• Shipping and aviation: Regulated under international frameworks, which can slow unified climate action.

Key Challenges in Decarbonization

Transitioning away from fossil fuels is critical, but several challenges hinder progress:

• Technological Limitations: Many low-carbon alternatives are still in development and lack scalability. For example, hydrogen-based steelmaking shows promise for reducing emissions, but technological and economic obstacles prevent widespread adoption.
• Economic Constraints: The shift to greener technologies often requires substantial capital investment. In the cement sector, carbon capture and storage (CCS) solutions have potential, yet they can be prohibitively expensive, particularly for smaller operators with limited resources.
• Infrastructure Deficits: Adopting new technologies necessitates extensive overhauls of existing infrastructure. Efficient use of hydrogen fuel will require new production facilities, storage capabilities, and distribution networks, leading to complex financial and logistical challenges.
• Policy and Regulatory Gaps: Inconsistent regulations and a lack of supportive policies can deter investment in low-carbon technologies. Effective transition finance strategies are crucial to create an environment conducive to innovation and the adoption of greener practices.

Emerging Solutions and Innovations in Decarbonization

Despite the formidable challenges faced in reducing emissions within hard-to-abate industries, innovative solutions are emerging that hold promise for significant decarbonization:

• Hydrogen Fuel: Clean hydrogen is gaining traction as a viable alternative fuel in sectors where electrification may not be feasible. Its dual functionality as both a fuel and a feedstock positions it as an invaluable asset, particularly in steelmaking and various chemical processes.
• Carbon Capture and Storage (CCS): CCS technologies play a crucial role by capturing and securely storing CO₂ emissions from industrial processes, thereby preventing them from entering the atmosphere. While challenges remain regarding economic viability and scalability, the potential of CCS in comprehensive decarbonization strategies is undeniable.
• Electrification Powered by Renewable Sources: Where feasible, transitioning from fossil fuel-based processes to electric alternatives powered by renewable energy can dramatically reduce emissions. This approach is particularly relevant in industries such as aluminum production, where electric solutions are making significant strides.
• Alternative Materials: The development and use of low-carbon materials, such as innovative cements that incorporate waste by-products or recycled metals, can substantially lower emissions linked to traditional production methods.

The Bottom Line

The complexity of abatement in these sectors stems not from a lack of awareness or willingness, but rather from entrenched technical, economic, and operational challenges. Addressing these issues requires sustained, long-term investments in paradigm shifting research and development. Policy interventions need to be introduced to effectively internalize carbon costs and incentivize innovation in low-emission technologies. Policy can also create a mandate for decarbonization, urging industries to take action sooner.

For corporations, strategic deployment of transition financing is crucial in alleviating upfront capital expenditures. It is worthwhile for corporations to explore innovation routes such as supporting young start-ups in the decarbonization space, which will help outsource R&D costs and allow solutions to be used across the industry. Scalable pilot programs and demonstration projects to reduce the risks associated with adopting new technologies, and working alongside startups in the space reduces risk.

Decarbonizing hard-to-abate industries is not merely about implementing quick fixes; it involves fostering systemic change. By prioritizing innovation, aligning policies with the needs of the industry, and mobilizing necessary capital, we can pave the way toward a net-zero future — even in the most challenging sectors.