The race towards a green and resilient industrial sector
Regulations and capital are falling into place – but is it enough?
Driven by the green transition, a rapid transformation of all industries is underway, with many innovative solutions reshaping every sector. The industrial sector, responsible for 25-30% of global CO2 emissions, has a key role to play in the green transition.
In this report from Sweco’s Urban Insight, ‘The Race towards a Green and Resilient Industrial Sector’, experts take a deep dive into the leading sectors in the green transition, highlighting the latest technologies, as well as the potential new risks for companies and decision makers to consider.
During the last decade, the industry sector has gone from slow movers to key participants in a green transition, which could be best described as a race towards net zero. No-one wants to be left behind, neither companies nor countries.
Sweco’s analysis is based on the Leadership Group for Industry Transition (LeadIT) database and shows that Europe is taking the global lead in the green transition of the industry sector, as 95% of the full-scale projects in cement worldwide are conducted in Europe, as well as 61% of all fossil-free steel projects.
In the short term, the green industrial transition means increased risk-taking because companies are testing new technologies that have not been run on an industrial scale anywhere in the world. But in the long term, the change is something that enables the industrial sector to survive, says Björn Nykvist, researcher at the Stockholm Environment Institute.
Technological advancements, innovative business models and collaborations together with new net-zero technologies are growing at a rapid pace.
There are a number of reasons why this is happening right now: Higher prices for CO2 emissions, new investments, regulations, the EU Net-Zero Industry Act and stronger demand for sustainable products from end customers, not least in the steel sector, are some of these reasons.
“We need a regulatory environment that allows us to scale up the clean energy transition quickly. The Net-Zero Industry Act will do just that,” Ursula von der Leyen, President of the European Commission said in connection with the presentation of the act in March 2023.
In the US, the Inflation Reduction Act came into law in August 2022, marking the most significant action Congress has taken on clean energy and climate change in the nation’s history. The latest addition to the European Green Deal was the Net-Zero Industry Act, which aims to scale up the manufacturing of clean technologies in the EU and make sure that the Union is well equipped for the clean-energy transition.
In particular, these so-called hard-to-abate industries must change radically, and several of them are now in the lead of the transition.
”The hard-to-abate sector must reduce its carbon dioxide emissions by 90 percent to reach net zero throughout the economy. Is it possible and, if it is, how can it be achieved?” asks Aaron Maltais, researcher at the Stockholm Environment Institute.
Indeed, we are in a hurry. However, when things have to be done quickly, the risks increases that all aspects of the transition are not taken into account. The knowledge needed to manage the goal conflicts is key in order to avoid good intentions leading to unintended consequences for people, the environment and societies.
Sweco’s report covers the following key insights:
- Regulations and capital are falling into place – but is it enough?
- The steel industry takes the lead, cement industry runner up
- CCS/ CCU – a necessary complementary solution
- The electrification revolution, spurred by renewables, hydrogen and batteries
- Resource efficiency and circular industrial processes
- Industrial symbiosis and new business models
Demand for industrial products is expected to increase significantly over the next three decades – steel by 30%, cement and ammonia by 40%, and aluminium by 80%. Companies in those hard-to-abate-industries are now required to deliver on that demand in a sustainable manner.
Electrification, circularity, renewable energy solutions, batteries, hydrogen, carbon capture usage and storage, energy storage, power-to-x, electro fuels, smart manufacturing using sensors, connected machinery, AI and data analysis… these are just a few in a range of new, promising technologies and solutions, which might help us achieve a fossil-free future.
“To address climate change effectively, a holistic perspective is necessary – one that balances global challenges with local conditions. Existing industries must adapt to enable the creation of new businesses. This represents an enormous challenge, and time is of the essence. All hard-to abate-sectors need to be involved, says Martina Söderström, Division manager Environment & Planning at Sweco Sweden.
In the report experts highlight knowledge of the strategies needed to navigate goal conflicts and the efficiency to expedite permit processes and carry out impact analysis — all essential components in facilitating a smooth transition.
is required annually for Europe to meet its energy transition goals and combat climate change.
annually will be needed to meet the objectives of the Green Deal and REPowerEU plan.
will be needed to address the objectives of the Net-Zero Industry Act.
The circular economy is key to meeting global material needs without exceeding the available carbon budget. Recirculating materials cuts CO2 emissions and requires much less energy than new production does.
What is industrial symbiosis? Industrial symbiosis is created by using waste from one operation as a resource in another operation and is a subset of the circular economy. Industrial symbiosis is a method for increasing industrial circularity by promoting transactions of information and residues to provide economic and environmental synergies in a network of industry actors. A more circular economy can cut CO₂ emissions from heavy industry by 56% by 2050. New business models and collaboration is key.
“Carbon emissions reduction is at the heart of the green transition, but just as with the heart, it won’t work without the rest of the body. The transition must include fostering biodiversity and empowering local communities. Otherwise, the transition won’t be green or just, or even happen. So, the challenge for the greening industries is to understand that they are societal developers, and they need to take that role, just the way that property developers did when they understood that they were developing cities and not only into buildings. We see the same thing happening in the industrial sectors now”, says Andreas Gyllenhammar Chief Sustainability Officer, Sweco
The report aims to take the pulse of the industrial sector’s progress and considers the driving forces required for the manufacturing industry to reach net zero, as well as the potential new risks that the transition could lead to if resilience is not also taken into account.
In the report we highlight key insights and actions in the wake of the green transformation of the industrial sector.
For more, download the report ‘The Race towards a Green and Resilient Industrial Sector’
