Energy use typically accounts for 80-90% of an industrial organisation’s CO2 emissions, yet only 5-10% of its costs. This often means that practical actions to reduce energy use and emissions struggle to gain traction – and highlights why any roadmap to achieving net zero needs to consider two types of factors: technological and organisational.
Technological and organisational
Technology such as heat pumps and variable-speed drives can save energy and reduce CO2 emissions in industrial facilities and processes. But many companies struggle to implement such initiatives. Reasons can include a lack of funding or a disconnect between the corporate-level goals and site-specific investments. Most large companies in Europe will have undertaken an energy audit in 2019 under the EED/ESOS regulations and these audit reports provide a rich source of information on opportunities to pursue. But we often find that companies struggle to implement more than one in 10 of the measures identified.
This is where organisational factors come in. Companies need to adapt their strategy and tactics to make carbon reduction projects happen on site, as well as training staff and bringing in any external expertise they need. Without backing from leadership, even technologies like sub-metering and LED plant lighting –relatively easy wins – can struggle to get funding.
At WSP, we worked with the UK government to develop a series of pathways for industrial decarbonisation
. We also work with clients such as IKEA, SABIC
and Saica to design and specify new technology, and to advise how an organisation needs to change if it is to implement its low-carbon strategy over the next decade and beyond.
For SABIC, we helped set an internal shadow carbon price and used the net present value of projects, instead of simple payback, to better determine their ultimate value. We also developed a marginal abatement curve covering SABIC’s chemicals manufacturing facilities. This will enable the company to make informed decisions on how to get the best emissions reduction for its money.
Beyond energy efficiency
Well-planned and costed energy-efficiency measures typically enable industrial companies to reduce their CO2 emissions by roughly 30%. Implementing renewable generation could increase this to around 50% but the last 50% presents more of a challenge. Eliminating these remaining emissions needs a step change in approach and will ultimately only be possible with regional industry partnerships and government support.
As the UK’s electricity grid decarbonises, natural gas and oil are left as the major sources of industrial CO2 emissions. So, particularly for intensive industries, such as fertiliser or glass manufacture, fuel-switching to hydrogen provides a possible path to further decarbonisation.
But this is not something a company can easily do alone. It’s only really possible as part of an integrated regional strategy whereby industries are clustered around a source of decarbonised hydrogen (produced through steam-methane reforming, with CO2 emissions captured). This can then be connected to carbon dioxide transportation and storage infrastructure. WSP is collaborating on the UK’s first such industrial cluster, HyNet North West – designing the hydrogen network
The price has to be right
The question of cost, however, remains; without subsidies, it looks as if decarbonised hydrogen will be up to twice as expensive as natural gas. A doubling of energy costs could result in companies closing UK facilities and moving abroad (so-called “carbon leakage”), so the government will need to support the price in some way as they are doing for biogas through the renewable heat incentive (RHI).
Yet even with a subsidy, hydrogen might not make sense for every industrial facility. Not every factory is conveniently situated in a cluster. A cement manufacturing plant – where two thirds of emissions come from the calcining process – crucial to cement making itself – is likely to require on-site carbon capture and storage to achieve deep decarbonisation. Other sites may be able to take advantage of biogas, which currently makes up only around 3% of UK gas in the network. Increasingly, industrial sites are also investigating the potential from on-site renewable generation from biofuels or solar.
In some cases, eliminating CO2 emissions may be impossible for a particular site. It might not be technologically feasible, or it might be just too expensive. In instances like this, companies can work with partners to invest in off-site methods of reducing emissions. For example, in our work with one global chemical manufacturer, we found that one process plant producing a CO2 rich waste stream could export this to another nearby plant for use as a feedstock in a methanol manufacture, saving up to 1 million tonnes of CO2 per annum between the two plants. The significant investment needed in the CO2 capture, compressors and transport pipeline could be split between the project partners, giving a low overall unit abatement cost.
So, while it is encouraging to see more industrial companies setting targets for net zero, achieving these ambitious goals will require a clear roadmap, informed by a detailed understanding of the technical and commercial issues – as well as a helping hand from government.