Tracking Progress: Industry

Industry

The industrial sector accounted for 154 exajoules (EJ), 3 or 36% of global total final energy consumption (TFEC) in 2014. The long-term trend of production growth in energy-intensive industrial sectors has continued, along with growth in the industrial sector’s TFEC, which grew by 1.3% in 2014. Even as production continues to grow in the future, annual growth in energy consumption must be limited to 1.2%, to stay on a 2DS pathway, less than a half of the average 2.9% annual growth since 2000. Decoupling of industrial production from CO2 emissions is also critical to meeting the 2DS pathway, which envisions 0.1% annual growth in CO2 emissions by 2025 from 2014, compared with 1.1% in the RTS. In the 2DS, industrial CO2 emissions need to peak by 2020.

Recent trends

Industrial sector energy consumption has grown by about 1.5% annually since 2010. Consumption of coal has grown fastest in recent years, more than doubling since 2000. Strong growth has also occurred in non-biomass renewables, such as solar thermal and geothermal, which have increased 80% since 2000 and have had the strongest growth of any fuel in 2014, at 7%. Structural effects based on changing shares of industrial subsectors, as well as regional shifts in production, could partly explain this, but the growth in renewable energy use in industry is nonetheless an encouraging sign.

The highest growth rate of industrial energy use occurred outside the OECD; the energy use of non-OECD countries grew 1.9% in 2014 compared with 0.2% for OECD countries, and continued to gain share of global industrial energy use, reaching 69% in 2014, up from 49% in 2000. Growth in energy use was strong in China (3.1%) and India (4.3%) in 2014.

Tracking progress

Energy-intensive industrial sectors have made progress in moving towards best practices and improving process energy efficiency. Industrial CO2 emissions have reached 8.3 GtCO2 in 2014, 24% of global CO2 emissions. ISO 50001, a certification for industrial energy management systems, continues to be deployed, reaching more than 12 000 sites in 2015, though 90% of those are located in North America and Europe, and deployment in other regions has been limited. Globally, post-consumer recycling has also been on an upward trend. Long capacity lifetimes and lack of co-ordinated international policies for industrial decarbonisation pose particular challenges in this sector, but energy-intensive industry has made some progress, which will need to accelerate to meet the 2DS. Annual growth in final energy consumption in industry must be limited to 1.2% from 2014 to 2025 to meet the 2DS, compared with 2.9% from 2000 to 2014.

Chemicals and petrochemicals

The chemicals and petrochemicals sector’s share of global final energy consumption has grown from roughly 6% to 10% over the last four decades, and an increasing proportion of that energy input is used as feedstock, signifying this sector’s growing prominence and an increase in process energy efficiency. Price trends in North American natural gas have contributed to a shift towards lighter feedstocks. Longer-term decarbonisation post-2025 requires additional effort on continuing to move towards less carbon-intensive production processes, improving process energy intensity, improving recycling of final products and continuing research on innovative, particularly bio-based, process routes.

Iron and steel

In 2014, 30% of global crude steel production was produced in electric arc furnaces (EAFs), growing from 29% in 2010, and aggregated global energy intensity of crude steel production grew slightly to 21.3 gigajoules per tonne (GJ/t) from 20.7 GJ/t in 2011. Scrap availability puts an upper limit on the EAF share, though additional material efficiency and recycling will be important strategies for meeting the 2DS. New process routes, such as innovative direct reduced iron and smelting reduction technologies, which facilitate CCS, play important roles later in the 2DS. Short‑term emissions reductions come mainly from energy-intensity improvements (47% of cumulative CO2 reductions in the sector by 2025) and greater shifts to scrap-based EAF production (26% of CO2 reductions by 2025).

Cement

Thermal energy intensity of cement kilns continues to improve, as higher-efficiency dry kilns replace older ones. Clinker ratio was about 0.65 on average in 2014 although in some regions significant potential exists to improve this ratio further to decrease the sector’s CO2 emissions, using new and existing clinker substitutes. Globally, biomass makes up about 2.0% of thermal energy consumption, and waste makes up an additional 3.3%; together they are envisioned to reach 12.4% by 2025 in the 2DS. The share of fossil fuels globally continues to decline. Process CO2 emissions from the calcination of limestone remain an important challenge for the cement sector, and continued R&D for alternative products and processes, including CCS and new low-carbon cements, remains critical to the sector’s pathway to 2DS.

Aluminium

The downward trend in energy intensity of both primary aluminium smelting and alumina refining continued, with the world averages decreasing by 1.9% for aluminium smelting and by 5.3% for alumina refining from 2013. In 2014, 31% of aluminium was produced from scrap, maintaining nearly the same share as in 2013, despite 6.7% growth in overall production. Meeting the 2DS pathways will require continued efforts to improve collection and recycling of scrap and SEC of both primary and secondary aluminium, along with R&D focused on alternative production routes, particularly those that address the process CO2 emissions from primary smelting, such as inert anodes. Further, because this is an electricity-intensive sector, options to enable low-carbon grids, including demand-side management and decarbonised electricity sources, should also be considered.

Pulp and paper

Production of paper and paperboard has been increasing, with demand growth in household and sanitary paper due to rising incomes counteracting the effects of digital technology displacing printing and writing paper. These structural effects have an impact, though growth in production has recently outpaced growth in energy consumption, suggesting a decoupling, and recovery and recycling of waste paper have also improved to 55.3% in 2014. The sector’s energy use already includes a large share of biomass fuel and bio-based by-products. Energy intensity improvements, along with system-level thinking including utilisation of by-products, integration of pulp and paper mills, and integration of mills with grids or other sites with heat and electricity demand, will play a growing role in the 2DS. Growth in energy consumption must be limited to 0.1% per year to meet the 2DS, and CO2emissions must decrease 1.7% per year, compared with 0.2% and 0.9% growth, respectively, in the RTS.

Recommended actions

Throughout the industrial sector, pre-2025 emissions reductions rely on implementation of best available technology (BAT) and continued work towards energy efficiency. Increasing post-consumer scrap recycling rates and utilising this scrap to offset primary production of materials would significantly reduce the energy and emissions intensity of production, and thus should be promoted. All sectors should also consider possibilities for sustainable utilisation of industrial wastes and by‑products as well as recovering excess energy flows. Implementation of these existing solutions, especially the low-cost, low-risk commercially available processes and technologies, will be a critical driver of the early phase of the 2DS transition. Policy makers should put in place a policy framework that incentivises decarbonisation while considering the impacts in terms of carbon leakage and competitiveness.

In the longer term, deeper cuts in industrial CO2 emissions will require innovative new low-carbon process routes and products. To ensure the future availability of those processes and technologies, the sector should focus R&D in the near term on low-carbon production and mitigation options. Furthermore, deployment of innovative technologies is needed at both pilot and commercial scale. This deployment will require collaboration across companies, sectors and national borders. Existing efforts should be accelerated, and policy frameworks put in place to incentivise low-carbon innovation.

Report

Published: 16 May 2017

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