05 Industry
05 Industry

Share of global emissions (IPCC)

The building blocks of civilisation

Cement, iron and steel: these materials are the fundamental building blocks of modern society. Every building, every bridge, every car constructed in the world requires one or more of them. Hundreds of kilograms of them are produced every year for every person alive on the planet. And they are among the largest sources of greenhouse gases, together responsible for about 10 percent of carbon dioxide emissions. Industry as a whole is responsible for nearly a quarter of emissions.

The chart shows that the global demand for materials has been rising much faster than the world’s population — a reflection of rising living standards.

The production of iron, most of which is used to make steel, requires extreme heat in a blast furnace to convert iron ore to pure metal, and that heat is usually obtained by burning coking coal, with the resulting carbon dioxide dumped into the air. The bulk of the emissions from cement comes from the process of turning limestone (calcium carbonate) into clinker, the basic ingredient of Portland cement. The limestone is heated to the point that the carbon is driven off, again in the form of carbon dioxide. Portland cement is mixed with sand and rocks to form concrete, the world’s most ubiquitous construction material.

Those are not the only emissions from global industry, of course. Manufacturing consumes a large fraction of the world’s electricity, and is therefore indirectly responsible for substantial emissions from that sector. Industry also produces process emissions from activities like plastic and fertiliser production. Nitrogen fertiliser is essential to global food security, but it is also fossil gas by another name — its production depends entirely on using gas as a source of both hydrogen and process heat, with the waste carbon dioxide dumped into the air, amounting to more than 1 percent of global CO2 emissions.

Figure 21: Direct emissions from industry and indirect emissions from electricity and heat production

Source: IPCC

These sectors must be cleaned up, but the thinking about how to do it is still primitive. The clearest and most obvious pathways involve steel. Existing steel products can be recycled, and recycled steel supplies a significant share of the market in advanced economies. The recycling is done by means of electric-arc furnaces that melt the scrap back into liquid steel. The enormous power demands of these furnaces have historically been met by burning fossil fuels, but the power can be supplied with renewable energy. An immense solar farm has just been constructed next to one of the most important steel mills in the western United States, and other mills are known to be studying this approach.

A vast solar farm with a steel mill in the background.

Evraz Rocky Mountain Steel, the largest electricity consumer in Colorado, is now getting much of its power from an immense solar farm next door. The farm was developed by Lightsource BP, half-owned by BP, the oil company. Image: Jim West/Alamy

Recycled steel has significant limitations, however. It is always contaminated with copper and other metals, which renders it unsuitable for making many types of products. The search for a technical solution to this problem is underway, but none has been commercialised, and it may not be achievable at reasonable cost.1 This could mean that economies are always likely to require some virgin steel, even after they come out of the high-growth phase of economic development.

Several possibilities exist for cleaning up the production of virgin steel. The one with the most momentum is to use green hydrogen, produced by electrolysis of water using renewable power, to displace fossil fuels in blast furnaces. A steel plant under construction in Sweden has already produced sample lots using this method, and it aims to bring fossil-free steel to full commercialisation in 2026. Some German steelmakers are also experimenting with green hydrogen. These early producers are finding buyers willing to pay a premium: the manufacturers of electric cars, for example, would like to market their products as made with fossil-free steel. It is as yet unclear, however, what green steel will ultimately cost to produce, or exactly how much of a market premium it will be able to command to offset the higher cost.

A worker in a hard hat and high visibility coat in the foreground points to a large factory emblazoned with the words "Fossil-Free Steel."

The Hybrit fossil-free steel plant in Luleå, Sweden. Image: Getty Images

Market signals needed

Accelerating the steel transition requires developing additional markets, and the same is true for industry more broadly. Right now, industries are getting almost no market signal telling them they have to make cleaner products. The majority of farmers are not yet demanding clean fertiliser, just as the majority of builders are not yet demanding clean cement. The market signals have been so weak for most industries that, for years, they barely budged on emissions targets, though the cement industry has recently put forward a plan to cut emissions 25 percent by 2030 and near to zero by 2050.2

The path forward is therefore to create a market demand for cleaner industrial products. Early steps in this direction have recently been taken. Much of the cement and steel in the world are bought by governments for large infrastructure projects like roads and bridges. California has adopted policies to begin requiring emissions reductions in bulk materials that it buys. This same type of demand signal, from both governments and large companies, is expected to spread around the world under a collaboration that was announced at the climate summit in Glasgow in 2021.3 We hope that consumer-products companies, electronics manufacturers and others are studying these developments closely, and preparing to begin making their own demands, as the market starts to develop.

For much of industry, the best technical path to cleaning up emissions is still unclear. Cement can be made with alternative chemistries featuring lower emissions, and although a few of these have come out, they have so far failed to make a significant dent in the market. It is possible that the only way to fully clean up the supply chain for cement will be to capture the carbon dioxide emissions emerging from cement plants and bury them underground, which would inevitably add significant costs in a low-margin industry. Getting any major development work done on the approach may therefore require some combination of government mandates and subsidies. The historical record on carbon capture is discouraging for advocates of this method: costs have barely declined, while early projects have seen enormous cost overruns and other failures. New methods of carbon capture are under development, however, offering some hope that a way forward can be found.

Another promising approach that may be useful in the near term is simply cutting the volume we use of these materials. Nearly all buildings are over-engineered; policies requiring that the “embedded emissions” of buildings be calculated and lowered may prompt developers to take a hard look at how much cement and steel they really need. Nitrogen fertiliser is over-applied in much of the world, and more judicious use could be made of it. We are still in the early days of public policies designed to cut single-use plastics, which not only create greenhouse emissions but are polluting the world’s oceans. As the market for green hydrogen develops, it could be used to displace fossil gas and cut emissions in the chemicals industry.