A new report from leading independent research provider Rhodium Group, Fueling a Transition Away from Fossil: The Outlook for Global Fossil Fuel Demand, examines the global economic transition away from fossil fuels and identifies challenges with how we should tackle fossil fuel demand from the industrial sector.
The industrial sector encompasses everything from fossil fuel producers to the manufacturers of critical goods like steel, cement, and aluminum, as well as the agriculture, mining, petrochemical, and construction industries. Right now, the industrial sector is responsible for nearly a quarter of greenhouse gas emissions, so addressing its appetite for fossil fuels is extremely important.
Key findings of the report:
- Industrial uses of fossil fuels could account for 40% of total fossil fuel demand in 2050
- The manufacturing of cement, plastics, and petrochemicals is likely to see demand for fossil fuels stay level or grow by mid century
- The manufacturing of iron and steel is likely to see demand for fossil fuels decline by mid century
- Today, roughly 13% of global fossil fuel consumption feeds non-energy purposes, primarily in the industrial sector, but without investments and policy interventions, this could increase to 19% by 2050
- To complete the global transition away from fossil fuels, we need increased levels of policy ambition, innovation, and credible and cost-effective alternatives for the industrial sector
At the Sierra Club, our Industrial Decarbonization campaign works to reduce fossil fuel consumption from the industrial sector, with a particular focus on the industries that are manufacturing goods critical to the economy like steel, cement, and aluminum. These industries use enormous amounts of fossil fuels to power their manufacturing facilities.
Industrial sector uses of fossil fuels
According to the Rhodium report, industrial uses of fossil fuels could account for 40% of total fossil fuel demand in 2050. Plummeting use of coal in the power sector and oil in the transportation sector will help drive down fossil fuel consumption, however, the current pace of policy and technology innovation is unlikely to contribute to overall reductions in demand for fossil fuels in the industrial sector.
Cement, a particularly challenging sector to decouple from fossil fuels due to its intense energy use during production, is likely to see demand for fossil fuels stay level or grow by mid century. Plastic and chemicals are also likely to see demand for fossil fuels stay level or grow by mid century. Meanwhile, fossil fuel demand for the manufacturing of iron and steel is likely to decline, thanks to the high rate of steel recycling that has lessened the need to make new iron for smelting into steel. The report sees the transition from integrated mills, which make new iron, to electric arc furnaces, which recycle scrap into steel, as a positive development.
A meaningful decline in the use of fossil fuels in the iron and steel sector would be a boon not only for climate, but also for fenceline communities that have for decades been exposed to hazardous releases from these plants.
At integrated steel mills, which make up 33 percent of the steel produced in the U.S., the traditional ironmaking process is responsible for a majority of greenhouse gas emissions and a host of human health harming pollutants. Ironmaking currently relies on coke, a refined coal used as a reducing agent in metallurgy. The process of making coke releases carbon monoxide, particulate matter, sulfur dioxide, volatile organic compounds, and carbon dioxide. These coke ovens are often located in or near integrated steel mills. Transitioning integrated steel mills off of coke — and other fossil fuels like methane gas — would be an important step toward significantly reducing such harmful pollution.
Tackling emissions from non-energy fossil fuel use
While the majority of fossil fuels are used to produce power and heat, roughly 13% of global fossil fuel consumption feeds non-energy purposes. This occurs primarily in the industrial sector, including the use of coal in iron and steel manufacturing.
According to the report, policymakers have largely neglected the need to tackle emissions from these non-energy fossil fuel uses, largely due to lack of data and the complexities of the manufacturing underlying processes. With fewer cost-effective solutions and little policy attention, the non-energy share of total fossil consumption could increase from 13% today to 19% on average by 2050.
There are some promising pathways for decarbonizing process emissions in heavy manufacturing. For example, green hydrogen can be used as a reducing agent instead of metallurgical coke in ironmaking, which would significantly drive down greenhouse gas emissions. But more investments are needed — both through federal funding through legislation like the Inflation Reduction Act and its grant programs through the Department of Energy, and through manufacturing upgrades from the businesses themselves — to further drive the upgrades needed to truly help decarbonize the industrial sector.
What policymakers can do
By mid century, the report estimates that much of the remaining global consumption of fossil fuels will come from industrial uses (40%). While technologies like carbon capture and low-carbon hydrogen may help drive down emissions in iron and steel manufacturing, these technologies don’t guarantee a total shift away from fossil fuels, with many industrial processes remaining unaddressed.
To complete the global transition away from fossil fuels, the report calls for the same level of policy and innovation to leverage solutions that we’re currently seeing in the power and transportation sectors. Transitioning away from fossil fuels will require credible and cost-effective alternatives to close these gaps for harder-to-abate sectors that rely heavily on fossil fuels today.
Sierra Club’s role
Sierra Club is working to ensure that workers and communities feel the benefits of decarbonizing heavy industry. We are closely following investment programs from the Inflation Reduction Act and Bipartisan Infrastructure Law to clean up manufacturing. The Department of Energy will soon announce recipients of its Advanced Industrial Facilities Deployment Program (AIFDP) grants, which will help high-emitting industries slash their greenhouse gas emissions.
We are also pushing the Biden Administration to up the ambition of Buy Clean, an initiative that uses government purchasing power to help create a more exclusive market for cleanly made goods.
In addition to using existing opportunities for industrial transformation, we are working with allies and partners to advocate for further investments in clean manufacturing that will deliver public health benefits and secure high-paying jobs.
We are also looking beyond U.S. borders to ensure that domestic manufacturing remains competitive while it transitions away from the heavy polluting status quo, by putting forward trade policies that reward climate action and environmental protection.
Learn more at https://www.sierraclub.org/trade.