IEA: G7 has 'responsibility and opportunity' to lead world in slashing industrial emissions
Group of seven nations could stop direct release of 6bn tonnes of CO2 a year by greening sectors including steel, cement and petrochemicals, agency finds in new report
“Emissions from heavy industry are among the most stubborn [to abate], making it essential that countries with significant financial and technological resources use them to scale up practical solutions in a coordinated way.”
Robert Habeck, federal minister for economic affairs and climate action in the government of Germany, which commissioned the report as part of its 2022 Presidency of the G7, said: “To achieve our goal to limit the global temperature rise to 1.5°C, we have to decarbonise our industries.
“This decade is key to set the tracks to climate neutrality. Especially in sectors where emissions are high but hard-to-abate like steel and cement, we have to fundamentally shift production methods.
“The IEA report… shows us pathways and advances our understanding of the tools and definitions we need. It brings us a big step further to jointly create an international economic and political environment that incentivises investments in green and low carbon production facilities,” he said.
According to IEA data heavy industry is responsible for more than 15% of coal use and about 10% of oil and gas use in G7 members, making the net zero transition in these sectors “an important pillar for reducing the reliance on fossil fuel”, said the report authors.
“However, many of the technologies for significantly reducing emissions from heavy industry are still at large prototype or demonstration stage, and competitive international markets for heavy industrial products often result in profit margins that are too thin to cover the higher up-front costs of integrating low emission processes.”
The IEA report provides a “toolbox” for G7 members designed to “set out ambitious long-term energy transition targets for heavy industry while supporting demonstration and early commercial projects through targeted finance and other risks mitigation measures”.
Such supply-side efforts would leverage “essential private investment”, said the authors, while on the demand side, carbon contracts for difference, public procurement rules, mandates, quotas and other related measures could be employed to create “differentiated markets” for near-zero emission steel and cement.
Birol also called on G7 governments to enshrine “stable, absolute and ambitious thresholds for material production with near zero emissions”, noting the report set out definitions and “relevant thresholds” for the group of countries to adopt “as a starting point that are compatible with a global pathway to net zero emissions by 2050”.