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Industry

Industry and the materials sector are now key areas of focus for the European Union’s efforts to fully decarbonise by 2050.

Industry and the materials sector are now key areas of focus for the European Union’s efforts to fully decarbonise by 2050. While the EU power sector is moving towards a net-zero compatible trajectory, progress towards reducing industrial emissions has largely stalled. In the five years up to the end of 2019, European industry has achieved no substantial reduction in emissions. Should this trend be allowed to continue, the EU will fail to meet its goal of achieving carbon neutrality by mid-century.

The materials sector, in particular, is a major contributor to the EU’s carbon footprint. The iron and steel, cement and chemical sectors together represent 14% of the EU’s annual CO2 emissions. The production of these materials has often been described as ‘hard to abate’. The central role that carbon plays in current production processes and the high heat levels involved means that emissions cannot easily be eliminated through direct electrification. But hard to abate does not mean impossible to abate, and initiatives to demonstrate the feasibility of producing very low-carbon materials are multiplying across Europe.

Our Theory of Change

Decarbonising industry and the materials sector will require the deployment of both innovative production processes and demand side and material efficiency measures. Our Relaunching a sustainable industrial sector report outlines some of the policy instruments that can help kickstart this transformative process. Among others, these measures will have to include an ambitious reform of the EU ETS. The lack of decarbonisation of the industrial sectors to date has been fuelled by the free allocation regime, an inappropriate ETS cap and the lock in of innovation through perverse incentives. A revision of the cap and a phase out of free allocation coinciding with the introduction of a Carbon Border Adjustment Mechanism would align incentives for a much swifter decarbonisation. The circular economy is a central pillar of industrial decarbonisation, and it is essential that public authorities create the necessary regulatory frameworks for decarbonisation and circularity, while industry actors invest in the development of new zero-carbon production processes and material efficiency measures. Lastly, the build-out of infrastructure to support industrial decarbonisation must prioritise energy efficiency and avoid creating stranded assets. While renewables-based hydrogen will be an important fuel and feedstock for decarbonising certain industrial processes that cannot be electrified, hydrogen transmission and distribution will not exist in the same quantities as the current gas grid. Rather, hydrogen infrastructure must be carefully planned to link priority users to renewable energy production, prioritising energy efficiency and hydrogen clusters.

In order to facilitate decision-making and stakeholder engagement, Sandbag is working on an industry map for the largest emitting industrial sectors: cement and concrete, iron and steel, and chemicals. Using input from Member State environment agencies and expert stakeholders from industry and academia, we aim to document costs, timescales and relevant projects that can be of interest to both policy makers and civil society organisations. To avoid possible carbon lock in and to make the best possible use of the resources mobilised for the decarbonisation of these sectors (through Horizon Europe, the Innovation Fund or InvestEU programmes, for instance), decision makers must be given an easy access to impartial information on the potential and prospects of different possible production technologies and decarbonisation pathways. Our aim is to set up a collaborative process with stakeholders to continuously update this information, which will ultimately be presented in the form of an interactive Marginal Abatement Cost curve.

Sandbag also contributes to public consultations, impact assessments and parliamentary processes for policies like the Circular Economy Action Plan, the Carbon Border Adjustment Mechanism and the Hydrogen Strategy. We sit on the roundtables of the European Clean Hydrogen Alliance and the expert panel of the Innovation Fund, where we push to ensure that policy supports and public funding are directed towards the most efficient and socially just decarbonisation solutions.

Sandbag successes

 

EU policymakers are now taking industrial decarbonization seriously

Carbon Border Adjustment Mechanism is now on the table

Free Allocation phase-out is on the table

European Parliament report on the Circular Economy highlighted the crucial role of circularity for industrial decarbonisation

ENVI Committee in the European Parliament called for an introduction of the CBAM coinciding with an end to Free Allocation and ambitious EU ETS reform

Industry Reports

 

Recent Industry blog posts

 

Benchmarks and Free Allocation: Details reveal problems in the EU ETS

Sandbag is actively campaigning for changes to the EU ETS benchmarking system and an end to free allocation in the upcoming EU ETS reform. In the meantime, the current EU ETS remains in place. On...

Sustainable Products Initiative: circularity requirements to drive industrial decarbonisation

When the European Commission launched the Circular Economy Action Plan in March 2020, it contained many ambitions to be worked out in future legislative projects. One of these is the Sustainable...

Building the Transition: Sandbag’s Response to the Review of the Construction Products Regulation

The European Green Deal lays out a list of EU policies and legislation that need to be updated and brought in line with the 2050 climate neutrality goal. One of these is the Construction Products...

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