05 Industry
05 Industry

Struggling for traction

Every time a pavement, a bridge or a skyscraper is built with modern methods, carbon dioxide escapes into the atmosphere. Many of the chemical transformations that create the materials of the modern world have a greenhouse footprint. Most of the food people eat was grown with chemical fertilisers made in part from fossil gas. Plastics typically start out as gas or oil, and they have a greenhouse footprint, too. Steel and cement, two of the fundamental building blocks of civilisation, are made by techniques that involve prodigious emissions.

Industry is not only one of the world’s largest sources of greenhouse gases, it is proving to be one of the hardest to clean up. Scant progress has been made so far. In many cases, methods that would allow chemicals and building materials to be produced with low emissions are still in their infancy, with little information available on what they may cost to scale up. In other instances, lower-emissions methods have been developed but adoption is lagging. In principle it may be possible to reduce the environmental consequences of many industries by capturing their emissions and burying them underground, but only halting progress has been made on that approach.

Data reflects emissions in 2019 

Source: WRI

Still, the picture is not entirely bleak. Governments, responsible for most of the world’s road and bridge construction, are starting to send market signals that they will be willing to pay for cleaner materials. They are beginning to pass laws and adopt targets designed to get industry moving in the right direction. In some jurisdictions, they are putting a price on industrial emissions, creating an economic incentive to find better methods. One promising approach is to electrify the production of heat that is now generated by burning fossil gas; to that end, efforts are under way to create immense, industrial-scale heat pumps that can run on clean power. This approach may be particularly useful in industries like food processing, which uses heat for operations like drying and cooking. Steel can be recycled using clean electricity, and some mills have already started adding solar panels to help power their operations. 

Governments are beginning to push hard on one approach that promises to help clean up a slew of industries: the development of clean hydrogen.’ Hydrogen is widely used in industry already, but it is made by dirty methods that involve significant carbon dioxide emissions. The clean variant of hydrogen can be four to five times as expensive as the dirty stuff.1 It can be made in several ways. The simplest, but also the most expensive at the moment, is to use renewable electricity to split molecules of water into their constituent atoms of hydrogen and oxygen; the technology is similar to an experiment many people have run in high-school science lessons. Another approach would be to produce hydrogen by combining natural gas with steam; this is the method widely used in industry already, resulting in large emissions, but in principle those could be captured and buried in underground reservoirs.

It is still unclear what the various flavours of clean hydrogen are going to cost, how much of it society will be willing to produce, how large the market will be, or what the ultimate end uses might be, though there is no shortage of experts willing to guess at all those questions. So many hydrogen projects have been announced lately that, if all of them were completed, the world might well be supplied with more hydrogen in 2030 than anybody could use. Many of these projects are likely to die before companies make the final decision to build them, but that still leaves dozens, at least, on the drawing board and likely to get built. 

Circle area chart showing global concentration of clean hydrogen projects, grouped by country or region. The largest concentrations are European cross-border and Australia. Almost all projects are in the concept or planned category. Netherlands Norway Sweden Spain Germany United Kingdom Denmark China France Australia Chile India Argentina Mauritania European cross-border Portugal South Africa Oman Brazil Kazakhstan Egypt United States
Concept or planned
Under construction

This chart shows that many green hydrogen’ projects have been dreamed up around the world, but few of them have proceeded to final investment, and fewer still are completed and operating. The map includes only projects based on electrolysis, excluding those based on fossil fuels and biomass, even where the sponsors of the latter intend to bury their emissions. Hovering over a project will show its prospective size, measured as the maximum power demand of the electrolyser stack in megawatts. 

In principle, clean hydrogen can be used to refine virgin steel without emissions, and several such steel projects are on the drawing board. Generation, through its Just Climate subsidiary, has invested in one of them, in Sweden.2 Clean hydrogen could be used to displace the immense quantities of fossil gas now used to produce nitrogen fertiliser, essential to the global food supply. Hydrogen could become the heart of systems for storing electrical power: it would be created when renewable power is abundant, by using the electricity to split water, then stored and turned back into power when electricity shortages loom. In theory, clean hydrogen could be used to make synthetic jet fuel that would not exacerbate global warming. Hydrogen could be used to clean up a substantial fraction of the global chemical industry, one of the largest sources of emissions. And it could be burned to generate heat for high-temperature industrial methods that now rely on fossil gas. 

With that all said, the hype about hydrogen has gone beyond reason. Claims by the gas industry that it can start sending hydrogen through its pipes for people to burn in their stoves and furnaces, in place of fossil gas, are dubious: heat pumps running on electricity will likely make more sense for heating homes, and induction stoves will probably make more sense for cooking. 

A large white tanker with an LH2 logo on its side is docked in Japan.

Japan and Australia are working together to develop an international trade in liquified hydrogen. This newly built ship, the Suiso Frontier, has already carried hydrogen between the two countries; it is a prototype for a potential fleet of hydrogen tankers. Image: The Asahi Shimbun via Getty Images

In the short run, the goal is to scale clean hydrogen up and drive the costs of producing it down. With that goal in mind, the new American climate law offers generous tax breaks for the production of clean hydrogen. Europe is pushing on the technology, too, but no country is pushing harder than Japan, which has been investing in hydrogen for decades. The country is still convinced that future cars will run on hydrogen, though few other countries believe it makes sense in vehicles, with the possible exception of the heaviest lorries. One of the German states tried running trains on hydrogen, but recently abandoned the experiment after realising that direct electrification would make more sense.3

Governments must navigate this situation carefully. The fossil-fuel industry sees the rising interest in hydrogen as one of its few avenues to carve out a big role in the energy transition. A lot of the current hydrogen hype is paid advertising from fossil interests, designed to make them appear to be doing more for the transition than they actually are.4 Subsidies make sense as a way to scale an infant industry, but the fossil producers have proven masterful at keeping overly generous subsidies on the books forever. Governments have to be careful about subsidising hydrogen too much; the uses that make true economic sense need to be discovered, and the others cast aside.

For too long, the missing ingredient with regard to dirty industry was the lack of any signal in the marketplace that low-emissions products would be welcomed, or that buyers would pay a premium for them. But we are starting to see buy clean’ policies from forward-leaning governments. Their role is potentially critical in jump-starting the market, especially in the cases of steel and cement, where government infrastructure projects constitute as much as half the sales in some countries.

Cement emissions soared in China as that country underwent its own accelerated version of the Industrial Revolution. 

Cement, the binder used to make concrete, is an enormous emissions problem, responsible for as much as 4 percent of the human-produced carbon dioxide entering the atmosphere.5 The majority of this does not come from energy use; most of it comes directly from the chemical process needed to convert the raw material, limestone, into cement. Cement products with reduced emissions have become available, but in this hidebound, low-tech industry, none of these alternative approaches has yet achieved significant penetration in the marketplace. Partly this is because the technical standards governing cement have been slow to change. Governments need to push cement makers, construction companies and engineering associations much harder on this issue. 

One potential method of reducing cement emissions, as well as emissions from steel and various other industrial techniques, is simply to bury them in impermeable underground reservoirs. This approach, known as carbon capture and storage, has been long discussed, but with relatively little investment. It is likely to be costly, involving extensive drilling and long-term monitoring of the underground reservoirs. Recent years have seen a rising number of projects, but the ultimate role of this approach compared to alternative methods remains unclear. In the case of cement, one company has decided to go forward with a full-scale capture plant near the German city of Hanover, after a successful test at pilot scale. 

Another major source of industrial emissions is the processing of fossil fuels, including oil refining, coal mining and the fugitive emissions’ involved in these activities. The latter includes a great deal of fossil gas, mainly methane, that leaks into the air from activities like digging up coal, the seams of which contain considerable trapped methane. It acts as a significant greenhouse gas. Some, but not all, of these emissions could be offset by capturing and burying them, or even potentially by the use of green hydrogen in oil refining. The better route, of course, is to reduce our reliance on fossil fuels in the first place, so that these emissions never occur.6

Circle area chart showing global concentration of carbon capture projects, grouped by country or region. The largest concentration of 307 megatonnes of carbon dioxide a year is in the United States, broken down as 75% planned, 5% under construction and 18% operational. France United States United Kingdom Australia Netherlands Canada Norway Belgium European cross-border Denmark Germany China
Under construction

This chart shows announced carbon-capture projects across the world, but as the colours indicate, the final decision to invest has been made for relatively few of them. Capacity is measured in megatonnes of carbon dioxide per year. 

Source: IEA

Perhaps nothing better illustrates the overlapping nature of modern environmental issues than the problem of plastic. People of a certain age will recall a movie from 1967, The Graduate,” in which the young character played by Dustin Hoffman is fretting about finding a career. An older man pulls him aside. I just want to say one word to you,” the fellow declares. Plastics! There’s a great future in plastics. Think about it.”

Who in 1967 could have imagined that plastics, far from being a great future,” would actually turn out to be one of the worst human assaults on Planet Earth? But that is exactly what happened. The horrifying gyres of plastic garbage in the ocean are by now world famous. Plastics are pervasive in the environment, from the top of Mount Everest to the deepest trenches in the ocean. In microscopic form, they enter human bodies through food and water, with unknown consequences. Wild animals the world over choke to death on plastic garbage. The plastic industry’s supposed solution to this problem, recycling, has turned out to be deeply problematic and, in its current form, largely unworkable.

Includes plastics production from polymerisation and production of mechanically recycled plastics.

Plastics are also a huge emissions problem. The feedstocks that become plastic originate as fossil fuels, and the production of plastic is responsible for at least 3 percent of global greenhouse emissions.7 Many countries, unable to recycle plastic effectively and with few other options for disposing of it, simply burn it to recover the energy, typically using it to generate electricity. In that instance, the plastic is simply another increment of fossil fuel that took a brief detour, perhaps through your refrigerator, before ending up in the atmosphere. The incineration of plastic comes with a nasty little chaser: it can produce dioxins, polychlorinated biphenyls and other compounds that are directly harmful to human health. Somehow, the incinerators that burn plastic tend not to end up in wealthy neighbourhoods, either; they are imposed on poor people, and so are the health effects from the burning of plastic.

This is yet another problem that is not going to be solved without a heavy dose of public policy. No country, to our knowledge, has put together a truly comprehensive and successful strategy for dealing with the problem of plastic, but around the world, we are starting to see elements of what such a policy might look like. 

The first and foremost strategy needs to be to reduce the production of plastic in the first place. Banning certain single-use plastic items, like plastic shopping bags, plastic cutlery and many others, is a good place to start. But plastics are undeniably convenient and, in certain medical applications, life-saving, so wholesale bans will not be practicable. The most powerful policies are likely to be those that put the true cost of dealing with plastic waste onto the manufacturers that create it. This approach is known as extended producer responsibility,’ and it can take several forms. The bottle bills’ that many countries and some American states adopted in the 20th century, requiring deposits on bottles that are repaid when the container is returned, were a precursor. The more modern approach, however, is to charge a disposal fee that must be paid directly by the producer of the plastic article, set high enough to cover the true cost of recycling or disposing of it properly. Widespread adoption of this approach would inject large amounts of money into the recycling system. It should be coupled with legally binding requirements that companies making plastic packaging use a rising percentage of recycled plastic, thus creating a stronger market for types of waste plastic that are now essentially stranded. 

Germany and South Korea are examples of countries that have effectively implemented many of the policies described above. They have also managed to embed recycling as a cultural norm. In South Korea this has been encouraged through celebrity and corporate endorsement. For example, K‑pop megastars BTS collaborated with Samsung to produce a video highlighting issues of plastic waste in the oceans. In both countries households are meticulous in sorting their waste into recyclable and non-recyclable items before the point of collection, enabling higher recycling rates.

For years, Western countries dealt with their plastics problem by exporting shiploads of plastic waste to developing countries in Asia, where only the most valuable plastics were recovered. Unsurprisingly, more than 80 percent of the plastic in the world’s oceans got there after being dumped into rivers in Asia. But Asian countries have started to push back, with China largely banning plastic imports in 2018, and some other countries starting to crack down, too. That has forced Western countries to reconsider their approach.

Worldwide recycling rates are rising but remain low. Mismanaged’ waste is plastic that was produced and sold, but not recovered and disposed of properly; much of it is presumed to have ended up in the environment. 

Source: OECD

In the United States, the plastic problem has largely been managed at the state and local level, with no effective national policy. Recently, President Joe Biden announced a goal of displacing 90 percent of today’s plastics with materials based on biological feedstocks. This would hugely benefit farmers, a key politicial constituency in the United States, if it were feasible, but many experts believe it is not. It would require a 154-fold scale-up in the production of bio-based plastics in that country.8 The European Union is taking a much different approach, considering mandates that would require recycled content in plastic products and packaging, as well as obligating companies to reuse and refill some types of packaging. This measure has a long legislative road ahead before it might become law, however. 

The best news of the past year is that the plastics problem is about to become the subject of an international negotiation. In early 2022, the United Nations agreed to devise a global treaty to deal with the root causes of plastic pollution. Many questions about this proposed treaty remain unanswered, including the critical issue of whether it will be legally binding on member states. The fossil-fuel lobby can be expected to push for the weakest possible treaty, seeing plastic as one of their few growth industries. Without a strong agreement, there is a real possibility that plastic production could triple by 2050, as could the greenhouse emissions associated with plastic use. Citizens need to push their governments hard to find better ways of dealing with this vexing problem.

  • 1. These were the costs being cited for production in the United States in 2021, before the global run-up in natural-gas prices caused by the Ukraine war. See, for example, Hedreen, Siri, Blue hydrogen runs significant risk’ of becoming stranded asset — advisory firm,” S&P Global Market Intelligence, 19 July 2022. Since fossil gas is the main feedstock for producing dirty hydrogen, prices will have changed with the recent price spike, but they are now falling and we assume this cost differential will likely apply for the better part of the coming decade, at least. The large subsidies in the Inflation Reduction Act will change production costs for green hydrogen in the United States, but that is not the same as a change in the unsubsidised economics. Back to inline
  • 2. Hallstan, Karin. Just Climate announces its investment in H2 Green Steel’s Series B equity round.” Press release, H2 Green Steel, 1 February 2023. Back to inline
  • 3. Bhattacharya, Ananya. The dream of the first hydrogen rail network has died a quick death,” Quartz, 7 August 2023. Back to inline
  • 4. In countries that enforce strong advertising standards, fossil-fuel companies have sometimes been reprimanded for excessive claims about their achievements in producing and distributing green hydrogen. See a Netherlands case, for instance, in Advertising watchdog: Shell misleads with ads about green hydrogen,” Advertising FossilFree, 11 February 2022. The decision against Shell is available in Dutch at reclame​code​.nl/​u​i​t​s​p​r​a​k​e​n​/​h​y​d​r​o​g​e​n​/​v​e​r​v​o​e​r​-2021 – 00561/347639/. Back to inline
  • 5. Friedlingstein, Pierre et al., Global Carbon Budget 2022.” Earth System Science Data 14, pp. 4811 – 4900, 2022. Back to inline
  • 6. Alert readers may realise that the fugitive emissions’ discussed in this paragraph were attributed, in last year’s Sustainability Trends Report, to power production. This is the category that the Intergovernmental Panel on Climate Change labels as other energy.’ While it is true that many of these emissions are incurred to produce coal for power generation, that is not the case for all the emissions. This year, we have chosen to allocate these emissions to the industrial sector rather than the power sector in our description of the categories. Back to inline
  • 7. Across various papers, the calculated range of plastics’ contribution to greenhouse emissions varies from below 2 percent to nearly 5 percent. The difficulties include the need to take conflicting estimates of electricity consumption by plastics producers into account, as well as variability in how much credit recyclers get for reducing emissions by offsetting the production of virgin plastics. Here we rely on Zheng, Jiajia and Sangwon Suh: Strategies to reduce the global carbon footprint of plastics,” Nature Climate Change 9, pp. 374 – 378, 2019. They calculate that if recycled plastic is assumed to fully offset virgin polymer production, then worldwide plastic production and use over its entire life cycle amounted to 3.5 percent of global greenhouse emissions in 2015. Back to inline
  • 8. Vasta, K., Tang, Y., Attwood, J., Q2 2023 Sustainable Materials Market Outlook,” BloombergNEF, 12 May 2023. Back to inline