Industrial

Transformation 2050
Pathways to Net-Zero Emissions from EU Heavy Industry

IN COLLABORATION WITH SUPPORTED BY

Industrial Transformation 2050
Pathways to Net-Zero Emissions from EU Heavy Industry

About Industrial Transformation 2050. This report is part of the

Industrial Transformation 2050 project, an initiative convened by the
European Climate Foundation in collaboration with the Cambridge
Institute for Sustainability Leadership, the Children's Investment Fund
Foundation, Climate-KIC, the Energy Transitions Commission, RE:Source,
and SITRA. It is published as part of the Net-Zero 2050 series, an initia-
tive of the European Climate Foundation.

Industrial Transformation 2050 seeks to work with industry and other

stakeholders to set out pathways and policy options for net-zero heavy
industry in Europe by 2050, achieving the objectives of the Paris
Agreement while strengthening industrial competitiveness and the EU’s
overall economic development and performance.

The objective of Net-Zero 2050 is to build a vision and evidence base Publication details
for the transition to net zero emission societies in Europe and beyond, Copyright © 2019 University of Cambridge Institute for Sustaina-
by mid-century at the latest. Reports in the series seek to enhance un- bility Leadership (CISL). Some rights reserved. The material featured
derstanding of the implications and opportunities of moving to climate in this publication is licensed under the Creative Commons Attribu-
neutrality across the power, industry, buildings, transport, agriculture and tion-NonCommercialShareAlike License. The details of this license may
forestry sectors; to shed light on near-term choices and actions needed be viewed in full at: https://creativecommons.org/licenses/by-sa/4.0/
to reach this goal; and to provide a basis for discussion and engage-
ment with stakeholders and policymakers. Please refer to this report as: Material Economics (2019). Industrial Trans-
formation 2050 - Pathways to Net-Zero Emissions from EU Heavy Industry.

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preface
There is intense debate about how to close the gap the myriad of new technologies and business models be-
between current climate policy and the aim of the Paris ing discussed can fit together into consistent European
Agreement to achieve close to net-zero emissions by industrial strategies to combine a prosperous industrial
mid-century. Heavy industry holds a central place in the- base with Paris compatibility, and what big choices and
se discussions. The materials and chemicals it produces ‘no regrets’ Europe faces when developing such industrial
are essential inputs to major value chains: transportation, strategies.
infrastructure, construction, consumer goods, agricul-
ture, and more. Yet their production also releases large This report thus explores the technical and economic
amounts of CO2-emissions: more than 500 Mt per year, aspects of the transition but stops short of concrete po-
or 14% of the EU total. Their emissions have long been licy recommendations. In a separate report, An Industrial
considered ‘hard to abate’ compared to those from se- Strategy for a Climate Neutral Europe, a group of policy
ctors such as buildings or electricity. experts explore what European policy is best suited to
achieve a balanced transition.
Policymakers and companies thus have a major task
ahead. There is an urgent need to clarify what it would This study has been carried out by Material Economics.
take to reconcile a prosperous industrial base with net Wuppertal Institute and the Institute of European Studies at
zero emissions, and how to get there in the 30 remaining the Vrije Universiteit Brussel assisted with the analysis. The
work has been supported by the Cambridge Institute for
years to 2050. The journey starts from a point of often
Sustainability Leadership (CISL), the Children's Investment
challenging market conditions for EU companies, and the
Fund Foundation (CIFF), Climate-KIC, the Energy Transitions
EU and its companies rightly is asking how climate and Commission, the European Climate Foundation, RE:Source,
wider industrial strategy can be joined together. There is and SITRA. The Steering Group has comprised Martin Porter
no doubt that significant innovation and entrepreneurship and Eliot Whittington (CISL), Tom Lorber (CIFF), Sira Sacca-
will be required, by companies, policymakers, cities, and ni (Climate-KIC), Adair Turner and Faustine de la Salle (Ener-
a range of other actors. gy Transitions Commission), Simon Wolf (European Climate
Foundation), Johan Felix (RE:Source), and Mika Sulkinoja
This study seeks to support these discussions. It charac- (SITRA). Research guidance have been provided by Dr.
terises how net zero emissions can be achieved by 2050 Jonathan Cullen, Prof. Dr. Stefan Lechtenböhmer, Prof. Lars
from the largest sources of ‘hard to abate’ emissions: J Nilsson, Clemens Schneider, and Tomas Wyns. We are
steel, plastics, ammonia, and cement. The approach very grateful for the contributions of these organisations and
individuals, as well as the more than 80 other industry ex-
starts from a broad mapping of options to eliminate fossil
perts, researchers, policymakers, and business leaders who
CO2-emissions from production, including many emerging
have contributed their knowledge and insight to this project.
innovations in production processes. Equally important, The project team has comprised Anders Åhlén, Anna Teiwik,
it integrates these with the potential for a more circular Cornelia Jönsson, Johan Haeger, Johannes Bedoire-Fivel,
economy: making better use of the materials already pro- Michail Pagounis, and Stina Klingvall. Partner organisations
duced, and so reducing the need for new production. Gi- and their constituencies do not necessarily endorse all fin-
ven the uncertainties, the study explores several different dings or conclusions in this report. All remaining errors and
2050 end points as well as the pathways there, in each omissions are the responsibility of the authors.
case quantifying the cost to consumers and companies,
and the requirements in terms of innovation, investment,
inputs, and infrastructure. The ambition is to explore how

Per Klevnäs Per-Anders Enkvist

Partner Managing Partner

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive summary

TABLE OF CONTENTs
EXECUTIVE SUMMARY 6

Chapter 1.
ACHIEVING PROSPEROUS, NET-ZERO EU INDUSTRY BY 2050 14

Chapter 2.
STEEL – INNOVATION LEADERSHIP FOR LOW-CO 2 STEEL 68

Chapter 3.
CHEMICALS - CLOSING THE SOCIETAL CARBON LOOP 100

Chapter 4.
CEMENT & CONCRETE – REINVENTING A FUNDAMENTAL MATERIAL 156

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Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive Summary

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Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive summary

executive
summary
This study explores multiple ways to achieve net-zero
emissions from EU steel, plastics, ammonia and cement
production while keeping that production in the EU. It quan-
tifies the potential impact of different solutions and finds that
emissions from those industries can be reduced to net zero
by 2050, confirming the findings of the pathways present-
ed in the Commission’s A Clean Planet for All. Many new
solutions are emerging, thanks to a more circular economy
with greater materials efficiency and extensive recycling of
plastics and steel, as well as innovative industrial processes
and carbon capture and storage.

Many different industrial strategies and pathways can be

combined to achieve net-zero emissions. The analysis finds
that the impact on end-user/consumer costs will be less
than 1% regardless of the path pursued – but all pathways
require new production processes that are considerably
costlier to industry, as well as significant near-term capital
investment equivalent to a 25–60% increase on today’s
rates. Keeping EU companies competitive as they pursue
deep cuts to emissions will thus require a new net-zero
CO2 industrial strategy and policy agenda. There is a need
to accelerate innovation, enable early investment, support
costlier low-CO2 production, overcome barriers to circular
economy solutions, and ensure that companies can access
the large amounts of clean electricity and other new inputs
and infrastructure they need. Time is short, with 2050 only
one investment cycle away, and any further delays will hugely
complicate the transition. As the EU ponders its industrial
future, this transformation should be a clear priority.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive Summary

NET-ZERO EMISSIONS FROM EU HEAVY INDUSTRY IS POSSIBLE BY 2050

The EU has set out a vision to achieve net-zero greenhouse This study confirms that it is possible to reduce emissions
gas emissions by mid-century as a contribution to achieving from industry to net zero by 2050. It reaches this conclu-
the Paris Agreement objectives of limiting global warming. sion by considering a much wider solution set than what
is often discussed. Whereas most existing analyses have
Resource and energy intensive industry holds a central place emphasised carbon capture and storage as the main op-
in this vision. The production of key materials and chemicals – tion for deep cuts, a range of additional solutions are now
steel, plastics, ammonia and cement – emits some 500 million emerging. A more circular economy is a large part of the
tonnes of CO2 per year, 14% of the EU total. Materials needs answer. Innovations in industrial processes, digitisation, and
are still growing, and on the current course, EU emissions renewable energy technologies can also enable deeper re-
from these sectors might increase as well. Globally, these ductions over time.
emissions are growing faster still, already accounting for
20% of the total. The EU needs to lead the way in combining Crucially, these deep cuts to emissions need not com-
the essential industrial base of a modern economy with the promise prosperity. Steel, chemicals and cement fulfil es-
deep cuts to emissions required to meet climate targets. sential functions, underpinning transportation, infrastruc-
ture, packaging, and a myriad of other crucial functions.
To date, emissions from these sectors have been consid- The analysis of this study is based on the premise that all
ered especially ‘hard to abate’. Existing industrial low-carbon these benefits continue, and also that the EU continues
roadmaps left up to 40% of emissions in place in 2050. This to produce the materials it needs within its borders to the
would make industrial emissions one of the main roadblocks same extent as today.
to overall net-zero emissions. The European Commission’s A
Clean Planet for All broke new ground by also considering
pathways that eliminate nearly all emissions from industry.

A WIDE RANGE OF SOLUTIONS FOR NET-ZERO INDUSTRY IS AVAILABLE AND EMERGING

There are many paths to net-zero emissions, and a wide opportunities for materials efficiency: achieving the same
portfolio of options provides some choice and redundancy. benefits and functionality with less material. The opportunity
At the same time, industry will need a clear sense of direc- is surprisingly wide-ranging, including new manufacturing
tion, so there is a need to debate and investigate the pros and construction techniques to reduce waste, coordination
and cons of different options. along value chains for circular product design and end-of-life
practices, new circular business models based on sharing
This study seeks to enable such discussion. It aims to be
and service provision; substitution with high-strength and
as comprehensive as possible in describing the available
low-CO2 materials; and less over-use of materials in many
solutions and finds an encouraging breadth of available op-
large product categories. For example, many construction
tions. It explores multiple different pathways, each with its
projects use 30–50% more cement and steel than would be
own benefits and requirements, and facing different road-
necessary with an end-to-end optimisation. Similarly, new
blocks. All pathways reach net zero, reducing emissions by
business models could cut the materials intensity of passen-
more than 500 Mt per year in 2050, but reflect different
ger transportation by more than half, while reducing the cost
degrees of success in mobilising four different strategies for
of travel. Much like energy efficiency is indispensable to the
emissions reductions:
overall energy transition, improving materials efficiency can
A. Increased materials efficiency throughout major val- make a large contribution in a transition to net-zero emis-
ue chains (58–171 Mt CO2 per year by 2050). The EU sions from industry. In a stretch case achieving extensive
uses 800 kg per person and year of the main materials coordination and a deep shift in how Europe uses materials,
and chemicals considered here. However, there is in fact these solutions can reduce material needs from today’s 800
nothing fixed about these amounts. This study carries out a kg per person per year to 550-600 kg, reducing emissions
comprehensive review of opportunities to improve the pro- as much as 171 Mt CO2 per year by 2050. In a more tradi-
ductivity of materials use in major chains such as construc- tional pathway, emphasising supply-side measures instead,
tion, transportation, and packaged goods. All offer major the reductions could be at a lower 58 Mt CO2.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive summary

B. High-quality materials recirculation (82–183 Mt CO2 2050. In addition, large amounts of zero-emissions electricity
per year by 2050). Large emissions reductions can also will be needed, either directly or indirectly to produce hydro-
be achieved by reusing materials that have already been gen. In a pathway heavily reliant on new production routes,
produced. Steel recycling is already integral to steel produc- as much as 241 Mt CO2 could be cut in 2050 by deploying
tion, substantially reducing CO2 emissions. The opportunity these new industrial processes, falling to 143 Mt in a route
will grow over the next decades as the amount of available that emphasises other solutions instead.
scrap increases, and as emissions from electricity fall. The
share of scrap in EU steel production can be increased by D. Carbon capture and storage / use (45–235 Mt CO2
reducing contamination of end-of-life steel with other met- per year by 2050). The main alternative to mobilising new
als, especially copper. With plastics, mechanical recycling processes is to fit carbon capture and storage or use
can grow significantly but also needs to be complement- (CCS/U) to current processes. This can make for less dis-
ed by chemical recycling, with end-of-life plastics that can- ruptive change: less reliance on processes and feedstocks
not be mechanically recycled used as feedstock for new not yet deployed at scale and continued use of more of
production. Unlike most other forms of recycling, chemical current industrial capacity. It also reduces the need for elec-
recycling of plastics requires lots of energy, but is almost tricity otherwise required for new processes. However, CCU
indispensable to closing the ‘societal carbon loop’, thus es- is viable in a wider net-zero economy only in very particular
caping the need for constant additions of fossil oil and gas circumstances, where emissions to the atmosphere are per-
feedstock that in turn becomes a major source of CO2 emis- manently avoided. CCS/U also faces challenges. In steel,
sions as plastic products reach their end of life. By 2050, the main one is to achieve high rates of carbon capture
a stretch case could see 70% steel and plastics produced from current integrated steel plants. Doing so may require
through recycling, directly bypassing many CO2 emissions, cross-sectoral coupling to use end-of-life plastic waste,
as steel and plastics recycling can use green electricity and or else the introduction of new processes such as direct
hydrogen inputs. The total emissions reductions could be smelting in place of today’s blast furnaces. For chemicals,
183 Mt CO2 per year in a highly circular pathway, but just it would be necessary not just to fit the core steam cracking
82 Mt if these are less successfully mobilised. process with carbon capture, but also to capture CO2 up-
stream from refining, and downstream from many hundreds
C. New production processes (143–241 Mt CO2 per year of waste incineration plants. Cement production similarly
by 2050). While the opportunity to improve materials use and takes place at around 200 geographically dispersed plants,
reuse is large, the EU will also need some 180–320 Mt of so universal CCS is challenging. Across all sectors, CCS
new materials production per year. As many current industrial would require public acceptance and access to suitable
processes are so tightly linked to carbon for either energy transport and storage infrastructure. These considerations
or feedstock, deep cuts often require novel processes and mean that CCS/U is far from a ‘plug and play’ solution ap-
inputs. Ten years ago, the options were limited, but emerging plicable to all emissions. Still, it is required to some degree
solutions can now offer deep cuts to CO2 emissions. For steel, in every pathway explored in this study. High-priority areas
several EU companies are exploring production routes that could include cement process emissions; the production
switch from carbon to hydrogen. In cement, new cementitious of hydrogen from natural gas; the incineration of end-of-life
materials like mechanically activated pozzolans or calcined plastics; high-temperature heat in cement kilns and crackers
clays offer low-CO2 alternatives to conventional clinker. For in the chemical industry; and potentially the use of off-gases
chemicals, several proven routes can be repurposed to use from steel production as feedstock for chemicals. In a high
non-fossil feedstocks such as biomass or end-of-life plastics. case, the total amount of CO2 permanently stored could
Across the board, innovations are emerging to use electricity reach 235 Mt per year in 2050, requiring around 3,200
to produce high-temperature heat. Many solutions are proven Mt of CO2 storage capacity. However, it also is possible to
or in advanced development, but economics have kept them reach net-zero emissions with CCS/U used mainly for pro-
from reaching commercial scale. They now need to be rapidly cess emissions from cement production. In this case, the
developed and deployed if they are to reach large shares by amount captured would be around 45 Mt per year.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive Summary

Net-zero emissions from

EU heavy industry is
possible by 2050.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive summary

ADDITIONAL COSTS TO CONSUMERS ARE LESS THAN 1%, BUT COMPANIES FACE 20–115%
HIGHER PRODUCTION COSTS
An analysis of the costs of achieving net-zero emissions Most EU companies know the current status quo offers
reveals a telling contradiction. On the one hand, the total little intrinsic advantage in a situation of trade uncertain-
costs are manageable in all pathways: consumer prices of ties, global over-capacity, and often lower fossil feed-
cars, houses, packaged goods, etc. would increase by less stock and energy costs in other geographies. Low-car-
than 1% to pay for more expensive materials. Overall, the ad- bon routes emphasising deep value chain integration,
ditional cost of reducing emissions to zero are 40-50 billion continued process and product innovation, and reliance
EUR per year by 2050, around 0.2% of projected EU GDP. on local end-of-life resources may well prove a more sus-
The average abatement cost is 75-91 EUR per tonne of CO2. tainable route for EU competitiveness. It will also offer a
head start in developing solutions that will eventually be
On the other hand, the business-to-business impact is large needed globally. In the longer run, low-CO2 production
and must be managed. All pathways to net-zero require the use systems may in fact be the more promising route to keep
of new low-CO2 production routes that cost 20-30% more for EU industry competitive.
steel, 20-80% for cement and chemicals, and up to 115% for
some of the very ‘last tonnes’ that must be cut. These differenc- A low-CO2 industrial transition can offer similar em-
es cannot be borne by companies facing both internal EU and ployment levels as today, provided that economic activity
international competition, so supporting policy will be essential. does not migrate from the EU. Overall, circular economy
solutions are more rather than less labour-intensive, so
Cost alone is not a basis for choosing one pathway over implementing them would create additional jobs in the
another. Total costs are similar whether the emphasis is on CCS overall value chains. Changes to industrial production,
or on new production technologies. The attractiveness of solu- meanwhile, would likely still occur on current sites and in
tions will vary across the EU, not least depending on electricity existing clusters, with little systemic impact on industrial
prices. A more circular economy and affordable electricity are employment.
among the most important factors to keep overall costs low.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive Summary

THE TRANSITION WILL REQUIRE A 25–60% INCREASE IN INDUSTRIAL INVESTMENT,

WITH IMPORTANT NEAR-TERM DECISIONS
All pathways also require an increase in capital expen- paying on average 30 EUR per tonne more for plastics and steel
diture. Whereas the baseline rate of investment in the core that often cost 600-1,500 EUR per tonne in today’s markets.
industrial production processes is around 4.8–5.4 billion
EUR per year, it rises by up to 5.5 billion EUR per year in For companies, however, the investment will be a ma-
net-zero pathways, and reaches 12–14 billion EUR per year jor challenge. The case for investment in the EU’s indus-
in the 2030s. Investment in other parts of the economy also trial base has been challenged for more than a decade.
will be key, including some 5–8 billion EUR per year in new All investment relies on a reasonable prospect of future
electricity generation to meet growing industrial demand. profitability. In capital-intensive sectors, choosing a low-
CO2 solution instead of reinvesting in current facilities can
How much is invested and where depends on the pathway, amount to a ‘bet the company’ decision – especially when
with generally much lower investment requirements for materials future technical and commercial viability is uncertain. In-
efficiency and circular economy solutions than for traditional pro- vestment in demonstration and other innovation often has
duction. Some additional investment occurs because low-CO2 highly uncertain returns. For all these reasons, strong poli-
routes are inherently more capital-intensive, but many others are cy support will therefore be needed in the near term.
one-off transition costs for demonstration, site conversion, and to
provide redundancy in uncertain situations. Investment also will In all pathways, EU companies will make important invest-
be required in infrastructure for electricity grids, CO2 transporta- ment decisions in the next few years. Each will create a risk of
tion and storage, and handling of end-of-life flows. lock-in unless low-CO2 options are viable at these forks in the
road. Changes to value chains and business models, mean-
For society as a whole these are not, in fact, large amounts. while, may take decades to get established. There is time for
They correspond to just 0.2% of gross fixed capital formation deep change until 2050, but it will have to happen at a rapid
and would be fully covered, including a return on capital, by pace, and any delay will hugely complicate the transition.

NET-ZERO INDUSTRY WILL REQUIRE LARGE AMOUNTS OF ELECTRICITY AND BIOMASS

AS WELL AS A MORE CIRCULAR ECONOMY
Steel, cement, plastics and ammonia production together bonise industry. Electricity must be all but zero-emissions,
use 8.4 EJ of mostly imported oil, coal and natural gas. A or emissions would simply migrate to the energy sector. It
major benefit of a more circular economy would be to re- also needs to be affordable (the cost estimates presented
duce these needs by up to 3.1 EJ per year in 2050 through here assume a price of 40–60 EUR per MWh, depending on
improved materials efficiency, new business models in ma- the application). The main ways to reduce electricity needs
jor value chains, and large shares of materials recirculation. is to achieve a more circular economy, which can reduce re-
quirements by 310 TWh, or large-scale deployment of CCS,
Remaining needs would be replaced by sustainably which can cut some 275 TWh.
sourced biomass (1.1–1.3 EJ), used primarily as feedstock,
and large amounts of electricity (2.5–3.6 EJ), used directly Sustainable biomass is a scarce resource, and industry
or for the production of hydrogen. The remaining fossil fuels must prioritise how it is used. Nearly all biomass used in the
and feedstock would be as low as 0.2 EJ, though with high pathways is as feedstock for chemicals, to enable a ‘soci-
levels of CCS, 3.1 EJ could remain. All in all, Europe could etal carbon loop’ for plastics and other chemicals without
become much less dependent on imports of inputs to its new additions of fossil carbon from oil and gas. The 85–
industrial production, even if some basic constituents (such 105 Mt required are within available resources, especially
as ammonia or hydrogen) were eventually to be imported. if non-conventional streams such as mixed waste can be
mobilised. Still, it is key to minimise the amount of biomass
Industry electricity demand will increase significantly. In required. The main ways to do so are high recycling rates
a maximum case, an additional 710 TWh per year is re- (mechanical and chemical) for plastics, increased materi-
quired (for comparison, all of industry and manufacturing als efficiency, innovation to enable new polymers suited to
uses 1,000 TWh today). However, up to four times larger bio-feedstock, and CCS to enable some continued use of
amounts are proposed in other analyses that envision a fossil feedstock.
greater use of CO2 and ‘Power-to-X’ as feedstock to decar-

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There is time for deep change
until 2050, but it will have to
happen at a rapid pace. Any
delay will hugely complicate the
transition.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Executive Summary

THE TRANSFORMATION REQUIRES STRONG SUPPORT ACROSS CLIMATE AND INDUSTRIAL POLICY
A successful transition will require concerted efforts by enable companies to make a near-term strategic choice
government, industrial companies, companies in major val- for low-CO2 production. It also requires a commitment to
ue chains, cities, civil society, and individuals. The transition continued support. The EU ETS offers an option, but wider
is technically feasible but requires a step-change in sup- climate policy offers a broad menu of fiscal/financial sup-
port to be economically plausible. The next 5–10 years will port and regulatory instruments that could be deployed,
be crucial in enabling EU heavy industry and major value such as contracts for differences for low-CO2 production,
chains to chart a low-CO2 course. standards for materials’ or products’ CO2 performances,
public procurement, and possible trade and investment
Many EU industrial companies know that ‘doing nothing’ mechanisms to ensure fair international competition.
is a far from viable approach. Indeed, EU industry has long
gravitated towards increased specialisation, performance • Enable early investment and reduce the risk of
and efficiency to counter pressures ranging from energy lock-in. Especially early in the transition, before techni-
costs, trade practices or global overcapacity. A low-CO2 cal and commercial risk can be fully resolved, financing
track would be a continuation and acceleration of these instruments for direct investment supports will likely be
trends. Low-CO2 solutions pioneered and commercialised required. Options include using public financial institu-
in Europe will eventually be needed globally in a world with tions, risk-sharing models, concessional finance, and
large unmet materials needs. Meanwhile, the EU would tran- early direct public investment. It also will be necessary to
sition to a much more secure position: a more materials-pro- handle the risk of stranded assets.
ductive economy that is less reliant on imported fossil fuels
• Create systems for high-quality materials recircu-
and feedstock, and more attuned to domestic sources of
lation. Both steel and plastics recycling are indispensable
comparative advantage: local integration, digitisation, end-
parts of any net-zero materials system, but incentives for
of-life resources, etc.
clean end-of-life flows are skewed and insufficient. Regula-
Nonetheless, the first steps of this transition will not oc- tory change is required to open up waste flows as a major,
cur without a step-change both in policy and in company large-scale feedstock resource, regulate against contam-
strategic choices. To launch a new economic and low-CO2 ination of end-of-life flows, and optimise product design
agenda for EU heavy industry, major policy innovation and and end-of-life dismantling for high-quality recovery.
entrepreneurship will be required. The EU ETS provides a • Integrate materials efficiency and new business mod-
fundamental framework, but many stakeholders see limits els in key value chains. As with energy efficiency, policy
to the credible commitments to future CO2 prices that it can help overcome barriers and market failures such as
can provide, not least given international competition. On incomplete contracts and split incentives, large transaction
its own, carbon pricing also does not provide sufficient in- costs and missing markets, and incomplete information.
centives for innovation, nor does it address market failures Standards, quotas, labelling and other approaches in ener-
that hold back many circular economy solutions. gy efficiency policy need rapid translation to major materi-
While all pathways require broad policy support, require- als-using value chains – while avoiding undesired outcomes
ments differ for different options. Effective policy therefore of such regulations, including potential hidden costs.
must start from a deep understanding of the change re- • Safeguard access to key inputs and infrastructure.
quired, and the business case for different options. Just like Key policy objectives in this area include public or reg-
the solution set for net-zero industry is wide-ranging, this ulated models for carbon transport and storage, hydro-
policy agenda must have many parts, each addressing dif- gen supply for major industrial clusters, an accelerating
ferent aspects of the transition. Options currently not in use electricity system transition, and modified incentives for
but which can be considered include: biomass use that maximise the benefits of its use. Pol-
• Launch major new mechanisms for innovation. icies that encourage industrial clusters and symbiosis
This includes some industrial R&D ‘moonshots’ and for heat, hydrogen and other flows also can contribute.
mission-driven innovation. Equally important will be to
Perhaps the most important near-term prerequisite for suc-
support the later stages towards fully commercial solu-
cess will be to create a shared expectation: that, much like the
tions: define and embed an innovation agenda in all EU
energy sector now focuses nearly all its efforts on low-carbon
and national programs, provide direct public finance for
resources, the EU heavy industry and major materials-using
demonstration, emphasise early learning by doing (de-
value chains will now direct innovation and investment towards
ployment), and develop new joint public-private models
solutions that enable deep cuts to CO2 emissions. The sooner
for large demonstration plants.
this is achieved, the greater the likelihood of success – and the
• Create lead markets for low-carbon production. greater the opportunity to build an EU industrial advantage in
This starts with creating an initial business case to low-CO2 production and in circular economy business models.

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1. Achieving
prosperous,
net-zero EU
industry by 2050
1.1 Net-zero materials – the need for a new
answer to industrial CO 2
There is intense debate about how to close the robust industrial base of modern economies
the gap between current climate policy and the while making deep cuts to emissions, the EU
aim of the Paris Agreement to achieve close to can not only help achieve its climate targets, but
net-zero emissions by mid-century. also develop and demonstrate solutions that are
urgently needed across the globe.
Heavy industry holds a central place in this
vision. The production of key materials and Yet emissions from these sectors have long
chemicals – steel, plastics, ammonia and ce- been considered ‘hard to abate’. Carbon is inex-
ment – emits more than 530 million tonnes of tricably linked into current production process-
CO2 per year (including electricity and end-of- es, either as a building block of the material
life emissions). Materials needs are still grow- (plastic), or in the process chemistry of their
ing, and on the current course, EU emissions production (ammonia, cement, steel). Existing
from these sectors would be little lower in 2050 industrial low-carbon roadmaps have eschewed
than they are today. significant change, emphasising carbon capture
as the key route to deep cuts – but still leaving
Globally, these emissions are growing faster some 30–40% of emissions in place in 2050.
still, already accounting for 20% of the total. In Industrial emissions are thus one of the main
fact, without deep change, the production of ba- roadblocks to a net-zero economy. Recognising
sic materials alone would exhaust the available the need to address this problem, the European
‘carbon budget’ for a 2°C objective, and make Commission’s A Clean Planet for All broke new
it completely impossible to keep warming ‘well ground by considering pathways that eliminate
below’ 2°C. Thus, in finding a way to maintain nearly all emissions from industry as well.

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This study confirms that it is possible to achieve On the contrary, many companies in the relevant
net-zero emissions from industry – if one consid- sectors have struggled in the aftermath of the fi-
ers a much wider solution set than is typically nancial crisis. They also face unfavourable inter-
envisioned. Carbon capture still plays a role, but national market conditions, including overcapac-
many other solutions also hold significant potential. ity, trade uncertainty, and adverse structural shifts
A large part of the answer lies in a more circular in energy and feedstock prices. A major transfor-
economy and new business models, both to im- mation from this starting point will be daunting for
prove materials efficiency and to enable the recircu- many. In a capital-intensive industry with long-lived
lation of end-of-life plastic and steel as feedstock for assets, investing in a low-CO2 option instead of
new production. Innovations in industrial processes, reinvesting in current high-CO2 processes could
digitisation, and renewable energy technology like- amount to a ‘bet the company’ decision.
wise help enable deeper reductions over time.
This study attempts to address those con-
Crucially, these deep cuts to emissions need cerns directly, by describing not just a set of
not compromise prosperity. Steel, chemicals, solutions to reduce emissions, but different po-
and cement fulfil essential functions, underpin- tential pathways to net-zero by 2050, recognising
ning transportation, infrastructure, packaging, today’s realities. It quantifies the cost, investment,
and many other crucial functions. The pathways input requirements, and innovation needs of
in this study start from the premise that all these each approach. The aim is to show what it would
benefits continue, and also that the EU keeps take to reach net-zero in each sector, both for
producing the materials it needs within its bor- business leaders making decisions about their
ders to the same extent as today. companies’ path ahead, and for policy-makers
who need to create an enabling policy environ-
However, technical feasibility is only a start. ment. The analysis recognises that achievement
The transition to net-zero emissions will require of climate objectives must go hand in hand with
profound change throughout the materials sys- continued competitiveness of EU industry. While
tem: in core production processes, in how mate- clarifying what needs to change for low-CO2
rials are used in major value chains, and in how solutions to be viable, it also shows how a suc-
they are treated at end of life. cessful transition will involve profound innovation,
This raises understandable concerns. The new sources of value throughout the major value
current business and policy environment is not chains, and opportunities for EU companies to
conducive to these industries undertaking such lead in the creation of solutions that will eventu-
an investment- and innovation-heavy transition. ally be required globally.

15
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

THE EU MATERIALS SYSTEM – THE PRODUCTION, USE AND END OF LIFE OF KEY MATERIALS
The scope in this study is four major materials and chem- The core materials and chemicals produced by these
icals: steel, cement and concrete, plastics, and ammonia. industries are used in major value chains of the economy.
Transportation, construction, packaging, and food account
The EU is a major producer of all these. In 2015, EU com- for as much as 70% of use. Infrastructure and machinery
panies produced 413 million tonnes (Mt), equivalent to add another 20%. The business models, manufacturing
812 kilograms (kg) for every person in the EU. This activity and construction methods, materials choices, and design
employs half a million people and adds €40 billion to the principles in these value chains thus directly determine
EU’s gross domestic product (GDP) each year. European how much of each material is needed to underpin essential
companies were pioneers in the development of heavy in- economic functions. This is why, as discussed below, these
dustry, and Europe is still home to large production assets, value chains are crucial in a transition towards a more cir-
with more than 50 steam crackers, about 200 steel plants, cular economy that can significantly reduce CO2 emissions.
200 cement plants, and 42 ammonia production facilities
at the core. These operations are complex and highly inte- Large amounts of these materials also exit econom-
grated, having been carefully optimised over their lifetimes. ic use each year, as products or structures reach the
end of their lives. For example, EU citizens discard
Overall, production has held steady or grown modestly over about twice their weight in packaging. There are simi-
the long term. However, in the aftermath of the 2008 financial larly large volumes of end-of-life vehicles and demol-
crisis, there was a major shift, as both steel and cement pro- ished buildings. In some cases, these flows have a large
duction dropped by a third, with only partial recovery since. economic value. For example, the 90 Mt of steel scrap
generated in Europe each year is worth some €20–25
Most of these products are commodities, with significant billion when it is either exported or reprocessed in the
international trade and price competition. For example, the EU to make new steel. The other materials are far less
EU exports 14% of its steel production and 29% of its plastic circular and preserve less of the original materials val-
production, and imports comparable amounts. Although EU ue. Plastic recycling is still limited, producing volumes
producers have largely maintained their market position, inter- corresponding to around 10% of total plastics use.
national competition is a challenge. In steel, massive increases
in production in China have led to global overcapacity and de- Together, the production, use and end-of-life flow of
pressed prices and profitability. In chemicals, the cost of both materials make up the EU materials system: a set of in-
ethylene and ammonia production can be as much as three terlocking production processes, products, business mod-
times more expensive in the EU than in regions with access els, infrastructures, and end-of-life handling involving large
to cheap natural gas fossil feedstock. Cement remains a local economic values – and as described below, also large
market, but seaborne imports are a real possibility if large cost CO2 emissions. To reduce these emissions, change across
differences were to develop between the EU and its neighbours. the entire system is possible.

16
 Exhibit 1.1
The EU materials system: more than 400 million tonnes
of steel, cement, plastics, and ammonia flow through
the EU economy each year

PRODUCTION, USE, AND END OF LIFE FOR EU STEEL, CEMENT, PLASTICS, AND AMMONIA
Mt, 2017

NET EXPORTS

417 STOCK BUILD-UP

397
AGRICULTURE
PACKAGING

MACHINERY

CEMENT OTHER

TRANSPORTATION
233
EXPORT

INFRASTRUCTURE INCINERATION
CHEMICALS & LOSSES

LANDFILL
CONSTRUCTION

STEEL

RECYCLING

PRODUCTION USE END OF LIFE

SOURCE : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 10

17
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

MATERIALS AND CO 2 EMISSIONS – WHY INDUSTRY IS SEEN AS ‘HARD TO ABATE’

These four heavy industries are major energy users and Continuing today’s pattern of materials use in an ex-
large sources of carbon dioxide (CO2) emissions. For ev- panding EU economy would require an estimated 14% in-
ery kilogram of cement that is produced, 0.7 kg of CO2 is crease in materials production and use by 2050. Thus,
released into the air. The equivalent figure for the primary in a baseline scenario, overall emissions from the four
production of steel in the EU is just under 2 kg of CO2, while industries would also grow (Exhibit 1.2). Incremental im-
1 kg of plastic leads to 4.6 kg of CO2, more than half of provement in energy efficiency and some fuel switching
which results from embedded emissions that are released would slightly reduce production emissions, but EU plans
if plastics are incinerated at end of life. Including electricity to phase out landfilling would lead to much greater levels
and end-of-life emissions, total annual emissions from these of incineration of plastics, causing additional fossil CO2
materials were 536 Mt of CO2 in the EU in 2015. That is 14% emissions.
of the EU’s total CO2 emissions from energy and industry.11

Exhibit 1.2
Without deep change, CO 2 emissions from steel, chemicals,
and cement would remain at more than 500 Mt CO 2 per year
EMISSIONS IN A BASELINE SCENARIO
Mt, CO2 PER YEAR

CEMENT CHEMICALS STEEL

68
62
536 -43 545
-77

2015 INCREASED INCREASED EFFICIENCY DECARBONISATION 2050

EMISSIONS PRODUCTION INCINERATION IMPROVEMENTS OF POWER SECTOR BASELINE
Demand for materials is Phase-out of landfilling Efficiency improvements The power sector is expected
expected to increase by changes end-of-life treatment in the range of 5-10% to decarbonise until 2050.
14% until 2050, of plastics. Increased in primary steel and cement However, as electricity is
resulting in 11% incineration by 60% leads production, and around not the dominant energy
increased emissions with to increasing end-of-life 30% for plastics production, source, this will have
current production emissions from plastics. reduces emissions in the limited impact on emissions.
technologies current production system

SOURCE : MATERIAL ECONOMICS MODELLING AS DESCRIBED IN SECTOR CHAPTERS.

18
Total annual emmisions
from these materials represent
14% of the EU´s total CO2
emissions from energy
and industry.

19
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

Any strategy to reduce emissions needs to address the steel, carbon is used to remove oxygen from iron ore
main sources of CO2. For the sectors in scope here, three to produce iron. In the case of cement, the calcination
issues are particularly important: high-temperature heat, of limestone to produce calcium oxide releases large
process emissions, and end-of-life emissions. These togeth- amounts of carbon contained in the rock. In steam
er make up as much as 84% of emissions from the four cracking, some 35–45% of the carbon in the feedstock
sectors (Exhibit 1.3): ends up not as high-value chemicals, but as hydrocar-
bon by-products that release fossil CO2 when burnt as
• High temperature heat: The core processes to melt fuel. And in the case of ammonia, CO2 is released in
and form steel, crack hydrocarbons into bulk chem- the production of hydrogen from natural gas. Eliminat-
icals, and transform limestone to cement clinker re- ing these emissions requires changing the fundamen-
quire very high temperatures, 850–1,600°C. This sets tals of the underlying industrial processes – not just
strict requirements for the energy sources and tech- the energy sources, but the feedstocks and equipment.
nologies used. In particular, while electricity already
is used for some for these (notably, in electric arc • End-of-life emissions: In the case of plastics, carbon
furnaces to melt steel), in most cases neither the tech- is built into the materials which is released as CO2 when
nologies nor the economics are yet in place to do so. incinerated at end of life. On average, as much as 2.7
kg of CO2 is emitted for every kg of plastic. To address
• Process emissions: All major processes in the four these, the carbon can be recirculated instead, while
sectors use carbon not just for energy, but also as new feedstock must be changed to a non-fossil source
an integrated part of their process chemistry, with of carbon (notably, biomass).12
significant CO2 emissions as a result. In the case of

20
 PROCESS EMISSIONS

Process emissions resulting from the process chemistry

48% of e.g. cement calcination and coke reduction.

Exhibit 1.3
Why CO 2 emissions from industry
546 are ‘hard to abate’

SOURCES OF CO2 EMISSIONS FROM STEEL, CEMENT, PLASTICS, AND AMMONIA (100% = 536 Mt CO2)
Mt CO2, 2015

ELECTRICITY
Electricity, production of 213 TWh
to serve industrial processes
LOW- AND MID TEMPERATURE HEAT
Low- and mid temperature heat for
64 e.g. plastic polymerisation and processing
22

END-OF-LIFE TREATMENT

PROCESS EMISSIONS
59
End-of-life treatment, carbon built into the

Process emissions from carbon

248 plastics is released when plastics is
incinerated at the end of life
used as an integrated part of the process
chemistry of materials production, e.g.
carbon used in reduction of iron ore,
calcination of limestone, and hydrocarbons
143
in fuel-grade by-products
in steam cracking
HIGH-TEMPERATURE HEAT
High-temperature heat,
1100-1600°C for core processes
of melting and forming steel, steam
cracking, and clinker production

84%
‘HARD TO ABATE’

SOURCE : MATERIAL ECONOMICS ANALYSIS, SEE ENDNOTE. 13

21
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

METHODOLOGY AND MODELLING APPROACH

The study covers cement and concrete, plastics (production of olefins and aromatics and po-
lymerisation), primary and secondary steel (including downsream processing), and ammonia.
The modelling approach starts from a characterisation of future activity levels. A baseline scena-
rio for demand in 2050 is estimated using a range of models. For steel, the principal tool is a
dynamic materials flow analysis along with assumptions about future saturation levels for the ste-
el stock in different end use segments. For plastics, cement and ammonia, activity levels are ba-
sed on scenarios for future construction, mobility, food production, and other activity. In the ba-
seline scenario, no major shift in materials intensity or industry structure is assumed. As the aim
is to characterise an EU net-zero CO2 industrial system, no change in net imports is assumed.

The next step defines a wide range of low-CO2 production routes. The analysis characterises
the technological maturity, investment requirements, energy and feedstock inputs, other ope-
rating costs, mass balance, and CO2 emissions of each process. Costs of energy inputs are ba-
sed on widely used energy-economic scenarios from the International Energy Agency and other
organisations. The scope of CO2 emissions includes emissions from electricity generation,
but also the carbon contained in products that may be released as CO2 at end of life.14 Electri-
city generation is assumed to be fully carbon free by 2050, but the analysis explores scenarios
where this is not the case. On the other hand, CO2 created in the production of other raw ma-
terials (such as the extraction of oil and gas or mining of iron ore) are not included, nor are im-
pacts on transportation estimated (e.g., the reduced transportation activity from lower materials
requirements). In addition to new production routes, current production routes are characterised,
including the reinvestment requirements and scope for process and energy efficiency improvement.

Alongside the production side, the analysis uses a range of models to explore opportunities for circu-
lar economy opportunities: improved materials efficiency and increased materials circulation. A model
of packaging characterises 35 classes of packaging and estimates opportunities for reduced materi-
als use, as well as options for substitution with other materials. Models of the mobility and buildings
value chains estimate the potential for a range of materials efficiency strategies, as well as for changed
use patterns (eg. based on sharing models) with new business models. Other quantities estimated
include potential to reduce scrap generation in manufacturing, cement levels in concrete, food waste,
fertiliser application through increased precsision, etc. Costs and input requirements of these mea-
sures are estimated and included alongside the production routes.15 In all cases, the estimates are
based on the premise that the underlying service or benefit provided (e.g., passenger-kilometres for
mobility, shelter from buildings, protection from packaging) should be maintained as in the baseline.

The third component is a characterisation of end-of-life flows of materials and production routes that
use these as inputs for new materials production. For steel, a dynamic materials flow model is used to
estimate future availability of steel scrap and scenarios for scrap generation, collection rates, and le-
vels of tramp elements. For plastics, a range of end-of-life flows are estimated based on levels of stock
buildup and product lifetimes, and are mapped for their suitability for mechanical recycling, including
impacts on yields, quality, and resulting effective replacement of new plastics production. Chemical
recycling is characterised as a new plastics production route, with focus on routes with high carbon
mass balance. The incineration of plastics at end-of-life is modelled and the CO2 accounted for. For
cement, the potential for recycling of concrete fines and recovery of unhydrated cement are estimated.

These three components are put together in a scenario analysis. All scenarios are constructed to
achieve close to zero emissions of CO2 from industrial production by 2050. Backcasting is used to
create pathways in five-yearly intervals, accounting for capital stock turnover, gradualy improvement in
technological maturity, lead times for construction, and other constraints. The aim of the pathways is
to describe ‘what it would take’ to achieve net-zero emissions in each of the four industrial sectors. The
aim is not to find one optimal pathway, but to illustrate both ‘no regret’ moves and important choices
ahead. Further details on the assumptions and approach are contained in the sector-specific chapters
of this report, as well as in Appendices.

22
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

THE BUILDING BLOCKS OF NET-ZERO EU INDUSTRY

The aim of this study is to lay out pathways for the steel, • Materials efficiency and new business models in
plastics, ammonia, and cement industries to achieve net-ze- major value chains: These consist of opportunities
ro emissions by 2050. This is far more ambitious than to reduce the amount of materials needed to deliver a
many existing analyses or ‘roadmaps’, which have typically given benefit or service, thus achieving CO2 reductions
focused on near-term opportunities or laid out scenarios without having to compromise on economic or socie-
that still leave up to 40% of industry emissions in place in tal benefits. This is analogous to the role of energy ef-
2050.16 ficiency in the wider energy transition, and this study
builds on other work that finds that ‘materials efficien-
A focus on a net-zero economy requires a different cy’ should be considered a major climate solution.18
approach (see Box to the left for more details about the
methodology used). First, it is necessary to consider sys- • Materials recirculation and substitution: Recirculat-
tem-wide emissions, including emissions from electricity ing steel, plastics, and cement can bypass the process
generation and from end-of-life treatment. This is to avoid emissions of primary production processes, avoid end-of-
solutions that reduce emissions from industrial production life emissions, and significantly reduce energy use com-
only to shift them to other parts of the economy. Second, pared with new production. This study also considers the
the focus must be on fully zero-CO2 production routes. option of switching from high-CO2 to lower-CO2 materials.
There are many measures that achieve partial reductions
of CO2, and that can make important contributions to ear- • New low-emissions processes: These opportunities
ly emissions reductions. However, in this study they are consist of fundamental changes to the underlying pro-
always accompanied by a full transition to fully fossil CO2- duction processes and feedstocks, often eliminating
free production in 2050.17 fossil carbon from the outset. Only processes that are
Finally, for deep cuts, all solutions must be included. A proven or at advanced stages of development are in-
major focus of this study is to include opportunities for more cluded in this study. Even so, many options are avail-
efficient use and reuse of materials, which in turn reduces able. Several use electricity as input, either directly or in
the need for new production. the production of hydrogen, or else they use biomass
as an alternative to fossil sources of carbon feedstock.
On the other hand, the study does not consider ‘offsets’,
whereby ‘negative emissions’ in other parts of the economy • Carbon capture and storage/use (CCS/U): These
would compensate for continued emissions in industry. It consist of processes to capture and permanently store
also does not consider the reduction of emissions through nearly all the CO2 emissions from production, feedstock
increased imports. Both are very real possibilities. The anal- production, or end-of-life incineration. Opportunities for
ysis of costs and potentials in this study can be an important carbon capture and use (CCU) also are considered, but
contribution to debates about how they should be handled. always with end-of-life emissions in mind. Only CCS/U
solutions that achieve very high capture rates can sig-
The study includes four main categories of emissions nificantly contribute to net-zero objectives, and often they
reduction strategies (Exhibit 1.4): require a major reconfiguration of production processes.

23
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

Exhibit 1.4
A solution set for achieving...

CIRCULAR ECONOMY IN MAJOR VALUE CHAINS

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

AND CIRCULAR BUSINESS MODELS AND SUBSTITUTION
Reducing the amount of materials used for a Using end-of-life materials as input to
given product or structure, or increasing the lifetime new production, or using low-CO2 alternative
and utilisation through new business models materials that provide the same function

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

•New design principles to reduce materials use •Increase collection rates
•Improve sorting and decrease contamination for
•Reduce over-specification and overuse
higher quality of reycled materials
•Use of high-performance materials to reduce the •Increase process waste recovery and recycling
amounts required
•Design for disassembly to facilitate materials
•Optimise component design and manufacturing separation
processes to reduce process waste

SHARING BUSINESS MODELS AND MATERIALS SUBSTITUTION

INCREASED LIFETIME OF PRODUCTS •Switch to low-CO2 materials that can provide
•Sharing business models to increase utilisation similar functionality
and amount of services gained from each product
•Product designs adapted to sharing and high
utilisation
•Design for increased product- and component
longevity
•Reuse and remanufacturing of products and
individual components

24
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

...a low-CO 2 materials system

CLEAN PRODUCTION OF NEW MATERIALS

NEW AND IMPROVED PROCESSES CARBON CAPTURE

Shifting production processes and feedstocks to Capture and permanent storage of CO2 from
eliminate fossil CO2 emissions production and end-of-life treatment of materials,
or use of captured CO2 in industrial processes

CLEAN UP CURRENT PROCESSES CARBON CAPTURE AND STORAGE

•Increase process- and energy efficiency •CCS on existing production and end-of-life
processes
•Switch to lower-CO2 fuels and electricity
•Reconfigure production processes to enable
high concentration of CO2 and consequently
higher capture rates

NEW PROCESSES AND FEEDSTOCKS CARBON CAPTURE AND UTILISATION

•Steel: hydrogen-based steelmaking, smelting •Use of captured carbon as feedstock in ways
reduction, CCU that permanently prevent release to the atmosp-
•Chemicals: bio-based polymers, chemical here as CO2 emissions
recycling processes, new processes for
by-products
•Ammonia: CO2-free hydrogen
•Cement: electrification, new binders

ELECTRIFICATION
•Electrification of production processes and
production of key inputs, including hydrogen

25
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

A. Circular economy - materials efficiency and new business proven potential to achieve the same lighting, mobility, thermal
models in major value chains (58–171 Mt CO2 potential). comfort, etc., with less energy input. Materials efficiency plays an
analogous role in the transition to a low-CO2 industrial economy.
As noted, the EU uses more than 800 kg of steel, cement,
plastics, and ammonia per person per year. On the current This study builds on an extensive review of opportunities to
course, this could increase to 870 kg by 2050. However, improve the productivity of materials use in large value chains
there is nothing fixed or absolute about these amounts. Ma- including construction, transportation, and packaged goods.
terials are not consumed for their own benefit, but for the It finds that the opportunity is surprisingly large: whereas A
services they provide: structure in buildings or vehicles, pro- Clean Planet for All explored reductions of 6–11% of materials
tection and barrier properties in packaging, etc. The idea use, this study finds potential to reduce steel, plastics, ammo-
of materials efficiency is to provide the same benefits and nia and cement use from 870 to 570 kg per person per year,
functionality with less materials use – or, equivalently, get- without compromise on the underlying benefits – a reduction
ting more useful service out of every tonne used. of 35%. This translates to a reduction of CO2 emissions of 171
Mt CO2 per year, or 31%, in an ambitious case (Exhibit 1.5).
This concept is hardly new to climate policy. Indeed, for energy,
the EU has adopted a principle of ‘efficiency first’.19 The large Therefore, a key finding is that materials efficiency can
policy attention devoted to energy efficiency is based on the make a major contribution to climate objectives.

Exhibit 1.5
Materials efficiency and new business models
in major value chains can cut emissions by 31%
EMISSION REDUCTIONS FROM MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS
Mt CO2 PER YEAR, EU, 2050

-31%

545
58
65
375
48

BASELINE STEEL CHEMICALS CEMENT CIRCULAR ECONOMY

SCENARIO
• Shared mobility reduces steel • Reduced overuse and over- • Optimisation of concrete
needed per passenger-kilometre specification of plastics recipes to reduce cement content
• Optimised steel use in construc- in e.g. packaging • Reduced overspecification in ready-
tion by e.g. less overspecification, • Sharing business models mix concrete and in exposure classes
use of high-strength steel such as car-sharing reduces • Reduced waste through
• Reduced process waste plastics demand per use of pre-fabricated parts
• Light weighting, passenger-kilometre • Optimisation of concrete elements
remanufacturing, and product- • Precision agriculture and • Reconstruction and re-use
as-a-service business models reduced overuse of fertilisers instead of demolition

SOURCE : MATERIAL ECONOMICS MODELLING AS DESCRIBED IN SECTOR CHAPTERS.

26
Materials efficiency place
an analogous role in the
transition to a low-CO2
circular economy.

27
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

The opportunities range widely, including:21 creased use-intensity that jointly can reduce materials
use in transport by 50–70% per passenger-kilometre
• Improved design: Redesign of products with materi- (Exhibit 1.6).
als efficiency in mind can result in significant savings.
Innovation in design is also critical for recycling (see • Longer lifetimes for products and structures: A
next section). combination of reuse and remanufacturing can ensure
materials and products stay in use much longer, reduc-
• High-performance materials: For example, high- ing the need for new material.
strength steel and techniques such as post-tensioning
can reduce the amount of steel needed for some con- These measures require changes by multiple actors in
struction projects by 30%, with similar opportunities for the main value chains: construction companies, concrete
high-performance concrete. producers, car manufacturers, shared-mobility providers,
• Reduced waste during production: Scrap in some technology providers, packaging producers, etc. Digitisa-
manufacturing chains can be cut by up to 50%, both by tion is often a key enabler. As with energy efficiency, a long
adopting current best practice, through more pre-fabri- value chain with multiple actors means there are many barri-
cation, and through advanced production techniques ers and market failures, including split incentives, coordina-
like 3D printing. In construction, some 15% of some tion, incomplete contracts, and missing markets. The policy
classes of building materials are wasted. agenda thus needs to not just send the right price signals,
but also overcome many other barriers.
• Less over-specification: Construction projects often
use 35–45% more steel than is strictly necessary. Sim- An analysis of costs also finds that mobilising these mea-
ilarly, it is often possible to achieve the same structural sures can improve the cost-effectiveness of reducing emis-
strength with only 50–60% as much cement as used sions. Many, such as car-sharing, are significant productivity
today, both by reducing the cement content of concrete opportunities of new business models, where reduced ma-
and by using less concrete in structures. terials use is one consequence of an overall much more ef-
ficient use of resources. In other cases, using less materials
• Higher intensity of use: New business models based requires new inputs: use of data, increased labour inputs,
on digitisation, such as car-sharing and product-as-a- increased inventory and logistics costs, etc. For example,
service arrangements, enable more concurrent bene- optimising concrete elements or steel beams to reduce total
fits from products, but are also major enablers of other materials use often comes at the cost of increased complex-
materials efficiency measures. For example, a shared ity and coordination, and a need for increased pre-fabrica-
mobility system would enable longer-lived vehicles, tion. Overall, however, the cost of this potential is lower than
improved maintenance, variation in car sizes, and in- that of many low-carbon production opportunities.22

28
 Exhibit 1.6
Shared mobility can dramatically cut emissions from
mobility and reduce materials intensity of transportation

MAJOR SHIFT OF INNOVATION FOCUS

FROM: Maximizing upfront sales volume and price

TO: Making the car a well-functioning effective part of urban mobility

VEHICLES RE-DESIGNED AND

HIGHER UTILISATION PER CAR MANAGED TO MAXIMISE RUN TIME

SHARING BUSINESS MODELS LONGER VEHICLE LIFETIMES

New business models to suit new High returns to durability
customer groups Longer-lived electric vehicles profitable
Integration with public transport system Professionally maintained fleet

DIGITISATION AND AUTOMATION MODULARITY AND REUSE

Self-driving cars enable new service Design for quick repair and upgrade-
models ability
Data-intensive optimisation of traffic Reuse built into vehicle design

LOWER VEHICLE WEIGHT

More varied car sizes with shared fleet
Advanced materials more profitable
HIGHER PROFITABILITY OF
CIRCULAR BUSINESS MODELS

END-OF-LIFE VALUE
Higher EOL value (modularity,
valuable materials etc.)
EOL flows more predictable in fleet
owned system

LOWER COST OF TRANSPORT

New design and high utilisation reduce
total cost
Competitiveness with other modes of
transport increases

SOURCE : MATERIAL ECONOMICS (2018) . 23

29
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

B. Materials circularity and substitution (82–183 Mt a stretch case, mechanical recycling could supply up to a
CO2 potential). third of total plastic needs.

These solutions focus on recirculating steel, plastics, and For deep emissions cuts, higher rates of recirculation
cement as inputs to new production, instead of making new are needed than can be achieved by mechanical recycling
materials from scratch. Increasing the share of recirculation alone. ‘Chemical’ recycling of plastics will be needed. These
materials can lead to significant emissions reductions, for methods break down plastic molecules and reconstitute
three reasons: them into new products. The idea would be to make end-of-
life plastics a major source of feedstock for the EU chemi-
1. Recirculation bypasses the process emissions of new cal industry. The processes required are largely known, but
production, so it eliminates some of the hardest-to- need to be further developed to become commercially via-
abate emissions. ble, and there is large scope for innovation. Doing so is a
crucial step towards enabling a ‘societal carbon loop’ that
2. The energy requirements are much smaller in most keeps the carbon from plastics circulating in society, instead
cases, and recycling typically can use electricity, which
of escaping into the atmosphere as CO2. Together, the two
is much easier to render CO2-free than are fuels used
approaches to recycling could recirculate up to 60-70% of
in primary production.
the carbon in plastics, approaching the recycling levels for
3. In the case of plastics, recirculation helps avoid the aluminium today. Where possible, mechanical recycling is
emissions from end-of-life incineration. preferable, as it is much more energy- and CO2-efficient.
Chemical recycling requires large amounts of energy input
Steel recycling is already well established, with a large- in pyrolysis and electrified crackers, and for hydrogen pro-
ly electrified process. Its use could increase to 2050, as duction.
more scrap will become available in the future as the EU
Recycling opportunities also exist for cement, where the
steel stock saturates. The EU could therefore choose a path
reuse of concrete ‘fines’ (particles with a small diameter)
where it meets up to 70% of its needs for iron for steelmak-
can reduce process emissions by substituting for new ce-
ing through recycling. However, this would require signifi-
ment. It also is possible to recover some unreacted cement
cant changes to current practice. Today’s product design,
from existing concrete, and to use this in place of new ce-
end-of-life dismantling, and scrap handling processes re-
ment.
sult in end-of-life steel being polluted with ‘tramp elements’
(especially copper) that degrade quality and cannot be re- Another option is to replace materials that are hard to
moved. A concerted agenda to reduce copper contamina- make emissions-free with ones that provide similar func-
tion should thus be high on an industrial climate agenda. tion but whose emissions (process, energy and end-of-life)
Alternatively, the EU could export its steel scrap, reducing are easier to cut. Key examples include the use of mate-
the need for new iron production in other countries. In either rials based on wood fibre instead of plastics in packag-
case, preventing the downgrading of the steel stock would ing, and the use of wood instead of concrete and steel in
make an important contribution to global climate objectives. construction. Another is to use alternatives to clinker in ce-
ment-making, such as calcined clays or natural pozzolans.
In contrast to steel, plastics recycling is only a minor part
CO2 savings could be substantial, but the benefits of such
of the industry. Today’s effort focuses on ‘mechanical’ re-
substitution depend heavily on achieving zero emissions
cycling, where plastic is cleaned and re-melted. However,
from the substituting material. For wood, a key requirement
despite significant efforts, the effective replacement of new
is that the underlying forestry practices capture at least as
plastics production through mechanical recycling in the EU
much carbon as do standing forests (this often is the case
is likely only around 5-10% of the total.24 Much higher rates
with managed silviculture in the EU today).
are possible, but will require major changes. The most im-
portant is in how products are designed and used in the first The total potential for recirculation is large. By 2050, in-
place; even small adaptations can drastically improve the creased recycling of steel, plastics and cement could re-
chances of high-quality recycling. Other measures include place some 150 Mt of new materials production. By also
significant improvements in collection and sorting of plastic rendering the recycling processes CO2-free, it is possible to
waste, and reduced contamination of recycling streams. In cut emissions by 187 Mt.

30
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

Exhibit 1.7
Increased materials recirculation
and substitution can reduce emissions by 33%

EMISSION REDUCTIONS FROM MATERIALS RECIRCULATION AND SUBSTITUTION

Mt CO2 PER YEAR, EU, 2050

-33%

545
64

100
364
18

BASELINE STEEL CHEMICALS CEMENT CIRCULAR ECONOMY

SCENARIO

• Increased share of scrap- • Mechanical and chemical • Clinker substitution with

based production recycling of end-of-life natural pozzolans and
• Higher scrap collection rates plastics to replace new calcined clays
• Reduced contamination of ’ feedstock in production • Substitution of concrete
tramp elements’ in steel • Substitution of plastics and steel with wood
recycling for higher-quality with fibre-based materials in construction
recycled steel in e.g. packaging • Recycling of cement
fines and recovery of
unreacted clinker

NOTE : INDIVIDUAL NUMBERS DO NOT SUM UP TO TOTAL DUE TO ROUNDING.

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN SECTOR CHAPTERS.

31
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

C. New low-emissions processes (143-241 Mt CO2 po- energy use. However, its main benefit from a CO2 per-
tential). spective is that it concentrates emissions to the point
where CCS/U is much more feasible (see below).
In a baseline case, annual primary production (i.e., new
production from new raw materials, as opposed to recy- • For chemicals, new processes are needed to enable
cling) of steel, plastics, ammonia, and cement in the EU the use of non-fossil feedstocks: biomass and recircu-
would amount to some 380 Mt in 2050. Increased materials lated plastics. New process steps are also required to
efficiency and recirculation can cut the need for new pro- process large flows of carbon in fuel-grade products
duction substantially, but 180–320 Mt will still be required. into useful chemicals, thus avoiding process emissions.
Globally, the need is still larger, as the opportunities for re- The new processes would be variations of ones already
circulation are lower in economies that have not yet built used extensively in chemicals production. Proven gas-
up their stock of materials to the same level as the EU. For ification, pyrolysis, digestion, reforming and other steps
net-zero emissions to be possible, new materials and chem- combine with new platform chemicals and routes (no-
icals production therefore must be rendered CO2-free. tably, methanol-to-olefins). Together, these can achieve
the carbon mass balance of 95–100% required for
Such solutions exist or are emerging across all four ma- net-zero production.
terials and chemicals (Exhibit 1.8). They have in common
that they replace or substantially modify the current core in- • In current cement production, 26% of the Portland
dustrial processes. Many are already proven or in advanced cement clinker is already replaced with low-CO2 ce-
development, but need to be further developed and brought mentitious materials, such as blast-furnace slag or fly
to deployment and full commercial scale. In many cases, ash. These will need to be gradually replaced by alter-
the new processes require large amounts of electricity – natives, including natural pozzolans and calcined clays,
either directly, or indirectly for the production of hydrogen.25 while also eliminating CO2 from their production and
Changing to new processes therefore depends on simulta- processing.
neously achieving a CO2-free wider energy system. • High-temperature processes need to be electrified.
This includes electrification of steam crackers, cement
Added to that, switching to new processes requires a com-
kilns, iron ore sintering, steel reheating furnaces, and
plex transition from the current production plant, which has a
high-temperature steam production. Several technolo-
cumulative sunk asset value measured in billions of euros. Fi-
gies are being investigated and/or developed, including
nally, Europe must ensure that the new methods are commer-
plasma, induction, and microwave energy. In the steel
cially viable, even when they cost more than current methods.
sector, electric arc furnaces are already being used to
Prominent examples include: re-melt steel scrap to new steel. Plasma heating has
been successfully used to provide the heat for calcina-
• For steel, the two main options are hydrogen-based tion in cement production. In some cases, substantial
direct reduction (H-DRI) and smelting reduction. H-DRI energy savings and process improvements could be
builds on existing DRI iron-making technologies, which achieved through electrification.
use natural gas to remove oxygen from iron ore. H-DRI
replaces natural gas with hydrogen, eliminating carbon Producing materials and chemicals through these pro-
from this step. Direct smelting reduces the number cesses would cut emissions by as much as 241 Mt CO2 per
emissions sources from integrated steelmaking, cutting year by 2050, compared to using current processes.

32
 Exhibit 1.8
Key new industrial production processes
for a low-CO 2 industry transformation

• Hydrogen direct reduction of iron. Replacing natural gas with pure hydrogen in direct reduction ironmaking
• Smelt reduction. New metallurgy to reduce iron in a molten stage, reducing energy needs while increasing the
feasibility of high rates of CO2 capture for CCS
• Blast furnace + CCU. A combination of a) switching to largely circular or bio-based inputs, b) recycling and
reprocessing off-gases for chemicals production, and c) CCS on residual emissions
steel • Electrowinning. Producing steel through direct electrolysis (not included in pathways)
• Electrification of other process steps, including ore sintering and reheating furnaces (c 1200°C)

Plastics
• Bio-based plastics produced from biomass. Key routes include anaerobic digestion or gasification into methanol,
and production of olefins via methanol-to-olefins (MTO), or production of bio-ethylene via fermentation of biomass
into ethanol
• Chemical recycling of end-of-life plastics through e.g. depolymerisation, solvolysis, gasification or pyrolysis +
steam cracking
• Electrification of steam crackers and reprocessing of by-products into chemicals (e.g. via methanol and
MTO) to avoid fuel emissions

chemicals • Reprocessing of by-products from cracking processes into olefins via e.g. methane-to-methanol and metha-
nol-to-olefins (MTO) to avoid fuel emissions from burning of by-products
• Innovation and further development including a) polymers from biomass with closer affinity to the molecular
composition of biomass, to increase mass balance and reduce energy demand and b) a range of new catalysts to
improve efficiency of all process step

Ammonia
• Hydrogen production via electrolysis for ammonia production using renewable electricity and water.

• Electrification of sintering and calcination processes (1450 °C) e.g. via plasma or microwave options
• Alternative binders such as efficient low-CO2 processing of natural pozzolans or calcined clays for use as
cementitious materials
CEMENT

• Further development of electrolysis for energy-efficient production of hydrogen through e.g. solid oxide
CROSS-CUTTING electrolysis cell (SOEC)​
THEMES • Electrification of other core processes such as steam boiling, and low/medium temperature heat

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN SECTOR CHAPTERS.

33
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

D. Carbon capture and storage or use (CCS/U) (45– source, and some process steps, such as ore sintering,
235 Mt CO2 potential). will need to be electrified. The alternative is a combina-
tion of CCU and CCS, involving significant modification
CCS relies on trapping carbon dioxide at its source, then to the current use of blast-furnace production, with recy-
permanently storing it so it cannot escape to the atmo- cling and reprocessing of off-gases in combination with
sphere (normally underground). CCU is a variation on this, using bio-based or recirculated carbon for much of the
embedding it in products instead. In a net-zero economy, feedstock, and CCS for the remaining CO2. Both cases
CCU would need to provide equivalent certainty that the would major changes to current production, amounting to
carbon will not be released as CO2 emissions. the introduction of altogether new production processes.
The potential attraction of CCS is that it would allow the • For chemicals, even if high capture rates were achieved
continued use of current processes and production assets, from steam crackers, the ‘embedded’ carbon in the prod-
and reduce the need to mobilise large amounts of electric- uct would still remain, as would the upstream emissions
ity and biomass. In the four industries studied, CCS could to produce feedstock in refineries. CCS works best on
be deployed in a range of settings, both on existing indus- large point sources with highly concentrated CO2 emis-
trial processes, to produce feedstock (especially hydrogen sions in proximity to suitable storage. In contrast, CCS
from natural gas), and to handle end-of-life emissions, by as a solution to plastics emissions would require capture
combining waste incineration with CCS. not just at the roughly 50 steam crackers in the EU, but
also on many hundred widely distributed waste incinera-
Technology to capture CO2 is already in an advanced
tion plants and on upstream refineries.
stage, and there are few technical obstacles to prevent
the capture of large amounts of CO2 from the existing in- • For cement and end-of-life emissions from plastics,
dustrial base to provide immediate, near-term reductions the challenge is similar to waste incineration, in that
in emissions. However, neither large-scale demonstration these industries are highly dispersed. There are nearly
plants nor CO2 transport and storage infrastructure are yet 200 cement kilns scattered across the EU. Deep cuts
in place for any of the sectors under consideration here. A through CCS alone would require near-universal trans-
significant acceleration of effort would be needed if CCS is port and storage infrastructure throughout the EU.
to be a large-scale solution by 2050.
Finally, large-scale use of carbon capture technologies re-
Moreover, CCS is far from a ‘plug-and-play’ solution for quires an extensive transport and storage infrastructure. Pub-
deep emissions cuts from the industrial sectors consid- lic provision and/or regulation may be a requirement. Public
ered here. Significant further development would be need- acceptance of CO2 storage has also been a major stumbling
ed to achieve the capture rates of 90% or more required block to early attempts to scale up CCS.
for a net-zero outcome:
Despite these challenges, there is no question that CCS
• In integrated iron- and steel-making, there are mul- could provide valuable early emissions reductions and play
tiple, interlinked emissions sources, which makes it a role in a fully net-zero production. High capture rates of
highly challenging to capture more than 60% of emis- 90% or more could be combined with bio-based inputs for a
sions. Therefore, to achieve deep cuts through CCS, truly net zero-CO2 solution. In a stretch case, some 235 Mt of
new ‘smelting reduction’ processes need to be de- CO2 could be captured from a wide range of sources in the
veloped that concentrate CO2 emissions to a single overall materials system (Exhibit 1.9).

34
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

Exhibit 1.9
CCS could be used across a wide range of industrial
sources, with 235 M t CO 2 captured by 2050 in a stretch case

CARBON CAPTURE AND STORAGE (CCS)

Mt CO2 CAPTURED PER YEAR, 2050

Some share of CCS will be required to handle process

CEMENT 85 emissions from cement production, but total amount
captured can be managed with other measures.

New processes are required (smelt reduction, CCU) to

STEEL 63 achieve deep emission reductions (>85%) from steel
through CCS.

CHEMICALS CCS can cut more than 90% of emissions from steam
(STEAM CRACKING 12 crackers, but is also required on refinery emissions for
AND REFINING) truly deep emissions cuts.

CHEMICALS CCS on waste incineration plants can reduce

(END-OF-LIFE 47 end-of-life emissions.
INCINERATION)

Using CCS in hydrogen production can reduce

HYDROGEN PRODUCTION 29 electricity needs (for steam methane reforming, or
emerging solutions such as methane pyrolysis).

In a stretch scenario for CCS, 235 Mt of CO2 is

TOTAL 235 captured per year in 2050 to achieve net-zero emissions.

45-47 Mt CO2 CAPTURED IN LOW-CCS PATHWAYS

235 Mt CO2 CAPTURED IN HIGH-CCS PATHWAY

NOTE : INDIVIDUAL NUMBERS DO NOT SUM UP DUE TO ROUNDING.

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN SECTOR CHAPTERS.

35
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

1.2 The choice ahead: pathways to net-zero

emissions for industry
The sheer breadth of solutions across the four strategies The approach taken here is therefore not to try and pre-
for emissions reductions is encouraging. However, views dict a most likely (let alone an ‘optimal’) path ahead. In-
will inevitably differ on which solution is most promising. stead, the study recognises that EU companies and society
Conversations with a large number of industry and other can choose different ways, and explores three illustrative
stakeholders for this study reveal large differences of opin- pathways (Exhibit 1.10). All three have in common that they
ion about which solutions will be easiest to mobilise rapidly leave no or very few emissions in place in 2050, and all
and at scale, with the greatest advantages for European three use the full set of solutions for net-zero industry, but
competitiveness. each with different emphasis (see figure below).

New Processes relies heavily on Circular Economy hinges on the Carbon Capture emphasises
new core industrial processes, potential of a more circular economy a greater role for carbon capture
often driven by electricity. for materials recirculation and in- and storage (CCS).
creased materials efficiency.

The intention of the analysis is to aid both policy-makers ty requirements in one pathway seem unmanageable, how
seeking to enable a low-CO2 transition industry, and com- much could they be reduced by mobilising circular econo-
panies setting their strategy in highly uncertain times. The my solutions or CCS? Alternatively, if large-scale CCS were
pathways show some no-regret options, such as solutions to prove difficult, how quickly would new, non-fossil produc-
required in all three pathways, and innovation and infrastruc- tion processes need to scale?) The analysis also estimates
ture priorities. the costs (to society, to consumers, and to companies) of
achieving net-zero emissions, as well as the requirements in
They also illustrate some of the major dependencies, sen- terms of investment and inputs.
sitivities and choices ahead. (For example, if the electrici-

36
 Exhibit 1.10
Pathways to net-zero emissions FOR Steel
EMISSION REDUCTIONS FROM STEEL, CHEMICALS, AND CEMENT
Mt CO2/YEAR

Baseline
536 545
73
450 • Relies heavily on new core industrial
183 processes driven by electricity, either
NEW PROCESSES
300 directly or through the use of hydrogen
Pathway
Remaining • Key enablers are abundant and
150 241 cost-competitive electricity supply and
Emissions
rapid commercialisation of new processes
0 45

2015 2050

Baseline
536 545

450 171 • Hinges on the potential of a more

circular economy for materials recircula-
300 182 tion and increased materials efficiency
CIRCULAR ECONOMY
Pathway • Key enablers are new business models,
Remaining
150 digitisation and extensive coordination
Emissions 143
across the value chain
0 47

2015 2050

Baseline
536 545
58
450 82 • Emphasis on a greater role for carbon
capture and storage (CCS)
300 167 • Key enablers are a critical mass of
CARBON CAPTURE
Pathway
infrastructure and risk distribution for CCS,
Remaining
150 and reconfiguration of production processes to
Emissions 235
allow for high CO2 capture rates
0

2015 2050

MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS

MATERIALS RECIRCULATION AND SUBSTITUTION
NEW PROCESSES
CARBON CAPTURE AND STORAGE
REMAINING EMISSIONS

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN SECTOR CHAPTERS.

37
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

New Processes pathway Circular Economy pathway Carbon Capture pathway

In this scenario, most emissions Here the EU succeeds in a transition In this pathway, a critical mass of
reductions are achieved through the to a much more circular economy, infrastructure for carbon capture is a
introduction of new core production capturing a large share of the poten- key enabler of major emissions cuts.
processes and new feedstocks. This tial for materials recirculation, materi- Most of the 235 Mt of captured CO2
is near a maximal electricity demand als efficiency, and new business mod- is stored underground. CCU can play
scenario, and also emphasises new els. Jointly, these account for nearly a role, notably in sector coupling of
feedstocks including end-of-life plas- 50% of the emissions abatement. As steel and chemicals production. Ex-
tics and bio-based inputs for chemi- a result, the need for materials pro- tensive carbon capture provides early
cals. Key themes are innovation, elec- duction from raw materials falls to just emissions reductions, buying time for
trification and investment. 180 Mt, as compared with 380 Mt in a more gradual introduction of new
the baseline. processes. It also reduces electricity
To get on this pathway, innovation demand relative to the New Process-
must accelerate significantly. Emerg- Much of the abatement is undertak- es pathway.
ing low-CO2 production routes need en by actors in the main materials-us-
to be rapidly developed and start ing value chains: concrete producers, In this pathway, there is concert-
large-scale commercialisation by the building companies, manufacturers, ed effort to demonstrate the viability
2030s, followed by rapid investment new mobility providers, retailers and of CCS across multiple uses, with
and deployment. Current industrial packaging companies, etc. Innovation demonstration plans in place by the
companies are key actors, making in product design and digitisation to early 2020s across multiple sec-
early decisions to adjust production measure and track materials use are tors and uses. Companies across
to new production routes. Policy must major enablers, as are new business all sectors need to start the devel-
enable the associated investment and models based on sharing and prod- opment agenda to adapt production
provide the basis for an underlying uct-as-a-service, and the deployment processes as required for high CO2
business case. The more abundant of new construction and manufactur- capture rates. Policy plays a key role
and cost-competitive that zero-carbon ing techniques. In addition, the path- not only in giving confidence that the
electricity becomes, the easier this way requires tight control and large increase costs to companies can be
pathway becomes. mobilisation of end-of-life materials recovered, but also in coordinating
flows (steel scrap, demolition waste, carbon capture with the building and
end-of-life plastics, and other waste). operation of infrastructure for trans-
port and storage. Social acceptance
In this pathway, new clean produc- of carbon storage is a requirement.
tion processes are also required, with By 2050, CCS is a standard feature
emphasis on those that have close af- across industrial production and
finity to recycling: H-DRI used jointly waste-to-energy plants.
with a high share of scrap in steel pro-
duction, and new processes for chem-
ical recycling in plastics production.

38
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

Exhibit 1.11
Costs, investments and input requirements
for net-zero emissions in 2050

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

Costs
TOTAL ADDITIONAL COST OF PATHWAYS 41
49 7-41 43
BILLION EUR PER YEAR, 2050

ADDITIONAL INVESTMENTS
5.5 3.9 4.2
BILLION EUR PER YEAR, AVERAGE

AVERAGE ABATEMENT COST

91 75 12-75 79 79
EUR PER TONNE CO2 AVOIDED

Requirements
ELECTRICITY
TWh PER YEAR, 2050 965 659 693

BIOMASS
1.3 1.1 1.3
EJ PER YEAR, 2050

HYDROGEN
13.0 8.8 6.8
Mt PER YEAR, 2050 8,8

CO2 CAPTURE 45
45 47 47 235
Mt CO2 /YEAR, 2050

NOTES : RANGES FOR CIRCULAR ECONOMY PATHWAY COSTS REPRESENT LOW AND HIGH COST ESTIMATES.
SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN SECTOR CHAPTERS.

39
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

TOTAL COSTS TO THE ECONOMY ARE MODEST, BUT INDUSTRIAL COMPANIES WOULD FACE
COSTS UP TO 115% HIGHER THAN CURRENT PRODUCTION
An analysis of the costs of achieving net-zero emissions ing both capital and operating expenditures (Exhibit 1.13).
in the four industries reveals a telling contradiction. Significant policy support will therefore be required for
low-CO2 processes to become viable. Many of the rele-
On one hand, the total costs for consumers and the overall vant products are sold on commodity markets, where sys-
economy are manageable. The prices of end products such tematic cost differences cannot be borne. Finding a way
as cars, houses, and packaged goods would increase by to handle this is essential for a successful EU industrial
less than 1% to pay for more expensive materials. Therefore, transition: both to avoid EU companies losing out to inter-
the added cost of low-CO2 materials will barely be notice- national competitors (‘leakage’), and to enable pioneers
able in the 2050 cost of transportation, infrastructure, build- within the EU.
ings, packaging and consumer goods.
Policy-makers need to keep both issues in mind. The
On the other hand, the business-to-business impact is transition need not be costly to consumers, or have a large
large. New low-carbon production routes cost 20–30% impact on GDP, but a successful transition to net-zero in-
more for steel, 70–115% more for cement, and potentially dustry nonetheless depends on ensuring that companies
15–60% for chemicals (plastics and ammonia), consider- remain profitable and competitive.

40
 Exhibit 1.12
Costs for end-users increase by less
than 1% in net-zero pathways

TOTAL PRODUCT COST INCREASE WITH INCREASED MATERIAL COSTS

% INCREASE

+0.4%
+1.0% HOUSE

SOFT DRINK

+0.5%
CAR

SOURCE : MATERIAL ANALYSIS, SEE ENDNOTE. 26

41
A succesful transition to net-zero
industry depends on ensuring that
companies remain profitable and
competitive.

42
 Exhibit 1.13
Costs of materials production increase
in a low-CO 2 transition
STEEL
EUR / TONNE

CURRENT PRODUCTION COST 547 Integrated blast furnace route (BF-BOF)

COST OF LOW-CO2 PRODUCTION 578- Electric arc furnace, direct smelting with
TECHNOLOGIES +20-30%
645 CCS, hydrogen direct reduction, CCU

PLASTICS
EUR / TONNE

CURRENT PRODUCTION COST 1,242 Steam cracking

Steam cracking with CCS, electric steam

COST OF LOW-CO2 PRODUCTION cracking, bio-based plastics production,
TECHNOLOGIES 1,491-1,822 +20-45%
chemical recycling

AMMONIA
EUR / TONNE

CURRENT PRODUCTION COST 354 Steam methane reforming

COST OF LOW-CO2 PRODUCTION Steam methane reforming with

TECHNOLOGIES 418-553 +15-60% CCS, electrolysis

CEMENT
EUR / TONNE

CURRENT PRODUCTION COST 51 Current cement production

+74-86%

COST OF LOW-CO2 PRODUCTION

TECHNOLOGIES 88-109 +70-115% CCS, electrified heat and CCS

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN SECTOR CHAPTERS.

43
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

There are differences between pathways,

but not to the point where cost alone
is a basis for choosing one production
route over another.

Specifically, the estimated cost of providing the required ma- per tonne of CO2. This is because some of the measures offer
terials and chemicals in a baseline scenario is €201 billion per productivity opportunities and thus cost savings compared with
year (this refers to core processes only, not to finished prod- the production of new materials. Examples include car-sharing
ucts). In the pathways this increases by 3–25%, to €208–251 models for mobility, reduced contamination of end-of-life flows,
billion per year. The average abatement cost is €12–91 per reduced waste in manufacturing, construction enabled by new
tonne of CO2 (Exhibit 1.14). manufacturing techniques, and co-benefits from the reduction of
other externalities.
There are differences between pathways, but not to the point
where cost alone is a basis for choosing one production route On the other hand, estimates of the cost of demand-side
over another. More emphasis on CCS does not appear system- measure are much less developed than are ones of pro-
atically cheaper than new production processes, if electricity duction. As with energy efficiency, there is a possibility that
prices remain below €50 per MWh. there are ‘hidden’ transaction costs that are missing from
bottom-up estimates. A highly conservative approach would
Instead, the main difference between pathways is that a more be to entirely exclude the possibility of cost savings (so
circular economy could capture some significant productivity im- that no measure is ever cheaper than the production of an
provements that reduce costs. In the Circular Economy pathway, equivalent amount of new materials). In such a scenario,
costs could be as low as €208 billion, just 3% higher than in the costs would rise to €242 billion per year, virtually identical
baseline. The average abatement cost would then be just €12 to the CCS pathway.

44
 Exhibit 1.14
The total cost of achieving the net-zero pathways
is 3-25% higher than in the baseline

TOTAL COST OF PATHWAYS, 2050

BILLION EUR PER YEAR

251 242 244

208 +3-25%
201

BASELINE LOW ESTIMATE HIGH ESTIMATE

NEW PROCESSES CARBON CAPTURE

Pathway CIRCULAR ECONOMY Pathway
Pathway

ABATEMENT COST
EUR PER TONNE CO2
91 12 75 78

NOTE : THE HIGH COST ESTIMATE HAS BEEN USED IN THE CIRCUALR ECONOMY PATHWAY.
INCLUDES CORE INDUSTRIAL PRODUCTION AND CIRCULAR ECONOMY SOLUTIONS.
SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

45
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

Exhibit 1.15
The average cost of abatement varies from €56–121 / t CO 2
depending on electricity cost and pathway

AVERAGE ABATEMENT COST IN PATHWAYS FOR DIFFERENT ELECTRICITY PRICES, 2050

EUR per tonne CO2

121
106
91 94 96
84 87
71
76 75 79
62 61 65
56

31
22
12
3

-6
20-40 EUR / MWh 30-50 EUR / MWh 40-60 EUR / MWh 50-60 EUR / MWh 60-80 EUR / MWh

CIRCULAR ECONOMY Pathway - Low estimate CARBON CAPTURE Pathway

CIRCULAR ECONOMY Pathway - High estimate NEW PROCESSES Pathway

NOTE : THE LOWER END OF THE RANGE REFLECTS THE COST OF ELECTRICITY FOR FLEXIBLE HYDROGEN ELECTROLYSIS.
THE HIGHER END OF THE RANGE REFLECTS PRICES FOR NEAR-CONSTANT LOADS, SUCH AS ELECTRICAL PROCESS HEATING.
THE BAR CHART IN THE MIDDLE (40-60 EUR/MWH) IS USED IN THE PATHWAYS.
SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

For the zero-CO2 production opportunities, the main deter- Arguably, these estimates of future costs are conservative,
minant is the cost of inputs. The estimates presented here are as they rely solely on currently known processes. Innovation
based on fossil fuel and biomass prices in widely accepted may well lead to substantial cost cuts, particularly if R&D in
climate scenarios, and similar to today’s levels.28 For elec- these areas is enhanced. Nonetheless, the safe bet for EU
tricity, the price range is €40–60 per megawatt-hour (MWh), policy is that low-emissions cement and chemicals produc-
depending on application. The higher end of the range is for tion, in particular, will still face a cost disadvantage relative
‘always on’ loads, such as electrified heating, and is similar to production based on fossil fuels.
to ‘whole system’ cost estimates for a system largely based
on renewable energy.29 The lower end of the range is based Input costs will also affect processes and thus pathways
instead on prices available to flexible loads, and specifically in different ways. In general, average abatement costs are
to hydrogen production.30 These prices rely on continued re- similar across pathways for electricity prices up to €50 per
ductions in the price of renewable electricity generation. MWh (Exhibit 1.15). After that point, the New Processes
pathway starts to become more expensive, reflecting its
Costs of electricity as well as other resources will vary both higher dependence on electricity. This illustrates how the cir-
across the EU and over time. This is another reason why cost cular economy and carbon capture pathways provide ways
alone is not a basis for choosing between different produc- to insulate against scenarios with very high electricity costs.
tion routes at this point in time.

46
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

THE TRANSITION WILL REQUIRE ADDITIONAL INVESTMENTS OF €3.9–5.5 BILLION PER YEAR
All pathways require an increase in capital expenditure. cause many solutions are less capital-intensive than is new
Whereas the baseline rate of investment in the core indus- production. In the Carbon Capture pathway, somewhat less
trial production processes is around €5.1 billion per year, investment is required because more of existing production
it rises by up to €5.5 billion per year in net-zero pathways, assets can be maintained, but from a 2050 perspective,
reaching €11–14 billion per year in the 2030s. Investments the effect is relatively modest. Overall, investments thus in-
are highest in the New Processes pathway. In the Circular crease by 76–107% on a baseline scenario where current
Economy pathway, less investment capital is needed be- production routes are maintained.

Exhibit 1.16
Investment needs increase by 76–107% across the pathways

INVESTMENTS IN PRODUCTION OF CRUDE STEEL, CEMENT, AND CHEMICALS INCREASE RELATIVE TO BASELINE
BILLION EUR PER YEAR + X%

CEMENT
CHEMICALS
STEEL
BASELINE

+107 % +76 % +81 %

16
14
14 13 13
12
12 12 11
10 11 11
10 10 10
10
9 9
8 8 8
7
6 6 6 6
6

0
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

NOTE : INVESTMENT IN CORE INDUSTRIAL PROCESSES ONLY, DOES NOT INCLUDE DOWNSTREAM PRODUCTION.
SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN SECTOR CHAPTERS.

47
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

The most important policy instrument

for investment in low-CO2 production
is to ensure a future business case for
higher-cost production routes.

For society as a whole these are not, in fact, large higher-cost production routes. However, doing this right re-
amounts. They correspond to just 0.2% of gross fixed capital quires understanding why increased investment is needed
formation. For steel and plastics, they could be recovered, at different points in the transition. There are five distinct
including a return on capital, by paying on average €30 per reasons, each with their own dynamic (Exhibit 1.17).
tonne more for products that often cost €600–1,500 per
tonne in today’s markets. Many of these investment decisions are imminent. While
2050 is more than 30 years away, many core production
For industrial companies, however, the investment will be assets have a lifetime of 20–50 years or more. Many EU
a major challenge. In capital-intensive sectors, choosing a industrial facilities such as coke ovens, blast furnaces and
low-CO2 solution instead of reinvesting in current facilities steam crackers will need replacement or large re-invest-
can amount to a ‘bet the company’ decision – especially ment in the next 15 years. There is a risk of lock-in un-
when future technical and commercial viability are uncer- less low-CO2 options are viable at these forks in the road.
tain. Added to this, the underlying case for investment in Changes to value chains and business models, mean-
the EU’s industrial base has been challenged for more than while, may take decades to get established. There is time
a decade. Strong policy support will be required for invest- for deep change until 2050, but it will have to happen at
ment to be viable. a rapid pace, and any delay will hugely complicate the
transition.
In addition to investment in the materials system itself,
there is a need for investment in new infrastructure. For ex- In the Circular Economy pathway, investments are low-
ample, whereas oil and gas require investment in new explo- er than those in traditional production. This is especially
ration and extraction (largely outside the EU), mobilising the so as the additional investments in electricity generation
additional electricity required for a low-CO2 industry would and in carbon transport and storage (not included above)
require on the order of €5–8 billion per year. A similar logic are not required. Still, some investment is required in as-
applies to the transport and storage infrastructure required sets ranging from new waste handling infrastructure to new
for CCS at scale, and (to a lesser extent) to new waste systems for tracking and sorting materials. In addition to
handling, logistics, and other infrastructure required for in- mobilising more capital, it will therefore be necessary to
creased materials recirculation. enable a new set of actors to invest, and to enable existing
producers to vertically integrate into these new sources of
The most important policy instrument for investment in value creation. As with any shift in the type of actor and
low-CO2 production is to ensure a future business case for investor, new sources of finance will need to be mobilised.

48
 Exhibit 1.17
Investment needs increase by 76–107% across the pathways

INCREASING INVESTMENT
REQUIREMENTS OVER TIME HIGHER CAPEX INTENSITY
2020 - 2050 5 Increased capex of low-carbon production routes
and carbon capture and storage

TRANSITION COST TRANSITION COST

4 Maintaining parallel Accelerated depreciation
systems of existing plants

CONVERSION COST
3 Cost for the adaption of
brownfield sites

RISK
2 Higher financing cost while
solutions remain unproven

INNOVATION COST
1 Pilot and demonstration plants

2020s 2030s 2040s 2050s

Innovation costs: Transition costs:

Early on in the transition, it will be necessary to invest in pilot and Many companies will want to keep their options open and maintain
demonstration plants. The investment amounts required are not, in fact, some degree of redundancy, to avoid fully committing themselves to
large compared with overall investment volumes in the sectors. For indi- a risky solution. The gradual transition from one system to another will
vidual companies they can be among the most challenging, as demon- thus require some degree of parallel production systems, with dual in-
stration rarely offers a return in its own right. As much of the benefit vestment requirements as a result. In addition, unless all investments
from these innovations go to society as a whole, there is a high risk of are perfectly timed, there is a risk that existing assets must be written
underinvestment without policy support. off ahead of the end of their technical lifetime.
Increased risk: Higher capex intensity:
The early investments will be undertaken in a situation of significant HIGHER CAPEX
From INTENSITY
the mid-2030s, the main reason for increased investment will be
5
uncertainty about technical viability, future availability and cost of new
inputs, and degree of policy support. Increased risk in turn increases
Increased
thecapex of
intrinsic low-carbon
higher capex production routes
associated with some low-CO2 processes and
and carbon capture and storage
with carbon capture and storage. This is particularly marked in chem-
the bar for raising capital, and the cost of both debt and equity.
icals, where there is a need to replace a single core process (steam
Conversion costs: crackers) with alternatives containing multiple loops to achieve a high
TRANSITION COST carbon balance andTRANSITION
very low COCOST
emissions.
4
Additional investment will be required to adapt current production sites. parallel 2
Maintaining Accelerated depreciation
Much of the new, low-CO2 production capacity will be on the same loca-
systems of existing plants
tions as current industrial facilities. Switching the process then requires
investment not just in the core production machinery, but also in a range
of supporting and integrating functions: raw materials loading and
CONVERSION stor-
COST
3
age, site transportation, pipeline networks, electricity and utility supply,
Cost for the adaption of
buildings to house new production, etc. These one-off costs come when
the new technologies are first put in place, andbrownfield
in steel andsites
chemicals,
they can be substantial.

RISK
2 Higher financing cost while
solutions remain unproven

INNOVATION COST
49
1
Pilot and demonstration plants
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

INPUTS – FROM IMPORTED FOSSIL FUELS TO INDIGENOUS RESOURCES

AND LARGE ELECTRICITY USE
In all sectors, the transition to net-zero emissions takes 3.1 EJ of fossil fuels and fossil feedstock can be avoided
place through a marked shift in the inputs used for materials through the recirculation of materials and more efficient
production. Steel, cement, plastics, and ammonia produc- use in major value chains. The main reason is the mate-
tion together use 8.4 EJ of mostly imported oil, coal and rials efficiency solutions substitute energy and feedstock
natural gas, rising to 9.1 EJ in a baseline scenario. In the resources for other inputs: labour, digitisation, logistics,
pathways, this is largely replaced by domestic resources: and comparatively simple industrial and manufacturing
increased materials efficiency, recirculated steel and plas- processes. The other reason is that recirculating materials
tics, electricity, hydrogen and biomass (Exhibit 1.18). Only is much less energy-intensive, and it eliminates the need
with widespread use of CCS does substantial use of fossil for new feedstock materials. The main exception here is
fuel and feedstock persist, amounting to 3.1 EJ in 2050. chemical recycling: while this eliminates the need for new
feedstock, it can require as much energy as today’s pro-
Circular economy solutions play a major part in enabling duction routes in order to achieve the very low emissions
this transition away from fossil resources. As much as required for net-zero solutions.

Exhibit 1.18
The transition to net-zero emissions industry entails a reduction
in energy and feedstock use and a major change in inputs
ENERGY NEED AND MIX, TODAY AND IN 2050
EJ PER YEAR

2015 2050
9.1 EJ in a 2050
8.4 baseline scenario
1.4 0.9
0.4
3.1
0.9
4.0 OIL 0.1 3.1
3.5 0.5
0.3
2.4 7.8
1.8 COAL 6.8 2.5
5.4
1.3
1.5 NATURAL GAS 1.1
1.3
0.8 1.9 1.6
0.2 0.1 0.9
CURRENT DEMAND

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

MATERIALS EFFICIENCY AND RECIRCULATION FOSSIL FUELS BIOMASS

MORE EFFICIENT PROCESSES ELECTRICITY END-OF-LIFE PLASTICS

SOURCE : MATERIAL ECONOMICS MODELLING AS DESCRIBED IN SECTOR CHAPTERS.

50
Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

ELECTRICITY REQUIREMENTS WOULD GROW BY 450–750 TWh

Electricity needs are particularly large. Depending on There are two major reasons why the estimates in this
the pathway, 450–750 terawatt-hours (TWh) of additional study are lower. First, some previous analyses have gone
low-carbon electricity will be needed in the production of ‘all in’ to illustrate what would happen if all production were
steel, plastics, ammonia and cement (Exhibit 1.19). For electrified. In contrast, all three pathways in this study use
comparison, all EU industries today use 1000 TWh per a range of solutions. Instead of resorting solely to very
year, which is 32% of total electricity production in the EU electricity-intensive options, some degree of materials effi-
today and corresponds to 200,000 wind turbines.31 In the ciency, materials recirculation, and carbon capture play a
pathways, the chemicals sector uses the largest amount, fol- role even in the electrification-reliant New Processes path-
lowed by steel. In both cases, a major source of demand for way.
electricity is water electrolysis for the production of hydro-
gen, which varies between 7 and 13 Mt per year in 2050. Second, this study largely eschews solutions based on
synthetic chemistry that uses CO2 as feedstock to make ma-
Despite the large numbers, these levels of electricity de- terials like plastic or fuels (synthetic fuels, or ‘synfuels’). Such
mand are significantly lower than in some other analyses of solutions are particularly electricity-intensive. For illustration,
a net-zero emissions future for industry. For instance, one capturing CO2 from the atmosphere (‘direct air capture’) and
report for the chemicals sector estimated that for the chemi- then using hydrogen from electrolysis to synthesise high-val-
cals industry to achieve major emissions cuts would require ue chemicals requires three times as much electricity as pro-
4,900 TWh of low-emissions power.32 ducing the same chemicals from recirculated plastics.

52
 Exhibit 1.19
Low-emissions pathways require an additional 450-750
TW h of electricity

ELECTRICITY DEMAND PER PATHWAY IN A NET-ZERO CO2 EMISSIONS INDUSTRY

TWh

2015 CEMENT
CHEMICALS
2050
STEEL 965

100

693
659 42
510 50
+ 450-750
TWh

395 413

213
19

118 355 214 238

75

CURRENT DEMAND

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 33

53
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

The electricity requirements depend strongly on the tricity – more than the total electricity consumption of Croa-
pathway chosen. As much as 310 TWh can be avoided tia.34 The electrification of heavy industry therefore adds to
by successfully mobilising circular economy solutions. This the pressure to integrate EU electricity production through
is because making less new material requires less energy, reinforced grids, so that low-cost resources across the con-
and recycling is less energy-intensive than new production. tinent can be used to their full potential.
CCS also offers a way to reduce electricity needs, for two
reasons: it offers an alternative route to hydrogen production Achieving close to net-zero emissions electricity is clearly
(which otherwise consumes large amounts of electricity for an essential enabler of emissions reductions in industry. Just
electrolysis); and it enables some continued use of fossil as CCS has the challenge of eliminating the last tonnes (as
fuels instead of hydrogen-based processes or electrification 100% CO2 capture is unlikely to be feasible), heavy electricity
of heat. Together, such CCS opportunities could reduce use will be a net-zero strategy only if production is essentially
electricity requirements by some 270 TWh. zero-emissions (Exhibit 1.20). For illustration, if EU electricity
remained as reliant on coal and gas as it is today (releasing
Mobilising the electricity required will be a matter not an average of 350g of CO2 per kWh), some 235–343 Mt CO2
just of large aggregate numbers, but of highly concentrat- would remain in 2050. To cut emissions by 95%, electricity
ed needs. For example, a steam cracker in the chemicals generation would need to release less than a tenth of today’s
industry has a heat load similar in size to the output of a level, or 30 g CO2 per kWh. With completely CO2-free elec-
coal-fired power plant (1 MW). A large steel plant producing tricity, emissions would be close to zero. The more reliant on
iron through hydrogen would require some 16 TWh of elec- electricity a pathway is, the more sensitive it is to this dynamic.

Exhibit 1.20
Eliminating CO 2 from electricity generation
will be crucial for cutting industrial emissions
EMISSIONS FROM STEEL, CHEMICALS, AND CEMENT FOR DIFFERENT CO2-INTENSITIES OF ELECTRICITY
Mt CO2, 2050

-10% -35–55% -95%

622

545

235–343

22–31
0

CURRENT PRODUCTION CURRENT PRODUCTION PATHWAYS WITH PATHWAYS WITH PATHWAYS

SYSTEM WITH CURRENT SYSTEM WITH CURRENT CO2-INTENSITY ~30 G CO2/kWh RESULT WITH ZERO-CARBON
CO2-INTENSITY OF ZERO-CARBON OF ELECTRICITY IN 95% EMISSIONS ELECTRICITY RESULT IN
ELECTRICITY ELECTRICITY REDUCTIONS NET-ZERO EMISSIONS

Zero-carbon electricity on its With today’s electricity To achieve 95% emission

own only reduces heavy industry mix, emissions would fall reductions in all pathways, the
emissions by around 10% by 35-55% CO2-intensity of electricity must be no
higher than 30 g/kWh in 2050

NOTE : EMISSION REDUCTION POTENTIALS COMPARED TO EMISSIONS IN A 2050 BASELINE SCENARIO..

SOURCE : MATERIAL ECONOMICS MODELLING AS DESCRIBED IN TEXT.

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Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

A decarbonised electricity
system is an essential enabler of
net-zero emissions from industry.

55
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

BIOMASS WILL BE REQUIRED PRIMARILY FOR FEEDSTOCK

Achieving net zero emissions for the economy as a whole There are five main ways to limit the amount of biomass
will lead to multiple competing claims on scarce biomass re- required:
sources. The use of biomass for fuel or feedstock can com-
pete with alternative uses for land like food or feed production, 1. Materials efficiency: This spans a range of strate-
conservation for maintained biodiversity, or as a ‘sink’ for CO2 gies, from car-sharing to high-performance polymers
emissions. Furthermore, once the biomass has been extracted, and reduced over-packaging, and can reduce plastics
there are multiple competing uses, from simple combustion use by around 20% as a cautious estimate.
for heat or electricity generation (the largest use today) to the
2. Substitution with alternative materials: Nearly half
production of transportation fuels, or use with CCS for ‘nega-
the mass of biomass is directly lost in the conversion
tive emissions’ to offset remaining emissions in other sectors.
to plastics. To avoid these losses, one option is to use
All the pathways nonetheless make significant use of bio- polymers that are more similar to bio-based molecules
mass. The total amount varies between 1.1 and 1.3 EJ, com- in structure. Another is to use wood fibre directly as an
pared with current EU biomass use of 5.9 EJ. Estimates of alternative to the polymers used today. Together, these
the amount of sustainable biomass available in the EU in could reduce biomass requirements by 10%.
2050 range between 12 and 16 EJ, so the amount used in
the pathways is around 15% of the total.36 3. Recirculation of plastics: The more circular the use
of plastics, the less additional bio-based carbon is re-
Bioenergy can provide a drop-in solution via wood pellets quired. High levels of reuse and mechanical and chem-
or biogas. This can provide valuable early emissions cuts, but ical recycling are therefore key; they can supply up to
switching a large amount of industrial energy to biomass rap- two-thirds of the input needed for plastics production.
idly starts to make large claims and electricity can often be
an alternative. This is one reason that the further development 4. CCS: This can enable continued use of fossil carbon
of electricity for high-temperature applications is important. instead of biomass, but only if the carbon embedded
Instead, the main use of biomass in the pathways is as a in plastics is permanently stored, which is the main ap-
feedstock and source of non-fossil carbon in industrial pro- proach taken in the Carbon Capture pathway. Massive
cesses. Whereas today’s discussion and scenarios focus CCS on waste incineration would then be required, a
on ‘bioenergy’, in fact we will also need ‘bio-feedstock’. challenging prospect. Another option would be to store
plastics permanently instead of burning them, but this
The main, near-indispensable use of biomass is in the chem- would require proof that the negative effects of landfill-
icals sector. It is not possible to achieve 100% recirculation of ing can be avoided.
plastics (even steel, the most circular material today, has a recy-
cling rate of 85%), nor to entirely eliminate emissions from chem- 5. Mobilisation of new bio-resources: Examples
ical processes so that 100% of carbon ends up in the products. include biomass now used as fuel in the pulp and pa-
Even if the ‘societal carbon loop’ could become more than 80% per industry, amounting to 0.5 EJ today, or half the
circular, some carbon would leak out of the system and (short of amount required in the pathways.36 Some of this is
landfilling plastics) escape to the atmosphere over time. Some in the form of ‘black liquor’, which could be a very
new carbon must therefore be added in order to supply all the good starting point for making bio-chemicals. More wi-
plastics needed. Using bio-based sources of carbon is neces- despread electrification of the pulp and paper sector
sary to avoid the constant addition of fossil carbon, which would would therefore free up a major source of chemical
result in continuing fossil CO2 emissions. feedstock in the future – and potentially create a new,
Biomass could also potentially be used to produce pure iron valuable use of pulp and paper industry by-products.
from ore, a key step in making steel, but in this instance hydro- Another potential source are various non-recycled mu-
gen provides a realistic alternative. It also is a possible source nicipal waste streams, which can have a high content
of carbon for steelmaking. Biomass is already a major fuel in of biomass and which have few other uses (indeed,
the cement industry, and continuing to use it with CCS could it is a major source of methane emissions and thus
be a way to offset emissions that cannot be captured. Finally, a conundrum for climate policy). Waste can be gasi-
biofuels – and biogas in particular – offer an alternative to elec- fied and the carbon and hydrogen recovered for use in
trification, especially for some high-temperature processes. chemical synthesis, including alongside pure-plastics
streams. Major innovation and new supply chains will
However, the pathways are cautious about all these uses, due be required to develop such processes, and should be
to the competing claims on biomass as a resource, so the a high priority.
focus is on the indispensable use of biomass as a feedstock.

56
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

The main potential alternative to using biomass would electricity requirements of the chemicals sector. In contrast,
be to use CO2 as a building block of chemicals. However, if 1 EJ of biomass were used to produce electricity (recall-
the electricity requirements are very large. For example, to ing that this is a major use of biomass in the EU today), it
switch out 1 EJ of biomass as feedstock for plastics, some would achieve less than 100 TWh of electricity output. In
400 TWh of electricity would be required instead to cap- this comparison, using biomass as chemicals feedstock is
ture CO2 from the atmosphere and produce hydrogen for four times as electricity-efficient as burning it in power sta-
synthetic chemistry. This would more than double the total tions to generate electricity.

Exhibit 1.21
Achieving net-zero emissions from industry requires
1.1–1.3 EJ of biomass per year by 2050

BIOMASS USE IN THE EU BIOMASS REQUIREMENT PER PATHWAY CEMENT

EJ, 2016 EJ, 2050
CHEMICALS
STEEL

5.9

1.3
1.3
1.1

CURRENT USE

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

SOURCES: CURRENT BIOMASS USE BASED ON IEA (2017). BIOMASS REQUIREMENT PER PATHWAY BASED ON MATERIAL ECONOMICS MODELLING AS DESCRIBED IN SECTOR CHAPTERS.37

57
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

1.3 Accelerated implementation: an agenda for the

coming 5–10 years
A successful transition will require concerted efforts by Changing the strategic direction of a company on the basis
government, industrial companies, companies in major val- of a carbon price would require very strong assurances that
ue chains, cities, civil society, and individuals. The transition future high prices are all but certain. However, such high
is technically feasible, but it is not economically plausible prices in the EU but not in other markets would rapidly make
in today’s markets. The next 5–10 years will be crucial in these industries globally uncompetitive. Policy-makers have
enabling EU heavy industry and major value chains to chart also demonstrated that the rules of the EU ETS are not fixed,
a low-CO2 course. but subject to continued revision.

Many EU industrial companies know that doing nothing is Moreover, carbon prices do not enable all the activity need-
not viable. Indeed, EU industry has long gravitated towards in- ed. On its own, carbon pricing does not provide sufficient
creased specialisation, performance and efficiency to counter incentives for investment in innovation. It also does not ad-
pressures ranging from energy costs, trade practices or glob- dress market failures that hold back many circular econo-
al overcapacity. A low-CO2 track would be a continuation and my solutions, which instead will likely require interventions
acceleration of these trends. Low-CO2 solutions pioneered similar to those used for energy efficiency in buildings and
and commercialised in Europe will eventually be needed glob- transportation.
ally in a world with large unmet materials needs. Meanwhile,
the EU could transition to a much more secure position: a A new policy agenda is needed. While all pathways re-
more materials-efficient economy that relies less on imported quire broad policy support, each option has different re-
fossil fuels and feedstock, and is more attuned to domestic quirements. Effective policy must start from a deep under-
sources of comparative advantage: local integration, digitisa- standing of the change required, and the business case
tion, end-of-life resources, etc. for different options. Just as the solution set for net-zero
industry is wide-ranging, the policy agenda must have many
Nonetheless, the first steps of this transition will not oc- parts, each addressing different aspects of the transition
cur without a step-change both in policy and in companies’ (Exhibit 1.22).
strategic choices. To launch a new economic and low-CO2
agenda for EU heavy industry, major policy innovation and This is a new area of policy. Whereas buildings, transpor-
entrepreneurship will be required. tation, and electricity generation all have many climate pol-
icies in place besides the EU ETS, this is not the case for
The main policy in place today is the EU Emissions Trading industry. New interventions create a risk of unintended con-
System (EU ETS). In theory, a predictable and rising carbon price sequences, and each mechanism would need careful eval-
could provide incentives for many (but not all) of the actions un- uation and design. This study has not evaluated which op-
derlying the pathways here. Achieving a cost-effective transition tions would be best, or indeed whether the disadvantages
will be much more difficult without a high-enough carbon price. of any one option outweigh its benefits. It therefore cannot
recommend a specific policy approach or package. Instead,
However, it is unlikely that the EU ETS by itself could drive the aim is simply to identify the extent of ‘policy gap’ and to
the strategies required for net-zero emissions from industry. start the conversation about possible options.

58
Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

Exhibit 1.22
six POLICY areas to enable
a low-CO 2 industrial transition

1 2 3
Accelerate innovation Create lead markets and Enable investment
and scaling of new solutions safeguard competitiveness and reduce risk
of low-carbon options
• Scale up mission-driven innovation • Create the certainty required for early • Ensure an underlying future business
programmes, including new approaches to commitment to low-CO2 development and case for higher-cost low-CO2 solutions
piloting and demonstration support investment
• Provide direct support and de-risking
• Ensure early deployment to create faster • Strengthen support, with options including through concessional finance, capital grants,
innovation loops carbon prices, subsidies, quotas, public public-private partnerships
procurement

60
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

4 5 6
Enable high-quality Integrate materials Make available the
recirculation of materials efficiency into EU necessary inputs and
climate policy infrastructure
• Create a business case for recycled • Introduce policy to directly target the • Ensure the availability of electricity grids,
materials and feedstock barriers holding back materials efficient hydrogen infrastructure, public waste
solutions and business models handling, etc. required for industrial
• Target high collection rates and regulate decarbonisation
for clean materials flows through targets • Use energy efficiency policy approaches
for recycling quality, charges for landfill/ such as standards, targets, labelling, • Launch a regulatory regime to guide the
incineration, and improved waste-handling and quotas early deployment of CCS transport and
infrastructure storage infrastructure

low-CO 2
industries

61
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Achieving prosperous, net-zero EU industry by 2050

1
1. ACCELERATE INNOVATION AND SCALING OF NEW SOLUTIONS
Reaching net-zero emissions from heavy industry will re- To support this innovation, government could play three
quire a major innovation and deployment programme, with major roles:
strong public financial and other support. By the 2030s,
EU companies must have gathered significant experience • Mission-driven research support: There is an urgent
and started to consolidate solutions – from car-sharing and need to clarify the innovation agenda. One key challenge
chemical recycling to new methods of making iron – that are is identifying the technical and commercial pain points.
now in early trials. Another is to create mission-driven innovation, in order
to develop technologies that could significantly contrib-
The materials system thus stands where the energy ute to the transition to net-zero emissions industry, but
system stood in the early 2000s. There is a largely known which have little or no near-term commercial potential.
set of emerging solutions to build upon, with significant These technologies could include efficient high-tempera-
innovation momentum, but many key options are not yet ture electric heating, novel chemical recycling routes,
commercially viable. Their further development cannot be and advances in hydrogen production. Identifying these
fuelled just by intellectual property law or the promise of high-priority technologies, as has been done for the en-
near-term commercial advantage, the typical drivers of ergy industry in the Strategic Energy Technology (SET)
business innovation. On the contrary, innovation on this Plans, could help coordinate action across the EU.
scale is risky. Companies going it alone would not only
• New approaches to piloting and demonstration:
be committing significant resources, but risking disrup-
The EU could support research and demonstration by
tion to production.
mobilising existing tools with a stronger industry focus
As a result, public support will be crucial. Indeed, given the (e.g., the InvestEU programme, Horizon Europe, the
punishingly short timescale to bring solutions to full read- Connecting Europe Facility and the upcoming ETS In-
iness, most of the early innovation funding may need to novation Fund). However, the short timescale means
come from public sources. strongly directed public support will be required,
de-risking and co-funding. State Aid rules may stand
Innovation needs to happen on both the demand and sup- in the way, in which case some may need to be modi-
ply side. On the supply side, the most urgent agenda is to fied. A particular focus should be the financing of large,
accelerate the demonstration of new production processes. capital-intensive demonstrations nearing commercial
On the demand side, the innovation agenda is broader. A scale, on which policy often has fallen short in the past.
key part is new business models, including sharing busi-
ness models for vehicles and other under-utilised capital • Deployment for early innovation loops: As in the
assets, and new systems for reuse and re-manufacturing. power sector, early deployment will be key. It is only through
New digital solutions will be important enablers, permitting real-world testing and experience that new insights can
the identification and tracking of materials, automation of be generated to fuel further innovation. Innovation needs
materials handling, and dismantling of end-of-life products. to be undertaken within industrial production systems, at
industrial sites, and with industrial companies as the main
actors. Therefore, the creation of lead markets (see below)
is also a prerequisite for accelerated innovation.

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2
2. CREATE LEAD MARKETS AND SAFEGUARD COMPETITIVENESS OF LOW-CARBON OPTIONS
Policy must support the introduction of new, low-CO2 pro- Design options include ‘feed-in tariffs’ and similar in-
duction routes and uses of materials. struments; tools that provide a contract-for-difference
relative to the market price for a product, or quotas
The traditional approach is to set a price on carbon emis- and tradable certificates for low-CO2 production. A key
sions, tilting the playing field so that low-CO2 solutions are challenge will be handling the heterogeneity of prod-
no longer at a disadvantage. In the long run, if ambitious ucts: one steel or chemical is not equivalent to another.
climate mitigation is undertaken internationally, this solu-
tion could work, with all its advantages of ensuring the right • Product quotas and standards: Another approach-
trade-offs and letting the market choose the most cost-effec- would be to create a specific low-CO2 market in each
tive way to reduce emissions. material-using value chain. For instance, a rule might
require that a specific share of the steel sold in EU
However, earlier in the transition, two concerns would get markets contain iron reduced using low-CO2 methods,
in the way: or that plastics contain a specific share of non-fossil
carbon. For illustration, more specific options could
1. International competition puts a practical limit on include requiring that the production of concrete not
the carbon price. Setting the price too high will cause
exceed an average maximum CO2 footprint. Such a
emissions-intensive industries to move outside of Eu-
policy would allow all the low-emissions solutions, from
rope – so-called carbon leakage.
clinker production to cement mixing, to compete to
2. While early deployment is needed to scale solu- achieve the desired emissions cuts. The current stan-
tions to 2050, pioneers within the EU will be at a dards regulating the CO2 intensity of tailpipe emissions
disadvantage relative to both international rivals and from vehicles could also be expanded to include the
EU peers. CO2 from the materials footprint.
• Public procurement: Public authorities can directly
As a result, other mechanisms may be needed. This is
create lead markets through their own procurement
tricky territory. The challenge is to strike a balance between
choices. Cities, regions and countries make up a large
the disadvantages of ‘picking winners’ and the risk of offer-
share of the market for infrastructure and construction,
ing insufficient incentive for the fundamental shifts required
and for a range of materials-intensive products.
for deep emissions cuts. The policies also need careful de-
sign to avoid distorting competition beyond what is needed • Border adjustments: It would be possible to intro-
to make low-CO2 options more attractive. duce taxes or tariffs for goods imported from regions
that do not enforce a CO2 price similar to that in the
With that in mind, policy-makers have a wide menu of op- EU. To allay fears of revenue-raising protectionism, the
tions. All are drawn from climate policies in other sectors. taxes could be refunded to the countries of origin. The
They fall broadly into five categories: trade ramifications, including admissibility under the
• Remove existing regulatory hurdles: There are cas- rules of the World Trade Organization, are complex.
es where existing standards, introduced for reasons Furthermore, feasibility will differ significantly between
unrelated to climate protection, need to be amended to products. Border adjustments also do not, on their
enable important low-emissions solutions. Stakehold- own, address the issue of enabling first movers within
ers have cited the current standards for a minimum the EU.
cement content in concrete, as well as the specifica-
Many of these options may work best as transitional mech-
tion of eligibility of binders in different cement classes.
anisms. However, the higher cost of some low-CO2 produc-
Of course, any changes to regulations must preserve
tion routes may well persist in the long run, in which case
safety and other requirements that drove their introduc-
permanent incentives will be required to overcome this dis-
tion in the first place.
advantage in operating expenses. CO2 prices may well be
• Subsidies for low-emissions solutions: This has the best long-term option, pursuing the logic already laid
been a major tool of policy in the electricity sector. down in the EU ETS.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

3. ENABLE INVESTMENT AND REDUCE RISK

Since a large volume of additional investment is needed • Large changes to infrastructure and industrial sites
to drive the transition to net-zero emissions heavy indus- can face significant permitting and other hurdles, cre-
try, government needs to ensure that companies can make ating further barriers.
those investments with an acceptable level of risk.
As a result of these challenges, industries may need direct
First they need to make the underlying business case. In investment support. There are many ways to do this. For
other areas of climate policy, investment has rarely been example, some Member States have provided very low-cost,
a direct target. Instead, the approach has been to create concessional finance – such as shouldering some of the
sufficiently secure market conditions – for example, through risk – for actions ranging from building retrofits to renewable
CO2 prices, quotas or subsidies. Governments then relied energy projects. There are also several pre-existing mecha-
on pre-existing financing mechanisms to respond to these nisms to build on. Another possibility is to change how the
incentives. This has been successful in many cases, such depreciation of assets is accounted for, reducing the tax
as the creation of entirely new sets of investors in the power burden during the early years of an asset and thus encour-
system, supporting the shift to renewable electricity genera- aging investment in new assets. Other options include fiscal
tion. Similarly, creating a credible framework to ensure a fu- rebates linked to new investments and European Investment
ture business case must also be the foundation for net-zero Bank financing instruments.
emissions heavy industry.
Beyond this, capital grants are the most direct way to offset
However, there are several reasons why this may not be enough: some of the challenges, but implementers will face the chal-
lenge of not distorting investment. Concessional finance or
• Early investment will be key, as EU industrial com- blended finance can improve the viability of some high-risk
panies are already facing significant reinvestment deci-
investments. As with the creation of lead markets, State Aid
sions in the next 5–10 years, for assets ranging from
guidance would need to be amended to enable some of
coke ovens to steam crackers.
these options. ‘Low regulatory zones’ could help overcome
• In industry, low-CO2 assets are rarely ‘modular’ in the
some of the inertia and uncertainty created by permitting
way that solar or wind power are. Instead, they require
rules.
large lump-sum investments in new production capaci-
ty, which then has a long lifespan. Finally, policy-makers must confront the risk of stranded as-
• Companies face large risks if solutions are only sets. Given the short time until 2050, it will not be possible
gradually becoming technically proven. In such cases, to avoid some redundancy. As a result, some high-CO2 as-
the future business case may depend strongly on con- sets may need to be written off before the end of their tech-
tinued policy incentives. nical or economic life. Such decisions will hit companies’
• Prudence may dictate some redundancy and option- balance sheets and therefore also their financing capacity.
ality. This could entail building up parallel, low-CO2
capacity while also maintaining existing production ca- Policy could handle this dynamic in different ways. At one
pacity, until market and technical conditions are right end, stranded assets are best prevented by avoiding any
for a full switch. additional investment in high-CO2 production systems, be-
• Many investments in the next 5–15 years would be yond what is strictly necessary. Another approach is more
in ‘first of a kind’ solutions, which entail larger capi- technical fixes, such as changing how accounting stan-
tal expenses than fully mature solutions. This creates a dards handle depreciation and write-downs. More directly,
first-mover disadvantage. direct support or ‘grandfathering’-style principles (in which
• Deploying low-CO2 solutions at existing sites may existing assets are exempt from new regulations that apply
increase complexity and induce additional adaptation to newly built assets) could directly defray some stranded
costs to fit into existing wider production systems. asset cost.

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Achieving prosperous, net-zero EU industry by 2050

4. Enable high-quality recirculation of materials

This requires two policy steps. The first is to encourage More indirect options include regulations for how end-
high collection rates and clean materials flows. The recir- of-life vehicles and other products are dismantled; de-
culation of materials relies on high collection rates. Once sign criteria for products containing copper wiring; and
collected, the resources to be used as feedstock or raw a requirement to keep copper-alloyed steel separate.
material for new production need to be both well separated • Creating public definitions and standards for plas-
and adequately pure. tic sorting grades and other materials, to create more
transparency.
This is a broad agenda, ranging from minor adjustments to • New waste-handling infrastructure to enable the
ambitious initiatives designed to redirect large waste flows. new levels of separation and sorting required for chem-
Potential examples to investigate include: ical recycling.
• Targets for cutting CO2 emissions from waste, similar • Adequate rules for the use of CO2 as a feedstock for
to existing targets for landfill emissions. making new materials (CCU), especially if the CO2 ulti-
• Updating recycling targets to encompass quality, not mately comes from a fossil source.
just quantity. It may be best to measure, not the quantity
The second step is to create the business case for using
of material sent to recycling, but rather that material’s
recycled materials and feedstock. This means creating mar-
effective capacity to replace virgin production. This is
ket incentives for the production and use of recycled mate-
the more relevant metric.
rials that reflect their contribution to emissions abatement.
• Charges for less desirable options for end-of life
Any specific incentive introduced on the production side
treatment of waste, such as landfill (already in place in
must also enable recycling, if there is not to be a distortion
many Member States) or incineration (currently often
in favour of new production rather than use of recirculated
encouraged rather than discouraged by policy).
materials. Mechanisms for lead markets that are neutral in
• Removing hurdles to cross-border trade in end-of-life
this respect are the best option. Where this is not achiev-
flows, to enable their large-scale use as feedstock or
able, it may be necessary to create separate markets. One
raw materials.
example would be to explicitly target the creation of de-
• Regulations to limit the levels of copper and other
mand for plastics produced from recycled feedstock.
‘tramp elements’ in steel scrap, as these elements
permanently downgrade the quality of the steel stock.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

5. Integrate materials efficiency into EU climate policy

By encouraging a step change in demand-side solutions, materials, there are no mechanisms that this could translate
government can ease many of the challenges of the tran- all the way to the product design stage, where the issue is
sition to net-zero emissions. In particular, a more circular often easiest to address. Regulation also sometimes gets
economy will reduce the cost and investment needs and cut in the way, especially in trying out new business models for
the amount of renewable electricity and biomass required. important services. Finally, the price of new materials often
However, there are a number of barriers to the creation of does not reflect the full cost of environmental externalities,
a circular economy, in particular the need to coordinate ac- including CO2 emissions.
tions across entire value chains.
Policy to redress these can span a wide range of options.
Policy in this territory can borrow heavily from the play- These can involve specifying targets for materials use in
book of energy efficiency policy. The motivations often are large product categories (such as the amounts of cement
the same: a known potential for improvement that often is used in a category of building, or the load-bearing capacity
cost-effective, but which is held back by a range of bar- of steel vs. requirements in buildings). Instruments such as
riers and market failures. These barriers are also familiar the Eco-Design Directive could potentially be adapted to in-
from the experience with energy efficiency. Incomplete con- corporate such principles for a range of products.
tracts result in split incentives where the parties best able
to avoid over-use of materials have few incentives to do As with energy efficiency policy, there is a delicate balance
so. The extent of materials use is often unknown now, due to strike. Policy that limits choices can induce hidden costs or
to a range of information barriers. Missing markets mean have unintended consequences. With that in mind, there are
that, even if there were demand for high-quality end-of-life a range of options for the regulation of materials efficiency.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry
Achieving prosperous, net-zero EU industry by 2050

6. Make available the necessary inputs and infrastructure

A final category of policy is to ensure that the inputs and On a more local scale, sector coupling offers an important
infrastructure required are available. way to enable some production routes. This can include
linking up of pulp and paper and chemicals production,
The build-out of up to 750 TWh of additional electricity steel and chemicals, and more. Hydrogen also can become
generation must be accompanied by available transmission a new feedstock requirement across multiple sectors, with a
and distribution capacity. The more this can link up cheap need to build new infrastructure for distribution and storage.
sources in one part of the EU with the key industrial demand
centres, the more competitive European industry will be. CCS will require an entirely new infrastructure for transport
and storage. To date, this has been a major impediment to the
Waste handling also would need to change profoundly further development of CCS. Companies looking to capture
to achieve the 40–80% recirculation of plastics implied CO2 face either uncertainty that transport and storage will be
by the pathways. Vertical integration of plastics producers available at all, or a risk of commercially unattractive depen-
with the waste sector could help, but as much of waste dence on a single (effectively monopolist) counterpart. One
infrastructure is publicly run, it also would be necessary to way to enable early investment and provide certainty would be
adapt public systems to mobilise waste as a major indus- to create a public regulatory regime, rather than expect compa-
trial resource. nies to become dependent on private storage operators.

67
 2. steel
INNOVATION LEADERSHIP FOR low-CO 2 STEEL

Steel is a vital material for a modern, in- spanning new production processes and
dustrialised economy. In fact, for every per- increased recirculation of steel, as well as
son in the EU, there are about 12 tonnes materials efficiency and circular economy
of steel1, underpinning vital functions from business models.
construction and infrastructure, to transport
Major and rapid change will be necessary in
and industrial production.
all cases – and there are clear needs for poli-
Yet, steel production is also a significant cies to enable the transition. Far more resour-
source of greenhouse gas emissions – ces must be devoted to accelerating innovation
on several fronts. Credible new policy solutions
more than 200 Mt CO2 per year in the EU.2
are needed to make it viable to pursue low-
Thus, to meet its climate objectives, the EU
CO2 production routes that are up to 20% more
must find a way to meet its steel needs whi- expensive than current routes. Barriers to many
le reducing emissions almost to zero. circular economy solutions must be overcome,
likely through policy supports similar to those
Until recently, no emissions reduction
used to promote energy efficiency.
scenario explored such deep cuts. Instead,
studies left as much as half of emissions in An increase in investment of up to 65% must
place even in 2050. This changed with the also be made possible, starting early to deve-
analysis underpinning the EU Long-Term lop demonstration plants and to steer the large
Strategy (LTS), which includes scenarios investments that will be needed in the coming
that reduce emissions by as much as 97%. years in a low-CO2 direction. Finally, a low-CO2
steel sector will require large new sources of
This study seeks to strengthen the evi- input, including 210–355 TWh of clean, affor-
dence base for what it would take to reach dable electricity.
such deep reductions. It confirms the fin-
In the context of a capital-intensive industry with
ding from the LTS, that truly deep cuts to long-lived assets, time is very short. The transition
emissions from steel production are, in fact, to low-CO2 steel in 2050 is possible, but any fur-
possible. The solution set is wide-ranging, ther delay would hugely complicate the transition.

68
68
Truly deep cuts to emissions
from steel production
are possible.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

2.1 The starting point

EU companies have been making steel for over 150 Steel users in sectors including construction and infra-
years, and despite shifts in global markets, the EU ste- structure (42% of demand), transportation (31%), industrial
el sector remains large. The European steel industry machinery (16%) and a range of metal products (11%) will also
produces 169 million tonnes of steel per year, me- be touched by the efforts to reduce emissions. Likewise, the
eting almost all of EU demand. It has an annual turno- EU will need to enable high-quality steel recycling; already to-
ver of 123 billion EUR and employs 320,000 people.3 day, 111 million tonnes of steel scrap is collected and either
remelted to make new products in Europe or exported. Once
Still, the EU steel sector faces real challenges. The- steel has been made it is processed into many different forms,
re was a 30% drop in steel demand in the year following so it is not a homogenous commodity. There are two major
the 2008 financial crisis, and EU production has not ful- categories: long products such as rebar and drawn wire, and
ly recovered, while net imports have been growing.4 Lar- flat products such as slabs and heavy plate. Steels are also
ge global over-capacity of as much as 540 Mt per year5 sorted into various grades, which specify either their chemi-
contributes to depressed prices, and tariffs and other cal makeup or their mechanical properties. Different uses re-
challenges to international trade add further compli- quire different grades: for example, the automotive industry
cations. For all these reasons, the profitability of most typically needs higher-quality steel than does construction.
EU producers has been depressed for many years.
The investment cycle of steel plants plays a major role in
Efforts to reduce emissions will touch all aspects of ste- how a transition to net zero emissions would play out. To 2050,
el: its production, use and recycling at end of life (Exhibit practically all major production assets will need substantial re-
2.1). In terms of production, 61% of the 169 Mt of annu- investments: blast furnaces on a cycle of 15–20 years, and
al production takes place through the so-called integrated most EU coke plants will also require substantial rebuilding or
route, using first a blast furnace and then a basic oxygen fur- replacement in the same time frame. Enabling companies to
nace (BF-BOF) to produce iron and then steel from iron ore direct capital towards new, lower-emissions production routes
and coal. The other main production route uses electric arc at these major investment points will be a key factor in a cost-
furnaces (EAF) to melt scrap steel. This recycling process effective transition. The alternative is lock-in to continu-
accounts for 39% of the annual EU production. ed high emissions, or the risk of stranded assets that
must be replaced ahead of the end of their technical life.

70
 Exhibit 2.1
Production, use, and end of life OF EU steel

ANNUAL STEEL VOLUMES

Mt, 2017

169
69
159
17
PRODUCTS & OTHER

26 131
ELECTRIC ARC
FURNACE 20
MACHINERY LOSSES
(’EAF’)

49 17
NET EXPORT
100
TRANSPORT 94

66 111
Collected
steel scrap
101
INTEGRATED
ROUTE
RECYCLING
(’BF-BOF’)
CONSTRUCTION

PRODUCTION USE END OF LIFE

CIRCULARITY
NOTES : TOTAL USE IS BASED ON EU APPARENT STEEL CONSUMPTION. INDIVIDUAL NUMBERS DO NOT SUM TO THE TOTAL DUE TO ROUNDING.
SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON EUROFER (2018) AND PAULIUK ET AL. (2013) . 6
EFFICIENCY IMPROVEMENT
FOSSIL FUELS AND FEEDSTOCK
CURRENT DEMAND 2050 DEMAND
ELECTRICITY
71 BIOMASS
8.9 8.9 8.9
 Exhibit 2.2
EU steel production will stabiliSe at AROUND
190 Mt per year IN THE 2040 s as the steel stock saturates

EU STEEL PRODUCTION IN A BASELINE SCENARIO

MILLION TONNES OF STEEL PER YEAR

240
169 193
220
200
180
160
Production levels Steel production stabilises
140
hovered around 190 Mt at around 190 Mt from the
120 Steel demand grows
from the 1990s up to 2040s as the steel stock
modestly at ~0.6% per year
100 the financial crisis saturates at 13.7 tonne steel
as the EU steel stock grows
Steel production per capita
80 with 15% from today’s level
dropped ~30%
up to the 2040s
60 during the 2008
40 financial crisis

20
0
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

NOTES : BASELINE SHOULD BE UNDERSTOOD AS “CURRENT PRACTICE”, WITHOUT DEMAND REDUCTION FROM A MORE CIRCULAR ECONOMY OR REDUCED MATERI-
ALS INTENSITY. THE MODELLING APPROACH IS A DYNAMIC MATERIALS FLOW ANALYSIS MODEL BASED ON THAT DEVELOPED BY PAULIUK ET AL. THIS INCORPORATING
STOCKS (HISTORICAL STOCK FLOWS, FUTURE STOCK LEVELS) , SCRAP FORMATION (PRODUCT LIFETIMES, SCRAP FORMATION, COLLECTION RATES, REMELTING LOSSES,
ETC.) , AND DERIVED NEW PRODUCTION REQUIREMENTS. TRANSPORTATION, MACHINERY, CONSTRUCTION, AND PRODUCTS ARE MODELLED SEPARATELY.
SOURCES : MATERIAL ECONOMICS MODELLING BASED ON EUROFER (2018) , WORLD STEEL (1990-2018) , AND PAULIUK ET AL. (2013) , SEE ENDNOTE. 7

72
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

The transition will take place against a backdrop of The special role of carbon combines with other factors
modestly growing need for steel (Exhibit 2.2). In a baseli- to make deep emissions cuts from current production proces-
ne scenario in which patterns of use are similar to today, ses challenging. First, the CO2 is released from multiple sour-
and imports and exports remain at the same level, pro- ces during the steelmaking process (Exhibit 2.3), all of which
duction in the EU would increase to around 190 Mt per must be addressed for truly deep cuts. Second, the chemical
year by 2050. Underlying this is a 15% increase in the process emissions from the reduction of iron ore are signi-
total per-capita steel stock, in part to underpin the buil- ficant, so just switching energy inputs will not suffice. Third,
dout of a low-emissions energy system and infrastructure. steel production requires very high temperatures, which limit the
technological options and necessarily require large amounts
The task ahead for policy-makers and companies of energy to generate. Finally, the process is highly integrated,
is thus threefold: to ensure society continues to enjoy with outputs of one step used as inputs in other parts – so
the benefits that steel provides, to avoid the relocation of changing one aspect of it often forces changes elsewhere.
production to other countries, and to cut CO2 emissions.
One major option for deep cuts is in fact already in use and
reduces sector emissions substantially: CO2 emissions from re-
CO2 emissions from iron and steelmaking cycled steel are significantly lower than those from production of
new steel. The energy required is only 10-15% of that required
Making steel produces a lot of greenhouse gas emis- in the production of primary steel from iron ore. Direct emissions
sions. Globally, 2.3 tonnes of CO2 are released, on av- can be as low as 0.1 t CO2 per tonne product. Another 0.1–0.3
erage, for every tonne of steel produced from integrated t CO2 arises in the production of the electricity used as input,
steelmaking. European producers are more efficient than but can be eliminated with zero-carbon electricity. However,
the average, but they still release 1.9 tonnes of CO2 per as discussed below, relying on more scrap requires both that
tonne of steel. The total direct emissions from EU ste- the scrap is available and that its quality can be controlled.
el production are just shy of 200 Mt CO2. This figure ri-
ses to 210 Mt CO2 when upstream electricity is included.8 In a baseline scenario without major changes to steel use and
production, emissions in 2050 would remain largely the same
In the integrated route, carbon plays multiple roles. First, as today, at 208 Mt CO2 per year. A slight increase in steel pro-
it is a reducing agent in the blast furnace, taking out the ox- duction would counterbalance marginal improvements in process
ygen from iron ore to produce iron. Second, it is the energy efficiency and an increase in the use of recycled steel. As we dis-
source producing the high temperatures required to melt ste- cuss in the following sections, the challenges to cutting emissions
el and also to drive the multitude of processes in the overall from iron and steel production can be overcome. However, doing
production system. Third, some carbon is in fact a necessary so will require major changes to how steel is produced: a sector
ingredient of steel, up to 1% for high-carbon steel. transformation rather than marginal improvements.

73
 Exhibit 2.3
CO 2 IS EMITTED FROM ALL STAGES OF STEEL PRODUCTION

CO2 EMISSIONS FROM STEEL PRODUCTION

TONNES CO2 PER TONNE STEEL

RAW MATERIAL IRON- STEEL-

PREPARATION MAKING MAKING DOWNSTREAM

COKE PLANT BLAST

0.3 FURNACE
Process emissions
INTEGRATED (BF)
STEELMAKING BASIC
(BF-BOF) ROUTE PELLET/ OXYGEN
SINTER PLANT 1.3 FURNACE
High-temperature 0.2 (BOF)
TOTAL: 1.9 heat emissions Process emissions

LIME
PRODUCTION
<0.1 <0.1 CONTINUOUS COLD ROLLING
Process emissions CASTING AND
AND FURTHER
HOT ROLLING PROCESSING

ELECTRICITY
Process emissions
ELECTRIC
ELECTRIC from the carbon in
ARC FURNACE
ARC FURNACE the steel itself and 0.1
(EAF)
(EAF) ROUTE from electrodes,
High-temperature
as well as indirect
heat emissions
emissions from 0.3
TOTAL: 0.4 electricity production

EMISSIONS

NOTES : DOWNSTREAM PROCESSES ARE THE SAME FOR ALL PRODUCTION ROUTES. THE FIGURE SHOWS WHERE CARBON EMISSIONS ARE
FIRST CREATED IN THE OVERALL PROCESS. THE ACTUAL POINT OF RELEASE OF CO 2 TO THE ATMOSPHERE MAY DIFFER.
INDIVIDUAL NUMBERS DO NOT SUM TO THE TOTAL DUE TO ROUNDING.
SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 9

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

2.2 Strategies for a low-CO 2 steel sector

Past roadmaps have tended to conclude that some re- emissions by 2050, looking not just at production, but
maining emissions in steel production are all but una- also at the use of steel throughout the value chains.
voidable, even many decades from now.10 The empha-
sis has been on carbon capture and storage, but the The study finds that there are large opportunities both to
challenges noted above (multiple emissions sources, improve steel recycling and to use steel more efficiently –
low CO2 concentration in flue gases, complex interde- much more than in previous roadmaps, including the LTS.
pendencies) have led most studies to conclude that as Much as energy efficiency reduces the need to mobilise new
much as half of emissions would remain even with CCS. supplies of energy, materials efficiency and circular economy
approaches can cut the need to make new, primary, steel.
The analysis underlying the EU Long-Term Strategy
took a first step towards moving beyond these limita- However, even in a stretch case for circular economy
tions. There are vestiges of the ‘traditional’ approach, solutions, it will be necessary to produce millions of ton-
with one scenario leaving 31% of emissions in place, nes of primary steel per year in the EU even in 2050 – and
but also scenarios that cut emissions by up to 97%. The- worldwide for most of the century or more. Therefore, this
se are arguably the first attempts to describe a steel se- study also includes a much wider set of clean production
ctor consistent with the need to reach net zero emissions. processes than in some previous roadmaps. They span new
techniques for ironmaking with fossil inputs combined with
This study seeks to complement this analysis by CCS; fossil-free steelmaking based on hydrogen instead of
describing in detail what it would take to reach coal; and the possibility of integrating steel into circular car-
very deep emissions reductions. It takes as broad an bon flows through carbon capture and utilisation (CCU) and
approach as possible to outline pathways to net zero coupling with chemicals production.

75
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Exhibit 2.4
Strategies for deep...

CIRCULAR ECONOMY IN MAJOR VALUE CHAINS

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

AND CIRCULAR BUSINESS MODELS AND SUBSTITUTION
Reducing the amount of materials used for a Using end-of-life materials as input to
given product or structure, or increasing the lifetime new production, or using low-CO2 alternative
and utilisation through new business models materials that provide the same function

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

•Reduced scrap losses in manufacturing •Improved design, end-of-life disassembly, and
scrap handling to reduce contamination with
•Materials efficient use of steel in products and copper and other tramp elements
constructions, notably reduced over-specification in
•Increased collection rates of end-of-life scrap
construction

•Higher-strength steel

SHARING BUSINESS MODELS AND

INCREASED LIFETIME OF PRODUCTS
•New business models such as car-sharing to in-
crease use intensity and product lifetime, reducing
steel needed per passenger-kilometre
•Remanufacturing and reuse of steel components
to increase lifetime of products and structures

76
...emissions reductions from steel

CLEAN PRODUCTION OF NEW MATERIALS

NEW AND IMPROVED PROCESSES CARBON CAPTURE

Shifting production processes and feedstocks to Capture and permanent storage of CO2 from
eliminate fossil CO2 emissions production and end-of-life treatment of materials,
or use of captured CO2 in industrial processes

CLEAN UP CURRENT PROCESSES CARBON CAPTURE AND STORAGE

•Incremental energy efficiency improvements •Carbon capture on coal-based processes
•Switch to biofuels and -feedstock in blast •Smelting reduction to concentrate CO2 flows
furnaces and downstream processes and achieve high capture rates
•Natural gas-based direct reduction (DRI) as a
transition step to net-zero production

NEW PROCESSES AND FEEDSTOCKS CARBON CAPTURE AND UTILISATION

•Direct reduction using hydrogen as reducing agent •Chemicals production from carbon-rich blast
furnace off gases

•Switch to recirculated / non-fossil feedstock

and CCS of residual CO2 required for net-zero
solution
ELECTRIFICATION
•Hydrogen production through water electrolysis
•Electrification of ore sintering
•Electrification of reheating furnaces and other
downstream processing

77
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Circular economy and materials efficiency in major value chains

As noted, modern societies require in the For policy-makers and businesses, a key in-
range of 10–13 tonnes of steel per person to sight is that major contributions towards lower
provide essential services such as mobility, in- emissions rest not only with the steel industry it-
frastructure, industrial production and more. self, but with actors in entirely different sectors.
Achieving these savings will mean changing prac-
However, there is nothing absolute about this tices along several of steel’s major value chains.
number, and in fact there are multiple opportu- In some cases, it also entails reorganising the way
nities to use steel more efficiently. By reducing basic services are provided – notably passenger
waste, optimising structures, increasing the utili- transport. In others, the key is product design,
sation of key capital goods, and increasing the business models, or digitisation to reduce trans-
lifetime of structures and products, it is possible action costs of improved construction techniques.
to achieve the same end-use benefits with less
steel (that is, the same amount of passenger-kilo- Although these levers result in reduced steel de-
metres of transportation, built area, infrastructure mand, they need not result in reduced economic
availability, protection of packaged goods, etc.) activity. In some cases, they represent producti-
vity opportunities: achieving more with the same
This study has carried out a bottom-up assess- output. Like other improvements in productivity,
ment of this potential (Exhibit 2.5), modelling the this can boost economic activity by freeing up re-
major opportunities in transportation, construc- sources for other use. In other cases, there is a
tion, machinery, and various products.11 Overall, migration of activity away from upstream steel pro-
we find it is possible in an ambitious scenario duction and into other points of the value chain.
to achieve the same economic benefits while In particular, there will be greater need for labour,
using 54 Mt (28%) less steel per year in 2050. data and energy in construction and manufacturing.

The most important measures include: Achieving these categories of measures can
• A reorganisation of mobility towards autono- be complex. They require extensive coordination
mous and shared vehicles, which could reduce and information flows. Incentives often are poorly
the amount of steel required by as much as 70% aligned, and current models for everything from
for the same number of passenger kilometres.12 contracts to performance management often
neglect materials efficiency. In this, too, circular
• Digitisation and other tools to optimi- economy and materials efficiency opportuni-
se steel use in construction. This includes re- ties are similar to energy efficiency, which often
duced over-specification (today’s buildings faces very similar barriers. On the other hand,
often use 50% more steel than required), digitisation is a strong driving force, reducing
modular construction and reconstruction in the transaction costs of many opportunities.
favour of demolition, re-use of structural ele-
ments, and the use of high-strength steels.13 It therefore is uncertain how much of the po-
• Reduced yield losses in manufacturing. tential can be achieved. This study explores two
The amount of steel scrap generated in ma- alternative scenarios:
nufacturing can vary by as much as 50% even
in mature processes. Although such scrap is In the scenario with a high level of circularity,
not lost, it is wasteful and leads to the need around 75% of the identified potential is realised.
for large absolute steel stock at any one point. This reduces the amount of steel required by 54
Mt per year in 2050, resulting in a total steel de-
• A range of materials efficiency and circu- mand of 139 Mt.
lar economy principles such as lightweigh-
ting techniques, remanufacturing oppor- The less ambitious scenario for circularity cap-
tunities, product-as-a-service business tures instead just one fourth of this amount. This
models, etc. across a range of product groups. would leave steel demand close to 181 Mt per year.

78
 Exhibit 2.5
Demand-side opportunities for materials
efficiency and new circular business models
Mt STEEL PER YEAR, 2050

REDUCED SCRAP FORMATION IN MANUFACTURING.

Although most steel scrap in the manufacturing process is recycled, in
the meantime additional primary steel has to be made. Therefore,
measures to cut the formation of scrap during manufacturing will cut
overall production. This can be achieved by switching to designs that
consider the production process, making semi-finished products that are
closer to the final shape, and embracing technologies like 3D printing
and powder metallurgy that make less scrap.

INCREASED EFFICIENCY OF
STEEL USE IN CONSTRUCTION MATERIAL EFFICIENT
The main opportunities are to reduce PRODUCTION
waste during the construction process;

12
SHARING MODELS OF TRANSPORTA-
reduce the amount of material in each TION FOR PASSENGER CARS.
Mt
building by avoiding over-specifica- Car-sharing and similar schemes
tion and using higher-strength ensure that each vehicle is used
materials; and reusing buildings and more intensively, reducing the
building components. For example, need to make extra units. A
high strength steel can reduce the shared mobility system
amount of steel needed for a given CONSTRUCTION TRANSPORTATION could reduce materials use in
project by 30%. Furthermore, projects transport by 50-70%

17 19
often use 50% more steel than is
physically necessary. INCREASING THE USEFUL SERVICE OF
Mt TRANSPORTATION UNITS
Mt
INCREASING THE USEFUL By increasing utilization and by
SERVICE FROM STEEL extending the lifetime through
By extending the lifetime of buildings, high strength steel and improved
and/or by increasing the utilisation of maintenance.
OTHER
floor space through sharing and other
circular business models.
6 Mt

INCREASED EFFICIENCY OF STEEL

USE IN MACHINERY AND PRODUCTS.
High strength steel applied in machinery could
reduce demand with 2.1 Mt steel per year.

SHARING SCHEMES
To ensure more intensive use of steel products
including sharing of domestic appliances and
machinery. A system for shared products can
reduce steel need with 20%.

SOURCE : MATERIAL ECONOMICS ANALYSIS, SEE ENDNOTE. 14

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Materials recirculation: enabling high-quality steel production from scrap

Steel is already a highly circular material. On average, The EU steel industry and wider economy face a funda-
85% of end-of-life steel is recovered for recycling – more than mental choice over whether to use this scrap in the EU or
has been achieved for any other major material.15 Recycling to export it. The impacts on global greenhouse gas emis-
is driven by the intrinsic economic value of steel scrap: the sions, and on the economics of the industry, are complex.
131 Mt generated in the EU every year has a value of some On the one hand, if primary production of steel was main-
30 billion EUR. Of this, some 94 Mt are used in the EU, ma- tained at current levels, the scrap exports could increa-
king up half of the iron input to EU steelmaking16, while 17 Mt se three- to fourfold, to 80 Mt per year. This in turn would
are exported, with Turkey the largest destination. reduce the need for primary production in other regions.
Especially if EU primary production became less emissions-
In coming decades, the availability of scrap in the EU will intensive, this would contribute to global CO2 reductions.
increase, as the EU steel stock saturates (Exhibit 2.6). There
are also opportunities to increase the collection rate for end- On the other hand, using the scrap generated in the EU would
of-life steel (which already varies depending on steel prices, mean EU producers needed fewer resources. The EAF route to
as well as country by country). By the 2050s, the amount of steel production uses only 10-15% of the energy of integrated
scrap available could be as large as total EU annual steel production and is significantly less capital-intensive. Direct CO2
needs, raising the intriguing prospect that EU steel needs emissions are also much smaller, at 0.1 t CO2 per tonne coil with
could be met largely by recycling steel already made. Steel best practice. Using these resources less would directly cut EU
could become the first, and by far largest, flow of a nearly fully emissions. It could also pioneer models for a highly circular steel
circular material. system that would ultimately be beneficial at the global level.

Exhibit 2.6
EU could fulfil most of its steel demand
using scrap-based production

STEEL SCRAP AVAILABILITY AND STEEL PRODUCTION

MILLION TONNES PER YEAR

200

STEEL PRODUCTION
160

120
AVAILABLE SCRAP

80

40

0
2008 2020 2030 2040 2050

NOTES : PRODUCTION AND SCRAP VOLUMES IN THIS EXHIBIT REFER TO A SCENARIO WITH
'MEDIUM CIRCULARITY', REPRESENTED IN NEW PROCESSES AND CARBON CAPTURE PATHWAYS.
SOURCES : MATERIAL ECONOMICS MODELLING BASED ON EUROFER (2018) AND PAULIUK ET AL. (2013) . 18

80
If the EU steel industry does opt to significantly in-
crease its use of scrap, major changes will be neces-
sary. There is some limited potential to increase the
amount of scrap used in the BF-BOF route, but the
main step would be to gradually switch towards a hig-
her share of EAF-based steelmaking.19 Today EAFs are
used almost exclusively for long products, but some flat
products (62% of EU finished steel production20) would
need to come from this route (as is already the case in
the United States). As noted, emissions from EAFs can
be reduced to very low levels if electricity is generated
using zero-emissions sources.

Increasing the share of scrap input above around

60% in total EU production also is possible, but would
require a concerted push to improve control over the
quality of steel scrap. The most important step is to
reduce the contamination of steel scrap by undesired
‘tramp elements’, especially copper, which is introdu-
ced during the steel lifecycle and recycling (for example,
copper wiring from other components often attaches to
the steel from the chassis and frame of an end-of-life
car). Even small levels of copper adversely affect the
quality of some steel products. Unlike many other ele-
ments, copper cannot be removed to slag when scrap
is re-melted.

There are concrete steps that can be taken to dras-

tically reduce the inmixing of copper in scrap, notably
more carefully sorting out scrap metal before it is recyc-
led, replacing copper with other metals where possible,
and designing products that can be easily disassemb-
led for recycling (see Box, next page).

Keeping the steel stock clean for future recycling is

not just desirable for EU resource efficiency – it also
affects global steel production. Unless practices are
changed, the recycling of steel would be constrained by
copper already by 2050, and more steel would have to
be made from iron ore.21 Given the higher resource use
and emissions from primary production it would result
in additional CO2 emissions, eventually reaching seve-
ral hundred million tonnes of CO2 per year. Therefore,
downgrading steel and selling it outside the EU is not a
long-term solution. Efforts to improve the collection rate
and reduce the contamination of steel scrap should be
high up the list of priorities for reducing emissions from
steel production.

To capture these considerations, this study considers

two different scenarios for the share of scrap metal in-
put to steel production. In a high recycling scenario, the
scrap share of steel production would reach 70%. This is
technically possible given total scrap availability, product
mix, the potential to reduce scrap contamination, and
the more widespread use of EAFs – but would require
changes to scrap handling as well as the structure of
production. In a low-scrap scenario, scrap-based inputs
would stay between 50% (today’s level) and 60%. De-
pending on how demand develops, the EU would then
export as much as 38-63 Mt of scrap per year by 2050.
81
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

FOUR WAYS OUT OF COPPER CONTAMINATION

Copper’s effect on steel has been known for a long time, but the problem has so far been relatively
easy to handle, because secondary steel demand has been limited. Looking ahead, four key strategies
need to be implemented:

Improved separation at end of life

The first step is to avoid adding high-copper scrap to otherwise clean flows, as is often done today to
dispose of flows such as copper-alloyed steel or some vehicle scrap. Beyond this, it will be necessary
to increase the separation of copper and steel in the recycling process. This already happens to some
extent, but practices vary widely, and the extent of sorting fluctuates with the copper price, since re-
moving copper can be costly, manual work. To avoid the cost of manual labour, more technologies for
automated sorting are being developed. More closed-loop recycling would also be necessary to keep
some scrap flows very pure and enable the use of scrap in especially copper-sensitive applications.

Product design for reduced contamination

The design of products can also improve the sorting process. Design principles for recycling and for
disassembly could facilitate the removal of copper components by making them easier to see and to
access and remove. Material substitution is sometimes an option, such as replacing copper cables
and wires with optic fibre or aluminium equivalents.

Metallurgy to increase copper tolerance

Production processes can be designed to be more tolerant to copper by avoiding the temperature
interval where copper causes problems. Although not in itself a long-term solution, this mitigates the
problem.

Separation of copper from steel

There is currently no commercially-viable method for removing copper from steel once it has been
added. Some assessments have been pessimistic that this will ever be viable. Nonetheless, some
research is ongoing into methods such as sulphide slagging, vacuum distillation and the use of O2/Cl2
gas.38 What will it take for these measures to take root? Arguably, current markets are poorly equipped
to really account for the impact of current practices on the long-term quality of the global steel stock.
Therefore, it may be necessary to consider regulation as the route to address copper pollution before
it becomes a significant problem for future steel recycling.

SOURCE : MATERIAL ECONOMICS (2018) . 22

82
 Exhibit 2.7
Four production routes are compatible
with net-zero emissions
CO2-INTENSITY OF EU STEEL PRODUCTION
TONNES CO2 PER TONNE STEEL

Current production routes

BLAST FURNACE – BASIC OXYGEN FURNACE (BF-BOF)

1,6
BF-BOF 1.9 60% of current steel production uses coal/coke to reduce
iron ore and produce steel in integrated steelworks.
1,5

BF-BOF WITH INCREASED PROCESS EFFICIENCY

1.6
1,1
BEST AVAILABLE An estimated 15% process efficiency improvement is
0,9 TECHNOLOGY possible within the current BF-BOF process.

0,4
SMELTING REDUCTION
SMELTING
REDUCTION 1.5 Smelting reduction combined with a Cyclone Converter
Furnace can reduce 20% of the emissions.

NATURAL DIRECT REDUCED IRON (DRI) BASED ON NATURAL GAS

0,0
GAS DIRECT 1.1 This route uses natural gas to reduce iron ore. DRI
REDUCTION accounts for 5% of current world production.
0,0

BF-BOF CARBON CAPTURE AND STORAGE (CCS)

WITH CCS 0.9 Capturing the CO2 from the blast furnace of an integrated
steel plant can reduce overall emissions by 50%.

ELECTRIC ARC FURNACE (EAF)

EAF 0.4 The main route for secondary steel uses electricity to
melt steel scrap, with only small direct emissions.

Low-CO2 production routes

CARBON CAPTURE AND UTILISATION (CCU)

CCU
0.0-1.0 Emissions strongly depends on lifecycle impact. Can be
low-CO2 if a series of stringent requirements are met.

SMELTING SMELTING REDUCTION WITH CCS (SR + CCS)

REDUCTION 0.0-0.2 80% of emission reduction with remaining emissions mainly coming
WITH CCS from the basic oxygen furnace. Can reach zero emissions by using biomass.

HYDROGEN HYDROGEN DIRECT REDUCTION (H-DRI)

DIRECT 0.0 This route uses hydrogen to reduce iron ore, with remaining emissions
arising from the EAF step that convert the reduced iron to steel.
REDUCTION
LOW-CO2 ELECTRIC ARC FURNACE (EAF)
LOW-CO2 EAF 0.0 Remaining emissions are from electrodes corresponding
to 2-5 kg CO2 per tonne steel.

NOTES : ALL PRODUCTION ROUTES ASSUMING ZERO-CARBON ELECTRICITY IN 2050. CURRENT PRODUCTION PROCESSES
INCLUDE DOWNSTREAM EMISSIONS FROM CONTINUOUS CASTING AND HOT ROLLING. THESE DOWNSTREAM
EMISSIONS ARE ASSUMED TO BE FULLY DECARBONISED BY 2050 IN THE LOW-CO 2 PRODUCTION ROUTES.
SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 23

83
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Clean production of primary steel

Increased materials efficiency and recycling can signi- sed inputs in production, can realistically provide only mar-
ficantly reduce long-term need for primary steelmaking. ginal CO2 reductions within the current production system.25
However, new primary production from iron ore will be re-
quired in any scenario. Globally, some 1 billion tonnes per This leaves two main routes to deeper cuts from steel
year of new, primary production will be necessary for the production. The first is to use direct reduction, replacing
foreseeable future to build up the amount of steel in the the carbon in fossil fuels with electricity (for energy) and
global economy.24 In Europe, some share of primary steel with hydrogen (for the reduction of iron ore). The second is
will be needed to enable the full production mix required. to capture nearly all of the carbon, and reprocess or store
Therefore, clean production processes will be necessary, in it in ways that permanently prevent release to the atmosp-
Europe as well as globally. here. However, unlike in energy processes (such as power
generation), carbon capture in the steel sector is far from
The scope for easy cuts has already been all but exhau- straightforward. Rather than an ‘end of pipe’ solution that
sted. Today’s integrated production emits just 50% of the CO2 can be fitted to existing production, it will require major mo-
compared to steelmaking in the 1970s and is now close to its difications to the core process of iron and steelmaking.
theoretical limits. The scope for further energy and process
efficiency improvement in integrated plants is on the order of In either case, low-CO2 iron and steel production therefore
5-10%. Other options, such as using a larger share of bio-ba- requires a major transformation.

LOW-EMISSIONS PROCESSES WITH HYDROGEN-BASED DIRECT REDUCTION

Nearly all CO2 emissions from steelmaking arise in two core ate new emissions elsewhere (see Box, next page). If hy-
processes: producing the heat energy to melt steel and drive the drogen is produced from water via electrolysis, some 3-4
processes, and the reduction of iron ore to iron. Thus, a major MWh of zero-carbon electricity is required for every tonne
candidate for deep cuts is to replace these two steps. The energy of steel produced. If the same hydrogen is instead produ-
part is in fact already proven, as the EAFs used in scrap-based ced from natural gas via today’s dominant production route
steelmaking are widely used. Eliminating carbon from reduction (steam methane reforming, SMR), it would be necessary
would require further development of the Direct Reduction of Iron to capture and permanently store 0.5 tonnes of CO2 for
(DRI) process to replace carbon with hydrogen. every tonne of steel. In either case, replacing today’s coal
and coke ovens with electrolysers and electricity or SMR
DRI is a proven process, accounting for 5% of steel- and CCS and its infrastructure is a major change. One ma-
making globally26 (but only 0.4% in the EU). It uses natu- jor aspect of this is large-scale hydrogen storage. A lar-
ral gas instead of coal as the ‘reducing agent’ to produce ge steel plant may require five days worth of storage both
iron, which in turn can be further processed into steel in to safeguard continuous operation, and to ensure flexibili-
much the same ways that scrap is: an electric arc furnace ty in electricity use to benefit from lower electricity prices.
(EAF) followed by several downstream steps. This process
is less emissions-intensive than the BF-BOF route, with Using hydrogen for reduction and EAFs for heating already
CO2 emissions around 40% lower.27 In the EU, the econo- would take care of most of the emissions. However, for truly deep
mics of current DRI production have been unfavourable, cuts it would also be necessary to further develop other steps in
as it depends strongly on access to cheap natural gas. the iron and steel production chain. First, an alternative source
of energy is needed for preparing (sintering and pelletising) iron
Swapping in hydrogen for natural gas is technically entirely ore. This requires high temperatures in excess of 1,000°C, with
plausible. Even in a natural gas-based DRI process, some 50% electricity and biofuels both possible candidates. Second, the
of the reduction of iron is done by the hydrogen contained in EAF process must be made largely fossil-free. Although direct
the natural gas, with the remainder done by carbon, which then emissions are already low today (around 0.1 t CO2 per tonne of
creates CO2. There is thus no question that hydrogen can re- steel), they can be cut further. Additional process development
duce iron ore. However, there has never been any commercial will be required to combine very low CO2 emissions with high
reason to increase the share of hydrogen, and further develop- yields and efficiency. Finally, as with all other steel routes, the
ment is required to bring this option to industrial scale. Several downstream forming processes must be either electrified or use
EU steel companies now have plans to start piloting H-DRI biogas. The largest energy use is in reheating furnaces that re-
including Salzgitter, SSAB, ThyssenKrupp, and Voestalpine.28 quire heat of 1,200°C prior to rolling and other processes, but
These companies foresee a sequence of piloting and demon- there also are a range of electric power, steam generation, and
stration spanning some 10–15 years before the technology is other processes that need zero-carbon energy inputs.29
fully proven and ready to operate at large capacities.
This study explores scenarios of 28–63 Mt of primary steel
The shift to hydrogen creates entirely new resource de- made every year by H-DRI by 2050 – a significant fraction of the
mands. The hydrogen production must itself be CO2-free, baseline production of 193 Mt. Actual steel made at plants using
either by capturing the CO2 from production or by using H-DRI would be significantly larger, as nearly all production would
zero-emissions electricity – otherwise it would simply cre- benefit from using a significant share of steel scrap as well.

84
Carbon capture and storage
Carbon capture and storage (CCS) has long been ex- These are stark findings. They amount to saying that ma-
plored as an option for steel production. The main thrust jor changes to steel production processes will be required
has been to explore how it could be fitted to existing blast for carbon capture to achieve deep emissions cuts. There
furnaces. However, the multiple sources of emissions and are two main options now actively explored in Europe. One
integrated nature of steel plants means that only a small is to replace the current blast furnace route with smelting
share of emissions would be addressed if carbon cap- reduction. The other is to take the top gas recycling con-
ture was applied to the process as currently configured. cept several steps further, to heavily reprocess gases from
By modifying the blast furnace to recycle its exhaust ga- both blast furnace and coke oven through a combination
ses (‘top gas recycling’), this could increase to a 50% re- of CCU and CCS. The pathways explored in this study
duction.30 In past roadmaps, this has been mooted as a show up to 54 Mt of steel per year produced through these
maximum feasible reduction level.31 No study appears to routes by 2050.
have deemed it feasible to fit all the major emissions sour-
ces within an integrated steel plant with carbon capture.

HYDROGEN BECOMES A KEY INPUT IN A NUMBER OF CLEAN

PRODUCTION ROUTES
Today, hydrogen is produced through steam reforming of methane from natural gas, and used predominantly in am-
monia production and petroleum refining. In a net-zero economy, large-scale, clean production of hydrogen will be a
necessary enabler for many low-GHG routes across industrial and other sectors.

• In steel production, hydrogen can replace coal as a reducing agent (removing unwanted oxygen from iron ore to
produce pure iron), avoiding CO2 emissions from steelmaking and coking processes.
•In plastics, hydrogen becomes a key building block in a range of new production processes, including to increase
yields in gasification, in the production of methanol, and potentially as a reactant in the synthetic production of plastics
from CO2.32
•In the cement industry, hydrogen is one option among several to achieve carbon-free high-temperature heat. Hydrogen
is also an energy carrier (or fuel), enabling energy storage and distribution that could facilitate the use of intermittent
renewable energy sources.33
•Hydrogen is already a key input in ammonia production – but changing how it is produced could dramatically reduce
or eliminate CO2 emissions in the sector.

There are two main routes for the production of hydrogen without large CO2 emissions. One is to eliminate carbon
entirely, and make hydrogen through the electrolysis of water. The most mature technology is alkaline electrolysis, which
can turn yield hydrogen output corresponding to 70–75% of the electrical energy input.34 Other options under develop-
ment (proton-exchange membrane electrolysis, solid oxide electrolysis) could achieve still higher efficiency. Electrolysis
already has high technology readiness, but it is only cost-competitive with SMR if the electricity is very cheap, so it has
rarely been used at scale. Many assessments expect the cost of electrolysers to fall by as much as half when they start
to be manufactured and deployed at scale.

The other main low-CO2 production route is continued use of SMR, but with capture of the CO2 produced. The challenge
is to achieve high capture rates: while the feedstock CO2 is concentrated and easy to capture, CO2 from fuel combus-
tion in the reformer is harder to reach. One option is to electrify the heat instead. While carbon capture technology is
relatively mature, it has not been applied to SMR in practice, so additional demonstration and development is needed.
Other options also are being explored, including methane pyrolysis, where the carbon is concentrated to a solid instead
of being released as CO2 gas. If the solid can be safely stored, this offers another potential route to CCS. The route
chosen for clean hydrogen production has a range of knock-on effects and requirements. For CCS, infrastructure for
carbon transport and permanent storage is a current major roadblock. Production is best carried out at scale, as both
SMR and CCS are most cost-effective at large units. Further technology development is required for the high capture
rates of 90% or more required for a net-zero economy.

Technologies for electrolysis are much more modular and can operate at smaller scale. The key requirement is large
amounts of essentially CO2-free electricity, which also becomes a major part of the cost of production. In addition,
electrolysers are capital-intensive. Large-scale hydrogen storage (another development priority) also has major benefits,
as it can enable electrolysers to operate flexibly. In an electricity system with large shares of variable renewable electricity,
this can drastically reduce the cost of electricity and therefore also the levelised cost per tonne of hydrogen (even accoun-
ting for the greater capacity required).

85
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

SMELTING REDUCTION WITH CARBON CAPTURE BLAST FURNACE-BASIC OXYGEN FURNACE WITH
Smelting reduction has been a candidate for iron and ste- CARBON CAPTURE, UTILISATION AND STORAGE
el production since the 1980s. Medium-scale operation has The final option for nearly CO2-free production is to substantially
been proven, but the technology has never reached a major modify the operation of the current blast furnace route, combining
share of production. In the EU, the HIsarna project run by it with both carbon capture and utilisation and carbon capture and
Tata Steel is the main ongoing effort to develop smelting storage. This builds on the top gas recycling concept but takes it
reduction further. much further. The core idea is to combine the gases produced
In direct smelting, the coking plant, sinter plant and blast from the main carbon sources (coke oven, blast furnace, and ba-
furnace are all dispensed with. Instead, iron ore is injected sic oxygen furnace) with hydrogen to produce syngas for chemi-
into a reactor alongside powdered coal. The ore is liquified cals production (instead of burning them for energy generation, as
in a cyclone converter furnace and drips to the bottom, is done today). Companies exploring this option include Thyssen-
and the coal reduces the ore to iron in a molten state. The Krupp (Carbon2Chem) and ArcelorMittal (Steelanol, IGAR).
molten metal can then be reprocessed to steel in a basic The main advantage of this route would be to find a way
oxygen furnace, as in the standard BF-BOF route. to continue using the blast furnaces that are at the heart of
The underlying motivations for smelting reduction have current steelmaking. However, for this to be compatible with
been to reduce energy consumption by up to 20%, to repla- net-zero CO2 emissions, very major additional industrial pro-
ce expensive coke with much cheaper coal, and to find a cesses and strict criteria would be required. Specifically:
production route with lower capex requirements. However, 1. The majority of inputs must be circular or bio-based carbon. Today,
direct smelting also has features that make it a good match advanced operation of blast furnaces can allow the share of coke to be as
with carbon capture. By replacing several processing steps low as 50%, with the remainder typically coal or petcoke. Industry experts
hypothesise that the share of coke could be reduced to as low as 25%, and
with a single reactor, it creates a single point source of CO2
the remaining 75% could then consist of end-of-life plastics or biomass as
for nearly all the emissions from ironmaking. Moreover, in alternatives to (new) fossil carbon.
the HIsarna case, the use of pure oxygen creates a very
CO2-rich gas that is much cheaper to capture than are the 2. Integration of all main processes. For deep CO2 cuts, the gases from
the coke oven, blast furnace, and basic oxygen furnace must all be diverted for
low-concentration CO2 streams resulting from traditional
reprocessing to chemicals.
processes. In total, some 90% of emissions could be elimi-
nated. The fuel flexibility of the process also makes it pos- 3. Large-scale carbon capture to offset fossil carbon input. The resi-
sible to introduce a share of biomass instead of coal, for a dual CO2 would have to be permanently stored (not used), in order to offset
the fossil carbon used. This could amount to 25% of the total, depending
fully net-zero solution. As with all other routes, for very deep
on how much hydrogen is added, but it may need to be more.
cuts it also would be necessary to adapt downstream steel
processing steps to electricity or other fossil-free energy. 4. Outputs restricted to circular products. The chemicals produced
would need to be used exclusively for products that themselves are nearly
fully recycled. If used for single-use chemicals or fuels, or if plastics were
Large-scale deployment of smelting reduction and CCS
only partially recycled as happens today, emissions would only be postpo-
would be a transformation on a similar magnitude to a ned briefly until end-of-life plastics were incinerated (almost half of plastic has
switch to H-DRI: a wholesale change of the core ironmaking a lifecycle of just one year).35
process of primary steelmaking, with a need to first demon-
5. Other inputs must be fossil-free: The processes would rely heavily on hydro-
strate industrial-scale operations. Assessments by industry
gen, which must come from a CO2-free source.
experts interviewed for this study diverge on the prospects
of achieving this. In practical terms, the further development If all of these five conditions are met, the concept is simi-
of HIsarna will now take place not in the EU, but in India. lar to the chemical recycling concepts for plastics described
It also would face the challenges of brownfield conversion, in Chapter 3. In a case of sector coupling, the steel sector
and of parallel investment to enable continuous production would then become the process for recirculating plastics
during the switch from one production system to another. to high-value chemicals, from which new plastics could be
made. Given the large amounts of carbon required for iron-
The other major requirement is feasible options for trans- and steelmaking, the quantity of chemicals produced would
porting and storing large volumes of CO2. This has been a rapidly grow very large (in the millions of tonnes).
major stumbling block for past efforts to develop CCS in
Europe. Escaping the chicken-and-egg dynamic of captu- These are exacting requirements. The CO2 emissions savings
re-and-storage is an indispensable step on the way to lar- would be very different if, say, fossil-derived coke continued
ge-scale use of direct smelting or any other CCS concept. to be the main input, if CCS was not applied, or if the outputs
were not fully circular. There thus are very narrow parameters
within which CCU could be part of a net-zero economy.

86
Low-CO2 iron and steel
production requires a
major transformation.

87
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

2.3 Low-emissions pathways for the EU steel sector

A major conclusion of this study is that there are many Circular economy pathway. In this scenario, Europe relies
technologies and strategies that could contribute to a net- on materials efficiency and circularity to meet much of its
zero emissions steel industry in the EU. Another is that all need for steel. The need for new steel production is reduced
options require major transformations: from how steel is by 54 Mt per year through increased materials efficiency
used in major value chains, to the organisation of mobility and widespread adoption of new business models in mobili-
and other sectors, and to the fundamental production routes ty and construction. Steel production in 2050 thus stands at
for iron- and steelmaking. 139 Mt. Much of this, in turn, is met through steel recycling,
as drastically improved product design, dismantling, scrap
With so many options in play, and so much uncertain- handling and advances metallurgy enable the EU to derive
ty over costs and risks, no one pathway can give all the 70% of its need for iron from scrap. The remaining 28 Mt of
answers and policy insights required to enable these tran- primary production takes place via a mix of H-DRI and CCS/
sitions. To guide discussions, this study explores three CCU options.
pathways to a net-zero emissions EU steel industry in 2050
(Exhibit 2.8). Each pathway incorporates all the solutions Carbon capture pathway. This pathway sees the same
identified above, but with different degrees of emphasis: amount of steel production as in the ‘New Processes’
pathway, but less use of scrap, which remains at the same
New processes pathway. In this pathway, there is only share as today (50% of iron input). Primary production of
modest success in capturing the potential for increased ma- iron therefore stands at 91 Mt in 2050, similar to today’s
terials efficiency (12 Mt steel equivalent per year by 2050). levels. As in the New Processes pathway, new production
Instead, production remains at 181 Mt in 2050, and is con- routes are rapidly scaled up in the 2030s, but the empha-
centrated in processes that rely on extensive use of electri- sis is on CCS rather than on extensive use of electricity.
city. The core production process is H-DRI, which amounts Smelt reduction with CCS plays a major role. H-DRI also
to 63 Mt of steel production in 2050. This is combined with finds a place, but half the hydrogen input is produced from
increased scrap use of 29 Mt, which can be combined with steam reforming of natural gas with CCS rather than from
iron from H-DRI in EAF production. This pathway has the electrolysis. CCU also plays a role, but is tightly bound by
largest gross amount of steel scrap being used, but not the the requirements to ensure permanent sequestration of car-
highest share of steel production. In contrast, in this scena- bon in products. In total, some 72 Mt of CO2 per year is
rio CCS and CCU options are limited to just 9 Mt per year, permanently stored via these processes in 2050.
corresponding to a few large plants in favourable locations.

88
 Exhibit 2.8
Pathways to net-zero emissions FOR Steel

CO2 ABATEMENT
Mt CO2 PER YEAR
Baseline
210 208 PATHWAY BASED ON ELECTRIFICATION
13 OF STEEL PRODUCTION PROCESSES
200
• Focus on primary production using
56 hydrogen-based direct reduction (H-DRI)
150
and indirectly electrifying the steel
NEW PROCESSES 100 Remaining production process by using hydrogen
Pathway 128 produced by electrolysis.
50 Emissions
• The share of steel produced through the
11 electric arc furnace route increases to 60%
0
by 2050.
2015 2050

Baseline EMPHASIS ON ACHIEVING MORE WITH

210 208 STEEL ALREADY MADE AND PRODUCTION
BASED ON RECYCLED STEEL
200
58 • Concentration on demand-side opportu-
150 nities for materials efficiency and new
circular business models for steel, such as
64
CIRCULAR ECONOMY 100 car sharing, and material efficiency in
Pathway
Remaining construction.
50 Emissions 69 • Increase in scrap-based production and
16 recirculation of steel within EU. The share
0
of steel produced through the electric arc
2015 2050 furnace route increases to 70% by 2050.

Baseline
210 208 PATHWAY FOCUS ON CAPTURING CO2 FROM
13 STEEL AND HYDROGEN PRODUCTION
200 PROCESSES
29
• Emphasis on using CCS/U on primary
150
steel production. In this pathway, 50% of
93
100 the primary production in 2050 is equipped
CARBON CAPTURE Remaining with CCS/U.
Pathway
50 Emissions • Producing 50% of the hydrogen required
71
for the Hydrogen direct reduction route
0 (H-DRI) with steam methane reforming
2015 2050 combined with CCS.

MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS

MATERIALS RECIRCULATION AND SUBSTITUTION
NEW PROCESSES
CARBON CAPTURE AND STORAGE
REMAINING EMISSIONS

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

89
 Exhibit 2.9
Production routes in net-zero pathways

EU IRON AND STEEL PRODUCTION MIX TO ACHIEVE NET ZERO EMISSIONS IN 2050
Mt STEEL PRODUCED PER YEAR AND ROUTE

193
200
6%
150
56%
100
NEW PROCESSES
Pathway
50
33%
0 5%
2015 2050

193
200
28%
150

CIRCULAR ECONOMY
100 50%
Pathway
50
14%
0 7%
2015 2050
193
200 6%

150
47%

100
CARBON CAPTURE
Pathway 19%
50
28%
0
2015 2050

MATERIAL EFFICIENCY AND CIRCULARITY

RECIRCULATED STEEL WITH EAF
PRIMARY STEEL WITH H-DRI
PRIMARY STEEL WITH CCS/U
UNABATED PRIMARY STEEL

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

90
While the three pathways are designed to business models. Which of these prove the ea-
be strikingly different, several elements are in- siest is still uncertain, but the strategy now must
escapable and recur across all three. These be to pursue as wide a portfolio as possible, and
cross-cutting elements offer crucial clues for the to immediately find ways to significantly increase
design of a net-zero emissions steel industry. the resources dedicated to their development.
Several ongoing projects developed by compa-
All pathways entail very major shifts in the nies are expected to be ready in the 2040s, but
production structure of the sector. Simply put, this could probably be pushed to an earlier date,
there is no path to truly deep emissions cuts given a suitably strong policy push.
in the steel sector that does not entail a ma-
jor transition in fundamental technologies and Also, while such rapid changes are unde-
processes. This presents a formidable chal- niably challenging, the transition to net-zero
lenge, but also an opportunity to develop new emissions will be significantly easier if more
solutions. circular economy solutions can be mobilised.
These buy time for technology development,
Likewise, while the emphasis in these and as we discuss below can reduce cost, in-
pathways is on truly net-zero options, transi- vestment needs, and input requirements. They
tional solutions will play an important role for deserve special emphasis, as they currently
early emissions reductions. These can include do not form part of either industrial strategy or
continued process efficiency solutions, early climate policy.
shifts towards increased use of steel scrap, in-
creased use of biomass, a range of materials Finally, in all pathways, both the steel indu-
efficiency improvements, and early decarboni- stry and new materials-efficient or circular bu-
sation of the electricity sector. The risk other- siness models will become heavily reliant on
wise is that deep cuts can be achieved only new outside actors. These include new infra-
from the mid-2030s, presenting a challenge to structure and inputs, whether for CO2 transport
near-term emission reduction goals. and storage, or for electricity supply. Likewise,
policy will become a major determinant of the
Another cross-cutting insight is that all decisions made in the sector. It will be a requi-
pathways depend on significant accelera- rement for innovation, but also for the sector
tion of solutions that are promising but none- to bear the increased costs and investments
theless emerging – car-sharing systems, materi- that reduce barriers to circular economy and
als-efficient construction, scrap handling, hydro- materials efficient solutions, and that enables
gen DRI, smelt reduction, and carbon storage the required infrastructure and inputs.

91
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Deep cuts to emissions will increase the cost of producing steel by UP TO 20%
Producing steel without CO2 emissions will come at a A closer look at the different production routes shows the
cost. By 2050, the additional costs range between 3.5 and key parameters that determine the costs of different options
5.0 billion EUR per year, implying an average abatement (Exhibit 2.10). In particular, the new low-emissions production
cost between 17-24 EUR / t CO2. There are differences routes remain more expensive than existing production routes
between the pathways, with the circular economy pathway even after full deployment, adding 0-20% to the cost of steel
the most cost-effective – provided the major materials effi- products. These costs are estimates for fully developed pro-
ciency levers can be successfully pursued – and little diffe- cesses, once some key components have travelled down the
rence between the other two pathways. cost curve. Early deployment is likely to be more expensive.

Exhibit 2.10
Cost of production is higher
for low CO 2 production routes
DOWNSTREAM
COST BREAKDOWN OF PRODUCTION ROUTES
CCS
EUR PER TONNE STEEL
ELECTRICITY
IRON ORE/PELLETS
STEEL SCRAP
COKE/COAL
OTHER
COST INCREASE OF 0-20% FOR LOW-CO2 PRODUCTION ROUTES
RELATIVE TO EXISTING INTEGRATED MILLS CAPEX

645 630
602
578
547 558
150-200
150-200
150-200
150-200 150-200

65
14 27 211
20
144
144
144
284
51 150 150
51
51
111
51 46 51
34 53
17 19 58 50 58

INTEGRATED MILL ELECTRIC ARC HYDROGEN DIRECT SMELTING HYDROGEN DIRECT MATERIAL
(’BF-BOF’) FURNACE (’EAF’) REDUCTION REDUCTION REDUCTION EFFICIENCY
(AT 40 EUR /MWh) WITH CCS (AT 60 EUR /MWh) AND CIRCULARITY

ABATEMENT COST
EUR PER TONNE CO2
6 18 36 57 48

NOTE : ABATEMENT COST CALCULATED ASSUMING ZERO-CARBON ELECTRICITY. CO 2 PRICES NOT INCLUDED IN THE PRODUCTION COSTS.
SOURCES : MATERIAL ECONOMICS MODELLING BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 36

92
 Exhibit 2.11
The carbon price and cost of electricity will determine
the best way to make net-zero emissions steel
CARBON PRICE
EUR/t CO2

200

H
H
150
HYDROGEN DIRECT REDUCTION SMELT REDUCTION + CCS
COST ADVANTAGE COST ADVANTAGE
Cost-competitive at an electricity Cost-competitive at an electricity
price below ~40 EUR/MWh and a price above ~40 EUR/MWh and a
100
CO2 price above ~50 EUR/tCO2 CO2 price above ~50 EUR/tCO2

50
BF-BOF COST ADVANTAGE
Cost-competitive at an electricity price above
~40 EUR/MWh and a CO2 price below ~50 EUR/tCO2 ELECTRICITY
0 PRICE
0 20 40 60 80 EUR/MWh

NOTE : BF-BOF IS NOT A NET-ZERO EMISSIONS PRODUCTION ROUTE.

SOURCES : MATERIAL ECONOMICS MODELLING AS DESCRIBED IN TEXT.

Given this picture, policy will play an indispensable role in tion and digitisation to reduce the transaction costs of their
making low-CO2 steel production viable, both to keep Euro- implementation. Overall, however, the finding is that circular
pean producers competitive relative to steelmakers abroad economy levers are likely to be as cost-effective as those for
who continue to use high-CO2 processes, and to enable low-CO2 production.37
pioneers to move ahead within Europe. Either the low-emis-
Cost also will depend strongly on how some key para-
sion routes will have to be given an opex advantage of some
meters develop. Electricity is especially important for the
form, or the EU will need to establish separate markets for
H-DRI route, where it can make up one-third or more of
low-emissions steel.
total production cost. The modelling is based on an electri-
Another conclusion is that cost alone does not provide a city cost assumption of 40 EUR per MWh for the produc-
basis for choosing one route over another, except to suggest tion of hydrogen. Achieving this level would likely depend
that omitting circular economy strategies from the solution on flexibility of use, so that production can benefit from
set would lead to higher aggregate costs. The advantage of periods of lower electricity prices (the modelling includes
one route over another will depend strongly on parameters the capex for five days of hydrogen storage). However, if
that will vary within Europe and over time: notably the electri- electricity prices were higher, costs would rapidly increase.
city price, the ultimate efficiency achieved for direct smelt A comparison of electricity and CCS options shows that
reduction, the viability of CCU, and the cost of developing CCS can be more cost-effective once the price of electrici-
large-scale CO2 storage. ty starts reaching 50 or more EUR per MWh (Exhibit 2.11).
The analysis also shows that abatement costs in the steel
The costs of increased materials efficiency and impro- sector need not be very high: for any electricity price, there
ved circularity are among the hardest to estimate. Surveying are options that cut emissions almost to zero at less than
a range of levers, they range from potentially very cost-ef- 50 EUR per tonne CO2. However, this comparison, like oth-
fective (such as improvements to mobility), to potentially ers, depends on many other assumptions, including that
expensive options (such as extensive optimisation of steel H-DRI, smelt reduction, and large-scale CO2 transport and
use in buildings). Many levers depend on changing regula- storage are all viable technical options.

93
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Investment in the steel sector will need to rise by 25-65%

The transition to a net-zero emissions steel sector will The amount of investment varies significantly by pathway.
require a new wave of investment in the industry. Investment In particular, circular economy solutions are less capital-in-
levels will need to be up to 65% higher than in the baseline tensive, so they reduce the amount of investment required.
scenario. Instead of an average of 1.6 billion EUR per year,
the amount required could reach 3-4 billion EUR per year in
some periods in the 2030s and 2040s.

Exhibit 2.12
New capacity for low-CO 2production increaseS investment need,
WHILE circularity BRINGS down total investments

INVESTMENT IN PRODUCTION CAPACITY OF CRUDE STEEL INCREASE RELATIVE TO BASELINE

BILLION EUR PER YEAR + X%

PATHWAY
BASELINE

+60% +25 % +65%

4.0
4,0 3.8
3.6
3,5 3.2 3.2
3.1
3,0 2.8 2.8
2,5 2.4
2.2 2.2 2.2
2,0 1.9 1.9 1.9
1.8 1.7 1.8 1.7
1.5 1.5
1,5
1,0
0,5
0,0
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

NOTE : INVESTMENT INCLUDE NEW PRODUCTION CAPACITY AS WELL AS REGULAR RETROFITS OF EXISTING ASSETS. INVESTMENTS DO NOT
INCLUDE DOWNSTREAM INVESTMENTS OF CONTINUOUS CASTING AND HOT ROLLING OR DEVELOPMENT COSTS OF BRINGING NEW TECHNOLOGIES TO MATURITY.
SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

94
 The transition to a net-zero
emissions steel sector will require
a new wave of investment
in the industry.

95
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Exhibit 2.13
Current fossil energy use can be replaced
with renewables in 2050

ENERGY MIX TODAY AND IN 2050

EJ ENERGY PER YEAR
2050

2.2 EJ IN A 2050
65 BASELINE SCENARIO
0.1 0.1 0.1
1.9
0.6
0.5

0.2 0.9
CIRCULARITY
0.5
EFFICIENCY IMPROVEMENT
1.7 FOSSIL FUELS
0.2
ELECTRICITY
1.3 1.6 1.1 2.0
BIOMASS
0.9
0.8

0.3 0.2
0.2 0.1

2015

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

NOTES : FOSSIL FUELS INCLUDE NATURAL GAS USED TO PRODUCE HYDROGEN IN THE CARBON CAPTURE PATHWAY.
INDIVIDUAL NUMBERS DO NOT SUM UP TO THE TOTAL DUE TO ROUNDING.
SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

The main reason for the higher investment need is not in Second, much of the new low-CO2 capacity will be brownfield
fact that the low-CO2 production routes all are inherently more conversion, which entails additional capex. Switching existing
capital-intensive. Smelt reduction, once fully developed, could integrated production to new processes will be a complex
require less capital. Once CCS is included, it is around 10% undertaking. The new production processes will have implica-
more capital-intensive than current production routes. Hydro- tions for large integrating infrastructure such as raw materials
gen DRI also is some 20–30% more capital-intensive, depen- storage and processing, utility supply, power distribution, gas
ding on how the capital cost of electrolysers develops. collection and storage, steam and power generation, transport
infrastructure, etc. that together can amount to half the capex of
Instead, the higher investment needs arise due to several an integrated plant. Additionally, a new plant energy system will
other requirements. First, there is a need for pilot and de- be needed to replace the energy currently derived from coke
monstration plants to accelerate the development of low-CO2 oven and blast furnace gases.
production routes. This is not the largest cost in absolute terms,
but is among the more difficult to mobilise for companies. The Third, there will likely be some need for double investment in
capex is always additional to what is required just to keep pro- capacity. Companies will need to ensure continuous produc-
duction going, and it has little likelihood of a commercial return tion, and therefore to build the new production capacity along-
on its own terms. side that already in place. Risk means that some redundancy

96
is a prudent strategy. As many of the low-CO2 technologies will Policy will thus play an indispensable role into enabling these in-
not be available at scale until the 2030s, there is some need creases in investment. Early commitment is particularly important to
for continued investment in existing BF-BOF plants, some of minimise the need for double investment. The upcoming reinvestment
which would then be retired early as the new, low-CO2 capacity in coking plants will be one important opportunity to avoid this. Many
is built out. This creates a risk that some assets must be written existing coking plants will need to be substantially rebuilt in the next
off ahead of the end of their useful life, with impacts on balance 20 years. These plants constitute massive investments and are the
sheets and therefore investment capacity. cornerstone of the current production system. To enable the transition
to low-emissions production, it will be essential to make the business
Finally, the sector will take on substantial additional risk in case for companies to direct the required capital towards low-emis-
going from tried-and-tested solutions to ones with uncertain sions technologies instead.
performance, and is dependent on policy support that has
not yet been articulated. Higher risk will, all other things being
equal, entail higher financing costs.

Exhibit 2.14
A NET-ZERO steel sector REQUIRES
3-5 TIMES MORE ELECTRICITY

ELECTRICITY INPUT TO EU STEEL PRODUCTION

INCREASE RELATIVE TO BASELINE
TWh PER YEAR
+ X%

HYDROGEN PRODUCTION
ELECTRIC ARC FURNACE PROCESSES
PRIMARY PRODUCTION PROCESSES
DOWNSTREAM PROCESSES

113% 355 72% 72%

316

257
238
223
x 4.7 206 214
188 192 190
179
163
142 144 x 3.2
x 2.9 134
107 107 105
91 92 91
75 75 75

2015 2050 2015 2050 2015 2050

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

NOTE : PRIMARY PRODUCTION PROCESSES INCLUDE ELECTRICITY FOR CARBON CAPTURE IN THE SMELTING REDUCTION WITH CCS ROUTE.
SOURCES : MATERIAL ECONOMICS MODELLING BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 38

97
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

A net-zero emissions steel industry will need new and different inputs

Compared with the current steel industry, a future net- Overall, the EU industry would rely less on imports of
zero emissions industry will require a substantially different coal, and more on indigenous resources. Likewise, the avai-
set of energy and feedstock inputs (Exhibit 2.13). Overall, lability of inputs will vary geographically within the EU, and
there is a marked reduction in total energy use, reflecting this will exert a major influence on viable production. Areas
the higher overall energy efficiency of the new production with early access to abundant, low-carbon power may be
processes, an increased reliance on scrap instead of prima- best placed to switch to hydrogen-based routes. Meanwhile,
ry steel production, and savings of energy from improved regions with early access to carbon transport and storage
materials efficiency and circularity. infrastructure may have better enablers for CCS-based rout-
es.
The amount of electricity required is large, between 210-
355 TWh per year. The highest electricity demand is in the Biomass is not a major input in the pathways, but it does
‘New processes pathway’, in which the steel industry re- have a role in achieving fully net-zero emissions, and in
quires 355 TWh per year in 2050. The ‘Carbon Capture’ achieving early cuts. Torrefied biomass could be used in
and ‘Circular Economy’ pathways require less electricity, blast furnaces, or to further reduce emissions from smelt
just above 200 TWh. While these are substantial electricity reduction with CCS (e.g. in the HIsarna process). Gasified
requirements, they are much lower than in some pathways biomass also can be used for DRI processes. However, sus-
presented in the LTS, where electricity use explodes to tainable domestic biomass will be a scarce resource, and
700–1,000 MWh for the scenarios that have very deep cuts. may find priority uses in other sectors (such as feedstock for
The main reason for this is that the pathways in this study chemicals, or for heavy-duty transport). Therefore, it does
do not require either reliance on synthetic fuels, or extreme not feature heavily in the pathways for the steel industry.
shares for hydrogen-based production.
Some non-energy inputs also will need to change. The
The main drivers of electricity demand are the production amount of steel scrap used varies between 110 and 125 Mt
of hydrogen and the increased use of EAFs (Exhibit 2.14). per year. As noted, a high share of scrap-based production
However, the elimination of CO2 emissions from iron ore sin- would require a much more tightly-controlled supply chain,
tering and from downstream processes also represent sub- with cleaner scrap flows and less contamination by tramp
stantial loads if carried out through electrification. With high elements.
dependence on electricity, the industry will likely need new
sourcing arrangements for power. It also remains to be seen Finally, certain inputs are a decarbonisation challenge in
whether hydrogen production will be ‘captive’ or supplied themselves. One example is lime, which is used to remove im-
through wider infrastructure. Either way, all this electricity purities during steel production. Lime is responsible for about 40
must be derived from net-zero emissions sources, if the EU kg of CO2 in BF-BOF and about 20 kg of CO2 in H-DRI.38 The
is to meet its proposed target of net-zero greenhouse gas emissions from lime manufacture can be abated in the same
emissions by 2050. way as those from cement, as described in Chapter 4.

98
The scope for easy cuts has
already been all but
exhausted.

99
3. chemicals
Closing the societal carbon loop

Plastics
Plastics are versatile, cheap and durable key, as is innovation for more plastics recycling.
materials that play many essential roles in the New feedstock will also be required: switching
EU economy, from packaging to transport. from fossil oil and gas and towards end-of-life
Some 100 kg of plastics are used per person plastics and biomass. This in turn requires new
and year in the EU, most of which is produced production processes and systems, with elec-
by EU companies. tricity and hydrogen as major inputs. There can
also be a role for carbon capture and storage,
Today’s plastics are made from fossil oil and both on production and on waste incineration.
gas. As much as 5 kg of CO2 emissions result
for each kg of plastics produced: both from All these solutions are available or emerging,
their production, and from the carbon built into but extensive policy support is needed to bring
the material and released if plastics are burnt them to the scale where they jointly provide a
at end of life. These emissions are set to grow net-zero solution. The change needed spans the
by 2050. entire value chain, from product design to end-
of-life disposal. Production costs will increase by
This study examines how a material literally 20-43%, so companies need policy to create a
built from carbon could fit into a net-zero econ- business case. A 122–199% increase in invest-
omy. It finds that a transformation is needed in ments will be required, with no time to lose if the
how plastics are produced, used, and handled transition is to succeed by 2050.
at end of life. Using plastics more efficiently is

100
100
The question is how a material
fundamentally built out of
carbon can fit in a net-zero
CO2 emissions economy.

101
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

3.1 THE STARTING POINT

Plastics are versatile, lightweight and low-cost materials with waste. A further 30% of plastics are used in building and con-
functional properties that have made them key building blocks struction, and in the automotive sector.1 Today, plastics ac-
in some of our largest value chains. Despite being relatively count for around 10-15% of the weight of an average car, and
new materials, plastics have increasingly moved into domains more still in terms of volume.2 In the building and construction
that previously belonged to more traditional materials such as sector, plastics are used for thermal insulation, pipes, floors,
wood, metals, glass, and cotton. and finishing, among other purposes.3 The remaining 30% of
plastics are used in a range of products, from electronics to
The EU used 51 million tonnes plastics in 2017, or 100 kg agriculture, medical equipment, and household products.4
per person per year (Exhibit 3.1). The largest use of plastics
is in packaging, which accounts for around 40% of all plastics Europe is also a major producer of plastics. At 64 million
use. Plastics packaging is an integral part of how we trans- tonnes in 2017, 19% of world production was made in the EU,
port and consume products. As packaging has a short lifetime, with a net export of 13 million tonnes.5
packaging accounts for as much as 60% of all recorded plastic

Exhibit 3.1
Production, use and end-of-life of EU plastics
ANNUAL PLASTICS VOLUMES
Mt, 2017

NET EXPORTS
68
RECYCLED
PLASTICS 4

STOCK BUILD-UP

51
35–45
OTHER
16

PRIMARY THE EXACT

INCINERATION & VOLUME OF END
PLASTICS TRANSPORTATION 5 OF LIFE PLASTICS
NOT SEPARATELY NOT CLASSIFIED
64 COLLECTED AS PLASTICS
WASTE IS
BUILDING &
CONSTRUCTION
20-30 UNCERTAIN

10

70 %
PACKAGING MECHANICAL
RECYCLING 4
20
EXPORT 3
LANDFILL
8

PRODUCTION USE END OF LIFE

NOTE : END-OF-LIFE NUMBERS ARE LATEST AVAILABLE DATA (2016) .

SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 6
102
103
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

Because so many plastics are used in short-lived applica- The transition of this sector to low CO2 emissions will take
tions like packaging, the average lifetime of plastics in the place against continued growth in many uses of plastics. In a
economy is only about 10 years.7 There are no firm esti- baseline scenario, plastics use would grow by 18% to 62 Mt
mates of the total volume of end-of-life plastics in the EU (as per year by 2050, assuming a slow average demand growth
waste statistics are notoriously incomplete), but analysis for rate of 0.5% per year. Provided that the EU can maintain its
this study puts the amount at around 40 million tonnes per position as a net exporter, production would then grow to 72
year. The 9 Mt that are sent to mechanical recycling replace Mt per year in 2050.10 Worldwide growth in plastics produc-
around 4 Mt of virgin production (given losses in recycling tion will be much larger, potentially doubling from 2015 to
process and less than one-to-one replacement, so recycled 2050.11 However, on current trends much of that growth is
plastics remains a very small share of total production). likely to be captured by other regions where production costs
are significantly lower.12
The term plastics comprises a wide range of different ma-
terials, with different properties and end-uses. For example,
PET is used primarily for packaging, and most PVC is used CO 2 EMISSIONS FROM PLASTICS
in construction. Despite the great variety of plastics, the five
polymer types PE, PP, PS/EPS, PVC and PET, account for The production of plastics gives rise to on average 2.3
some 75% of use (Exhibit 3.2). The recyclability also varies tonnes of CO2 for each tonne of product.13 The key sources of
between different plastics types. However, all five major types emissions are refining, steam cracking and other foreground
are thermoplastic polymers that can, in principle, be mechan- processes, and polymerisation, adding up to 1.7 tonnes of
ically recycled. CO2 per tonne plastics. In addition, upstream emissions
from feedstock production and electricity are on average 0.6
Plastics are built from a backbone of carbon. Today, plastics
tonnes per tonne plastics (Exhibit 3.3).
are dominantly produced through steam cracking of naphtha
and ethane, which are respectively obtained by refining crude The integrated use of fossil hydrocarbons as fuel and
oil and from natural gas. In the EU, naphtha is the by far feedstock make some of these production emissions diffi-
dominant route, constituting three-quarters of the feedstock. cult to eliminate. One obstacle is that crackers require large
The steam cracking produce High Value Chemicals (HVCs), amounts of energy to produce high temperatures of 850-
which are the key building blocks of the petrochemical indus- 1100°C. Another is that the cracking process results in fossil
try. HVCs can be divided into two main categories; olefins hydrocarbon byproducts that are used as fuel in the process.
(including ethylene, propylene and butadiene) and aromatics In fact, an efficient steam cracker can be driven entirely by
(mainly benzene, toluene and xylene).8 Added to these, there the energy from its own byproducts. Even if the cracker were
are a number of other petrochemical processes in plastics run on external, low-carbon fuel, these fossil byproducts must
production such as production of chlorine and styrene.9 Many be accounted for. If they are simply burnt for fuel in other
of these chemicals are also carbon-based and therefore are processes, fossil CO2 emissions have just migrated from the
ultimately derived from fossil fuels, albeit by several steps. cracker to other parts of the energy system.
The assembled HVCs and other components are then po-
lymerised into plastics with the use of energy for processes Moreover, these production emissions are only half of the
such as cooling, heating and pressure. story. An even larger amount of carbon is embedded into the
product itself, corresponding to 2.7 t CO2 for every tonne of
The early stages of the plastics production value chain plastics.14 As long as plastics are made from new, fossil feed-
is carried out in large, integrated chemical complexes. stock, the total fossil CO2 baggage of a tonne of plastics there-
The production of colouring or additive masterbatches for fore amounts to as much as 5 tCO2 per tonne of product. The
mixing with the polymers to obtain the right properties is timing of end-of-life emissions depends on how plastics are
also a concentrated market. After that point, however, the handled upon being discarded. The current trend is towards
value chain is more fragmented. The plastic granules are increased incineration, which releases the entire stock of fossil
processed into finished products through manufacturing carbon immediately into the air. If the plastics are landfilled
processes such as injection moulding, blow moulding and instead, emissions could, in theory, be postponed. However,
extrusion, depending on the design of the final product. This the EU has adopted a zero-landfill target for recyclable waste,
process is done in a more localised way by small- and me- including plastics, to be achieved by 2030. The options for dis-
dium-sized plastic converters. carded plastics are therefore either recycling or incineration.15

104
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

Exhibit 3.2
Five plastics types
ACCOUNT FOR 75% of DEMAND

SHARE OF EUROPEAN PLASTICS DEMAND (51 Mt)

%, 2017

75% OF PLASTICS DEMAND

PACKAGING BUILDING & AUTOMOTIVE ELECTRONICS OTHERS

CONSTRUCTION

PE
(POLYETHEN)

PP
(POLYPROPHEN)

PS
(POLYSTYRENE)
INCL.EPS
(FOAM)

PVC
(POLYVINYL
CHLORIDE)

PET
(POLYETHYLENE
TEREPHTHALATE)

OTHER
PLASTICS

40% 20% 10% 5% 25%

SOURCE : ADAPTED FROM PLASTICS EUROPE (2018) . 16

105
 Exhibit 3.3
The plastics value chain and sources of
CO 2 emissions from plastics

PLASTIC PRODUCTION AND EMISSIONS (5 TONNE CO2/TONNE PLASTIC)17 EMISSIONS

TONNES CO2 PER TONNE PLASTIC
SCOPE
NOT IN SCOPE

CRACKING &
FEEDSTOCK ELECTRICITY OTHER
REFINING
PRODUCTION PRODUCTION FOREGROUND
PROCESSES
0.3 0.3 0.2
0.9

Extraction of crude oil Electricity for Refining of crude oil Steam cracking of
and production of downstream use gives into naphtha gives rise naphtha into ethylene
natural gas rise to emissions from to hard-to-abate and other high value
power production emissions from a chemicals, fossil fuel use
Emissions from energy number of sources in steam cracking
use and release or including cracking, dominant emission
burning of methane steam boiling and source
(flaring, venting, and heating
fugitive emissions) Other foreground
processes and produc-
tion of precursors

106
POLYMERISATION PROCESSING INTO PROCESSING
USE INTO END OF LIFE
AND BLENDING PLASTIC PRODUCTS PLASTIC
PHASE
PRODUCTS TREATMENT

0.6 2.7

Polymerisation of Manufacturing into Use in major value Mechanical recycling,

monomers and mixing finished plastics chains such as incineration, or landfill
with additives to products through e.g. packaging, automotive, of end-of-life plastics
produce plastics, injection moulding, and building and
emissions form e.g. compression moulding construction Emissions dominantly
steam and heat and extrusion from incineration of
plastics waste

107
Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

End-of-life emissions
from plastics become
increasingly important

108
 Exhibit 3.4
Without change, CO 2 emissions from THE EU
plastics industry will increase until 2050
EMISSIONS FROM PLASTICS PRODUCTION AND END OF LIFE TREATMENT
Mt CO2 per year, 2015

+11 %

12

68
58
Increased mechanical
recycling reduces emissions 192
from end-of-life, and
173 20 from primary production
Successful phase-out of replaced by the use Energy efficiency and
landfill changes end-of-life of recycled plastics. switch to lighter fuels can
Production increase treatment of plastics. decrease direct emissions
of 15%, from 62 Mt Incineration increases in production by around
in 2015 to 71 Mt by 60%, increasing end of 30%, and
per year in 2050. life emissions. decarbonisation of power
sector reduces average
173 electricity emissions from 192
350 to 0 kg CO2/MWh
in 2050.

2015 EMISSIONS INCREASED INCREASED INCREASED EFFICIENCY 2050 BASELINE

PRODUCTION INCINERATION MECHANICHAL IMPROVEMENTS EMISSIONS
RECYCLING
NOTE : INDIVIDUAL NUMBERS DO NOT SUM UP TO TOTAL DUE TO ROUNDING.
SOURCES : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

End-of-life emissions become increasingly important the Today, plastics have only modestly higher CO2 emissions
more the rest of the economy transitions towards low CO2 than other fossil fuels, but in a net-zero economy, every
emissions (Exhibit 3.4). Increased volumes of plastics, on tonne of fossil CO2 emissions militates against the target
their own, leads to only a modest increase of 20 Mt CO2 to to eliminate emissions. With no net-credit from replacing
2050. They could be counterbalanced by some 58 Mt of other fossil fuels, increased incineration would lead to an
emissions reductions through increased energy efficiency increase of as much as 68 Mt CO2 by 2050. Unlike most
improvements, the decarbonisation of electricity used as of the economy, plastics thus sees a significant increase in
inputs, and some degree of fuel switching. However, end- emissions in a baseline scenario. A major effort therefore
of-life emissions increase much more due to two effects. is required to make the production and use compatible
First, the amount incinerated increases as landfill is phased with a net-zero economy.
out. Second, every tonne burnt leads to much higher net
CO2 emissions in a low-carbon economy than it does today.

109
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

3.2 Strategies for a low-CO 2 plastics sector

The complexity of carbon and CO2 in plastics requires spe- a ‘cradle-to-gate’ perspective that would leave up to 127 Mt
cial criteria for a pathway to net-zero emissions. The question of end-of-life emissions unaddressed in 2050. Exhibit 3.5 il-
is not how emissions can reduced gradually, but how a mate- lustrates the dilemma. Options such as improved energy ef-
rial fundamentally built out of carbon can fit into an economy ficiency and fuel switching can cut emissions a fair amount
that produces no net CO2 emissions. in production, and more ambitious changes such as electri-
fication of crackers and CCS on production processes can
The major solutions of current roadmaps go a long way achieve deeper cuts still.
towards addressing production emissions18, but they all take

110
 Exhibit 3.5
Recycling and production from biomass
feedstock are low-GHG options

CO2 INTENSITY OF PLASTIC PRODUCTION AND END-OF-LIFE ROUTES

t CO2/t PLASTIC

REFINING CRACKING POLYMERISATION END OF LIFE

UNABATED ROUTE 4.2

ENERGY EFFICIENCY
& FUEL MIX CHANGE 3.5
IMPROVEMENTS TO
EXISTING PROCESSES

ELECTRIFIED CRACKING
& POLYMERISATION 2.9

CCS ON REFINING, CRACKING

& POLYMERISATION 2.8

CARBON CAPTURE AND

CCS ON END-OF-LIFE
INCINERATION 1.7 STORAGE ON EMISSIONS
FROM DIFFERENT SOURCES

CCS ON REFINING, CRACKING,

POLYMERISATION &
END OF LIFE
0.4

CHEMICAL RECYCLING 0.2

LOW-GHG OPTIONS

MECHANICAL RECYCLING 0.0

BIOMASS FEEDSTOCK &

ELECTRIFIED POLYMERISATION 0.0

NOTES : NOT INCLUDING EMISSIONS FROM FEEDSTOCK PRODUCTION, AND ASSUMING ZERO-CARBON ELECTRICITY AND TRANSPORT IN 2050.
CRACKING INCLUDES STEAM CRACKING AND OTHER FOREGROUND PROCESSES. POLYMERISATION STEP IS ASSUMED
TO BE DECARBONISED IN LOW-GHG OPTIONS IN 2050, MAINLY THROUGH ELECTRIFICATION.
SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

111
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

However, end-of-life emissions then rapidly Overall, these solutions can create a ‘societal car-
become by far the dominant source of emissions. bon loop’ (Exhibit 3.6), where no or very little fos-
To address end-of-life emissions, much deeper sil carbon escapes as new, fossil CO2 emissions.
change will be necessary. One approach is to
switch much of the feedstock away from fossil To complement these solutions in the produc-
hydrocarbons and towards recirculated plastics tion, recirculation, and end-of-life handling of
and bio-based alternatives. The use of these new plastics, there also are opportunities to change
feedstocks in turn makes it necessary to adopt the ways plastics are used. Such opportunities
new production routes and platform chemicals. span changed product design, materials efficien-
The other main approach is to extend carbon cap- cy, new sharing business models, and ways to
ture to all relevant sources. The requirements for increase product lifetimes.
net-zero are then very exacting: CO2 must be cap-
tured not just from production, but also from up- The key to any plausible pathway will be to trans-
stream refining and from end-of-life incineration. late these rather abstract objectives into concrete
business opportunities.

112
 Exhibit 3.6
Closing the societal carbon loop for plastics
PLASTICS PRODUCTION & RECIRCULATION
NEW FEEDSTOCK New production from biomass feedstock
New feedstock from biomass to Mechanical and feedstock recycling
replace lost carbon and meet Minimised losses in recycling processes
net growth and exports and incineration of non-recyclable plastics EXPORTS

NEW BIOMASS FEEDSTOCK

PRODUCTION
INCINERATION
&
LOSSES 2

END OF LIFE PLASTICS 1

Collection of RECIRCULATION
end-of-life plastics for
DEMAND
recycling
Minimised losses of
non-collected plastics

COLLECTED
PLASTICS
WASTE

LOSSES

END-OF-LIFE USE
PLASTICS

STOCK BUILD-UP
Build-up of plastics in the economy
means available end-of-life plastics
are less than demand
USE
The average residence time
for plastics in the economy
is 10 years, spanning from
CIRCULAR ECONOMY ~0.5-50 years
Materials efficiency, sharing business
models, increased lifetime of products and
BIO-BASED PLASTICS
materials substitution can reduce the
FOSSIL BASED PLASTICS overall amount of plastics in circulation

The first step is to achieve very high recycling rates from end-of-life plas- Some new feedstock therefore is also required to replace the carbon that is lost,
tics (1). This requires both mechanical and feedstock recycling of plastics, as well as any net growth in the amount of plastics (3). If this is derived entirely
so that most of carbon in the plastic produced comes from recirculated from biomass, the total plastic stock will eventually consist of biogenic carbon,
material. However, 100% recycling is not a realistic target, for plastic or and end-of-life emissions taken care of. The main way to keep total biomass
any other material. Achieving even an 80% rate would require a major demand manageable is to ensure recycling rates are as high as possible.
reorganisation of the waste sector.
If, on the other hand, new fossil carbon is used, an equivalent amount of car-
Realistically, some 20-30% of plastics would therefore be incinerated bon must be captured permanently and stored. CCS on end-of-life incineration
after an average residence time in the economy of 5 years. (2) can achieve this. Another option would be to permanently store solid plastics.

113
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Steel

Exhibit 3.7
Strategies for deep...

CIRCULAR ECONOMY IN MAJOR VALUE CHAINS

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

AND CIRCULAR BUSINESS MODELS AND SUBSTITUTION
Reducing the amount of materials used for a Using end-of-life materials as input to
given product or structure, or increasing the lifetime new production, or using low-CO2 alternative
and utilisation through new business models materials that provide the same function

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

•Reducing over-use in packaging and other pro- •Innovation in product design and materials
ducts and components choice for efficient and high-quality mechanical
recycling
•Design principles for reduced materials use
•Technology and infrastructure for collection and
•Switch to high-performance polymers sorting systems
•Large-scale collection of end-of-life plastics as
feedstock for new production (when mechanical
recycling not possible)

SHARING BUSINESS MODELS AND MATERIALS SUBSTITUTION

INCREASED LIFETIME OF PRODUCTS •Switch to low-CO2 materials such as sustainably
•New business models such as car-sharing to sourced fibre alternatives where they can provide
increase intensity of use and shift innovation focus equivalent functionality

•Increased product lifetimes including through

reuse and remanufacturing of products and com-
ponents

114
...emissions reductions from plastics

CLEAN PRODUCTION OF NEW MATERIALS

NEW AND IMPROVED PROCESSES CARBON CAPTURE

Shifting production processes and feedstocks to Capture and permanent storage of CO2 from
eliminate fossil CO2 emissions production and end-of-life treatment of materials,
or use of captured CO2 in industrial processes

CLEAN UP CURRENT PROCESSES CARBON CAPTURE AND STORAGE

•Increase process- and energy-efficiency (steam •Carbon capture and storage (CCS) on ste-
crackers) am cracker furnaces and refinery processes
•Switch to lower-CO2 fuels and electricity •CCS on waste-to-energy plants
•Increased use of lighter feedstock

NEW PROCESSES AND FEEDSTOCKS CARBON CAPTURE AND UTILISATION

•Plastics from bio-feedstock •'Synthetic chemistry' to produce new chemicals
•Chemicals recycling of end-of-life plastics from CO2 ('power to X') using non-fossil sources
(depolymerisation, solvolysis, pyrolysis + of carbon
steam cracking, gasification)

•Reprocessing of by-products (e.g., through

methanol-to-olefins)
•New polymers and catalysts

ELECTRIFICATION
•Electrification of steam crackers

•Electrification of cooling, heating, compres-

sion, and steam

•Electrification of hydrogen production

115
 Exhibit 3.8
Fitting plastics into a net-zero economy
will require a system redesign

FROM TO

END OF LIFE PLASTICS AND

FOSSIL FEEDSTOCK BIOMASS FEEDSTOCK
FEEDSTOCK
End of life plastics important feedstock for new
crude oil and e.g. ethane sourced from natural production
gas
Biomass feedstock in the form of e.g. biogas
and bio-naphtha

UNABATED STEAM CRACKING NEW, CLEAN PRODUCTION

AND POLYMERISATION PROCESSES
Production of plastics from fossil feedstock PRODUCTION New plastics production from biomass
through steam cracking and polymerisation feedstock via methanol as new platform
chemical
Emissions from the burning of cracking
by-products for heat and from other fossil fuel Plastics produced from mechanical and
use in production processes chemical recycling supply a meaningful share
of demand

Electrification of steam cracking, polymerisation

and other foreground processes

CCS on conventional steam cracking,

polymerisation, and refineries alternative
abatement strategy

INTENSIVE AND LINEAR MATERIALS EFFICIENT AND

USE OF PLASTICS CIRCULAR USE OF PLASTICS
USE
Intensive use of primary plastics in products
and components and components

Large share of plastics is single-use and Sharing business models, reuse and remanu-
short-lived in the economy facturing of plastics to extend lifetime

INCINERATION AND LIMITED

MATERIALS RECIRCULATION
MECHANICAL RECYCLING
Materials recirculation with high collection
collection and sorting losses and downgrading END OF LIFE rates, improved yields and high-value use of
to low-value products recycled material

Emissions from incineration of end of life CCS on unavoidable incineration of recycling

plastics residues and non-recyclable fossil plastics,
plastics from biomass eliminates emissions
from incineration
not collected

116
The EU currently uses
100 kg of plastics per
person per year.
117
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS

The EU currently uses 100 kg of plastics per person per principles that reduce the amount of materials, and by us-
year, which would increase to close to 120 kg if current ing higher-strength plastics to reduce the mass required.
trends continue.
Sharing business models in major value chains pro-
However, the amount of plastics required depends heav- vide another major opportunity to reduce the amount
ily on how it is used, and there are in fact numerous op- of materials required. Car-sharing is a prominent ex-
portunities to use plastics more efficiently without compro- ample, with potential to reduce total materials demand
mising on functionality or end-user benefits (Exhibit 3.9). by half or more. Combined, materials efficiency and
sharing business models could reduce the EU’s an-
A bottom-up assessment finds that there are significant nual plastics demand by 13 million tonnes by 2050.
opportunities to make products more materials efficient.
Because plastics are cheap and lightweight, their spec- The potential for materials efficiency and circular business
ification has not been optimised, leading to significant models is fragmented along long value chains, and therefore
overuse. Experts in the food and consumer goods indus- overlooked. There are significant barriers that must be over-
try indicate that continuous innovation could reduce the come, but also strong innovation and new solutions enabled
plastics in packaging by 20% or more without compro- by digitisation. To capture the uncertainties about future de-
mising functionality. Product designs can also be made velopments, this study explores scenarios for the potential
more materials-efficient, both by applying new design of materials efficiency and circular business models corre-
sponding to 7-13 Mt of plastics use per year.

SUBSTITUTION OF PLASTICS WITH OTHER MATERIALS

The substitution of plastics with other materials offers For this study, we used a detailed analysis of all major pack-
another way to reduce CO2 intensity. This is a thorny top- aging segments to investigate the potential to use fibre-based
ic: materials always compete, and product designers materials instead. The finding was that up to 25% of current
make their choices based on numerous criteria. Also, the plastics used in packaging could, in principle, be substitut-
choice of one material over another affects lifecycle emis- ed with fibre-based alternatives without compromising on the
sions in complex ways.19 Nonetheless, the requirement to unique properties of plastics (barrier properties, formability,
fully eliminate CO2 emissions adds another dimension to transparency, etc.).21+ For other plastics applications, such as
this discussion.20 Some other materials are much easier buildings, automotive and electrical or electronic equipment,
to render CO2-free than are plastics; for example, some similarly detailed assessments are not available. However,
paper and board products are already produced virtual- biocomposites offer a drop-in solution for many structural
ly without fossil CO2 emissions. Moreover, as we discuss elements, with at least 5% aggregate substitution potential.
below, the cost of producing plastics may need to in-
crease substantially to fully eliminate emissions, chang- All in all, the pathways explored in this study range from a
ing plastics’ competitiveness vis-à-vis other materials. modest 4 Mt of substitution of plastics, to 6 Mt.

118
 Exhibit 3.9
MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS COULD
reduce plastics demand by 13 million tonnes BY 2050

DEMAND REDUCTION POTENTIAL

Mt, 2050

EFFICIENT USE OF PLASTICS...

...by reducing overuse and over-specification. Innovation and materials efficient design
could reduce plastics in packaging by 20% or more without compromising functionality.

MATERIALS
MATERIALS-EFFICIENT DESIGN...
EFFICIENCY & SHARING
BUSINESS MODELS ...and production can reduce mass required in plastics products and components by

13
using new design principles, high-strength plastics, and optimised production processes.

Mt SHARING BUSINESS MODELS...

...can reduce the materials required per service and in some cases also per product.
Car-sharing for example could reduce overall materials use by 50%, as a shared
mobility system enables a smaller average size car to cater to the average 1.5 passengers
per car. Moreover, higher intensity of use in a shared system could reduce the number of
cars per passenger-kilometre, further reducing materials demand.

REUSE OF PLASTICS PRODUCTS...

...to extend their lifetime. Reuse of up to 5% of end-of-life plastics products can reduce
REUSE & demand for new plastics, the biggest potential is in business-to-business applications
MECHANICAL RECYCLING
such as transport packaging, but a decreased reliance on single-use plastics products in

13
the consumer category also holds potential to reduce demand.

Mt MECHANICAL RECYCLING...
...of up to one-third of end-of-life plastics can reduce demand for primary production
as well as avoid end-of-life emissions from incineration.

SUBSTITUTION OF PLASTICS WITH OTHER MATERIALS...

...that provide similar functionality but are easier to render CO2-free. Up to 25% of
SUBSTITUTION
current plastics used in packaging could be substituted with fibre-based alternatives

6 Mt
without compromising functionality. For other plastics applications such as compo-
nents in buildings, automotive and electrical or electronic equipment, biocomposites
could provide around 5% aggregate substitution potential.

SOURCES : MATERIAL ECONOMICS ANALYSIS, SEE ENDNOTE. 22

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

PLASTICS RECIRCULATION (REUSE AND MECHANICAL RECYCLING)

Plastics recycling is perhaps the most familiar of circular It is possible to dramatically increase this, by at least
economy strategies for plastics, with long-standing targets a factor of three.25 Such a significant boost to mechan-
and regulation. This study finds that mechanical recycling, ical recycling would require a significant shift in focus:
in which the plastics are sorted, shredded, cleaned, melted away from waste management, and towards a wholesale
and reprocessed into new plastics products, will have a major push of innovation, large-scale operation, and adaptation
role in any low-CO2 plastics system. Up to a third of end-of-life of designs across the plastics value chain (Exhibit 3.10).
plastics could be reused or mechanically recycled by 2050.23 Mechanical recycling thus can be an indispensable contri-
bution to emissions reductions in the plastics sector. How-
Mechanical recycling leads to significant CO2 savings. ever, for plastics to reach the very high recirculation rates
Even today, the emissions are just 0.5 tonnes of CO2 per required to close the societal carbon loop, other forms
tonne recycled plastics, compared with 2.3 tonnes for pri- of recycling will also be required, as discussed below.
mary production. Mechanical recycling also avoids the 2.7
tCO2 equivalent of emissions from end-of-life incineration. The pathways span recycling rates that can replace be-
Moreover, manufacturing plastics products through mechani- tween 15 and 25% of new plastics production that would
cal recycling means a move from what are today intrinsically otherwise be required.
fossil-based processes with high temperatures and new oil
and gas as feedstock towards processes focused around A push for increased reuse of plastics products before
logistics, low heat, mechanical power, and data-driven sort- being discarded as waste could provide another 3 mil-
ing and automation that are much easier to decarbonise. lion tonnes of emissions cuts per year by 2050. Currently,
around 40% of plastics could be categorised as ‘single-use’,
To assess the potential for mechanical recycling, it is nec- meaning the product is disposed of after a very short useful
essary to first understand the starting point. Perhaps surpris- life.26 While there is some potential to adapt consumption
ingly, the amount of effective displacement of new plastics patterns for increased reuse of single-use consumer plas-
production through mechanical recycling is in fact less than tics such as bags and bottles, the biggest potential is found
10%. Official statistics often quote higher numbers, but do in plastics used by businesses, such as business-to-busi-
not account for all plastics, for losses in the recycling pro- ness packaging.27
cess, and for recycled plastics that displace non-plastics,
leading to a potential rebound effect on plastics demand.24

120
 Exhibit 3.10
Mechanical recycling and reuse has the potential
to supply 30% of plastics demand

MECHANICAL RECYCLING AND REUSE OF END OF LIFE PLASTICS

Mt, SHARE OF PLASTICS DEMAND

FROM TO

1. VIRGIN PLASTICS carry cost for

VIRGIN PLASTICS do not carry embodied carbon (other
cost of externalities RAW MATERIAL externalities likely via regulation)

PRODUCT DESIGN does not MATERIALS AND DESIGN choices

to
bear costs for downstream 2. make reuse and recycling the
externalities and costs PRODUCT intended destination at end of life

POLICY AND SYSTEMS focuson FOCUS ON ENABLING raw

collection volumes – similar 3. materials flows for secondary
to other ‘waste’ flows COLLECTION materials production

30 %
PRODUCTS DESIGNED for
END-OF-LIFE TREATMENT and
4. disassembly and dismantled
dismantling without focus on to retain secondary
retaining material value END OF LIFE material value

LOW-QUALITY inputs and LARGE-SCALE INDUSTRY with high-

investment uncertainty results 5.
quality outputs with high retained
in low yields and small-scale, SECONDARY value and the ability to replace 13
fragmented industry MATERIAL primary materials one-to-one
PRODUCTION
7%

6. RELIABLE PRODUCTS and demand-

INCENTIVES focusedon supply side incentives create market
4 into recycling process MARKET FOR certainty and stimulate
RECYCLED investment in capacity
MATERIAL
2015 2050

SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 28

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REDUCING EMISSIONS FROM THE CURRENT PRODUCTION SYSTEM

Materials efficiency, circular business models, mechanical emissions by up to 50% per tonne of ethylene.30 Changing
recycling, and reuse can significantly reduce the need for new from liquid naphtha to gaseous ethane feedstock requires up-
plasticds production in the long run. However, even in an am- grades and alterations to existing assets, but provides flexibility
bitious scenario, some new plastics will be required, which to change between feedstocks depending on current prices.
means that new cleaner production methods are needed.
A more significant step would be to switch to electricity
The most immediate starting point is to reduce the CO2 as the source of heat in steam crackers, potentially elimi-
footprint of current production processes. There is consid- nating direct CO2 emissions almost entirely. This contrasts
erable scope to do so through improved energy efficiency, with the current practice of generating heat from by-products
switching to lower-CO2 fuels, lighter feedstocks, and electri- or natural gas. While electrification will require technology
fying steam crackers. development, most experts deem it feasible. The challenge
is more one of commercial viability: it will require signifi-
The scope for energy efficiency improvements is con- cant investment and requires competitive electricity prices.
siderable, because there is a large difference in energy
efficiency between the ‘best’ and ‘worst’ steam crackers Electrifying crackers does not on its own lead to net-zero
in Europe today, with additional potential in other process- emissions, if the feedstock continues to be fossil hydrocar-
es. Direct emissions could be cut by 20-40% depend- bons. However, it is a crucial component of a net-zero chem-
ing on how much of this potential can be mobilised.29 icals sector. Crackers will continue to play an important role,
Switching from naphtha to lighter feedstocks such as eth- for example in some chemical recycling or bio-based pro-
ane can result in significant emissions reductions for some cesses, as described below.
products. For ethylene, the increased yield reduces direct

122
 Chemical recycling will
play an indispensable
role in a future net-zero
emissions plastics system.
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FEEDSTOCK RECIRCULATION (CHEMICAL RECYCLING)

A major finding of this study is that chemical recycling will novation to achieve resource-efficient routes with high
play an indispensable role in a future net-zero emissions plas- yields, and that are amenable to mixed polymer streams.
tics system. It is a complement to mechanical recycling, which
is more resource-efficient. Together, the two approaches could The energy demand can vary in the range of 1–7 MWh of in-
bring the recirculation of plastics to as much as 62% of pro- put required, depending on the process and product produced.
duction. Plastics would then be as circular as the major met- For gasification, zero-CO2 hydrogen from either electrolysis or
als (steel is 85% recycled, and aluminium around 70%).31 steam methane reforming with CCS is a major input. For pyrol-
ysis, the central part is the electrification of the cracker stage.
Chemical recycling breaks down plastics into monomers,
oligomers or simpler molecules, creating new feedstocks for For low emissions, the overall carbon mass balance must
plastics production. The key benefit is that it ‘erases the mem- be very high, so that the amount of CO2 released is minimal.
ory’ of the material. Unlike other materials (such as wood fi- To make chemical recycling commercially viable today, mass
bre or metals), there need be no downgrading of quality, the balance is often sacrificed (and some of the plastics input in
output can hold just as high a quality as new plastics pro- effect used as fuel input). In a net-zero system, however, nearly
duction. For this reason, chemical recycling is an attractive all of the carbon in the inputs must be transformed into out-
option for plastics that are not suitable for mechanical recy- puts. For gasification, this comes at the price of needing to add
cling. These include mixed polymer flows, aged or contami- more hydrogen. For pyrolysis, the main implication is the need
nated plastics, and thermosets or fibre-reinforced plastics.32 to add another process step, so that the fuel-grade by-prod-
Recirculating end-of-life plastics as feedstock is a form ucts from cracking (in large part methane) are not burnt, re-
of recycling, in that the same molecules are used again leasing CO2, but further processed into HVCs. If this is done,
for new products. But in many ways it is more akin to a new the carbon escaping as CO2 could be below 5% of the total.34
production route: requiring large-scale infrastructure, se-
cure and large-scale feedstock supply, integration with oth- Finally, the above implies that chemical recycling likely will
er chemicals processes, and substantial energy inputs. require adaptation of chemical production systems, with
processes and new platform chemicals. One candidate is
Chemical recycling has a long pedigree, with large-scale methanol, which can be further processed to olefins with
trials already in the 1990s, but it fell out of fashion during established catalysts. Methanol also enables the produc-
periods of lower oil prices. It is far from a mature and large- tion of plastics from a large variety of biomass feedstocks.35
scale production route, but several European companies are
now investigating multiple options for future production. There If these conditions are met, chemical recycling can achieve
are a range of emerging technologies that are suitable for very low emissions to the atmosphere of around 0.2 tCO2
different types of plastics waste. For instance, depolymeri- per t plastics – compared to the 2.3 tCO2 from de novo pro-
sation breaks plastics down into monomers or oligomers, duction from fossil feedstock. On the other hand, if some or
whereas feedstock recycling by pyrolysis or gasification all the conditions were not met, the outcome could be dras-
yields even simpler molecules. Meanwhile, solvolysis is a tically different: chemical recycling with poor carbon mass
‘lighter treatment’ that separates the polymer from additives balance, high-CO2 energy inputs, or where the output is
and contaminants before it is reprocessed into plastics.33 used to produce transportation fuel could easily have a CO2
footprint approaching that of an existing current cracker.
This study explores two largely-proven processes: gas-
ification and pyrolysis, both of which convert plastics into For the pathway analysis, this study explores one option
simpler molecules (Exhibit 3.11). These routes should where as much as 65% of end-of-life plastic is sent for chemi-
be understood as representative, and not in any way an cal recycling, and a less ambitious scenario with 20% chemical
attempt to provide the final answer for chemical recy- recycling.
cling. On the contrary, there is ample opportunity for in-

124
 Exhibit 3.11
chemical recycling of end-of-life plastics
through two representative routes

GASIFICATION METHANOL TO OLEFINS

ELECTRICITY
H 2O ELECTRICITY
INPUT
Plastic waste OUTPUT
1.1 TONNE ‘RAW ‘SWEET Plastics (HVCs)
SYNGAS’ SYNGAS’ METHANOL METHANOL
Electricity GASIFICATION ELECTROLYSIS SYNTESIS MTO 1 TONNE
1.4 Mwh CO2-emission
Hydrogen
Hydrogen added to
0.2 TONNES
0.2 TONNES make ‘sweet syngas’
CO2

PYROLYSIS & STEAM CRACKING

ELECTRICITY
INPUT
Plastic waste
1.1 TONNE NAPHTHA-LIKE
OUTPUT
PYROLYSIS OIL ELECTRIC HVCs (0.8 TONNE)
Electricity PYROLYSIS STEAM Plastics (HVCs)

6.9 Mwh
CRACKING
1 TONNE
Hydrogen CO2-emission
ELECTRICITY
0 TONNES 0.3 TONNES
CO2

METHANE METHANOL METHANOL

SYNTESIS MTO
HVCs
(0.2 TONNE)

NOTES : THE METHANE STREAM IS THE MAIN BY-PRODUCT FROM STEAM CRACKING. ELECTRICITY FOR PRODUCTION OF 0.2 KG
HYDROGEN REQUIRES AROUND 8 MWH OF ADDITIONAL ELECTRICITY. THE PATHWAYS USE A COMBINED ROUTE
WITH A 50/50 SHARE BETWEEN THE GASIFICATION AND THE PYROLYSIS & STEAM CRACKING ROUTES.
SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON RESEARCH INSTITUTES OF SWEDEN (RISE) AND DECHEMA (2017) , SEE ENDNOTE. 36

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BIO-BASED PLASTICS PRODUCTION

It is not possible to meet 100% of a modern society’s de- tial. The gasification route requires as much as 3.5 tonnes
mand for plastics through mechanical and chemical recy- of dry biomass input for every tonne of HVCs produced. The
cling. New carbon needs to be added to build up stocks, to route based on anaerobic digestion requires much less bio-
meet any increase in demand, and to offset losses both in mass, 1.9 tonnes, but it also requires large amounts of elec-
collection and in recycling processes. Even in a stretch sce- tricity – 13 MWh per tonne – to produce hydrogen instead.37
nario, therefore, at least 38% of plastics must be made from
new rather than recirculated feedstock – and a much larg- Sustainable biomass resources are scarce, with compet-
er share if systems are less circular, or if demand is higher. ing and growing demands from the power, transportation,
heat and other sectors. A major finding of this study is that
If plastics are made from new fossil feedstock, the overall ‘biofeedstock’ nonetheless needs to be considered a high
plastics works like a slow-burn combustion system: oil is ex- priority in the overall transition to a net-zero economy. The
tracted, it is turned into plastics, it circulates through the econ- use of biomass for chemicals feedstock is not recognised
omy with some losses in every cycle, and anything that is in today’s climate policies and discussions, which tend to
not recirculated is burnt at the end of life. The cumulative im- equate ‘biomass’ with ‘biofuel’. Yet there are few alternatives
pact on CO2 is large: even with a high recycling rate of 70% if we are to achieve truly deep emissions cuts from plastics.
(against less than 10% today), some two-thirds of the car- The main option would be to use renewable electricity to
bon would be released as CO2 to the atmosphere within 15 capture CO2 for further synthesis, but as we discuss below,
years. In other words, a net-zero plastics system cannot this comes with still much higher resource requirements.
rely entirely on recirculation – it must also find a way to
avoid CO2 from all the new carbon that must be added. At the same time, it is crucial to reduce biomass require-
ments for plastics as much as possible. In no scenario will it
One solution is to switch from fossil to renewable feed- be feasible to simply use bio-based production as a drop-in
stock – much like energy systems switch from fossil to re- replacement for today’s fossil-based system. Instead, bio-
newable energy. For plastics, this means using carbon from based plastics must be used strategically as a solution within
biomass, or ‘biogenic’ carbon. (The other option would be an overall production system of increased materials efficiency,
to use CO2 captured from air and synthesised to chemi- circular business models, some degree of substitution, high
cals, but as discussed later in this chapter, this is much levels of plastics recycling, and flexible processes capable
more resource-intensive.) A range of biomass feedstocks of using the biomass streams with the least opportunity cost.
can be processed into bio-ethanol, bio-methanol, biogas
or bio-naphtha, which can then be used to produce con- The routes used here arguably are conservative, as they
ventional plastics. The biogenic carbon emitted at end-of- investigate how today’s polymers could be produced from
life incineration of plastics produced from biomass does entirely different feedstock that in molecular terms is often
not lead to net emissions, as they are offset by the car- a poor match. Further development of other polymers, such
bon sequestered during the growth phase of the biomass. as polylactic acid (PLA), with a closer affinity to the original
composition of various bio-molecules could significantly re-
There are several possible ways to produce conventional duce the resource claims. There is a lot of scope for innova-
plastics from biomass. Two options illustrate the range of po- tion into efficient routes for production of bio-based plastics.
tential feestocks and uses: anaerobic digestion and gasifi-
cation, which both use methanol as a platform chemical (Ex- The pathways explored in this study produce between 20
hibit 3.12). Both are established processes, and gasification and 24 Mt of plastics derived from bio-feedstock in 2050,
in particular is developing fast. In both routes, it is possible with the volume largely dependent on how successful other
to produce methanol, which in turn can be turned into olefins strategies to reduce CO2 from plastics turn out to be.
via the MTO route. The resource requirements are substan-

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Exhibit 3.12
BIO-BASED PLASTICS PRODUCTION WITH
METHANOL AS A NEW PLATFORM CHEMICAL

ANAEROBIC DIGESTION BIOGAS: 50%

METHANOL TO OLEFINS
METHANE, 50% CO2

ELECTRICITY ELECTRICITY
INPUT
Dry biomass
1.9 TONNES (35 GJ) ANAEROBIC METHANOL
OUTPUT
SULPHUR CATALYTIC
Electricity DIGESTION ELECTROLYSIS PRODUCTION MTO
(ŋ 70%)
REMOVAL METHANATION
(ŋ 95%)
Plastics (HVCs)
1.4 Mwh 1 TONNE
Hydrogen
0.3 TONNES BIODIGESTATE HEAT (200-500ºC)

GASIFICATION
ELECTRICITY

INPUT
Dry biomass OUTPUT
GASIFICATION
3.5 TONNES (66 GJ) (ŋ 70%)
METHANOL
MTO Plastics (HVCs)
Electricity 1 TONNE
1.4 Mwh
AROMATICS (10 KG)

NOTES : ELECTRICITY FOR PRODUCTION OF 0.3 KG HYDROGEN REQUIRES AROUND 13 MWh OF ADDITIONAL ELECTRICITY.
THE PATHWAYS USE A COMBINED ROUTE WITH A 50/50 SHARE BETWEEN THE ANAEROBIC DIGESTION AND GASIFICATION ROUTES.
BIOMASS IS ASSUMED TO CONTAIN 30% MOISTURE AND HAVE AN ENERGY VALUE OF 18.5 MJ/KG.
SOURCES : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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CARBON CAPTURE
The final strategy for reducing CO2 emissions from plas- CCS could also have a role in the production of hydrogen, which
tics is to capture the carbon and store it in ways that prevent is used in several of the low-carbon routes in significant volume.
release into the atmosphere on the timescales relevant for CCS with steam methane reforming can be preferable to produc-
climate change. tion via water electrolysis when electricity prices are high.

There are three major CO2 sources at different parts in the A final theoretical option for CCS is to use solid plastics
value chain: petroleum refining, steam cracking, and waste directly as a form of CO2 storage. A major concern with
incineration. All can in principle be done. Carbon capture plastics is that they are long-lived, so they present challeng-
and storage is in principle possible from steam crackers, us- es for waste management. However, if plastics could be
ing either post-combustion or oxyfuel options. Costs would safely stored, without the disadvantages of standard landfill-
likely be higher than for some applications often mooted for ing, then it might be possible to use such storage as a form
CCS, given the lower carbon intensity of fuels used in crack- of CCS. The feasibility of such an approach is far from clear:
ers and higher resulting oxygen needs.39 Above all, there it would require a U-turn on current EU policy to phase out
is little practical experience, as CCS has not been applied landfilling; there would need to be strict safeguards against
on steam crackers to date. Waste to energy also is being pollution (such as the risk of escaping microplastics); and
explored, with a trials starting at the Klemetsrud waste-to-en- the permanence of the CO2 sequestration would need to be
ergy facility in Oslo, Norway. assessed. As this is highly speculative, it is not included in
the pathways explored in this study, which instead build on
Still, there are several reasons why CCS could be chal- current EU policy to phase out landfilling.
lenging to apply in the case of plastics. The ideal scenario
for CCS is a single, large-scale emissions source, prefer- The pathways explored in this study span a wide range of
ably with a high concentration of CO2. In contrast, in the possible uses of CCS. At one extreme, some pathways use
case of plastics, three separate emissions sources at differ- no CCS, but instead achieve CO2 neutrality through recircu-
ent points in the value chain would have to be addressed. lation and biomass inputs. In other pathways, CCS is used
Waste incineration is also typically small-scale, with more across refineries, steam crackers, incineration plants, and
than 500 waste-to-energy plants across the EU.40 Universal hydrogen production, alongside other options. In this sce-
coverage would therefore be difficult to achieve. nario, CCS leads to emissions cuts of 59 Mt CO2 per year.

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CARBON CAPTURE AND UTILISATION AND ‘POWER-TO-X’

A final option for CO2 reductions to use CO2 as a feed- The exception is where the product itself displaces some
stock for chemicals production (carbon capture and utili- other fossil CO2; for example, CO2 from one fossil-based pro-
sation, CCU). As discussed in Chapter 2, this has been cess could in principle be captured to make a transportation
proposed as a way to handle the significant CO2 and carbon fuel that, in turn, displaces standard fossil-based transporta-
monoxide (CO) generated from core processes in the steel tion fuels, somewhat reducing overall CO2 emissions. As long
sector. By combining CO2 with hydrogen, it is possible to as the energy system as a whole is fossil-based, CCU based
synthesise a wide range of chemicals. on fossil CO2 sources may thus be able to reduce CO2 emis-
sions, although there is a lively debate about the extent of
At one extreme, it is possible to capture CO2 from the air savings. In a net-zero economy, however, the release of CO2
and combine it with hydrogen from water electrolysis using from fossil sources is not possible without some offset mech-
renewable energy. In this case, the CO2 reductions relative anism, even if the CO2 is ‘used twice’ before it is released.
to fossil feedstock are immediately apparent. Much like
sustainable biomass, it provides a source of new carbon Fuels are an extreme example of a short-lived product, but
supply for chemicals that requires no fossil hydrocarbons. the same logic applies in cases with longer lifetimes. Few car-
However, the energy resources required are phenomenal: bon-based products have lifetimes and recycling rates that, com-
as much as 27 MWh of zero-carbon electricity is required bined, make them comparable to permanent sequestration of
to produce one tonne of HVCs.41 For comparison, deriving carbon (the chief potential exception may be some mineral-based
the same amount of HVCs from biomass requires 1.5-14 construction materials). Specifically, plastics do not offer an op-
MWh of electricity. Viewed through this lens, using bio- portunity for long-term sequestration. As noted, even if recycling
mass for chemicals production saves as much as 25.5 rates were 70%, as high as those for aluminium today, some two-
MWh of electricity per tonne HVCs. thirds of the carbon would be released as CO2 after 15 years.42

The other option is to capture CO2 from another indus- As noted in Chapter 2, these considerations do not rule
trial or energy process and use this as a building block out the use of CO2 or CO from one process for the production
of chemicals. This already takes place in some cases: of chemicals in a net-zero economy. However, the conditions
for example, urea is produced using CO2 from ammonia that must apply are very strict. In brief, any fossil CO2 used
production. However, as the CO2 is of fossil origin, and it in the process must be offset by permanent storage through
is released into the air once urea is used as fertiliser, it CCS; and any CO2 that leaks during the product lifetime must
delays rather than prevents the release of the fossil CO 2. be replenished by a non-fossil source such as biomass. The
The same applies to other uses of CO2 where the origin overall viability of CCU as a zero-emissions solution is therefore
is fossil, and the product is short-lived. inextricably linked to the use of non-fossil sources of CO2.

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3.3 Pathways to a net-zero co 2 plastics sector

We have seen that a range of complementary strategies through chemical recycling, and thus requires signifi-
are required to achieve deep emissions cuts for the EU cant improvements in the collection of end-of-life plastics.
plastics sector. By successfully deploying these strate-
gies, the EU can transition to a net-zero emissions plas- Circular economy pathway: This pathway entails heavily
tics sector by 2050. The revamped plastics sector would restructuring the use of plastics in all major value chains,
have a renewed production base, new patterns for the so that a third of the baseline demand for plastics is met
use and reuse of materials, and new sources of value. through materials-efficient products and production, shar-
ing-economy options, and materials substitution. There is
Clearly this is a major transformation agenda, span- a large migration of value towards these new economic ac-
ning the entire plastics value chain. While many of the tivities. In addition, plastics become highly circular mate-
core technologies and business models are already de- rials, with mechanically recycled plastics meeting 26% of
veloped, they are either optimised for other end products demand, and chemical recycling another 47%. The need
such as fuels, and/or need accelerated commercialisation for production from new feedstock is the lowest of any of
and upscaling. There are also many costs and risks as- the pathways, making smaller claims on biomass resources.
sociated with developing and deploying these strategies.
Carbon capture pathway: This pathway pushes the
Given the many uncertainties, there is a need to explore potential to use CCS the farthest. Circular economy op-
many different pathways to a net-zero emissions EU plastics portunities play a relatively minor role. 40% of produc-
sector in 2050. Together, the pathways are intended to span tion uses fossil feedstock via routes largely similar to
the full set of strategies, but each pathway has a different today’s, but with crackers either electrified or equipped
focus, and not all strategies are employed in all pathways: with CCS, so there are no ‘unabated’ steam crackers
left in 2050. CCS is also fitted on refineries and on two-
New processes pathway: This pathway emphasises new thirds of waste incineration plants for any plastics that
processes and feedstocks for new plastics production. are not recycled. Mechanical and chemical recycling also
A range of routes for the production of HVCs from from play a significant but smaller role in this pathway. Bio-
biomass feedstock and end-of-life plastics are rapidly mass is used as feedstock as well, to provide the com-
scaled up during the 2030s, and production from new fos- pensating ‘negative emissions’ from incomplete carbon
sil feedstock is entirely phased out by 2050. By this time, capture (a capture rate of less than 100% at individu-
these routes produce the same amount of plastics as is al plants, but above all the challenge of equipping ev-
made in the EU today. These processes both rely heavi- ery facility with CCS) through capture of biogenic CO2.
ly on electricity: for heat input to pyrolysis and cracking,
the production of hydrogen, methanol synthesis, and vari- All three pathways assume the same total underlying ser-
ous other processes such as MTO. This pathway has the vices from plastics in 2050 (packaging, mobility, etc.), but
highest share and largest amount of plastics produced they fulfil these in different ways (Exhibit 3.14).

130
 Exhibit 3.13
Pathways to net-zero emissions FOR PLASTICS

CO2 ABATEMENT
Mt CO2 PER YEAR

EMPHASIS ON NEW PRODUCTION ROUTES

Baseline THROUGH RECYCLING AND PRODUCTION
FROM BIOMASS FEEDSTOCK
192
• 62 percent of production from end-of-life
173 29 plastics by 2050 through a combination of
150 mechanical and chemical recycling,
hinging on a significant increase in
111 collection rates of end-of-life plastics
NEW PROCESSES 100
Pathway
Remaining • Remaining 38 percent of production
50 Emissions from biomass feedstock, using methanol as
60 new platform chemical
0 • Increased reliance on electricity for
hydrogen production and in production
2015 2050 processes

Baseline
192 EMPHASIS ON DEMAND-SIDE MEASURES
TO ACHIEVE A MATERIALS EFFICIENT AND
173
CIRCULAR PLASTICS SECTOR
54
150 • Emphasis on demand-side opportunities
for materials efficiency, materials substitu-
100 tion and new circular business models for
CIRCULAR ECONOMY Remaining 105
plastics, resulting in the decreased
Pathway
50 Emissions production volume to 52 Mt by 2050
• Highly circular scenario with 62 percent
40
0 produced through mechanical and
chemical recycling, and remaining 38
2015 2050 percent from biomass feedstock

Baseline
192 EMPHASIS ON CARBON CAPTURE AND
STORAGE/UTILISATION ALLOWS FOR A
173 29 CONTINUED ROLE FOR PRODUCTION
150 FROM FOSSIL FEEDSTOCKS
51
• Emphasis on using CCS/U on plastics
100 production from fossil feedstocks as well as
CARBON CAPTURE Remaining 61 CCS on end-of-life incineration, and
Pathway Emissions electrification of steam crackers to reduce
50
59 direct emissions
0 • 32 percent of production from biomass
feedstock to enable offsets from incomplete
2015 2050 fossil CO2 capture through capture of
biogenic CO2 from incineration of
bio-based plastics
MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS
MATERIALS RECIRCULATION AND SUBSTITUTION
NEW PROCESSES
CARBON CAPTURE AND STORAGE
REMAINING EMISSIONS

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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While the three pathways are significantly different, a waste incineration plants that would be the destination for
number of cross-cutting lessons emerge from them. the carbon embedded in plastics products in this pathway.

All pathways rely on significant innovation and technology de- In all pathways, early action to pursue of ‘traditional’ CO2
velopment. The solution set included in the pathway is largely reduction strategies would ease the transition. Energy effi-
proven in principle, but absent commercial incentives, it is still ciency and electrification can provide early cuts, before new
far from large-scale deployment. To achieve deep emissions production routes can be scaled up, and also limit the the
cuts by 2050, new solutions must be proven by the 2030s, so total amount of new feedstock and energy required. Electrifi-
the next decade is key. These pertain not just to the production cation of crackers and other high-temperature heat (e.g. for
of chemicals, but also to a range of innovation in business pyrolysis) will be needed in all routes.
models and product design to enable reuse, recycling, and
materials efficiency. On the other hand, there is a large upside: Just as important, achieving the potential for mechanical
if innovation effort can be redirected, it is all but certain that recycling and reuse, materials efficiency, and circular busi-
new solutions, catalysts, and processes will emerge. ness models further helps the transition to fit plastics use
into a net-zero economy. Together, they hold the potential
All pathways entail deep and pervasive change. Current to provide the same benefits as the production of 25 Mt of
chemical production systems are highly optimised and in- plastics by 2050. Tapping into this potential eases many
tegrated. All pathways entail disruptive and large-scale of the transition challenges, reducing costs and investment
change in feedstocks, processes, platform chemicals, and needs, the amount of electricity and biomass required, and
energy sources. For EU companies, the strategic ramifica- the pace at which new production technologies must be
tions could hardly be larger. On one hand, current produc- deployed. To unlock this potential, ‘upstream’ innovation
tion faces structural challenges of more expensive feedstock will be key: changing product design, materials choice, and
and energy than many other regions. On the other, striking business models. In terms of policy, it may require a pro-
out to embrace entirely new production systems and inputs gram of ‘energy efficiency-type’ interventions.
is a ‘bet the company’ level of commitment. Enabling such
non-marginal change through policy is notoriously difficult, Finally, the chemicals sector will need to become more
and will require early, robust, and credible policy signals. integrated and tightly linked to other sectors in this transi-
tion. One reason is an increase in the number of process-
The CCS pathway may seem less disruptive in some ways, ing steps. To achieve truly deep cuts to emissions, it will be
as it continues to use well-established processes with fossil necessary to transform a fuller range of feedstock flows that
feedstock at its core. However, the flip-side is that this would today are burnt as fuel, or to capture the CO2 and store it.
arguably be the most challenging CCS effort in the econo- Likewise, mobilising new feedstocks will require industrial
my. Fitting CCS to a substantial share of the 50 steam crack- symbiosis to use byproducts from other sectors (such as pulp
ers in the EU is a significant undertaking in its own right, but and paper or food and drink), or join forces with other parts
there are also 90 petroleum refineries providing much of the of the economy to mobilise feedstock (notably, hydrogen).
feedstock (and facing much-diminished demand for fossil Tight integration of chemicals and the waste sector is another
transport fuels in a low-carbon transition), and 500–1000 potential enabler, especially in the more circular pathways.

132
 Exhibit 3.14
Production routes in net-zero pathways

EUROPEAN PLASTICS PRODUCTION MIX TO ACHIEVE NET ZERO EMISSIONS IN 2050

Mt PLASTICS PRODUCED PER YEAR AND ROUTE

80 72
14%
60 13%

40 33%
NEW PROCESSES
Pathway
20
40%
0
2015 2050

80 72

27%
60
18%
40
CIRCULAR ECONOMY
Pathway 27%
20
28%
0
2015 2050

80 72
14%
60 13%

40 28%
CARBON CAPTURE
Pathway 12%
20 16%

0 16%
2015 2050

CIRCULAR ECONOMY IN MAJOR VALUE CHAINS ELECTRIC STEAM CRACKING

MECHANICAL RECYCLING ELECTRIC STEAM CRACKING WITH CCS
BIO BASED PRODUCTION STEAM CRACKING WITH CCS
CHEMICAL RECYCLING (INCL. STEAM CRACKING) UNABATED PRODUCTION

SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

DEEP CUTS TO CO2 EMISSIONS WILL INCREASE THE COST OF PLASTICS PRODUCTION OR USE BY 20-43%

Most of the routes to eliminating emissions from plastics The switch to new feedstocks means the cost of plas-
production and end-of-life flows come at a cost. By 2050, tics production will now be heavily determined by the prices
the additional costs in the pathways range between 27 and of biomass and end-of-life plastics, instead of oil and gas
34 billion EUR per year. The average CO2 abatement cost prices. Competition for biomass from other sectors, notably
lies in the range 140-177 EUR / tCO2. The differences in energy, could drive up prices. At present, there are also poli-
costs are not large enough that one set of solutions is obvi- cies that favour the use of biomass in other sectors, such as
ously more attractive than another, and all face major non-fi- transportation and power generation. Therefore, further poli-
nancial barriers that may be at least as important (whether cy action will be needed to ensure that the plastics industry
mobilising very high levels of end-of-life collection, pro- can compete for access to this biomass.
ducing the electricity required, or finding acceptance and
commercial logic in large-scale CCS infrastructure). Overall, CCS also becomes a major potential cost driver. Fitting
the circular economy options have the potential to be more CCS onto plants that incinerate end-of-life plastics will be
cost-effective, provided that the major materials efficiency particularly challenging, because the plants are typically
levers can be successfully pursued. small, which leads to higher costs per tonne of CO2 cap-
tured. They also are widely dispersed, which drives up trans-
A closer look at the different production routes indicates port and storage costs.
the cost drivers for different solutions (Exhibit 3.15). Overall,
options that eliminate not just production but also end-of-life As for other materials and value chains, the costs of in-
emissions add 20-43% to the cost of bulk plastics. These creased materials efficiency and improved circularity are
are estimates of fully demonstrated processes at scale; ear- among the hardest to gauge. Levers span the full range
ly deployment is likely to be more expensive. from genuine productivity improvements to potentially ex-
pensive options to optimise plastics use. Digitisation is a
As this shows, all major solution levers will depend on major enabler to reduce transaction costs across the board.
some form of policy support if they are to compete against Overall, the finding is that circular economy levers are likely
current, incumbent solutions. EU producers are already to be as cost-effective as those for low-CO2 production.
heading more towards specialisation than bulk production,
but much of the plastics volume is still a commodity busi- All of these are likely also to vary across Europe – with
ness where systematic cost disadvantages are not feasible. local renewable energy resources, carbon transport and
A solution will therefore be necessary to level the playing storage infrastructure, availability of industrial clusters, and
field of these new production routes, both relative to com- other circumstances. This adds another reason to pursue a
petitors outside Europe who continue to rely on high-CO2 portfolio of solutions.
processes, and to allow early movers in Europe to move While these cost estimates have various uncertainties,
ahead of local competitors. Either the OPEX disadvantage they arguably are on the side of caution by not including the
has to be offset, or markets must be separated depending potential upsides of innovation. The approach in this study
on their emissions profile of products (e.g. the degree of has been to use processes that are as near tried-and-tested
recycled or non-fossil feedstock they contain). as possible, and to use today’s efficiencies and yields for
The additional costs are driven primarily by four factors: the quantitative estimates.43 Many of the building blocks of a
electricity, feedstock switching, CCS, and the cost of mate- low-CO2 sector – large-scale gasification, highly automated
rials efficiency and circular economy solutions. Electricity is sorting technology, methanol-to-olefins, new circular econo-
a major driver of the increased costs of the new production my business models, carbon capture technologies suitable
routes. It is used in large quantities both to produce hydro- for steam crackers, etc. – are emerging but only early in
gen and as a source of heat. The electricity accounts for their journey towards industrialisation. There is therefore a
27% of the cost of chemical recycling, and 23% of the cost significant potential for costs to fall as they are deployed.
of production by electric steam cracking.

134
 Exhibit 3.15
COST OF PRODUCTION IS HIGHER FOR NEW
LOW-CO2 PRODUCTION ROUTES

COST BREAKDOWN OF TECHNOLOGIES

EUR PER TONNE PLASTICS

DOWNSTREAM
ELECTRICITY
CCS TRANSPORT AND STORAGE
PLASTIC WASTE
BIOMASS COST INCREASE OF +20-43% FOR LOW-CO2 PRODUCTION ROUTES
FOSSIL FUELS AND FEEDSTOCK
OTHER 1,822
CAPEX 1,720
1,653
400
1,491 400
400
1,242 400
411
1,377
400 65 383 458
55
12 28

561
609 334
69 679 542
646
126
112
400
69 80
50 37 338 402
220
134 102 191
STEAM CRACKING MECHANICAL STEAM CRACKING ELECTRIC STEAM BIOBASED CHEMICAL MATERIAL
RECYCLING + CCS & EoL CCS CRACKING FEEDSTOCK RECYCLING EFFICIENCY AND
+ EoL CCS CIRCULARITY

ABATEMENT COST
EUR PER TONNE CO2
-154 65 113 139 121 32

NOTES : ABATEMENT COST CALCULATED ASSUMING ZERO-CARBON ELECTRICITY. CO 2 PRICES NOT INCLUDED IN THE PRODUCTION COSTS.
SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

INVESTMENT IN PLASTICS PRODUCTION AND VALUE CHAINS WILL NEED TO INCREASE BY 122-199%
Enabling a new production and consumption system for The need for early development of new technologies
plastics will require a wave of investment. Total capex rises through piloting and demonstration further increases the
by an estimated 122–199% depending on the pathway, to investment requirements, as do costs of brownfield conver-
the tune of 3-4 billion EUR per year on average to 2050. sion of existing complexes. The additional capital require-
The variation between pathways is thus relatively large, ments will also depend heavily on whether new solutions
with lower costs the more prominent the role of circular can be put in place at the point when existing assets need
economy solutions. These rely less on large-scale and retrofitting or upgrading anyway. A major objective of the
capital intensive infrastructure, and more or on logistics, transition must be to avoid double investment: first in main-
data, business model adaptation, and labour. taining current, fossil-based production capacity, and then
in abandoning this in favour of new, low-CO2 production
Much of the increase in investment is due to the in- routes. The more policy can enable a single fork in the
creased complexity of production. Mobilising end-of-life road, the less of an investment penalty there will be.
plastics as feedstock requires greater capital investment
in waste handling. Many of the production routes go from This additional investment will take place only if the EU
a single step of steam cracking to produce HVCs from becomes an attractive destination for investment in chem-
naphtha or ethane, to also include secondary steps (such icals production overall. Globally, most recent investment
as methanol synthesis and methanol-to-olefins) to process has taken place outside the EU, in regions with strongly
by-products that otherwise result in CO2 emissions. Carbon growing home markets or with favoured access to cheap
capture in all cases requires new capital assets. Similarly, feedstock. The EU will need a different investment model
routes based on pyrolysis, digestion or gasification involve to realise a net-zero transition in chemicals. Pioneering
more process loops before HVCs can be produced, each low-carbon solutions within an overall enabling policy en-
with additional capital requirements. Overall, the new vironment may well have as much claim to likelihood of
routes are as much as 45-200% more capital-intensive. success as any other strategy.

136
 Exhibit 3.16
LOW-CO 2 PRODUCTION CAPACITY
INCREASES THE INVESTMENT NEED

INVESTMENT IN PLASTICS PRODUCTION CAPACITY INCREASE RELATIVE TO BASELINE

BILLION EUR PER YEAR + X%

PATHWAY
BASELINE

+199% +158 % +122%

10
8.9 8.8
9 8.5
8.1
8 7.8
7.4
7 6.5
6.0 5.8 5.9
6
5.4 5.3
5.0
5 4.7 4.6
4.3
3.9
4 3.5
2.9 2.9 3.1
3

0
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

NEW PROCESSES CARBON CAPTURE

CIRCULAR ECONOMY
Pathway Pathway
Pathway

NOTES : INVESTMENT NEEDS DO NOT INCLUDE DOWNSTREAM PRODUCTION. INVESTMENTS IN

POWER GENERATION OR CARBON TRANSPORT AND STORAGE INFRASTRUCTURE ARE NOT INCLUDED.
SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

A NET-ZERO EMISSIONS PLASTICS INDUSTRY WILL EXCHANGE FOSSIL

OIL AND GAS FOR ELECTRICITY, BIOMASS, AND CIRCULAR RESOURCES
Today’s plastics production system is integrated to the In the low-carbon pathways, these fossil sources are
wider petrochemicals and fossil fuel supply chain. Naph- either replaced, or used in contexts with CCS (Exhibit
tha, by far the dominant feedstock for plastics production 3.17). The main replacements are 0.9–1.2 EJ of electricity
in the EU, is an intermediate stream in the refining of fossil for hydrogen, heating and process thermal energy, 1-1.2
hydrocarbons to fuels. Ethane, used in most remaining EJ of biomass and 0.9–1.9 EJ of end-of-life plastics, for
production, is a component of natural gas. Natural gas and use as feedstock. In the CCS pathway, 1.5 EJ of oil and
various fuel-grade products are also used in steam genera- gas continue to be used, but with CCS in the production of
tion and in furnaces. All in all, some 1000-1500 TWh of oil hydrogen, in steam cracking, and at end of life.
and natural gas are used in the production of HVCs and in
downstream processes.

Exhibit 3.17
Inputs change from fossil sources to electricity,
biomass, and end-of-life plastics

ENERGY AND FEEDSTOCK MIX TODAY AND IN 2050

EJ ENERGY PER YEAR

2050
65

5.5 EJ IN A 2050
5.2 BASELINE SCENARIO
0.8 0.8
1.5 0.1
0.5
MATERIALS EFFICIENCY
AND RECIRCULATION
0.5 1.5
1.2 MORE EFFICIENT PROCESSES
0.9 FOSSIL FUELS
4.7
1.2 1.2 ELECTRICITY
4.2 3.5 4.6
1.0 BIOMASS

END-OF-LIFE PLASTICS
1.0
1.9 1.6
0.3 0.9
0.2

2015

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

NOTES : 0.9-1.2 EJ OF ELECTRICITY CORRESPONDS TO 238-332 TWh.

SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Plastics

ELECTRICITY BIOMASS
In all three pathways, the plastics industry needs an The final major change is the need to mobilise large
abundant supply of affordable low-emissions electricity. volumes of biomass for use as feedstock. Supplying 32-
The additional electricity is necessary for thermal energy in 38% of the EU’s plastics demand through production with
cracking and pyrolyisis, for steam generation, and to power biofeedstock in 2050 would require 75-95 million tonnes of
a range of additional processes. Around 75% of the elec- biomass.
tricity will be needed to produce hydrogen. The electricity
There is no doubt that this will be a scarce and valuable
requirements could be reduced by alternative hydrogen
resource. This study nonetheless finds that using biomass
production methods, whether steam methane reforming
for chemicals feedstock is a high priority: it is high time
with CCS or emerging options such as methane pyrolysis
that EU climate and energy policy avoided directing bio-
(see Box in Chapter 2).
mass towards relatively low-value uses where there are
The cost of electricity also becomes a major determi- other viable options (such as the generation of bulk elec-
nant of the cost of production. With a degree of storage tricity), and prioritised uses where few other options are
and over-capacity, hydrogen production can be flexible available. The use of biomass as feedstock for chemicals
and benefit from periods of lower electricity prices, which is one such use. On average, the routes included in the
becomes especially important in energy systems with a pathways require 19 MWh of biomass and electricity for
high share of variable renewables such as wind and solar every tonne of HVC produced. For illustration, if instead
power. In contrast, the core thermal loads of cracking and ‘power-to-X’ methods were used (direct air capture of CO2,
related processes will depend on much more continuous combined with synthesis of chemicals from CO2 and hydro-
operation, and likely also face higher prices. Electrification gen from electrolysis), the electricity required would be as
can be done gradually on an existing steam cracking com- much as 27 MWh of electricity for one tonne of HVC.
plex, for instance by first replacing one or two furnaces, or
Nonetheless, the amount of biomass used for chemicals
by using hybrid system switching between fossil fuel and
must be limited. The most important strategy is to use
electrical heating depending on prices.
other options to bring down the total amount of new car-
bon from biomass that is required. In the pathways, this is
END-OF-LIFE PLASTICS achieved through a balanced portfolio of materials efficien-
cy, mechanical recycling, chemical recycling, and carbon
Meanwhile, the focus on production from recycled plas- capture. That way, bio-based production never need to
tics creates a need for collected and sorted end-of-life meet more than 38% of underlying demand in the path-
plastics. The share varies by pathway, but is always major: ways. Another strategy is to mobilise waste streams that
35-41 Mt per year. This boost in recycling would require compete as little as possible with biodiversity targets, food
significant changes across the value chain. High-quality and feed production, or other high-priority uses for bio-
mechanical recycling requires very pure plastics flows with mass. One such source is the bio content of mixed waste,
little contamination to achieve high-quality recirculation. which can be used in gasification. Others could include
Chemical recycling is less exacting, but also requires some various current energy uses of biomass, such as byproduct
pre-processing, and above all collection and processing streams in the pulp and paper industry or bioenergy used
of large volumes matching those of large-scale chemicals for basic heat generation, that could be freed up if some
production. processes were electrified instead. A final option is to
gradually switch to polymers that have closer affinity to the
These changes also require significant change to the biomass inputs, and which therefore require less biomass
current waste handling sector. In all cases, it needs to rap- per tonne produced.
idly break the current trend towards large amounts of fossil
CO2 emissions from end-of-life plastics. In a more circular All of these changes to inputs point to a chemicals sec-
pathway, the disruption will be the need to collect, sepa- tor much more closely integrated with other parts of the
rate and centralise much more of end-of-life plastics as economy. This includes energy (electricity), transportation
feedstock for new production. Vertical integration of waste (hydrogen), waste (end-of-life flows, biomass), pulp and
handling and chemicals production may well be the most paper, and food and drink (biomass), as well as providers
reliable way to organise this. In a CCS pathway, the driver of carbon transport and storage.
of change would instead be to fit carbon capture to waste
incineration plants – which in turn may require that end-of-
life incineration is scaled up and centralised to a smaller
number of sites in a significantly reorganised sector. Either
way, the status quo for waste handling is not an option for
net-zero emissions from plastics.

139
 Ammonia
Ammonia is fundamental to our modern so- clean hydrogen feedstock, and carbon cap-
ciety. It is the basis for most fertilisers, which ture and storage.
in turn make our industrialised food produc-
tion possible. In 2015, the EU consumed 19.6 There is a clear need for policy to sup-
Mt ammonia, the vast majority (17.1 Mt) pro- port these solutions, as they would make
duced within the EU-28, and 90% of which production 15–111% more expensive than
was used for fertiliser.1 it is today. Changing fertiliser use and food
handling could play a very significant role,
EU ammonia production is a major source but it is also particularly challenging, as it
of carbon emissions: 44 Mt CO2 per year. In involves a complex food value chain with a
order to achieve its climate objectives, the EU large number of actors.
needs to bring those emissions down to zero
– while ensuring that food needs continue to On the other hand, reducing fertiliser
be met, and production does not simply shift use also helps reduce other environmental
to other countries. problems, including air pollution, GHG emis-
sions from agriculture, and damage to eco-
This study seeks to clarify and quantify what systems from eutrophication.
it would take to decarbonise the ammonia in-
dustry. The transition to near-zero emissions is Like other industries examined in this
feasible through large-scale implementation study, ammonia is capital-intensive, with
of new technologies and use patterns. There long-lived assets. This means that time is
are multiple possible solutions, including in- very short if the EU is to transition to low-
creased use efficiency, reduced food waste, CO2 ammonia by 2050. Any delays would
substitution with organic fertiliser, the use of complicate the transition and increase costs.

140
140
The transition to near-zero emissions
is feasible through large-scale
implementation of new technologies
and use patterns.

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3.4 The starting point

Large-scale ammonia production took off after World War Much of the nitrogen applied as fertiliser is not actually ab-
I, when the Haber-Bosch process was invented.2 Today, the sorbed by the plants, but rather is lost to the environment.
nitrogen captured in ammonia production is an integral part Reducing the so-called ‘nitrogen balance’ has long been a
of modern agriculture, and it remains a cornerstone of food priority for EU and individual Member States’ environmen-
production for a growing global population. tal policies, due to the large negative effects that excess
nitrogen has on ecosystems.12 Indeed, some argue that
In the EU, annual production of ammonia amounts to 17 mil- the degree of disturbance of the nitrogen cycle from cur-
lion tonnes per year. Of this, 90% is used to produce nitro- rent practices is approaching a ‘planetary boundary’ that,
gen fertilisers, and the rest in various industrial applications. if crossed, could cause irreversible damage.13 Still, despite
The EU produces 75% of the N fertilisers and imports the governments’ efforts, the nitrogen balance in the EU is not
remaining quarter.3,4 The EU ammonia and fertiliser industry declining. However, there are large differences between
has annual turnover of €11 billion, and it employs 78,500 countries in the nitrogen lost per hectare of agricultural
people.5 Production takes place at more than 40 plants, with land, and numerous studies confirm that there is potential
typical capacity of half a million tonnes per year.6 for large improvements in the efficiency of fertiliser applica-
The ammonia production process combines nitrogen (taken tion.14 As discussed in more detail below, many have point-
out of the air) with hydrogen; indeed, more than half the ed to digitisation as a major opportunity to increase nitrogen
hydrogen produced industrially around the world is used to efficiency in agriculture.
make ammonia.7 The hydrogen, in turn, is derived from natu- Other than use efficiency, the amount of fertiliser required
ral gas through a process called steam methane reforming. is largely determined by agricultural production. However,
The natural gas input makes up the vast majority of the there is no simple relationship with calories consumed. The
cost of ammonia production, often 80% or more.8 As in oth- composition of diets is a major factor, as different foodstuffs
er processes heavily dependent on natural gas, European have very different nitrogen requirements. In addition, the
producers face a substantial cost disadvantage. Cash costs amount of food that is wasted determines how much pro-
can be less than half in regions with cheap gas, notably the duction is needed to satisfy demand.
Middle East, the United States, and Russia.9
Future ammonia requirements depend on a balance of all of
Mineral fertilisers (largely derived from industrially produced these factors. Demand in the EU is largely stable. In a baseline
ammonia) are used in combination with organic fertiliser, scenario, this study follows other analyses that see a slight
including manures. Mineral fertiliser provides around 45% increase, with ammonia use growing somewhat less (3%) than
of nitrogen input, and organic fertiliser 40%.10 Total use of the projected increase in EU population to 2050 (4%).15 For
mineral fertiliser in the EU is increasing, both in absolute the purposes of analysis, the baseline scenario assumes no
numbers and in kg per hectare.11 change in imports, although as noted, current input markets
strongly favour production in lower-cost regions.16

CO 2 EMISSIONS FROM AMMONIA PRODUCTION

The production of each tonne of ammonia in the EU re- therefore easy to capture. For example, it is used in the pro-
sults in emissions of 2.5 tonnes of CO217 (see Exhibit 3.18). At duction of urea, a major precursor to fertilisers, which requires
current production levels, the total CO2 emissions are 44 Mt. both ammonia and CO2 in its production.20
European producers are already more CO2-efficient than some
of their global counterparts. For example, in China ammonia The remaining emissions come from the energy inputs to the
is often produced with coke/coal rather than natural gas as a process steps. In the EU, natural gas is typically used for heat-
source of energy and hydrogen, and average CO2 emissions ing, and the process also requires electricity for compressors.
are more than 4 tonnes per tonne of ammonia.18 In addition to emissions from production, the use of fertiliser
CO2 arises from two separate sources in ammonia production. gives rise to very considerable emissions in the agriculture
First, steam methane reforming creates CO2 as a by-product.19 sector. The smaller impact is from the CO2 used to produce
The resulting stream of CO2 is around 70% of the direct emis- urea, which is released into the air when urea-based fer-
sions of CO2 from ammonia production (or half if CO2 from tilisers are applied in the field. While urea therefore is argu-
electricity generation is also counted). It also is very pure, and ably a case of ‘carbon capture and use’ (CCU), it is not an
application of CCU that has any net climate benefit.

142
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Exhibit 3.18
CO 2 emissions from ammonia production arise in the
production of electricity and hydrogen inputs

CO2 EMISSIONS
TONNE CO2 PER TONNE AMMONIA

H
H

HYDROGEN
ELECTRICITY PRODUCTION AMMONIA
USE PHASE
PRODUCTION (STEAM METHANE SYNTHESIS
REFORMING)
0.7 Total
0.5
1.3 2.5
Fuel
~6 GJ of electricity used Haber-Bosch process 80% used for fertilisers
Feedstock
for compression, air takes nitrogen and in agriculture
separation, and other Feedstock emissions hydrogen as key inputs
functions released from carbon in Application leads to
natural gas No direct emissions, but CO2 and nitrous oxide
electricity use emissions
Fuel emissions from 10
GJ of natural gas

EMISSIONS
SCOPE
OUT OF SCOPE

SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON DECHEMA (2017)

The far larger climate impact comes from the release of nitrous The baseline scenario sees only a slight reduction in the
oxides, greenhouse gases which trap more than 300 times amount of CO2 released per tonne of ammonia produced,
more heat than does CO2. Nitrous oxides from agriculture are mostly due to a reduction in CO2 produced in electricity gener-
also a major precursor to air pollution, with adverse health ef- ation. However, as ammonia production would increase slight-
fects. The more excess fertiliser is used, the more nitrous oxides ly, emissions in 2050 would be in parity to today. Concretely,
are released. This study looks only at CO2, so it does not con- the scenario sees 32 Mt CO2 per year in 2050, compared with
sider ways to reduce nitrous oxide emissions, but these are a 44 Mt CO2 today.
key part of any strategy to cut GHG emissions from agriculture.

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Exhibit 3.19
Strategies for deep...

CIRCULAR ECONOMY IN MAJOR VALUE CHAINS

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

AND CIRCULAR BUSINESS MODELS AND SUBSTITUTION
Reducing the amount of materials used for a Using end-of-life materials as input to
given product or structure, or increasing the lifetime new production, or using low-CO2 alternative
and utilisation through new business models materials that provide the same function

USE EFFICIENCY AND REDUCED WASTE SUBSTITUTION WITH ORGANIC

FERTILISERS
•Increase uptake efficiency of fertilisers and reduce
leakage to water and air by controlling conditions, •Switch a greater share of nitrogen input to
improving timing of application, using additives, organic fertilisers (40% today)
increasing precision of application, etc.

• Reduction of food waste, especially in processing

and by consumers, reduces the amount of food pro-
duction required and subsequently fertiliser needs

144
...emissions reductions from ammonia

CLEAN PRODUCTION OF NEW MATERIALS

NEW AND IMPROVED PROCESSES CARBON CAPTURE

Shifting production processes and feedstocks to Capture and permanent storage of CO2 from
eliminate fossil CO2 emissions production and end-of-life treatment of materials,
or use of captured CO2 in industrial processes

HYDROGEN FROM WATER CARBON CAPTURE ON STEAM

ELECTROLYSIS METHANE REFORMING
•Electrolysis using CO2-free electricity can fully •Capture of 90% of CO2 emissions from
eliminate CO2-emissions from ammonia produc- hydrogen production through steam methane
tion process reforming. For high capture rates, both fuel
and feedstock emissions must be captured

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Ammonia

3.5 Strategies for reduced CO2 from ammonia production

Technically, CO2-free ammonia production is feasible us- (CCS) in steam methane reforming (SMR) plants.
ing the same Haber-Bosch process as is used today. The
crux is the inputs. Hydrogen would need to be produced In addition to CO2-free production, it is possible to reduce
without release of CO2, as would electricity. ammonia requirements in agriculture without reducing food
production. The key measures are to reduce food waste, in-
The production of low-CO2 hydrogen could take place crease the efficiency of fertiliser use, and switch from mineral
through two main routes: water electrolysis using zero-car- fertiliser to organic fertiliser.21
bon electricity, or the use of carbon capture and storage

CIRCULAR ECONOMY AND USE EFFICIENCY

In 2015, 64 kg of mineral fertiliser was used per hectare of dition, some fertilisers produced from ammonia, such as
utilised agricultural area in the EU.22 This corresponds to 21 urea, also causes large CO2 emissions, as much as 97% of
kg per tonne of food, on average.23 the bounded C in urea evaporates within the first eight days
corresponding to 0.7 ton of CO2 per kg urea applied.27 A
This study has made a top-down estimate of how the same long list of small changes to practice can increase efficien-
amount (and composition) of food could be provided with cy substantially: ensuring sufficient availability of other nutri-
less fertiliser input, and therefore ammonia production. The ents such as sulphate and phosphate, controlling soil acidity,
most important measures identified are: switching to nitrate fertiliser, timing application to weather
• Reduction of food waste: An estimated 90 Mt of food is conditions, using additives that stop volatilisation of urea, us-
wasted yearly in the EU.24 Reducing this already is a major ing cover crops, varying rates of application with conditions,
EU policy goal, with a target to halve per-capita food waste using more frequent and varied application, and improving
in the retail and consumer level by 2030.25 Grocery-store application accuracy.28
food handling holds some of this potential, but most sits Many of these measures are challenging to work into
in how consumers use the food they purchase, and in how standard agriculture. However, digitisation and automation
food is processed and handled in the supply chain prior to can make it easier. As technology improves, costs will fall.
arriving in stores.26
Substitution of mineral fertilisers with organic fertiliser:
• Increased use efficiency and precision agriculture: As noted, organic fertilisers already are widely used in EU
The large nitrogen balance gives a sense of the degree agriculture. It is possible to achieve still-higher shares, thus
of over-use of nitrogen fertilisers in current practice. In ad-

146
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Ammonia

Exhibit 3.20
A stretch case for efficiency and substitution reduces
N-fertiliser demand by 45% by 2050 while meeting food demand

AMMONIA DEMAND REDUCTION FROM IMPROVED VALUE CHAIN EFFICIENCY AND SUBSTITUTION
Mt AMMONIA PER YEAR USED FOR FERTILISERS, EU (2050)

-45%
16.2 2.0
3.9
1.3 8.9

BASELINE REDUCED IMPROVED NITROGEN SUBSTITUTION CIRCULAR ECONOMY

FOOD WASTE USE EFFICIENCY SCENARIO
Fertiliser demand in Estimated potential to Range of techniques to Switching to a greater
the EU is projected to reduce food waste by increase uptake by share organic fertilisers
stabilise around 12 Mt 70% by 2050 plants and reduce excess
per year by 2050 nitrogen application

SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES. 29

reducing the need for mineral fertiliser production. Major and nitrous oxide emissions to air (the latter having major
obstacles are logistics and the unpredictability of supply. GHG reduction benefits as well as benefits for clean air),
and reduced leakage of nitrogen to water, with reduced
In an ambitious scenario, reduced food waste could cut eutrophication as a result.
ammonia requirements by 12%, precision agriculture and
use efficiency by 24%, and substitution with organic fertiliser Nonetheless, achieving these measures can be complex.
by 8%. This results in a total of 45% less ammonia demand They require systemic changes involving a large number
in 2050 – a 7.3 Mt decrease – relative to the baseline sce- of actors within the food supply chain, from farmers to
nario that largely continues current practice (Exhibit 3.20). wholesalers, retailers, and producers. It is therefore uncer-
tain how much of the potential can be achieved. This study
Although these measures result in reduced ammonia explores two alternative scenarios:
demand, they need not result in reduced economic activity.
Some would be genuine productivity improvements (such • In a high scenario, three-quarters of the identified
as the reduction of food waste); others would shift eco- potential is realised. This reduces the amount of am-
nomic value from the production of inputs, to activities that monia required by 5.5 Mt per year in 2050, resulting
achieve more precise and efficient use, or that put waste in a total ammonia demand of 12 Mt.
from related sectors (livestock) to a good use. • In the less ambitious scenarios, just 40% of the
Added to this, reduced fertiliser use would have a range potential is achieved. This would leave ammonia de-
of co-benefits. The largest are the reduction of ammonia mand close to 15 Mt per year in 2050.

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LOW-CO 2 PRODUCTION OF AMMONIA

Fertilisers will always play an important role in ensuring that The technology to produce the hydrogen through electrol-
agriculture is productive enough to feed a growing population. ysis and nitrogen through air separation is already estab-
Finding ways to produce low-emissions ammonia will therefore lished, although there is significant scope to improve the
be necessary even with very efficient use or with substitution efficiency of electrolysis. There also is a need to develop
with organic fertilisers. The need will be even larger in regions efficient ways of storing hydrogen at scale. This in turn can
of the world where incomes are rising as the population grows. enable flexible operation that capitalises on the variability of
electricity supply in an electricity system with a high share
EU production already is highly efficient, with CO2 emis-
of solar and wind power.
sions within 10% of the theoretical minimum for the current
technology.30 Efficiency improvements thus have only limited Overall, however, the main challenge with switching to
potential to further contribute to reduced CO2 emissions. It ‘green’ ammonia from electricity is financial rather than tech-
is possible in principle to reduce fossil CO2 emissions by nical. Key considerations are the need to replace current pro-
switching from natural gas to biogas. However, the analysis duction units, the availability of electricity at attractive prices,
carried out for this study found this much more expensive in and infrastructure for hydrogen storage and transportation.34
the long run than other options.31 Biomass is a very expen-
sive source of hydrogen, and there are many other, high-pri- Given uncertainties, this study explores scenarios with
ority uses of biomass resources that would take precedence 4–15 Mt of ammonia production through this route.
in an overall net-zero transition.
B. Carbon capture and storage
This leaves two main technologies for very deep emissions
Hydrogen production through SMR has significant potential
cuts: either to capture emissions from the current steam
for carbon capture and storage. The larger the point source of
methane reforming and permanently store it, or to produce
CO2 emissions, and the more concentrated the flow of CO2,
ammonia using hydrogen derived from water electrolysis.
the easier it is to use CCS. In the case of ammonia, emis-
A. Zero-emission ammonia with water electrolysis sions typically are around 1 million tonnes per year, allowing
for good economies of scale. More importantly, the process
Emissions from an SMR plant arise for two reasons: i) emissions are a nearly pure stream of CO2 that can be cap-
when natural gas is split into ‘syngas’ (a mix of carbon mon- tured at very low cost. Indeed, more than one-third of this CO2
oxide and hydrogen), and ii) when natural gas is burnt in the is already captured today, used in the production of urea, for
SMR furnace used to heat the process.32 enhanced oil recovery, and in food production.35
In contrast, water electrolysis involves no carbon, as long For genuinely low-CO2 production, however, two addi-
as electricity production is carbon-free. The most mature tional things are needed. First, as noted, the process CO2 is
technology for doing so is alkaline electrolysis, but there are only around half of the total. The emissions from combus-
many other processes at various stages of development.33 tion must also be addressed. One option is to fit the furnace,
too, with CCS. The other would be to electrify the source of
Electrolysis switches inputs from natural gas and electric-
heat input. The second requirement is infrastructure to com-
ity, to just electricity. Total energy requirements are broadly
press, transport, and store the CO2.
similar. Whereas today’s process uses 8.9 MWh of natural
gas for fuel and feedstock plus 2.1 MWh of electricity, elec- The main way to achieve high CO2 capture rates from am-
trolysis uses around 9.1 MWh electricity per tonne of ammo- monia production is to use chemical absorption technolo-
nia, depending on the efficiency of electrolysis. gies. These can achieve capture rates between 55%–90%,
where the 90% rate requires also capturing the CO2 in the
For electrolysis to cut emissions, electricity generation
flue gas of the furnace, which raises energy requirements
needs to be less emissions-intensive than it is in the EU
substantially.36
today. Whereas the average CO2 emissions from electricity
production in the EU are 350 g CO2 per kWh, they would The acceptance of CCS and availability of transport infra-
need to be less than 210 g CO2/kWh for electrolysis to structure and suitable storage are all uncertain. This study ex-
result in less emissions than SMR per tonne hydrogen (see plores up to 10 Mt of ammonia production through SMR with
Exhibit 3.24, further below). CCS, but also considers scenarios where no CCS is used.

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Improving the efficiency of

ammonia use has many benefits
beyond GHG reductions.
149
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3.6 Low-emissions pathways for EU ammonia production

To guide discussions, this study explores three pathways prioritise large-scale deployment of CCS, or switch to a new
to a net-zero emissions EU ammonia production in 2050 production technology.
(Exhibit 3.21), each emphasising a different approach to
CO2 emissions reductions: Ammonia has the advantage of technically being relative-
ly easy to make CO2-free or with drastically reduced emis-
• New Processes pathway: In this pathway, only 40% sions. The way ahead becomes a strategic choice where
of the potential to reduce fertiliser demand is captured. technology is only one consideration: should CCS resourc-
Ammonia production in 2050 stands at 15 Mt, but all es be used on a product that could instead be produced
of it uses water electrolysis for hydrogen production. completely CO2-free by using electricity? Or should R&D
resources and electricity be saved for sectors that are far
• Circular Economy pathway: In this pathway, 75% of
more challenging for CCS?
the potential for demand reduction is captured, through
a concerted push to reduce food waste, increase the Once the emission intensity of electricity allows for it,
efficiency of fertiliser use, and a switch to organic fer- and water electrolysis-based ammonia is ready to scale up
tiliser. Ammonia production is reduced to 12 Mt annu- significantly, the industry could be transformed. The new
ally in 2050, substantially lower than today. The remain- technology is not as dependent on large-scale plants, but
ing production all uses water electrolysis. is rather modular. Ammonia can in fact also be used as a
• Carbon Capture pathway: This pathway sees the ‘fuel’, so entirely new sources of demand could arise.
same amount of ammonia production as in the ‘New In all pathways, both the ammonia industry and materi-
Processes’ pathway. However, production continues to als-efficient or circular business models will depend heavily
use predominantly SMR, which is gradually fitted with on new outside actors. They, in turn, require new infrastruc-
CCS from the 2030s. By 2050, 20% (4 Mt) is produced ture and inputs, whether for CO2 transport and storage or
with completely CO2-free technology and 11 Mt through for electricity supply.
SMR and carbon capture. Remaining emissions are 2
Mt CO2 in 2050, while 17 Mt CO2 is stored annually. Finally, in all pathways, the use of fertilisers will be the largest
influencer of demand, but it is outside the control of the am-
Similar to the pathways outlined for other sectors, the monia industry. Instead it is dependent on the development of
three ammonia pathways result in very different outcomes, a more efficient food industry and the adoption of new meth-
illustrating key options for how the ammonia industry can ods within agriculture. Any improvement would not only reduce
achieve near net-zero emissions. More than in other sectors, emissions from ammonia production, but also have positive
however, the ammonia industry clearly faces a major choice: consequences for the future of sustainable food production.

150
 Exhibit 3.21
Pathways to net-zero emissions FOR ammonia

EMISSION REDUCTIONS IN AMMONIA PRODUCTION, 2015-2050

Mt CO2/YEAR

44
Baseline
40
32
30 4 1 Relies heavily on hydrogen production
through electrolysis of water
NEW PROCESSES 20 Remaining
Pathway
Emissions 27 Key enabler is abundant and cost-
10 competitive electricity supply
0
2015 2050

44
Baseline Hinges on the potential of more
40
32 efficient use of fertilisers, reduced food
waste, and substitution with organic
30 8 fertiliser
2
CIRCULAR ECONOMY 20 Remaining Key enablers include digitisation and
Pathway
Emissions 22 automation, new business models, and
10
extensive coordination across the value
0 chain

2015 2050

44
40 Baseline
32 Emphasis on a greater role for carbon
4 capture and storage (CCS) of
30 1 emissions from steam methane
8 reforming
CARBON CAPTURE 20 Remaining
Pathway Emissions 17 Key enabler is access to transport and
10
storage infrastructure for captured
0 2 CO2

2015 2050

MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS

MATERIALS RECIRCULATION AND SUBSTITUTION
NEW PROCESSES
CARBON CAPTURE AND STORAGE
REMAINING EMISSIONS

SOURCES : MATERIAL ECONOMCIS ANALYSIS AS DESCRIBED IN TEXT.

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DEEP CUTS TO EMISSIONS WILL INCREASE THE COST OF PRODUCING AMMONIA

Producing ammonia without CO2 emissions will come at At these values, the additional cost of production ranges
a cost (Exhibit 3.22). Fitting CCS to ammonia production between €0.5 and 2 billion per year in 2050, implying an
adds €39 per tonne of CO2 captured, or €64 per tonne of average abatement cost of €39–215 / tCO2. The carbon
ammonia, an increase of 15% on the standard SMR process capture pathway is 25% cheaper than one reliant exclusively
without carbon capture. on water electrolysis for the same volume of production.
However, the circular economy pathway could potentially
The water electrolysis route is costlier under most elec- cost even less.
tricity prices. In a scenario with highly flexible use of elec-
tricity (some 5,000 load hours per year), electrolysers could Overall, cost alone is not a robust metric for choosing one
likely access electricity at a cost similar to the levelised cost approach over another. Instead, different solutions will be
of electricity production from a mix of solar and wind power, required, depending both on local conditions (availability of
estimated at around €40 per MWh by 2050.37 This comes CO2 storage, price of electricity), and on how technology
with higher costs for electrolyser capacity and hydrogen develops.
storage. The estimated cost of ammonia production is €553
per tonne, an increase of 55% on the standard SMR pro- Finally, this study assumes continued production in the EU
cess. as a basis for the analysis. However, hydrogen and therefore
ammonia production could very well be one of the sectors
In contrast to these, the cost of reducing food waste and where access to cheaper renewable electricity make for a
increasing use efficiency may be significantly lower, potentially substantial cost advantage (much like cheaper natural gas
coming at no additional cost (or even at a cost saving), if digi- does today). If so, it would be more cost-effective for the EU
tisation and automation develop as many stakeholders expect. to import CO2-free ammonia than to produce it.

152
 Exhibit 3.22
Low-CO 2 production routes cost 15-111%
more than the current SMR process

PRODUCTION COST BY ROUTE

EUR PER TONNE AMMONIA, EUR PER TONNE CO2 ABATED

ELECTRICITY
HYDROGEN
NATURAL GAS
OTHER OPEX
CAPEX

747

104

553
+15-111%
69

418

354
124 563

124
403
154
141
21
21 0 0
21 21
119
68 60 60

STEAM METHANE STEAM METHANE WATER ELECTROLYSIS WATER ELECTROLYSIS

REFORMING REFORMING + CCS (HYDROGEN AT 40 EUR/ (HYDROGEN AT 60 EUR/
MWh ELECTRICITY) MWh ELECTRICITY)

ABATEMENT COST
EUR PER TONNE CO2
39 108 215

NOTES : ABATEMENT COST CALCULATED ASSUMING ZERO-CARBON ELECTRICITY. CO 2 PRICES NOT INCLUDED IN THE PRODUCTION COSTS.
SOURCE : MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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INVESTMENT IN AMMONIA PRODUCTION WILL NEED TO INCREASE BY 6-26%

The transition to a net-zero ammonia sector will require in- year, while the circular economy scenario has just above
vestments, but not necessarily higher than in the base case €0.6 billion per year, and the carbon capture pathway has
(Exhibit 6). Although the production costs of the water elec- €0.7 billion per year.
trolysis route are higher overall than those for steam meth-
ane reforming, the investment costs are lower than SMR The sector would take on substantial additional risk in go-
with CCS. Added to this, circular economy solutions are less ing from tried-and-tested solutions to ones with uncertain
capital-intensive, and therefore bring down total investment performance and higher total production costs. Policy will
costs relative to a baseline scenario. therefore play an important role in enabling these invest-
ments, not least by providing some certainty about a future
The amount of investment thus varies significantly by business case.
pathway. The base case has an average of €0.6 billion per

Exhibit 3.23
Investment requirements increase by
6-26% in low-CO 2 pathways

INVESTMENT REQUIREMENTS INCREASE RELATIVE TO BASELINE

BILLION EUR PER YEAR + X%

PATHWAY
BASELINE

+17% +6 % +26%

1.2

1.0
1.0 0.9
0.8 0.9
0.8 0.8
0.8 0.8 0.8
0.7 0.7
0.6 0.6
0.6 0.6 0.6 0.6 0.6 0.6
0.6
0.5 0.5
0.4 0.3

0.2

0.0
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

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NET-ZERO EMISSIONS AMMONIA PRODUCTION WILL REQUIRE NEW AND DIFFERENT INPUTS
The main shift in inputs is from today’s natural gas to elec- The new processes and circular economy pathways rely
tricity, depending on the amount of production based on on production that does not involve carbon at all, and they
water electrolysis. In the new processes pathway, as much can thus achieve zero CO2 emissions. However, this de-
as 160 TWh of electricity is required to replace the approxi- pends on electricity production being carbon-free (Exhibit
mately 35 TWh of electricity and 151 TWh natural gas used 3.24). As noted, water electrolysis reduces emissions only
today. The carbon capture pathway uses less than half as once the CO2 emissions from electricity generation fall be-
much electricity (69 TWh), but instead sees 99 TWh of re- low 210 g CO2/kWh.
maining natural gas consumption. In addition, there is a
need in this pathway for infrastructure to transport and store
17 Mt CO2 per year by 2050.

Exhibit 3.24
Eliminating emissions from electricity will be
crucial for deep emission cuts
CO2-INTENSITY OF AMMONIA PRODUCTION ROUTES WITH DIFFERENT CO2-INTENSITY OF ELECTRICITY
TONNE CO2 PER TONNE AMMONIA

3.8

2.6
2.3 2.3

1.8

0.9
0.6

0.2
0.0

CURRENT CO2 INTENSITY BREAK-EVEN POINT FOR EMISSIONS WITH ZERO-CARBON

OF ELECTRICITY CO2 EMISSIONS AT ELECTRICITY
(350g CO2 PER kWh) 210g CO2 PER kWh

STEAM METHANE REFORMING

STEAM METHANE REFORMING + CCS
WATER ELECTROLYSIS

SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

155
 4. Cement
& Concrete
reinventing a fundamental material
Concrete is ubiquitous in our modern society. that net-zero emissions are possible, and the
It is the most widely used construction material solution set is wide-ranging. It includes changes
for both buildings and infrastructure. Currently, to cement production – notably carbon capture
the EU uses more than two tonnes of concrete and storage, electrification, and switching to new
per person per year, of which 325 kg is cement. raw materials. It also involves changes to how
concrete is made and used: optimising the use
Concrete production is also a major source of cement in its production, efficient use of con-
of CO2 emissions. Up to 95% of these come crete in structures, and new circular economy
from the production of cement – some 109 Mt business models.
of CO2 per year. These emissions are hard to
cut: 60% are an unavoidable result of the pro- Many different pathways to net-zero emis-
cess chemistry of production, and the remain- sions are possible, and all require major chang-
ing 40% arise from the need to produce very es to current practices. Policy will be crucial
high-temperature heat. to enable coordination along the value chain
and to support low-CO2 production routes that
Until recently, no emission reduction scenar- are 75–115% more expensive than the current
io had explored how to achieve the deep cuts routes. Moreover, substantial resources need
needed to fit concrete production into a net-ze- to be devoted to innovation, while investments
ro society. Indeed, studies left as much as two need to increase by up to 50%.
thirds of emissions in place even in 2050, with
further reductions dependent on the degree of In the context of a capital-intensive industry
carbon capture and storage. with long-lived assets, time is very short. The
transition to low-CO2 concrete in 2050 is pos-
This study evaluates what it would take to sible, but it needs to begin promptly to avoid
achieve truly deep reductions by 2050. It finds escalating costs later on.

156
As much as half of the solution may
be changes to how concrete
is specified and used.

157
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4.1 The starting point

Of all building materials, concrete is the by far most wide- Production is highly capital-intensive. A new integrated plant
ly used. In 2015, the EU used 2.2 tonnes per person, or producing 2.5 million tonnes costs up to €500 million to build.6
more than a billion tonnes in total.1 For comparison, the Once built, variable costs are much lower – sometimes as low as
second-largest volume of material in construction was steel, €15–20 per tonne, especially if low-cost waste fuel is used. The
at 66 Mt.2 large number of plants across the EU reflects the need to co-lo-
cate production near a suitable limestone source, and the high
Concrete is aggregates (sand, gravel, crushed stone), cost of transportation. Transporting cement can cost €10–15
water and cement. Cement has a key role: it is the ‘glue’ per 100 km7, and with sale prices in the range of €60–80 per
that gives concrete its structural stability. Although cement tonne, large distances quickly become uneconomic. This also
makes up just 7–20% of concrete, from a climate perspec- means that Europe is largely self-sufficient in cement produc-
tive it is the key constituent, with 95% or more of the CO2 tion, although trade can occur across the Mediterranean.
footprint.
Half of European cement is used in the construction of new
A climate scenario for cement and concrete must there- buildings, and 30% in infrastructure (Exhibit 4.1). The remain-
fore take two perspectives. On the one hand, cement use ing 20% are used for various forms of maintenance and repair
depends chiefly on how concrete is used: how much con- work across these two categories. As noted, the large majority
struction, using how much concrete, with how much cement. of cement is used for concrete. Most of this, in turn, is sold as
On the other hand, for low-CO2 production, the focus needs ready-mix concrete, produced at a batch plant. These need
to be on cement itself. to be highly local, to minimise transport distances and times
between mixing and use. Most of the remaining concrete is in
The European cement industry produced 167 million the form of pre-cast elements that are used whole in construc-
tonnes (Mt) of cement in 2015.3 Construction activity is tion. Pre-cast production allows for greater control over on-site
highly correlated with economic cycles, so the production casting. Finally, just over 20% of cement is used for mortar (to
of cement varies accordingly. The EU cement sector saw hold together bricks, cinder blocks, etc.).
a 35% drop in demand after the 2008 financial crisis, and
volumes remain at similar levels since 2013. Whereas cement production is concentrated among a
few large companies in the EU, concrete is a highly frag-
The cement sector contributes €4.5 billion to direct mented business. It is also larger, with 350,000 employees
added value in the EU, and employed 38,000 people. 4 and a contribution to GDP of 16 billion per year.
There are around 200 active cement kilns, and another
100 plants that perform grinding of cement.5 In recent There are also multiple categories of both cement and
years, there has been a consolidation of plants, concen- concrete. Concrete is divided into ‘exposure classes’, each
trating production in fewer and larger facilities. Industry with different resistance to risk of corrosion, chemical expo-
stakeholders expect a continuation of this trend, so that sure, tolerance for wet environments, or resistance to tem-
the average size could increase from today’s roughly 1 perature variation. Likewise, cements are classified in 27
million tonnes per plant per year to as much as a 2.5 common types, in five main groups (CEM I-VI), depending
million tonnes. on their specific composition and properties.

158
 Exhibit 4.1
Cement is produced for concrete and mortar
and used in buildings and infrastructure

100% = 167 Mt 100% = 167 Mt

20% MAINTENANCE MORTARS AND PLASTERS

24%

CIVIL ENGINEERING
30%
(INFRASTRUCTURE) 28% PRECAST CONCRETE

50% BUILDINGS 48% READY-MIX CONCRETE

USE OF CEMENT IN VALUE-CHAINS, EU USE OF CEMENT IN DOWNSTREAM PRODUCTS, EU

MILLION TONNES, 2015 MILLION TONNES, 2015

SOURCES : MATERIAL ECONOMIC ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 9

159
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CO 2 EMISSIONS FROM CEMENT AND CONCRETE

Nearly all the emissions from concrete production contained in the rock itself. The resulting CO2 is all
(95%) result from the production of cement, and spe- but irreducible. Clinker production therefore inevita-
cifically the production of cement clinker, the main bly results in 0.54 tonnes of CO2 for every tonne of
binder component (Exhibit 4.2). clinker. These emissions are among the hardest to
address. They cannot be avoided except by reducing
Clinker is produced through the calcination of production or by switching the raw material. Once
limestone, whereby the rock is crushed and com- produced, they must be captured if they are not to be
bined with a small amount of clay and other ingre- released to the atmosphere.
dients and heated to temperatures of 1,450°C or
more. CO2 arises from two distinct sources in this The emissions from all other steps in the produc-
process. One is the fuel used in the kiln. Each tion of concrete are minor by comparison. In the EU,
tonne of clinker requires some 3.7 GJ of energy. cement consists of 74% clinker. The other major con-
Although the cement industry uses a range of fu- stituents are i) filler materials (normally, limestone), ii)
els, the large majority (54%) is coal or petcoke, other materials required to obtain the right chemistry
which is suitable for the very high temperatures of and properties of cement, and iii) so-called supple-
1,400°C or more required for calcination, but also mentary cementitious materials (SCMs). SCMs can
has high emissions intensity.10 fulfil much the same binder role as clinker, up to a
point. The two main sources are slag from blast fur-
The second source is process emissions. The naces in the steel sector, and fly ash produced in
chemical process of calcination releases carbon coal-fired power plants.

160
 CEMENT
The purpose of cement is to bind fine sand and coarse
aggregates together in concrete and mortar. It acts as hydraulic
binder, meaning it hardens when water is added.

Cement is made by grinding clinker with a small amount of

gypsym and other materials. Ordinary Portland Cement
Exhibit 4.2
contains 95% clinker, but other cement types substitute some
share of clinker with other, supplementary cementitious
materials. The average clinker content in EU cement is 26%.

Clinker makes up ~10% of concrete by mass,

but more than 90% of the carbon footprint

CLINKER CEMENT CONCRETE

% OF TOTAL MASS % OF TOTAL MASS % OF TOTAL MASS

100% Concrete

85% Other
100% Clinker 100% Cement (Aggregates
and water)
26% Other 15%
74% Clinker (Gypsyn and SCMs) Cement

% OF TOTAL CO2 FOOTPRINT % OF TOTAL CO2 FOOTPRINT % OF TOTAL CO2 FOOTPRINT

100% Cement 100% Concrete

100% Clinker

94% 6% Other, 95% 5%

Clinker mainly Cement Other
electricity

Clinker is made by calcining a The purpose of cement is to bind Concrete is the fundamental
mixture of approximately 80% li- fine sand and coarse aggregates structural component of many
mestone (to provide calcium) and together in concrete and mortar. It buildings and a large amount of
20% aluminosilicates. Raw mate- acts as hydraulic binder, meaning it infrastructure. It is a mix of cement,
rials are heated up to 1,450 °C, hardens when water is added. water and aggregates and can
transforming limestone to calcium also contain small quantities of
oxides and sintering the mixture. Cement is made by grinding clin- chemical admixtures. The cement
The carbon dioxide released in ker with a small amount of gypsym content in concrete varies between
this chemical reaction accounts for and other materials. Ordinary Port- 7-20%, depending on the compres-
65% of the clinker CO2 footprint. land Cement contains 95% clinker, sive strength and other characteris-
The remaining 35% arise from the but other cement types substitute tics required.
burning of fossil fuels to provide some share of clinker with other,
heat for the kiln supplementary cementitious mate-
rials. The average clinker content in
EU cement is 26%.

NOTES : ’OTHER’ CO 2 EMISSIONS FROM CONCRETE INCLUDE THE MANUFACTURING OF CONCRETE AND EMISSIONS
FROM OTHER MATERIALS THAN CEMENT. TRANSPORT EMISSIONS ARE EXCLUDED FROM THESE FIGURES.
SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 11

161
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Exhibit 4.3
In a baseline scenario, cement production would increase
by ~10%, while emissions remain at today’s levels

PRODUCTION VOLUME CARBOND DIOXIDE EMISSIONS

MILLION TONNES CEMENTITIOUS MATERIAL PER YEAR MILLION TONNES CO2 PER YEAR

10 %

184
167 109 108

2015 2050 2015 2050

10% INCREASE IN CEMENT USE EMISSIONS INTENSITY FALLS FROM 0.65 TO 0.59 KG PER
• Increase in built area of 7% by 2050 TONNE CEMENT, MEANING EMISSIONS STAY CONSTANT
• Recovery of infrastructure built-out • 10% improvement in energy efficiency
• Maintained market share with other building materials • Full decarbonization of power inputs
• Constant share of SCMs
• No increase in biomass uses

NOTES : INCLUDES DIRECT AND INDIRECT EMISSIONS.

SOURCES : MATERIAL ECONOMIC ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 12

As a basis for comparison, this study uses a baseline increase by some 10%, reflecting a recovery of con-
scenario for future production. The baseline scenario re- struction activity as well as ongoing urbanisation and
flects what would occur if concrete continued to be speci- build-out of new infrastructure (in part related to a new
fied and used largely as it is today, while cement production low-CO2 energy and transport systems). This would be
techniques improved its efficiency, but did not adopt any counterbalanced in part by reduced emissions from
dramatic changes to production. improved energy efficiency (~10%), and from decar-
bonisation of electricity supply (~6% reduction in emis-
In such a scenario, cement emissions in 2050 would be sions). In contrast, the baseline sees no change in the
about 108 Mt CO2 per year, similar to today’s level of 109 share of SCMs used (if anything, supplies of current
Mt CO2 (Exhibit 4.3). Production of cement is projected to SCMs may fall in the future – see next section).

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4.2 Strategies for low-CO 2 cement and concrete

To date, roadmaps for the future of the cement sector have considers cement in the context of the overall value chain of
tended to conclude that some of the industry’s emissions are construction and infrastructure. The analysis presented here
virtually unavoidable, even in 2050. In the EU, some analyses is thus as much a ‘concrete’ roadmap as it is a ‘cement’
have suggested that two-thirds of emissions would remain in roadmap. This builds on other recent studies that have high-
2050, with further reductions depending on how many cement lighted the wealth of opportunities across the cement value
kilns were fitted with carbon capture and storage (CCS).13 The chain: both in how cement is used to make concrete, and
European Commission’s A Clean Planet for All was more am- in the use of concrete to help create buildings and other
bitious, tackling this problem for the first time. Most of its sce- infrastructure.16
narios foresaw reductions of around 60%, so still far from all
emissions, but the two most ambitious ones went up to 85% The second step is to consider additional innovations in
reductions in emissions.14 On a global level, the International the production of cement. CCS is a major part of low-CO2
Energy Agency (IEA) has proposed 24% as a possible target.15 production of cement, but past analyses have highlighted
that near-universal CCS will be difficult to achieve, so it is
As these analyses indicate, eliminating all emissions in necessary to consider a range of options. These include
this sector is challenging, so it is particularly important to supplementary cementitious materials and alternative bind-
consider the full set of possible solutions (Exhibit 4.4). This ers to traditional cement clinker, the use of electricity for
study differs from prior analyses in two main ways. First, it heat, and novel approaches to CO2 capture.

163
Exhibit 4.4
Strategies for deep...

CIRCULAR ECONOMY IN MAJOR VALUE CHAINS

MATERIALS EFFICIENCY MATERIALS RECIRCULATION

AND CIRCULAR BUSINESS MODELS AND SUBSTITUTION
Reducing the amount of materials used for a Using end-of-life materials as input to
given product or structure, or increasing the lifetime new production, or using low-CO2 alternative
and utilisation through new business models materials that provide the same function

LESS CEMENT IN CONCRETE cement intensity

RECYCLING OF CEMENT FINES
•Reduce intensity in concrete by using advanced
fillers and admixtures •Separation of pure concrete fines as raw material
for new cement production
•Reduce overspecification of ready-mix concrete •Recovery and separation of unhydrated cement
for direct reuse
•Optimise concrete exposure classes to reduce

LESS CONCRETE PER STRUCTURE SUBSTITUTION OF CLINKER WITH

OTHER CEMENTITIOUS MATERIALS
•Reduce waste in construction
•Use of natural pozzolans and calcined clays
•Optimise structure design to limit over-
specification •Development of alternative binders and novel
cements
•Advanced construction techniques including
3D-printing
•Increased use of pre-cast elements
•Post-tensioning for increased strength
•Use of high-performance concrete SUBSTITUTION WITH WOOD
•Increased use of cross-laminated timber and
engineered wood products as alternatives to steel
and cement

MORE BENEFIT FROM EACH STRUCTURE

•‘Build to last’ principles and modularity to increa-
se lifetimes and flexibility
•Re-construction and refurbishment to reduce
demolition
•Re-use of structural elements
•Space sharing to reduce need for additional built
area

164
...emissions reductions from cement & concrete

CLEAN PRODUCTION OF NEW MATERIALS

NEW AND IMPROVED PROCESSES CARBON CAPTURE

Shifting production processes and feedstocks to Capture and permanent storage of CO2 from
eliminate fossil CO2 emissions production and end-of-life treatment of materials,
or use of captured CO2 in industrial processes

CLEAN UP CURRENT PROCESSES CARBON CAPTURE AND STORAGE

•Increased energy efficiency through pre-calcin- •Separation of process and combustion
cers, preheating, waste heat recovery, and other emissions
techniques •Oxyfuel or other CCS options for integrated
•Switch to biofuels (and in the short term, waste combustion and process emissions
fuels)

ELECTRIFICATION OF PROCESS CARBON CAPTURE AND UTILISATION

HEATING •Capture of CO2 and incorporation into cement
•Plasma, microwave energy, hydrogen, or
other technologies

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CIRCULAR ECONOMY AND MATERIALS EFFICIENCY IN MAJOR VALUE CHAINS

The EU economy currently uses 325 kg of cement and 2.2 to net-zero emissions. It can reduce costs and investment
tonnes of concrete per person per year. These materials needs, the amount of electricity or carbon storage required,
provide important services, such as housing and infrastruc- and the speed at which new production technologies would
ture – but there are multiple opportunities to use them more need to be deployed.
efficiently.
The theoretical potential is surprisingly large. In a stretch
It is possible to achieve the same end-use benefits (that is, scenario with end-to-end optimisation of cement use, it is pos-
the same amount of built area and infrastructure availability) sible to achieve the same economic benefits while using 121
with less cement in concrete, and less concrete per struc- Mt (65%) less cementitious material per year in 2050 (Exhibit
ture or service. This can be done by optimising concrete 4.5). For policy-makers and businesses, a key insight is that
recipes with advanced fillers, reducing over-specification, major contributions towards lower emissions rest not with the
reducing waste, optimising structures, reusing elements, cement industry itself, but with actors in entirely different sec-
and increasing the lifetimes of buildings and infrastructure. tors. Achieving these savings will mean changing practices
along the cement and concrete value chain. Climate policy
Materials efficiency can never reduce emissions to zero. instruments must therefore be able to also create incentives
However, it eases many of the challenges of transitioning and overcome barriers for these actors.

Exhibit 4.5
A stretch scenario for materials efficiency
can reduce the need for cement by 65%
MILLION TONNES CEMENTITIOUS MATERIAL PER YEAR, 2050

LESS CEMENT IN CONCRETE LESS CONCRETE PER STRUCTURE AND

MORE BENEFIT FROM EACH STRUCTURE

47

21 -65 %

184 24

13
3
6

63

CURRENT REDUCED BINDER LESS OVER- REUSE AND OPTIMISATION OF REDUCED OVER- LESS WASTE SPACE SHARING STRETCH
PRACTICE INTENSITY SPECIFICATION RECONSTRUCTION  ELEMENTS SPECIFICATION IN CONSTRUCTION SCENARIO
OF CONCRETE

SOURCES : MATERIAL ECONOMICS ANALYSIS BASERD ON MULTIPLE SOURCES, SEE ENDNOTE. 17

166
 Major contributions towards lower
emissions rest not with the cement
industry itself, but with other actors
in the construction value chain.

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LESS CEMENT IN CONCRETE

Today, concrete typically contains 300 kg or more of ce- which leads to overuse of cement. By one estimate, it
ment for every cubic metre (m3) of concrete. This practice is might be possible in theory to cut cement requirements
based on widely established practices to ensure sufficient by as much as one-third if it were possible to perfect-
concrete strength, corrosion resistance, and other proper- ly match exposure class to the actual needs of each
ties for a given application (with different ‘exposure classes’ structural component.20
defining what is required). The minimum cement content
• In practice a perfect matching is very unlikely to be
for a given class of concrete is in fact directly regulated via
achievable, but these estimates illustrates the potential
standards, with little variation across the EU.18
size of the opportunity.
However, there is now a large body of research and prac-
The second opportunity is to modify production to
tical experience to show that the same requisite strength,
achieve the same strength of concrete with a much lower
reliability and durability can be achieved with significantly
cement content. The key concept is that of ‘binder intensity’:
lower cement content. In fact, there are opportunities to re-
how much cement is used for every unit of concrete (cubic
duce the amount of cement in concrete by as much as half
metre, m3), to generate a given compressive strength of (1
(Exhibit 4.6).
Megapascal, MPa) at the industry standard of 28 days.21
These opportunities fall in two categories. The first is to Today, the average binder intensity globally is 12 (kg of
reduce over-specification of the concrete compared with cement per m3 and MPa).22 With good current practice, a
what is needed for the intended application,SOURCE
which: MATERIAL binder intensity of 8 is achievable. For a strength of 30-40
occursECONOMICS (2018) . 22

for two major reasons: MPa, a typical target in many applications, this corresponds
to over 300 kg cement per m3 of concrete.
• Concrete manufacturers have an incentive to over-spec-
ify the product by adding more cement than necessary However, a range of experience shows that it is possible
– for instance, to make it robust against incorrect use to achieve the same strength with much less binder: in prin-
at the building site. Ready-mix concrete often contains ciple, it is possible to substitute up to as much as 70–75%
20% more cement than is required by standards. 19 of the binder with advanced filler materials, while achieving
the strength required.23 By a more cautious estimate, binder
• The concrete’s exposure class is often higher than the content could be reduced by 50% (Exhibit 4.6).24 In other
situation demands. Logistics and procurement are eas- words, it is possible in principle to reduce the amount of
ier when using the same, high-level class throughout, cement used by half.

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Exhibit 4.6
The use of advanced fillers enable a 50% reduction
in cement content without sacrificing concrete strength

BINDER INTENSITY OF CONCRETE

Kg CEMENT PER m3 OF CONCRETE AND MPa COMPRESSIVE STRENGTH

Improving the efficiency of cement in Advanced engineering of particle size

concrete by using sufficiently fine distributions combined with the use of
12 particles to fill the space between dispersants allow a binder replacement
aggregates can reduce the amount of of 50% or more by inert fillers
cement binder with one third from the (limestone, etc.) without negative effects
current global average of 12 kg per 8 8 28-day compressive strength.
on
m3 of concrete.
4-5

GLOBAL AVERAGE CURRENT PRACTICE MINIMUM REDUCTION ACHIEVABLE WITH

HIGH-FILLER CONCRETE

NOTES : THE DATA CONTRAST CURRENT PRACTICE WITH ‘HIGH FILLER LOW WATER’ APPROACHES. CURRENT PRACTICE LEADS TO A MINIMUM BINDER INTENSITY OF 8 kg
PER m 3 CONCRETE AND MPa COMPRESSIVE STRENGTH.SSIONS ARE ASSUMED TO BE FULLY DECARBONISED BY 2050 IN THE LOW-CO 2 PRODUCTION ROUTES.
SOURCES : MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 25

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Reducing the binder intensity of concrete requires chang- The first lever is to extend the lifetime of existing structur-
es to production, adopting more advanced techniques in the al elements, including through reuse. Buildings are rarely
blending and processing of concrete. demolished because the fundamental structure is unsound.
On the contrary, the shell can often last another 50 years.27
The approach of ‘high filler, low water’ concrete has sev- Instead, demolition is chosen because areas change their
eral steps. First, it is necessary to add an ultrafine filler that character or because refurbishing the building is consid-
allows for very high packing density. This can often be ordi- ered too expensive. The most resource-efficient approach
nary limestone, which is widely available and easy to grind, in such situations is to avoid demolition and instead refur-
but would need to be ground much more finely than today. bish. Where this is not possible, the next-best solution is to
Second, high-quality aggregates must be used. And third, reuse structural elements, either in the new building or in a
various admixtures are needed to reduce water requirements nearby development. This is being trialled at several places
while preserving workability. While these jointly represent a in the EU, including Denmark, Belgium and Germany, but
significant shift in practices, the techniques themselves are only at an experimental scale.28 As with many other circular
all relatively standard industrial methods. Grinding requires economy opportunities, reusing structural elements saves
no special equipment, although larger capacities would be resources but increases complexity, and often depends
required for more extensive grinding. Similarly, admixtures on the ability to match supply with requirements. However,
of various sorts are already used in 80% of ready-mix and stakeholders interviewed for this project indicate significant
precast concrete. interest, and many see increased potential if building pro-
Nevertheless, industry practices would need to change cesses are digitised to a greater extent.
considerably. For example, it may be necessary in some The second option is to optimise structures so that they
cases to accept longer hardening times, even if the same require less input of new concrete. This is a relatively unex-
28-day strength is achieved. Furthermore, action would be plored area, but it is known that the potential for materials
required by all actors in the supply chain, from producers of efficiency of construction has not been exploited. For exam-
ready-mix concrete to construction companies. Digitisation ple, various studies have documented that 35–45% of steel
of construction would be a crucial tool to allow for more vari- in construction is in excess of what is necessary to achieve
ation in the class of concrete used, and to track the intensity the desired structural strength.29 There are fewer similar pub-
of cement used. lished estimates of concrete overuse, but there does seem
For these techniques to become widespread, incentives to be a similar lack of optimisation with respect to materials
must also be changed. Today, there is little measurement efficiency.30 Stakeholder interviews for this study support this,
or reporting of materials efficiency in construction. Instead, but emphasise that the potential varies significantly by end-
practices remain unchanged due to a combination of current use segment. Civil engineering projects are often carefully
technical standards and protocols, entrenched practice, and designed, with much less overuse of concrete, whereas sev-
risk distribution along the value chains. In fact, current in- eral stages of buildings construction are prone to overuse.
dustry standards all but bar the use of advanced techniques A range of levers could reduce the amount of concrete
to reduce binder content, specifying a minimum amount. for a given structure, likely by as much as 45%.31 These
Denmark is a significant exception, allowing concrete with include: 3D printing; increased use of pre-fabricated ele-
half the amount of cement of other Member States.26 ments, which generally use less material due to optimisation
Given the extent of the changes required, we do not of shape; post-tensioning; and reduced waste in construc-
consider any scenario that captures the full potential. tion, which cuts the amount of concrete needed.

Achieving the full potential in this area would be a ma-

Less concrete per structure and service jor undertaking. Some aspects, such as greater used of
pre-fabricated elements, could be achieved with relative-
As well as cutting the amount of cement in concrete, it is ly minor modifications. However, more fundamental changes
possible to significantly reduce the amount of new concrete would require that the current Eurocode framework for safety
required for a given structure or service. criteria in construction be revisited, in itself a major undertaking.

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RECIRCULATION OF CONCRETE AND SUBSTITUTION WITH ALTERNATIVE MATERIALS

Unlike plastics or metals, cement is not easily recycled by are now many examples of new, large buildings using ad-
re-melting or similar processes, and the original chemical vanced wood products instead of traditional steel and con-
process cannot be reversed. Nonetheless, there are oppor- crete structures, such as Light House Joensuu in Finland
tunities to recover useful constituents from end-of-life cement and the planned London Google HQ.
to reduce requirements for new production. The other major
opportunity is to replace the clinker in cement with other Substitution is only a viable low-CO2 strategy if the
cementitious materials, or novel forms of cement binder. replacement material is genuinely zero-CO2. For wood
products, the main prerequisite is sustainable forestry.
Although sustainable forestry has many facets, from a
Cement and concrete recycling CO2 perspective, the basis for wood as a climate solu-
tion is that the managed forest must capture more CO2
End-of-life concrete is typically either not recycled at all per year and area than does an equivalent standing, old-
and instead sent to landfill, or downcycled into aggregates growth forest. Provided that forestry is conducted so that
for use in low-value applications such as road base. How- as much forest regrows as is harvested, a managed for-
ever, it is possible to recycle concrete fine particles (‘fines’) est can then capture more CO2 than an unmanaged or
as a source of calcium for new cement. This has immediate ‘natural’ forest.
CO2 benefits, as the 0.54 t CO2 of process emissions from
producing new clinker can be avoided. Given this, the CO2 savings can be substantial. By one
estimate, to support one square meter of floor space, the
Recycling of fines requires regrinding and medium-tempera- required wooden floor beams emit 4 kg CO2, while an equiv-
ture heating, both of which are substantially easier to render alent concrete slab floor emits 27 kg of CO2.34 However,
low-CO2 than the high-temperature heat of calcination or the precise estimates will vary from building to building. Addi-
production of clinker from limestone.32 Furthermore, technol- tionally, as construction products are long-lived, they can in
ogies are being developed that could recover the roughly themselves provide a source of CO2 storage on timescales
30–40% of end-of-life cement that is unreacted.33 This cement of several decades.
can then be used as raw material for new concrete production.
There currently appear to be no good estimates of the
The main obstacle is common to many forms of recy- potential to switch to wood, either as main construction ma-
cling: ensuring that the end-of-life stream is not contami- terial or in hybrid solutions. As an indication of the potential,
nated by other materials that downgrade quality. Specif- the European building stock is currently made up of 48%
ically, concrete must be separated from other building single-family homes and 27% multi-family homes.35 The po-
materials such as plaster or bricks. Therefore, demoli- tential for wood construction is relatively high in these seg-
tion practices would need to change in many cases. It ments, while the current market share is low (8–10% and
is also necessary to further develop advanced technol- 1–5%, respectively).36 On the other hand, the availability of
ogies for crushing, sensors, and thermal reactivation sustainably sourced wood is uncertain, given many compet-
(which is needed to bring back the binding properties). ing claims on the resource.

This study therefore takes a conservative approach of as-

Substitution with wood construction suming that up to 5% of concrete used for buildings could
be substituted with wood. Many stakeholders interviewed for
Given the challenges of cutting emissions from cement this study expressed the view that this was a highly conser-
production from zero, an alternative is to consider the use of vative assumption.
other materials that can more easily be rendered zero-CO2.
For wood to be a realistic alternative, regulations must
Wood provides a potential alternative for many structures allow it. Construction materials use is highly regulated by
that currently use cement and steel. Cross-laminated timber building codes. These often include limitations on the num-
(CLT) and other Engineered Wood Products (EWP) can pro- ber of floors that can be timber-based, due to fire safety and
vide additional structural strength that enable use in a wider acoustic performance.37 Many stakeholders argue that these
range of building components and higher buildings. There are outdated, not accounting for advances in wood products.

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Increased use of supplementary cementitious materials

Some of the clinker in cement can be replaced with other Natural pozzolans exhibit this pozzolanic behaviour with
materials with the binder properties required for concrete. minimal processing. They chiefly consist of volcanic ash,
These typically are referred to as ‘supplementary cementi- but can also include other ashes and volcanic glasses like
tious materials (SCMs). Use of SCMs has immediate CO2 pumicite or obsidian. They are extensively used in cement
benefits, as they typically only require grinding without heat- production in EU countries with convenient deposits, such
ing, and do not release any CO2 as process emissions. as Greece and Italy.
The use of SCMs already is established practice. Since A second set of minerals require heat treatment to trans-
the 1980s, the use of SCMs has reduced CO2 emissions form them into pozzolans. These include clay and shale,
by 20–30%.38 SCMs now make up 26% of cement in the both of which become pozzolans if calcined, and metaka-
EU, with clinker making up the remaining 74%.39 The largest olin. Calcined clays can be combined with limestone to re-
categories are limestone, fly ash, and blast furnace slag. duce the clinker content of to 50%.42 Though thermal energy
is needed, the temperatures are lower than in the production
The potential to increase the use of the current main SCMs of clinker and thus easier to switch to low-CO2 sources,
is limited. Limestone is already used near its maximum, while including electricity.
90% of coal fly ash and 80% of blast-furnace slag are already
directed towards use in construction.40 Moreover, the supply A major limiting factor for both natural pozzolans and cal-
of fly ash and blast-furnace slag is likely to fall substantially in cined clays is the local availability of raw materials. A major
a scenario where climate targets are met. Fly ash is largely a attraction of Portland cement is that the main constituent is
by-product of coal-fired power generation, which may be all ordinary limestone, which is widely available. Deposits of
but eliminated in a low-emissions scenario.41 Similarly, Chap- calcined clays and of natural pozzolans such as volcanic
ter 2 (Steel) shows that the volume of blast-furnace slag may ash are also available across the EU, but not nearly as uni-
be substantially in 2050 than it is to date, due to technology formly distributed. Extensive use of these SCMs would thus
shifts in steel production. require additional transportation, such as supply chains
from the Mediterranean basin to the wider seaboard of Eu-
Therefore, to continue the use of SCMs, significant new rope. However, such medium-distance sea freight has small
sources will be required. This is desirable not only for cli- emissions per tonne compared to cement production (and
mate reasons, but also because SCMs can improve cement can also be rendered much lower-CO2 by 2050).
properties, for instance achieving increased resistance to
sulphur and chlorine. This study examines two scenarios for the future use of
SCMs. In a stretch scenario, SCMs could replace 40% of
The main contenders for alternative SCMs are pozzolans, cement clinker in 2050 (compared with 26% today). In a
which can be either natural or calcined. A pozzolan is a si- more conservative scenario, they increase only slightly, to
liceous material that possesses little cementitious value by 30%. Depending on how much cement is produced, these
itself. However, if finely divided in the presence of moisture, scenarios require 41–56 Mt of SCMs in 2050, compared
it reacts with calcium hydroxide to form cementitious com- with 43 Mt today.
pounds like calcium silicate hydrate. In this form, they can
be used directly in concrete.

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Exhibit 4.7
Most alternative binders reduce process emissions only slightly,
and are also limited by the availability of materials
EMISSION INTENSITY PER BINDER TYPE (EXAMPLES)
TONNES PROCESS CO2 EMISSIONS PER TONNE BINDING MATERIAL
MATURITY1 AVAILABILITY 2

PORTLAND CEMENT
CLINKER
0.54

BELITE CLINKER 0.50

(BELITE) CALCIUM SULPHO-

ALUMINATE CLINKER
0.40

CALCIUM SULFO-
ALUMINATE CEMENT
0.30

ALKALI-ACTIVATED BINDERS 0.01-0.52

MAGNESIUM
SILICATE CLINKERS3 0.00

NOTES : 1MATURITY LEVELS: 1/3 R&D PHASE, 2/3 DEMONSTRATION-PILOT PHASE, 3/3 COMMERCIAL ,
2
AVAILABILITY ON A GLOBAL LEVEL, 3MAGNESIUM OXIDES DERIVED FROM MAGNESIUM SILICATES.
SOURCES : BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 43

Other binder alternatives and novel cements Notably, alkali- and geopolymer-based cements could in
principle eliminate nearly all process emissions, and ce-
There has long been a search for new cement chemistries ment based on magnesium silicate could eliminate them
that can substitute for Portland cement. From a CO2 per- entirely, but the required minerals are not widespread. In
spective, the chief attraction is the potential to reduce the pro- many cases, reported emissions savings are measured
cess emissions in cement manufacture. Some also absorb by comparing the new chemistries with pure Portland
CO2 when they are cured. Many such binders and cements cement, rather than cement that uses a degree of SCMs,
are in development, and it seems likely that at least some of so the true savings will be smaller than shown. Added to
them will play a role in the transition to net-zero emissions. this, there are obstacles to adoption, including technical
However, the current candidate options face a number of ob- parameters such as hardening time or final strength, or
stacles that limit their realistic role in a net-zero transition by the need for lengthy or highly specialised curing pro-
2050. Exhibit 4.7 shows the most prominent alternative bind- cesses.
ers and novel cements currently being developed.
Research and development of new cement chemistries
The chief limitation role of alternative clinkers in a net-zero should be a high priority, as it may ultimately be possi-
scenario is the extent of emissions reductions they offer and ble to achieve significantly greater emissions cuts than
the limited availability of raw materials. For example, be- are presented here. Nevertheless, in common with many
lite clinker reduces emissions by only 10%, while clinkers other studies, we see a restricted role by 2050, corre-
from calcium sulphoaluminate or carbonisation of calci- sponding to 5% of Portland cement in 2050. 44 Given the
um silicates achieve emissions reductions of 20–40%. premise of this study to achieve net-zero emissions, the
The general rule is that those substances with the most chief effect is to somewhat reduce the amount of CO2
potential to cut emissions are also the least available. that needs to be captured and stored via CCS.

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Any net-zero roadmap for concrete

must consider options to achieve close
to zero CO2 emissions from cement
kilns.

CLEAN PRODUCTION
Even with full use of materials efficiency, recirculation, and technology, fitting preheaters and precalciners, and recovery of
substitution options, there will still be a need for convention- process waste heat. By 2050, it is expected that current cement
al cement clinker production in 2050. Any net-zero road- kilns can become 10% more efficient relative to today by fur-
map for concrete therefore must consider options to achieve ther spreading these technologies.45 Fuel switching can provide
close to zero CO2 emissions from cement kilns, as well as some further emissions reductions, though as discussed below,
ways to cut emissions in the near-term. the role of alternative fuels will change in a 2050 perspective.

Exhibit 4.8 provides an overview of the main options and Fully eliminating CO2 emissions is restricted to two main
their representative CO2 reduction potential. Remaining ener- routes: either full carbon capture from both combustion and
gy efficiency potential is relatively limited, following widespread process emissions, or a combination of replacing the ener-
adoption of highly efficient processes among EU companies. gy used for heating with a zero-CO2 source, and capturing
The key technologies are a switch from wet kilns to dry kiln process emissions.

174
 Exhibit 4.8
Net-zero CO2 production of cement and concrete
requires some degree of carbon capture

CO2 INTENSITY OF CLINKER PRODUCTION FUEL EMISSIONS

TONNES CO2 PER TONNE CLINKER
PROCESS EMISSIONS

CURRENT CLINKER Current emissions from clinker consists of 35%

PRODUCTION 0.82 fuel emissions and 65% process emissions from
calcination of limestone.

ENERGY EFFICIENCY Energy efficiency improvements can reduce fuel

IMPROVEMENT 0.79 consumption with 10%.

Currently available alternative binders on average

ALTERNATIVE BINDERS
0.77 reduce process emissions by ~10% relative to
Portland clinker (weighted average).

FUEL SWITCH TO Natural gas can achieve a reduction of fuel

NATURAL GAS 0.72 emissions by ~35% compared to current fuel mix.

Using recycled cement fines can eliminate up to

RECYCLED FINES
0.71 20% of process emissions (more with very
ambitious scenarios for recycling).

FUEL SWITCH TO BIOMASS 0.54

Electrification of the cement kiln and fuel switch
to biomass can both eliminate fuel emissions from
clinker production.
ELECTRIFICATION OF KILN 0.54

SEPARATION AND CAPTURE OF PROCESS CO2

0.31
OXYFUEL CCS WITH FOSSIL FUELS Capture rates of 95-100% could be achieved
AND BIOMASS
0-0.04 through direct-separation + electrification or with
Oxyfuel CCS. Partial capture can achieve a
Net-zero CO2
net-zero emissions if a share of biomass is used in
production routes
ELECTRIFICATION OF KILN AND the fuel mix.
DIRECT SEPARATION OF PROCESS CO2 0-0.02

SOURCES: MATERIAL ECONOMICS ANALYSIS BASED ON MULTIPLE SOURCES, SEE ENDNOTE. 46

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CARBON CAPTURE AND STORAGE

The main challenge with clinker production are the CO2 The other main approach is to handle fuel and process
emissions from the limestone. These are irreducible, and emissions separately.48 In today’s kiln designs, the two
will arise as long as clinker is produced from this raw ma- streams are mixed. If they can be separated, the very pure
terial. This is a rare example of carbon capture being all flow of process CO2 could be relatively easily captured at
but indispensable if emissions to the atmosphere are to be rates close to 100%. Such separation of CO2 would require
avoided. modification to kiln design (to indirectly heat the limestone),
but it has the major attraction that no other capital expendi-
There are two main ways that CCS can be applied in ture would be necessary, except for equipment to compress
cement production. One is to capture CO2 emissions from the CO2 before it is transported and stored. With process
both the burning of fuels and from process emissions from emissions captured, fuel emissions could be eliminated
limestone. The fuel emissions are the most challenging. through electrification.
They contain many other gases than CO2, making high cap-
ture rates difficult to achieve. There is only limited practical Regardless of which approach is used, CCS faces major
experience of real-world trials of CCS on cement produc- obstacles. The 200 cement kilns in the EU are widely dis-
tion, with one active demonstration plant in the EU.47 persed, located near limestone deposits and serving local
markets to minimise transportation costs. Costs per tonne of
While there are many potential CCS technologies (see CO2 captured increase the smaller is the size of the facility,
Box to the right), most industry stakeholders and experts while transport costs would be particularly high for plants
interviewed for this study saw oxyfuel CCS as the likeliest sited far from storage locations. The cost of CCS therefore
long-term option to capture both fuel and process emis- is likely to increase sharply from the most to the least suited
sions. When fully developed, oxyfuel CCS could achieve a kilns.
capture rate of up to 95%. The last few tonnes of emissions
could then be abated through continued use of biomass in In this study, we consider penetration of CCS on 90% of
cement kilns, effectively creating some ‘negative emissions’ the production capacity. In combination with some biomass
to offset the CO2 that is not captured. use and high capture rates, this provides a net-zero solution
for the sector.

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Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

CARBON CAPTURE AND STORAGE

Carbon capture and storage (CCS) is the capturing and permanent storage
of CO2 emissions produced from the use of fossil fuels and industrial pro-
cesses (e.g. process emissions in the cement industry from the calcination
of limestone), preventing the CO2 from entering the atmosphere.

There are three categories of CCS: pre-combustion processes, post-com-

bustion processes, and oxyfuel combustion. In pre-combustion, a fuel is
first converted into hydrogen and CO2. The hydrogen is seperated and
burned for energy while the CO2 is captured. In post-combustion, CO2 is
seperated and captured from the exhaust gases of a combustion process
by absorbing it in a suitable solvent. Finally, in oxyfuel combustion the fuel
is burned in oxygen rather than in air. This produces a much purer stream
of CO2 that is easier to capture.

In the industrial sector, there is limited experience with capturing CO2. Indu-
strial CCS projects in the EU include (1) the Brevik project in Norway that is
testing different post-combustion technologies in the cement industry; (2)
the LEILAC project in Belgium that is developing Direct Seperation CCS for
process emissions in the cement industry; and (3) the HIsarna project in
the Netherlands that is exploring Smelting reduction with CCS for the steel
industry. There are currently no ongoing projects in the chemical industry.

Captured CO2 also has to be transported and injected deep into rock for-
mations for secure and permanent storage, and this has been a major
obstacle. There is a significant uncertaintiy and risk of storing CO2 under-
ground, effectively for eternity. In the EU, storage will most likely happen
in the North Sea, because the risk of leakage close to populated areas.

177
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Electrification of heat input More generally, cement kilns can supplement their core
fuels of coal and petroleum coke with a range of others.
Using electricity for heat input to cement production pos- Over the last 20 years, the cement sector has invested
es a considerable challenge, because the production pro- heavily in the use of alternative energy sources, espe-
cesses requires temperatures up to 1450°C. There are no cially waste-derived fuels. These now make up 30% of
commercially available solutions so far, but stakeholders the sector’s energy input.49 As a result, cement plants
interviewed for this project ascribe this more to a lack of a are an integral part of waste handling in several parts of
business case for their development, than to any intrinsic the EU. They are the destination of end-of-life flows such
technical obstacle. as tyres, end-of-life plastics and mixed wastes. The main
Developing solutions applicable for cement kilns would motivation behind the use of alternative fuels has been
have wider applicability as well, not just in including in lime economic. Cement plants often pay very little for waste
and ceramics production. Potential options include plasma streams, or even get paid to accept them, as it helps
energy, microwave energy, and indirect heating using hydro- avoid landfilling.
gen (see Box for an overview). However, the CO2 consequences of these alternative fu-
Alternative fuels els are complex. Much of the energy content in waste fuels
comes from fossil carbon, so the emissions are fossil CO2
As noted, EU cement production already derives 15% of its emissions. As discussed in Chapter 3 (Plastics), the inciner-
energy from biomass. However, increasing this share signifi- ation of end-of-life plastics and other fossil carbon sources
cantly could prove challenging, chiefly because of the many will tend to become a major source of CO2 in a net-zero
competing claims on this resource. Despite the challenges emissions economy. These energy sources therefore are
of electrification, it may be a more viable option. not a low-CO2 solution in a net-zero economy by 2050.

OPTIONS FOR ZERO-CO 2 HIGH-TEMPERATURE HEAT IN CEMENT PRODUCTION

Plasma generators can generate the very high temperatures needed for some of the steps in cement production, with an efficiency
of 85–90%. These generators are available at suitable output ranges and are already proven in industrial contexts. While no single
commercial plasma generator can output more than 7 MW, it is possible to run several generators in parallel to supply higher power
levels. However, one disadvantage is that the generators are sensitive to dust, so they tend to require maintenance every 200–300
hours. There is also the question of how to maintain heat transfer within the kiln. Plasma energy has been studied by CemZero, a
project run in partnership by the Swedish state-owned utility company Vattenfall and Cementa, a subsidiary of HeidelbergCement.

Using microwave energy for heating has the potential to reduce energy consumption by up to 40%. This is because microwaves can
be uniformly absorbed throughout the entire volume of an object, whereas traditional fuels warm an object gradually from the outside
inwards. To date, high-temperature microwave heating has not been used at scale in industrial processes, although microwaves are
routinely used at lower temperatures. However, a lab-scale prototype and a semi-industrial prototype has been developed in Europe
through the EU-sponsored DAPhNE project (2012–2015). Using microwaves for heating offers many other advantages for the indu-
stry, relative to traditional fuels. These include shorter processing times, the possibility of modular production facilities, lower annual
maintenance costs for kilns, and the option to operate kilns much more flexibly.

Hydrogen offers a dense source of energy that does not emit CO2, provided the hydrogen is made using a net-zero emissions techno-
logy. It has a higher technology readiness than microwave energy, so electrification through hydrogen could be deployed at an earlier
date. However, it would require substantial modification of existing cement plants. Furthermore, hydrogen would entail much higher
production costs, as it requires nearly twice as much energy as the microwave option.

178
RE-CARBONATION OF CEMENT
Cement structures gradually absorb CO2 over their lifetime, as free lime
in the concrete reacts with CO2 to form calcium carbonate. In standard
structures, the effect is relatively limited, as re-carbonation only occurs
at or near the surface of the structure and does not penetrate deeply.
In fact, when it does penetrate, it creates a problem for steel-reinforced
structures by causing corrosion of the supporting metals.

Re-carbonation can be increased and sped up if the concrete is crushed

at end of life and exposed to air. A wide range of estimates of re-carbo-
nation rates exist, but many appear to converge at around 20%, which
is close to value proposed by the EU cement industry for use in future
emissions inventory methodologies used by the Intergovernmental Panel
for Climate Change.50

If re-carbonation is included in standard emissions accounting protocols,

it can offer another element of a net-zero cement sector. If the proposed
value were to be used, residual emissions of up to 20% today could po-
tentially be accounted against future re-absorption tomorrow. This would
still require deep emissions cuts, using all the levers discussed in this
report, but would easy the pressure on the last, hard-to-get tonnes that
otherwise have to be addressed through near universal appliation of
CCS.

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 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

4.3 Low-emissions pathways for the EU cement sector

Clearly there is a very wide range of solutions that could als by 44% or 81 Mt through widespread adoption of
contribute to a net-zero emissions cement industry. These material efficiency, recirculation and substitution. This
solutions would address everything from how the basic corresponds to 65% of the technical potential identi-
binding material is produced, to how concrete is used in fied, so while the pathway does not require ‘perfect’
construction, to what is done with end-of-life concrete. implementation of any one strategy, most need to be
pursued to some degree. Production of cement is 103
Shifting to a net-zero system will require changes along Mt in 2050, split between electrified heat without CCS
the whole value chain, and reaching the full potential of (10 Mt), electrified heat with and carbon capture and
any of these opportunities is a considerable challenge. The storage (46 Mt) and fossil fuel-fired processes with oxy-
good news is that all can be pursued in parallel: there are fuel carbon capture and storage (46 Mt). This scenario
no major conflicts between low-CO2 clinker production, the means 31 Mt of CO2 per year is captured and stored
substitution of clinker with other materials, or changes to from cement production in 2050. The key enabler for
concrete composition, or to the use of concrete in struc- this scenario is the widespread adoption of new prac-
tures. At the same time, no single solution can achieve all tices by concrete companies, architects, constructors,
the necessary emission reductions. building companies, demolition companies, and others
in along the construction value chain. While the core
This study lays out three pathways to a net-zero emissions technologies for electrification and carbon capture are
EU concrete industry in 2050, with different degrees of required, they can be introduced later.
success and adoption of each measure (Exhibits 4.10 and
4.11). Each incorporates all the solutions identified above, • Carbon Capture pathway: This pathway is the one
but with different degrees of emphasis: most similar to existing cement ‘roadmaps’. Only 15% of
the potential for cement demand reduction is achieved,
• New Processes pathway: In this pathway, there is and patterns of use are largely similar to today. Materi-
modest success in capturing the potential for increased als efficiency and substitution reduce demand by 19 Mt
materials efficiency. Cement demand is reduced by 44 by 2050 and barely offsetting growth in activity. Produc-
Mt per year by 2050, requiring production of 140 Mt, tion of cement in 2050 therefore is similar to that today,
which is somewhat lower than that in 2015 (167 Mt). at 165 Mt. The emphasis is on integrated CCS on fuel
The key technology choice is widespread electrification and process emissions. 16 Mt is produced with electri-
of that input, in combination with separate capture of fied heat with carbon capture and storage, but as much
process CO2. With 90% of cement production using car- as 148 Mt using oxyfuel or other integrated CCS. As
bon capture, a total of 35 Mt CO2 is captured in 2050. a result, 85 Mt of CO2 per year is captured and stored
15% of energy input is biomass, thus achieving net-ze- from cement production in 2050. This pathway sees an
ro emissions from the sector overall. A major driver of all-out effort on CCS, which must be fitted across the
emission reductions is the rapid development of the EU on a large number of kilns. It shows what it would
underlying electrification and CCS technologies, with take to reach net-zero emissions if either electrification
widespread investment since the 2030s and plenty of or value-chain measures proved very hard to achieve,
clean electricity available. whereas CCS gained widespread acceptance and mo-
mentum, becoming a standard feature of industrial pro-
• Circular Economy pathway: In this scenario a large duction, supported by extensive infrastructure across
share of the circular economy potential is captured, re-
the continent.
ducing the need for production of cementitious materi-

180
 Exhibit 4.9
Pathways to net-zero emissions FOR Cement & Concrete

CO2 ABATEMENT
Mt CO2 PER YEAR

Baseline
EXTENSIVE ELECTRIFICATION OF CEMENT
109 108
PRODUCTION PROCESSES
100 • The pathway sees some adaptation of the
26
80 concrete value chain, but more emphasis on
22 changing the composition of cement and the
NEW PROCESSES 60 inputs to cement production
Pathway 11121
40 Remaining • Key enablers are i) abundant and affordable
Emissions electricity, with near complete electrification of
20 35
production, and ii) innovation and investment
0 in processes to enable separate capture of process
2015 2050 CO2

Baseline EMPHASIS ON MATERIALS EFFICIENCY, NEW

109 108 BUSINESS MODELS, AND SUBSTITUTION
100 • The pathway sees concerted effort by actors
48 throughout the value chain including cement
80
producers, concrete manufacturers, architects,
CIRCULAR ECONOMY 60 construction companies, demolition companies
Pathway
18 to jointly capture two-thirds of the materials
40 Remaining 9
Emissions efficiency and substitution potential
20 31 • Key enablers include revision of standards to
0 enable new practices, behavior change and
diffusion of new practices across the value chain,
2015 2050
and digitisation and introduction of new
construction processes
Baseline
109 108
11 MINIMAL CHANGE TO VALUE CHAIN AND
100 9 EXTENSIVE CAPTURE OF CO2 FROM CEMENT
80 3 PRODUCTION
• The pathway sees only minor change to the
CARBON CAPTURE 60
Pathway 85 cement production process and to the use of
40 Remaining cement and concrete.
Emissions • Instead the emphasis is on CCS at nearly all
20
cement plants
0
2015 2050

MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS

MATERIALS RECIRCULATION AND SUBSTITUTION
NEW PROCESSES
CARBON CAPTURE AND STORAGE
REMAINING EMISSIONS

SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

181
 Exhibit 4.10
Production routes in net-zero pathways

EUROPEAN CONCRETE PRODUCTION MIX TO ACHIEVE NET ZERO EMISSIONS IN 2050

Mt CEMENTITIOUS MATERIAL PRODUCED PER YEAR AND ROUTE

184 334
44 EXTENSIVE ELECTRIFICATION OF CEMENT PRODUCTION
14 PROCESSES
•100% electrification of cement kilns
NEW PROCESSES • Direct separation CCS on 90% of cement plants
Pathway • Medium level of materials efficiency and substitution levers (44 Mt less
126
cement relative baseline in 2050)

184

EMPHASIS ON MATERIALS EFFICIENCY, NEW BUSINESS

81 MODELS, AND SUBSTITUTION
• 65% of the substitution and demand-side potential captured, reducing
CIRCULAR ECONOMY
10
cement production by 81 Mt in 2050
Pathway 46 • 90% of cement kilns fitted with CCS, with production of 55 Mt of
cement per year
46 • 55% of cement kilns electrified

184
19
16
MINIMAL CHANGE TO VALUE CHAIN AND EXTENSIVE
CAPTURE OF CO2 FROM CEMENT PRODUCTION
CARBON CAPTURE
• 100% CCS on cement kilns
Pathway 148 • 90% of CCS using Oxyfuel CCS and 10% using direct separation CCS
• 10% electrification, use of biomass to achieve net-zero emissions

MATERIALS EFFICIENCY AND CIRCULAR BUSINESS MODELS

ELECTRIFICATION OF KILN

ELECTRIFICATION OF KILN AND DIRECT SEPARATION OF PROCESS CO2

OXYFUEL CCS WITH FOSSIL FUELS AND BIOMASS

SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

182
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

The transition to net-zero

emissions will be significantly
easier if more circular economy
solutions can be mobilised.

The three pathways are designed to be substantially dif- ising, are only at an emerging stage today – not least of
ferent, but there are recurring themes. Carbon capture and them CCS. Increased demonstration is needed in all three
storage is used in all three. However, the amount of CO2 cases, but especially in the Carbon Capture pathway. Elec-
captured varies significantly, between 31 and 85 Mt. This trification, the mobilisation of new sources of supplemen-
reflects the considerable uncertainty about the cost and tary cementitious materials (SCMs), high-filler concrete, a
the availability of storage capacity that is situated near- change towards more pre-cast structures, and new con-
by and socially accepted. In all pathways, all production struction techniques will all take time and require technical
is shifted away from the current production route. There innovation, behavioural change, new business models, and
is no pathway that does not entail major investment and in some cases regulatory change. In all cases, early policy
transformation, either in cement kilns or in other steps of guidance will be required, as options are rarely viable in
the value chain. today’s market conditions.

Likewise, while the emphasis in these pathways is on truly The transition to net-zero emissions will be significantly
net-zero options, a range of solutions play an important easier if more circular economy solutions can be mobilised,
role in early emissions reductions, including fuel switch which have a very substantial potential in this sector. These
to biomass and energy/electrical efficiency improvements. buy time for technology development, and as we discuss
They enable deeper cuts before the mid-2030s, when oth- below, can reduce cost, investment needs, and input re-
er solutions can be deployed at larger scale. quirements. They deserve special emphasis, as they are
currently not part of industrial strategy or of climate policy,
Another cross-cutting insight is that all pathways depend and have not been recognised in most ‘roadmaps’ for future
on significant acceleration of solutions that, while prom- cement production.

183
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

DEEP CUTS TO EMISSIONS WILL INCREASE THE COST OF PRODUCING CEMENT BY 70–115%
The new ways of producing cement come at a substantial es) face coordination costs that are high today, but which
cost relative to today’s practices. By 2050, the additional could fall significantly in a more digitised construction indus-
costs range would be €6–9 billion per year, implying an try that also employs more advanced techniques, including
average abatement cost of €60–83 per tonne CO2. 3D printing.

There are differences between the pathways, with the cir- This leads to three main conclusions. First, the most
cular economy pathway the more cost-effective (€6.3 billion cost-effective solution will vary across markets and with lo-
per year). At an electricity price of €60 per MWh, the New cal circumstances, notably electricity prices and the cost of
Processes pathway appears more expensive (€6.8 billion carbon storage and transport. However, cost alone is not a
per year in 2050) than the Carbon Capture pathway (€8.6 robust basis at this stage in the transition for choosing one
billion per year), but the difference is negligible if electricity approach over another. It is likelier that the barriers – of
is available at €40 per MWh or less. innovation and rapid deployment, mobilisation of measures
in the value chain, and acceptance and infrastructure for
The new production routes add significant costs to cement CCS – will determine which solution is most promising in a
production (Exhibit 4.11). Electricity becomes a major part given setting.
of production cost for any electrified route of production, but
increased capital costs and the cost of carbon transport Third, the level of cost increase could drive very substantial
and storage also make up significant elements. change in the industry. Of particular concern is the signifi-
cant risk of carbon leakage. A cost increase of €40 or more
The cost of increased materials efficiency and improved per tonne of cement is more than enough to offset transpor-
circularity are among the hardest to estimate. Surveying a tation costs from a range of geographies. Even if carbon
range of levers, however, they appear relatively more cost-ef- leakage has not occurred on a large scale today, it would
fective compared with the high cost of electrification and become a very real prospect with this large an increase in
CCS. In particular, the techniques underlying increased use the price of cement.
of SCMs and high-filler cement are much less resource-in-
tensive, and could see a cost advantage once they reach Given this picture, policy will play an indispensable role in
industrial scale. Others (such as reuse or optimisation of making low-CO2 cement production viable, and to support a
structural elements, or variation in concrete exposure class- transition that otherwise will raise many challenges.

184
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

Exhibit 4.11
The production cost of net-zero CO2 cement is 70-115%
higher than current production

CEMENT PRODUCTION COSTS PER ROUTE OR COST OF MATERIALS EFFICIENCY AND SUBSTITUTION PER TONNE CEMENT AVOIDED
EUR PER TONNE OF CEMENT

109

11
94
88
11
16
44
40-70
29
18

51
6
9 CCS
24 24
6 ELECTRICITY
25
FUEL
17
CAPEX
30 30
23 OTHER
19

CURRENT CEMENT OXYFUEL ELECTRIFICATION ELECTRIFICATION MATERIAL EFFICIENCY

PRODUCTION WITH CCS WITH CCS AND CIRCULARITY
(40 EUR/MWh) (60 EUR/MWh)

ABATEMENT COST
EUR PER TONNE CO2 60 66 89 28

NOTE: HIGH ESTIMATE FOR MATERIALS EFFICIENCY AND CIRCULARITY IS USED TO CALCULATE ABATEMENT COST.
SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

185
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

INVESTMENT IN THE CEMENT SECTOR WILL NEED TO RISE BY 20–50%

The transition to a net-zero emissions cement sector will energy sources, or to adapt sites for carbon capture and
require a new wave of investment in the industry, with sub- onward transport and storage. Replacing current energy
stantially higher investment levels than in the baseline sce- systems also has a range of knock-on effects.
nario. Total investment needs increase by one-third in the
New Processes pathway, but by half in the more capital-in- These investment estimates are based on a gradual re-
tensive Carbon Capture pathway. The Circular Economy investment and replacement in current production facilities,
pathway sees a lower overall increase of 22%, as many of and the gradual build-up of alternative solutions for SCMs
the underlying opportunities are much less capital-intensive and for concrete. However, given the size of cost differenc-
than is cement production. Overall, the total additional cap- es between low-CO2 and current production routes, it is
ital requirements are an additional €150–350 million per possible that much more drastic change will be required.
year, on average, until 2050. Cement production today is organised for local sup-
ply, from facilities with low incremental cost per tonne but
The main reason why investment needs increase is that the
substantial capital outlay. With much higher marginal cost,
underlying processes are more capital-intensive. CCS always
or with large changes to demand patterns, several other
entails significant investment either in adaptation of the kiln or
changes are possible. One possibility is that it would push
in capture equipment. Electrification uses more capital-inten-
towards further consolidation of the industry, a development
sive methods than standard combustion methods of heating.
that some industry stakeholders anyway expect. New fac-
Companies will also need to invest more for a range of tors would then become relevant, including access to car-
other reasons. The amounts required for early investment in bon storage, access to new sources of raw materials (cal-
pilot and demonstration plants are not large compared with cined clays and natural pozzolans, in addition to limestone),
a full industry roll-out. However, they can be among the most or other local advantages. Such a consolidation scenario is
difficult for companies to undertake, as there often is little not represented in these pathways, but would require addi-
direct commercial benefit. tional investment.

Another source of investment is the need for one-off con- Either way, policy will play an indispensable role, both in
version of brownfield sites to use new raw materials and creating the underlying business case and in reducing risk.

186
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

Exhibit 4.12
Investment requirements in a net-zero transition
increase by 22-49% on baseline levels

INVESTMENT IN CEMENT PRODUCTION CAPACITY

INCREASE RELATIVE TO BASELINE
BILLION EUR PER YEAR
+ X%

PATHWAY
BASELINE

+34 % +22 % +49 %

0.7
1.4

1.2 0.7 0.7

1.1 1.2
1.1 1.1
1.0 1.0
1.0 1.0 1.0 0.9
0.7
0.9 0.9 0.7
0.8 0.9
0.8 0.7 0.7
0.8 0.7 0.8
0.7 0.7 0.7
0.6 0.6

0.4

0.2

0.0
2020 203 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

1,4
1,2 1,1

187
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

Exhibit 4.13
The level and mix of energy sources changes
significantly in a net-zero transition

ENERGY MIX FOR CEMENT PRODUCTION, 2050

PJ ENERGY PER YEAR

MATERIALS EFFICIENCY AND RECIRCULATION FOSSIL AND WASTE FUELS ELECTRICITY

MORE EFFICIENT PROCESSES BIOMASS

535 PJ IN
533 A 2050
BASELINE
54 SCENARIO
157 127 4
PETROLEUM
COKE
235
28

272
137 WASTE FUELS 20
476
73
COAL AND 380 13
100 380 280 47
OTHER

69 194
157

70

2015

NEW PROCESSES CIRCULAR ECONOMY CARBON CAPTURE

Pathway Pathway Pathway

SOURCE: MATERIAL ECONOMICS ANALYSIS AS DESCRIBED IN TEXT.

A NET-ZERO EMISSIONS INDUSTRY WILL NEED NEW AND DIFFERENT INPUTS

A net-zero emissions concrete industry will potentially The other major shift is towards electricity, which increas-
see a very major change in the inputs used (Exhibit 4.13). es most in the maximal electricity use represented by the
In a baseline scenario, total energy use in 2050 would be New Processes pathway, but increases also in the Carbon
similar to today, as increased efficiency largely offset an Capture pathway, in part to drive the carbon capture pro-
increase in production. The major changes to concrete use cess. The Carbon Capture pathway otherwise maintains
in the Circular Economy pathway sees a very major reduc- much more use of fossil and waste fuels. The biomass re-
tion in energy requirements, as the large energy needs of quired to achieve full net-zero emissions is relatively small,
cement production are replaced by measures with much lower than the sector uses today, but with less CCS pen-
lower energy intensity (despite transportation, grinding, etration, requirements for deep cuts from the sector as a
and other requirements). whole would rise rapidly.

188
 Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry / Cement & Concrete

Policy will play an indispensable

role, both in creating the underlying
business case and in reducing risk.
189
ENDNOTES
Chapter 1
1
The carbon budget for materials production is estimated to 300 Gt CO2 (Material Economics, 2018), based on the average of available scenarios in the IPCC AR5 database
(Intergovernmental Panel on Climate Change, 2014). The overall carbon budget is estimated to 800 Gt for the period 2015-2100 (Material Economics, 2018), based on Mercator
Research Institute on Global Commons and Climate Change (2018).

Intergovernmental Panel on Climate Change (2014). IAMC AR5 Scenario Database. https://secure.iiasa.ac.at/web-apps/ene/AR5DB/.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

Mercator Research Institute on Global Commons and Climate Change (2018). Remaining carbon budget. https://www.mcc-berlin.net/en/research/co2-budget.html.

2
Prominent existing industrial roadmaps include analyses published by CEMBUREAU and the International Energy Agency for Cement (CEMBUREAU, 2013 and International
Energy Agency, 2018), EUROFER for steel (EUROFER, 2013), and CEFIC and DECHEMA for chemicals industry (CEFIC, 2013 and DECHEMA, 2017), and the International
Energy Agency for integrated scenarios including industry (International Energy Agency, 2017). More recently, the most prominent update is the analysis by the European Com-
mission (European Commission, 2018c).

CEFIC (2013). European Chemistry for Growth: Unlocking a Competitive, Low Carbon and Energy Efficient Future. http://www.cefic.org/Industry-support/.

CEMBUREAU (2013). The Role of Cement in the 2050 Low Carbon Economy. http://lowcarboneconomy.cembureau.eu/.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

European Commission (2018c). A European Long-Term Strategic Vision for a Prosperous, Modern, Competitive and Climate Neutral Economy.

The European Steel Association (EUROFER) (2013). A Steel Roadmap for a Low Carbon Europe 2050. Steel Industry.

International Energy Agency (IEA) and The World Business Council for Sustainable Development (WBCSD) (2018). Technology Roadmap - Low-Carbon Transition in the
Cement Industry. http://www.iea.org/publications/freepublications/publication/TechnologyRoadmapLowCarbonTransitionintheCementIndustry.pdf.

3
This refers to direct employment in the production cement, steel, and plastics in primary form. Adding the next step in the value chain (concrete production, manufacturing of
plastics products, and indirect and induced GVA from steel), the numbers are 5 million employees and a €362 billion addition to GDP.

CEMBUREAU (2017b). Key facts & figures. https://cembureau.eu/cement-101/key-facts-figures/.

European Commission (2018a). A European Strategy for Plastics in a Circular Economy. http://ec.europa.eu/environment/circular-economy/pdf/plastics-strategy.pdf.

The European Steel Association (EUROFER) (2018). European Steel In Figures 2018. http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFigures.pdf.

4
CEMBUREAU (2017a). Activity Report 2017. https://cembureau.eu/media/1716/activity-report-2017.pdf.

The European Steel Association (EUROFER) (2018). European Steel In Figures 2018. http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFigures.pdf.

5
Eurostat (2019b). Trade statistics (Comext data code: DS-018995).

Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

The European Steel Association (EUROFER) (2018). European Steel In Figures 2018. http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFigures.pdf.

6
OECD (2018b). Recent Developments in Steelmaking Capacity. DSTI/SC(2018)2/FINAL.

7
CEFIC (2018). Landscape of the European Chemical Industry 2018. http://www.chemlandscape.cefic.org/wp-content/uploads/combined/fullDoc.pdf.

8
Eurostat (2018). Packaging waste statistics - Statistics Explained. https://ec.europa.eu/eurostat/statistics-explained/index.php/Packaging_waste_statistics.

9
Steel scrap export volumes are given by the Bureau of International Recycling (BIR, 2018) and by Eurofer (Eurofer, 2018). The value is based on recent steel scrap prices as
published by the London Metal Exchange (The London Metal Exchange, 2019).

The London Metal Exchange (2019). LME Steel Scrap. London Metal Exchange: LME Steel Scrap, 27 February. https://www.lme.com/Metals/Ferrous/Steel-Scrap#tabIndex=2.
Proice.

190
Bureau of International Recycling (BIR) (2018). World Steel Recycling In Figures 2013 – 2017. Brussels, Belgium. https://www.bdsv.org/fileadmin/user_upload/180222-Fer-
rous-report-2017-V07.pdf.

The European Steel Association (EUROFER) (2018). European Steel In Figures 2018. http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFigures.pdf.

10
Production volumes: 163 Mt of cement (WBCSD Cement Sustainability Initiative, 2016), 17 Mt of ammonia (International Fertilizer Association, 2016), 169 Mt of Steel (Euro-
fer, 2018, and Bureau of International Recycling, 2018), 64 Mt of primary plastics (Plastics Europe 2018) and around 4 Mt of recycled plastics (see Plastics chapter). Use cate-
gories have been broadly divided into construction, infrastructure, transportation, machinery, packaging, agriculture, and other based on steel, plastics, and cement sector chapter
analyses. 80% of ammonia is used for fertilizers, based on Dechema (2017). End-of-life volumes for steel and plastics are found in the sector chapter analyses. No authoritative
statistics quantifying annual cement waste exist. Estimate is based on Material Economics analysis assuming all EU construction waste to be waste, the share of concrete in waste
to be 42% and cement share of concrete to be 16%.

Bureau of International Recycling (BIR) (2018). World Steel Recycling In Figures 2013 – 2017. Brussels, Belgium. https://www.bdsv.org/fileadmin/user_upload/180222-Fer-
rous-report-2017-V07.pdf.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

The European Steel Association (EUROFER) (2018). European Steel In Figures 2018. http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFigures.pdf.

Eurostat (2019a). Generation of waste by waste category, hazardousness and NACE Rev. 2 activity (env_wasgen). http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=env_
wasgen&lang=en.

International Fertilizer Association (IFA) (2016). Ammonia production and trade statistics.

Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

Based on energy and industry CO2 emissions of 3,536 million tonnes in 2014 (international Energy Agency, 2017) and consistent with data reported by the European Environ-
11

ment Agency.

International Energy Agency (IEA) (2017). Energy Technology Perspectives 2017: Catalysing Energy Technology Transformations. International Energy Agency, Paris.

European Environment Agency (2019). Total greenhouse gas emission trends and projections. February. https://www.eea.europa.eu/data-and-maps/indicators/greenhouse-gas-
emission-trends-6/assessment-2.

Total emissions estimate for the sectors are based on European Union Transaction Log (European Commission, 2017), electricity consumption data from Eurostat (Eurostat,
2017), plastics end-of-life treatment data based on previous analyses (Material Economics, 2018), and bottom-up data of process CO2 emissions based on multiple sources as
given in the sector-specific chapters.

European Commission (2017). Climate Action - European Union Transaction Log. 11 October. http://ec.europa.eu/environment/ets/.

Eurostat (2017). Electricity production, consumption and market overview - Statistics Explained. Eurostat - Statistics Explained, June. http://ec.europa.eu/eurostat/statistics-ex-
plained/index.php/Electricity_production,_consumption_and_market_overview.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

12
It would be possible in principle to prevent the release of this CO2 by storing plastics instead of burning them. However, landfilling has many other disadvantages, which has
led the EU to set ambitious landfill-reduction targets. The options for end-of-life treatment of plastics going forward therefore are either recycling or incineration.

13
Emissions from materials production and end-of-life treatment (for plastics) has been categorised into ‘easier-to-abate’ emissions (electricity and low- and mid-temperature
heat) and ‘hard-to-abate emissions’ (process emissions, high temperature heat, and end-of-life treatment). For steel, 40% of direct emissions from BF-BOF and all direct emis-
sions from EAF are allocated to process emissions, and the remaining 60% of direct emissions from BF-BOF allocated to high-temperature heat. For cement, emissions from
fuel use are allocated to high-temperature heat, and remaining direct emissions are process emissions. For plastics, 100% of refinery emissions and 50% of direct emissions
from steam cracking and polymerisation are allocated to process emissions. Remaining 50% of direct emissions from steam cracking are allocated to high-temperature heat and
remaining 50% of direct emissions from polymerisation are allocated to low- and mid-temperature heat. Emissions from end-of-life incineration and transport emissions from
mechanical recycling (negligible) are allocated to end-of-life emissions. For ammonia, 1/3 of the direct emissions have been allocated to low- and mid-temperature heat, and the
remaining 2/3 of the direct emissions to process emissions. All electricity use is categorised into emissions from electricity.

14
CO2 and nitrous oxide emissions from fertiliser application are not included in the analysis. In keeping with current inventory methodologies, the analysis also does not include
the potential for cement to absorb CO2 through recarbonation.

191
15
Material Economics (fortcoming). Industrial Transformation 2050 - Appendix.

16
See references in Endnote 2.

17
See the detailed chapters on each sector for discussion. In brief, important examples include the electrification of steam crackers, which leaves in place the process emissions
from the 35-45% of by-products that are not HVCs, and also does not solve the issue of end-of-life emissions from plastics; non-fossil input to cement kilns, which leaves the
process emissions from calcination that constitute 60% of the total; capture of the pure CO2 stream from ammonia process emissions is cheap, which leaves the 40-50% of CO2
emissions that stem from fuel use; and CCS on blast furnaces in steel production, which typically leaves other emissions sources that constitute 40% of the total emissions from
steel production.

18
Allwood, J. M., Ashby, M. F., Gutowski, T. G. and Worrell, E. (2011). Material efficiency: A white paper. Resources, Conservation and Recycling, 55(3). 362–81.
DOI:10.1016/j.resconrec.2010.11.002.

International Energy Agency (IEA) (2019). Material Efficiency in Clean Energy Transitions. OECD. DOI:10.1787/aeaaccd8-en.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

19
European Commission (2018b). Energy efficiency first: Commission welcomes agreement on energy efficiency. www.europa.eu, 19 June. http://europa.eu/rapid/press-release_
STATEMENT-18-3997_en.htm.

20
Many of these opportunities are described in more detail in the report The Circular Economy – a Powerful Force for Climate Mitigation (Material Economics, 2018).

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

21
See The Circular Economy – a Powerful Force for Climate Mitigation (Material Economics, 2018) and the sector chapters in this report for details about the underlying oppor-
tunities.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

22
See The Circular Economy – a Powerful Force for Climate Mitigation (Material Economics, 2018) and the forthcoming appendix to this report (Material Economics, forthcom-
ing)

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

Material Economics (fortcoming). Industrial Transformation 2050 - Appendix.

23
Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.
24
The widely reported numbers for plastics recycling refer to the share of reported plastics waste that is collected for recycling. Thus, this number only account for the collected
plastics waste (there are also other streams of plastics waste that is part of e.g. the municipal waste stream). Moreover, there are significant sorting and recycling losses, meaning
that the volumes of plastics waste collected for recycling is significantly larger than the volumes of plastics produced through recycling that can replace the production of primary
plastics. See the sector chapter on Chemicals in this report as well as for example Van Eygen et al. (2018).

Van Eygen, E., Laner, D. and Fellner, J. (2018). Circular economy of plastic packaging: Current practice and perspectives in Austria. Waste Management, 72. 55–64.
DOI:10.1016/j.wasman.2017.11.040.

25
However, this study does not find that it is necessary to use still more energy intensive ‘power-to-X’ technologies at large scale. These synthesise fuels or chemicals directly
from CO2 and hydrogen, and are three times more electricity-intensive than the bio-based and chemical recycling routes used in this study.

26
The cost increase of a soft drink has been calculated for a 1.5 EUR bottle weighing 26 grams. The current cost of plastics raw-materials are based on average polymer prices
from OECD (2018). The cost increase of a building has been calculated using a total cost for buildings of 5,994 EUR/m2 and an average of 3 tonnes of materials per m2 (Material
Economics, 2018). The composition of materials in a building is based on Ecorys et al. (2014), resulting in on average 74 kg of steel, 15 kg plastics, and 206 kg of cement per m2.
The cost increase of a car is calculated for an average car with a sales price of 20,661 EUR with a tax rate of 21% (based on European Automobile Manufacturers Association,
2013) weighing 1.4 tonnes (ICCT, 2012). The composition of materials in a car is based on Material Economics (2018), resulting in on average 916 kg steel and 130 kg plastics
per car. The material cost increases in 2050 is calculated using the modelled average production cost in 2050 in the pathway with the highest production cost for each material,
respectively, compared to current costs for each material.

Ecorys, Copenhagen Resource Institute, Herczeg, Dr. M., McKinnon, D., Milios, L., Bakas, I., Klaassens, E., Svatikova, Dr. K. and Widerberg, O. (2014). Resource Efficiency in
the Building Sector. Rotterdam.

European Automobile Manufacturers’ Association (ACEA) (2013). The Automotive Industry Pocket Guide. https://www.acea.be/uploads/publications/POCKET_GUIDE_13.pdf.

International Council on Clean Transportation (ICCT) (2012). European vehicle market statistics - Pocketbook 2012. 107.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

OECD (2018a). Improving Markets for Recycled Plastics: Trends, Prospects and Policy Responses. OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264301016-en.

27
See The Circular Economy – a Powerful Force for Climate Mitigation (Material Economics, 2018) for a detailed discussion of the cost of different measures. The Appendix to
this report provides additional detail of the cost estimates underlying these calculations.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

Material Economics (fortcoming). Industrial Transformation 2050 - Appendix.

192
28
Specifically, the prices are based on commodity prices in the International Energy Agency’s SDG scenario (International Energy Agency, 2018), complemented with data on
end-use costs to industry from Material Economics experience with working with industrial companies.

International Energy Agency (IEA) (2018). World Energy Outlook 2018. https://www.iea.org/.

29
See, for example, Öko-Institut (2017) and Agora Energiewende (2015)

Agora Energiewende (2015). The Integration Cost of Solar and Wind Power.

Öko-Institut (2017). Renewables versus fossil fuels – comparing the costs of electricity systems. https://www.agora-energiewende.de/fileadmin2/Projekte/2016/Stromwel-
ten_2050/Agora_Gesamtkosten-Stromwelten-EN_WEB.pdf.

30
Specifically, all cost estimates for hydrogen are based on a load profile of 5000 hours’ operation per year. This results in higher electrolyser capacity as well as hydrogen
storage costs, which are account for in the cost modelling, but on the other hand allows for electricity costs that are closer to the levelized cost of a combination of offshore and
onshore wind in combination with solar photovoltaics.

31
Assuming an average turbine of 2.2 MW producing 4.7 GWh annually.

32
DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

33
See sector chapters for details of the underlying analysis.

34
A large plant is estimated to have an annual production of 4.5 Mt steel and a total electricity need of 3.5 MWh/t produced steel.

35
Elbersen, B., Startisky, I., Hengeveld, G., Schelhaas, M.-J., Naeff, H. and Böttcher, H. (2012). Atlas of EU Biomass Potentials. https://ec.europa.eu/energy/intelligent/projects/
sites/iee-projects/files/projects/documents/biomass_futures_atlas_of_technical_and_economic_biomass_potential_en.pdf.

36
CEPI (2017). Key Statistics 2017 - European Pulp & Paper Industry.

37
See endnote 35.

Chapter 2
1
Material Economics analysis based on Pauliuk et al (2013). In 2017, the EU steel stock was 11.92 tonne steel per person with 73% of the steel stock being in the construction
sector.

Stefan Pauliuk, Tao Wang and Daniel B. Müller (2013). Steel all over the world: Estimating in-use stocks of iron for 200 countries. Resources, Conservation and Recycling, 71.
22–30. DOI:10.1016/j.resconrec.2012.11.008.

2
Material Economics analysis, calculated bottom-up based on EU production volumes and emission factors of the BF-BOF and EAF route. EU production volumes in 2015
was 101 Mt for the BF-BOF route and 65 Mt for the EAF route based on Eurofer (2018). Emissions factors include direct and indirect emissions for crude steel production and
include emissions from some downstream processes (continuous casting and hot rolling) but not all downstream processes such as cold rolling. Total downstream emissions in
2015 is estimated to be 0.11 tCO2 / t steel. Direct emissions of the routes are based on a wide literature study and conversations with industry experts while indirect emissions
are based on electricity use for the two production routes and an average CO2 emission factor of 0.35 tCO2 / MWh for the EU electricity grid based on the IEA (2017). Electricity
use has been checked with multiple sources and industry experts and the calculated indirect emission factor has been verified with literature. Based on Eurofer (2013) and expert
interviews, it has been assumed that the BF-BOF route produces all of its electricity use and the emission factor for direct emissions has therefore been adjusted for this assump-
tion.

The European Steel Association (EUROFER) (2013). A Steel Roadmap for a Low Carbon Europe 2050. Steel Industry.

Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

Fischedick, M., Marzinkowski, J., Winzer, P. and Weigel, M. (2014). Techno-economic evaluation of innovative steel production technologies. Journal of Cleaner Production, 84.
563–80. DOI:10.1016/j.jclepro.2014.05.063.

Doug Zuliani, Vittorio Scipolo and Carsten Born (2009). Opportunities to reduce costs and lower GHG emissions in EAF and BOF steelmaking. Stahl und Eisen, 129.

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

International Energy Agency (2017a). Energy Technology Perspectives 2017. www.iea.org/etp2017.

3
EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

4
EU steel production dropped from 199 Mt crude steel per year in 2008 to 139 Mt crude steel per year in 2009 according to

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

193
5
European Commission (2018). Steel: Global Forum takes important steps to tackle overcapacity. http://europa.eu/rapid/press-release_IP-18-5865_en.htm.

6
Losses are calculated from an 85% effective recovery rate based on Pauliuk (2013) and World Steel Association (2009). Production volumes, demand, and end-of-life volumes
are based on Eurofer (2018). Steel use per sector from Eurofer (2018) have been categorized by Material Economics in four major groups, ‘Transportation’, ‘Construction’,
‘Products’, and ‘Other’, which means that the data cannot be looked up directly. Metalware and tubes have been split among several of these categories.

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

Stefan Pauliuk, Rachel L. Milford, Daniel B. Müller and Julian M. Allwood (2013). The Steel Scrap Age. Environmental Science & Technology, 47(7). 3448–54. DOI:10.1021/
es303149z.

Stefan Pauliuk, Tao Wang and Daniel B. Müller (2013). Steel all over the world: Estimating in-use stocks of iron for 200 countries. Resources, Conservation and Recycling, 71.
22–30. DOI:10.1016/j.resconrec.2012.11.008.

World Steel Association (2009). The Three Rs of Sustainable Steel. Brussels/Beijing. Fact Sheet.

7
The modelling approach is a dynamic materials flow analysis model based on that developed by Pauliuk et al (2013). This incorporates stocks (historical stock flows, future
stock levels), scrap formation (product lifetimes, scrap formation, collection rates, remelting losses, etc.), and derived new production requirements. Transportation, Machinery,
Construction, and Products are modelled separately. Four factors drive this demand for steel produced in the EU:

1. The need to build up the stock of steel to supply demand for new structures and product. The EU’s steel stock has increased from around 6.1 tonnes per capita in 1970 to 11.8
tonnes per capita in 2015. During the same period, the EU’s population grew by 69 million people.

2. The need to replace end-of-life products and structures. The lifetime of steel varies a lot depending on use, from less than 10 years for some consumer products, to many
decades for infrastructure. On average, some 2–3% of the EU’s steel stock is turned over every year.

3. The need to cover steel that is lost as scrap during manufacturing. This amounts to around 27% of steel. This steel is not permanently lost, as almost 100% of it is recycled.
Nonetheless, these process losses mean more steel production is needed in any given year.

4. The economic need to export steel to other regions. Net imports now stand at 3.2 Mt per year (exports are 22.9 Mt and imports 26.1 Mt).

The methodology used here builds on the excellent and foundational work described in Pauliuk, Milford, et al. (2013), Milford et al. (2013), and Daehn et al. (2017), which has
been crucial to developing the estimates and insights presented here. The scenarios and assumptions we use differ in some respects, especially in relating future steel demand
more closely to recent projected GDP developments. However, the implementation of a stock-driven model of future demand as well as the foundational data are the same.

Pauliuk, S., Milford, R. L., Müller, D. B. and Allwood, J. M. (2013). The Steel Scrap Age. Environmental Science & Technology, 47(7). 3448–54. DOI:10.1021/ es303149z.

Milford, R. L., Pauliuk, S., Allwood, J. M. and Müller, D. B. (2013). The Roles of Energy and Material Efficiency in Meeting Steel Industry CO2 Targets. Environmental Science
& Technology, 47(7). 3455–62. DOI:10.1021/es3031424.

Daehn, K. E., Cabrera Serrenho, A. and Allwood, J. M. (2017). How Will Copper Contamination Constrain Future Global Steel Recycling? Environmental Science & Technolo-
gy, 51(11). 6599–6606. DOI:10.1021/acs.est.7b00997.

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

World Steel Association (worldsteel) (2018). World Steel in Figures 2018. https://www.worldsteel.org/en/dam/jcr:f9359dff-9546-4d6b-bed0-996201185b12/
World%2520Steel%2520in%2520Figures%25202018.pdf. Steel industry statistics.

International Iron and Steel Institute (2000). Steel Statistical Yearbook 2000. http://www.worldsteel.org/steel-by-topic/statistics/steel-statistical-yearbook-.html. Informatics(Sta-
tistical Yearbook).

8
Emissions for the steel industry depend on scope of emissions and different assumptions and the value is therefore hard to look up directly. Values used in this report have been
calculated bottom-up by Material Economics using production volumes from Eurofer (2018) and emissions factors for the BF-BOF and EAF route. It has furthermore been
assumed that the BF-BOF route produces all its electricity and therefore is self-reliant on electricity use based on Eurofer (2013). Direct emissions from the BF-BOF route has
therefore been adjusted after this assumption and is based on multiple sources and expert interviews. Indirect emissions of 18 Mt CO2 have been calculated by multiplying the
production volume of EAF based on Eurofer (2018) with the average emission factor of EU electricity based on the IEA (2017).

International Energy Agency (2017b). World Energy Outlook 2017. www.iea.org.

The European Steel Association (EUROFER) (2013). A Steel Roadmap for a Low Carbon Europe 2050. Steel Industry.

9
Emission factors represent average values across the EU since emission factors of the two production routes vary depending on factors such as the age of the steel plant, energy
mix, and external factors such as emissions from the power grid. An extensive analysis of multiple sources have been analysed in order to create a representative production
routes, and sources include:

Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

LKAB (2016). 100% LKAB Pellet Steel vs. Average European Primary Steel. Info on Steel Industry.

The European Steel Association (EUROFER) (2013). A Steel Roadmap for a Low Carbon Europe 2050. Steel Industry.

EUROFER (2019). Eurofer Reporting template - Example 160214. http://www.eurofer.org/Sustainable%20Steel/CO2%20Standard.fhtml.

Vogl, V., Åhman, M. and Nilsson, L. J. (2018). Assessment of hydrogen

Ecofys, Fraunhofer Institute for Systems and Innovation Research and Öko-Institut (2009). Methodology for the Free Allocation of Emission Allowances in the EU ETS Post
2012. https://ec.europa.eu/clima/sites/clima/files/ets/allowances/docs/bm_study-lime_en.pdf.

194
Doug Zuliani, Vittorio Scipolo and Carsten Born (2009). Opportunities to reduce costs and lower GHG emissions in EAF and BOF steelmaking. Stahl und Eisen, 129.

Xiaoling Li, Wenqiang Sun, Liang Zhao and Jiuju Cai (2017). Material Metabolism and Environmental Emissions of BF-BOF and EAF Steel Production Routes. Material Me-
tabolism and Environmental Emissions of BF-BOF and EAF Steel Production Routes, 19 May. https://doi.org/10.1080/08827508.2017.1324440.

And expert interviews.

10
Several roadmaps have analysed scenarios for deeper emission cuts in the EU steel sector. Eurofer (2013) predicts that approximately 15% of emissions can be reduced eco-
nomically by 2050 relative to baseline, and that 57% is the ‘maximum theoretical abatement with CCS’. To reach further emission reduction, ‘hypothetic breakthrough technol-
ogies in combination with CCUS’ would be required in the Eurofer roadmap. In the EU long-term strategy by the European Commission (2018), emission cuts reach up to 97%
reductions in the scenarios and are between 80-90% in most scenarios in the PRIMES and FORECAST model. In the IEA ETP by the International Energy Agency (2017), there
is no EU scenario, but a global steel scenario. In the IEA’s ‘World 2°C Scenario’ 60% of emissions are cut by 2050 relative baseline while the ‘World Beyond 2°C Scenario’
reach 85% emission cuts.

The European Steel Association (EUROFER) (2013). A Steel Roadmap for a Low Carbon Europe 2050. Steel Industry.

European Commission (2018). A European Long-Term Strategic Vision for a Prosperous, Modern, Competitive and Climate Neutral Economy.

International Energy Agency (2017b). World Energy Outlook 2017. www.iea.org.

11
Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

12
See chapter 5 in Material Economics (2018),

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

13
See chapter 6 in Material Economics (2018).

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

14
Material Economic analysis based on Pauliuk et al. (2013) and Eurofer (2018).

Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

15
Losses are based on an 85% effective recovery rate based on Pauliuk (2013) and World Steel Association (2009). All steel scrap exported is assumed to be used and conse-
quently recycled.

Stefan Pauliuk, Tao Wang and Daniel B. Müller (2013). Steel all over the world: Estimating in-use stocks of iron for 200 countries. Resources, Conservation and Recycling, 71.
22–30. DOI:10.1016/j.resconrec.2012.11.008.

World Steel Association (2009). The Three Rs of Sustainable Steel. Brussels/Beijing. Fact Sheet.

16
In 2017, 94 Mt steel scrap was consumed in the EU while net export was 17 Mt based on Eurofer (2018). Based on an 85% effective recovery rate, according to Pauliuk (2013)
and World Steel Association (2009), this means that that the total amount of steel falling out of use equals 131 Mt. The value of steel scrap falling out of use has been calculated
by using the price of €259 per tonne steel scrap based on Fischedick (2014) and The London Metal Exchange (2019). Steel scrap as share of iron input to EU steelmaking is
based on the 94 Mt steel consumption, while total production of steel was 169 Mt based on Eurofer (2018). Adjusting for the non-iron content and losses in remelting, the share
of iron input was approximately 50%.

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

Fischedick, M., Marzinkowski, J., Winzer, P. and Weigel, M. (2014). Techno-economic evaluation of innovative steel production technologies. Journal of Cleaner Production, 84.
563–80. DOI:10.1016/j.jclepro.2014.05.063.

The London Metal Exchange (2019). LME Steel Scrap. London Metal Exchange: LME Steel Scrap, 27 February. https://www.lme.com/Metals/Ferrous/Steel-Scrap#tabIndex=2.
Proice.

17
Steel scrap falling out of use in 2050 is based on Material Economics modelling that it based on Pauliuk et al (2013). A stock-based model with four product categories (con-
struction, transportation, products and machinery) where each product category has its own maximum life length and the steel falls out of the steel stock when it reaches the end
of its useful life. Steel scrap falling out of use in 2050 is 175 Mt excluding losses. Assuming the same share of production between BF-BOF (61%) and EAF (39%) as today, this
would result in a scrap need of 95 Mt in 2050 under a production level of 181 Mt, resulting in a net export of 80 Mt steel scrap.

Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

18
Material Economics stock modelling based on Pauliuk et al. (2013). Assuming different lifetimes for four product groups: Transport 20 years, construction 70 years, machinery
25 years and products 15 years. Actual scrap levels depend on the level of circularity applied from today until 2050 - higher production levels between today and 2050 will mean
that more scrap falls out of use in 2050.

Stefan Pauliuk, Tao Wang and Daniel B. Müller (2013). Steel all over the world: Estimating in-use stocks of iron for 200 countries. Resources, Conservation and Recycling, 71.
22–30. DOI:10.1016/j.resconrec.2012.11.008.

19
This would mirror the transition undertaken in the United States, where 67% of steel is produced through scrap-based EAFs - although the US imports more of the steel it uses
than does the EU, which is not necessarily desirable for the EU.

World Steel Association (2018b). Steel Statistical Yearbook 2018. https://www.worldsteel.org/en/dam/jcr:e5a8eda5-4b46-4892-856b-00908b5ab492/SSY_2018.pdf. Steel indus-
try statistics.

Doug Zuliani, Vittorio Scipolo and Carsten Born (2009). Opportunities to reduce costs and lower GHG emissions in EAF and BOF steelmaking. Stahl und Eisen, 129.

195
International Energy Agency (2017b). World Energy Outlook 2017. www.iea.org.

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

20
The EU produced 95 Mt of flat products and 59 Mt of long products in 2017 according to Eurofer (2018).

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

21
Daehn, K. E., Cabrera Serrenho, A. and Allwood, J. M. (2017). How Will Copper Contamination Constrain Future Global Steel Recycling? Environmental Science & Technol-
ogy, 51(11). 6599–6606. DOI:10.1021/acs.est.7b00997.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

22
Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

23
Material Economics analysis based on multiple sources and expert interviews, including:

The Boston Consulting Group (2013). Steel’s Contribution to a Low-Carbon Europe 2050. Scientific report.

Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

Tata Steel (2017). Hisarna: Game Changer In The Steel Industry. https://www.tatasteeleurope.com/static_files/Downloads/Corporate/About%20us/hisarna%20factsheet.pdf. Steel
Industry

Fischedick, M., Marzinkowski, J., Winzer, P. and Weigel, M. (2014). Techno-economic evaluation of innovative steel production technologies. Journal of Cleaner Production, 84.
563–80. DOI:10.1016/j.jclepro.2014.05.063.

Jan van der Stel (2013). Development of the ULCOS-Blast Furance: Working toward technology demonstration. https://ieaghg.org/docs/General_Docs/Iron%20and%20Steel%20
2%20Secured%20presentations/1050%20Jan%20van%20der%20Stel.pdf.

Hybrit (2017). Hybrit - Towards Fossil-Free Steel. Info on Steel Industry.

Tanaka, H. (2013). Potential for CO2 emissions reduction in MIDREX direct reduction process. https://ieaghg.org/docs/General_Docs/Iron%20and%20Steel%202%20Se-
cured%20presentations/2_1400%20Hidetoshi%20Tanaka.pdf.

24
Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

25
Biomass can be used to make a partial substitute for coke. Unfortunately, biomass cannot entirely replace coke. Pre-processed biomass, for example in the form of charcoal,
can offset up to 57% of the CO2 emissions on-site. However, the best option may be making charcoal by slow pyrolysis, as the resulting charcoal is similar to conventional coal.
Some plants in Brazil have completely replaced coke with charcoal, but only in small blast furnaces. European blast furnaces are bigger, so the fuel needs to meet more stringent
requirements, and charcoal on its own is not enough.

26
Global DRI production in 2017 was 87.1 Mt based on MIDREX (2018) and global steel production was 1,690 Mt according to World Steel (2018b).

MIDREX (2018). World Direct Reduction Statistics 2017. MIDREX. https://www.midrex.com/assets/user/news/MidrexStatsBook2017.5_.24_.18_.pdf. Scientific

World Steel Association (2018b). Steel Statistical Yearbook 2018. https://www.worldsteel.org/en/dam/jcr:e5a8eda5-4b46-4892-856b-00908b5ab492/SSY_2018.pdf. Steel indus-
try statistics.

27
Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

28
It is possible that future steel production will be done using electrolysis instead of hydrogen. Both use electricity as the main input to produce the steel. In this report, we have
focused on Hydrogen Direct Reduction (H-DR), because it has a higher technological readiness level than electrolysis. At present, reduction by electrolysis is at a more experi-
mental and research stage. With further development, electrolysis could yet prove to be the future for the steel sector. However, the electricity demand of this technology should
be roughly similar to that of H-DR, so an electrolysis-driven future would not substantially change our conclusions.

29
If this is achieved, two small sources of emissions would remain from H-DR. First, there would be some very minor emissions from the electrodes during the process of
making hydrogen by electrolysis. These amount to just 2-5 kg of CO2 per tonne of steel. However, these emissions can be eliminated by using biological carbon instead of fossil
carbon. Second, there are some emissions from the lime used in the steel production process, amounting to 20 kg of CO2 per tonne of steel. Lime production would need to be
decarbonised in a similar way to cement (see chapter 4).

J. P. Birat, D. Maizières-lès-Metz and UNIDO(United Nations Industrial Development Organization) (2010). Global Technology Roadmap for CCS in Industry. UNIDO and
30

ArcelorMittal. https://hub.globalccsinstitute.com/sites/default/files/publications/15671/global-technology-roadmap-ccs-industry-steel-sectoral-report.pdf. Steel sectoral report.

31
The European Steel Association (EUROFER) (2013). A Steel Roadmap for a Low Carbon Europe 2050. Steel Industry.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
32

European chemical industry. 168.

Hydrogen Council (2017). Hydrogen scaling up - A sustainable pathway for the global energy transition. November. http://hydrogencouncil.com/wp-content/uploads/2017/11/
33

Hydrogen-Scaling-up_Hydrogen-Council_2017.compressed.pdf

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
34

European chemical industry. 168.

35
Plastics packaging represent 40% of demand (see Plastics Europe, 2018), and has a mean lifetime in the economy of 0.5 years (see Geyer et al., 2017).

196
Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

Geyer, R., Jambeck, J. R. and Law, K. L. (2017). Production, use, and fate of all plastics ever made. Science Advances, 3(7). e1700782. DOI:10.1126/sciadv.1700782.

36
Material Economics analysis based on multiple sources, including data provided by industry experts.

Harry Croezen and Marisa Korteland (2010). Technological Developments in Europe A Long-Term View of CO2 Efficient Manufacturing in the European Region.

Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

World Steel Association (2018a). Fact Sheet Steel And Raw Materials. https://www.worldsteel.org/en/dam/jcr:16ad9bcd-dbf5-449f-b42c-b220952767bf/fact_raw%2520materi-
als_2018.pdf. Information.

Fischedick, M., Marzinkowski, J., Winzer, P. and Weigel, M. (2014). Techno-economic evaluation of innovative steel production technologies. Journal of Cleaner Production, 84.
563–80. DOI:10.1016/j.jclepro.2014.05.063.

Vogl, V., Åhman, M. and Nilsson, L. J. (2018). Assessment of hydrogen direct reduction for fossil-free steelmaking. Journal of Cleaner Production, 203. 736–45. DOI:10.1016/j.
jclepro.2018.08.279.

37
The appendix gives a more systematic account of the cost modelling for circular economy levers.

38
Electricity need has been calculated based on future production volumes and electricity use of different steps in the production routes. Future steel production volumes have
been modelled by Material Economics and varies in each pathway depending on the level of circularity and material efficiency in major value chains as well as the focus of
different production routes, for example if the focus is electrification using Hydrogen Direct Reduction or CCS using Smelting Reduction with CCS.

Electricity use for Primary Production process include electricity needed for processes to produce primary steel from the BF-BOF route, the Hydrogen Direct Reduction (H-DR)
route, and the Smelting reduction with CCS route. This excludes electricity used to produce hydrogen in the H-DR route.

Electricity use for Electric Arc Furnace processes is based on an electricity consumption of 0.45 MWh/t steel based on conversations with industry experts. Electricity use of the
EAF route has been compared with multiple sources and range from 0.40 to 0.54 MWh/t steel based on Xiaoling (2017), Hybrit (2017), and Steelonthenet (2018).

Electricity use for hydrogen production is around 2.8 MWh/t steel in the Hydrogen Direct Reduction route. It is based on a hydrogen consumption of 61 kg hydrogen per tonne
steel which includes 20% losses on top of the 51 kg hydrogen needed per tonne steel (which excludes losses) as stated in Vogl. (2018). In the New Processes and Circularity path-
ways all hydrogen is produced using electrolysis which require 45 MWh/t hydrogen according to Philbert (2017) The electricity need per tonne hydrogen using electrolysis also
corresponds to data given by other sources including Vogl (2018) and DECHEMA (2017). In the Carbon Capture pathway, 50% of the hydrogen is produced using electrolysis
while the remaining 50% is produced using Steam Methane Reforming with CCS.

Electricity use for downstream processes include electricity need for continuous casting and hot rolling which is about 0.10 MWh/t steel today according to Milford (2012).
Included downstream processes are also assumed to be fully electrified by 2050 in order to reach net-zero emissions. Current fuel use for downstream processes are 0.36 MWh/t
steel (excluding electricity use) based on Milford et al (2012) and this is assumed to linearly decrease to zero by 2050 as processes are electrified.

Rachel L Milford, Stefan Pauliuk, Julian M Allwood and Daniel B Müller (2012). Supporting Information: The last blast furnace? 37.

Steelonthenet (2018). Electric Arc Furnace Steelmaking Costs 2018. March. https://www.steelonthenet.com/cost-eaf.html. Costs for electric arc steelmaking.

Steelonthenet.com (2018). Basic Oxygen Furnace Route Steelmaking Costs 2018. March. http://www.steelonthenet.com/cost-bof.html. Steelmaking Costs.

Hybrit (2017). Hybrit - Towards Fossil-Free Steel. Info on Steel Industry.

EUROFER (2019). Eurofer Reporting template - Example 160214. http://www.eurofer.org/Sustainable%20Steel/CO2%20Standard.fhtml.

ArcelorMittal (2015). Worldwide Resource Efficient Steel Production. VITO: Vision on technology, . 60.

Xiaoling Li, Wenqiang Sun, Liang Zhao and Jiuju Cai (2017). Material Metabolism and Environmental Emissions of BF-BOF and EAF Steel Production Routes. Material Me-
tabolism and Environmental Emissions of BF-BOF and EAF Steel Production Routes, 19 May. https://doi.org/10.1080/08827508.2017.1324440.

Åhman, M., Olsson, O., Vogl, V., Nyqvist, B., Maltais, A., Nilsson, L. J., Hallding, K., Skåneberg, K. and Nilsson, M. (2018). Hydrogen Steelmaking for a Low-Carbon Econ-
omy : A Joint LU-SEI Working Paper for the HYBRIT Project. Miljö- och energisystem, LTH, Lunds universitet. http://lup.lub.lu.se/record/e8289959-1fa9-48e0-87d6-e3f79c-
b93aac.

Vogl, V., Åhman, M. and Nilsson, L. J. (2018). Assessment of hydrogen

Philibert, C. (2017). Producing ammonia and fertilizers: new opportunities from renewables. International Energy Agency, . 6.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168

39
Hybrit (2017). Hybrit - Towards Fossil-Free Steel. Info on Steel Industry.

197
Chapter 3 - Plastics
1
Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

2
Szeteiová, K. (2010). AUTOMOTIVE MATERIALS PLASTICS IN AUTOMOTIVE MARKETS TODAY. Institute of Production Technologies, Machine Technologies and
Materials, Faculty of Material Science and Technology in Trnava, Slovak University of Technology Bratislava, . 7.

3
Al-Sherrawi, M. H., Edaan, I. M., Al-Rumaithi, A., Sotnik, S. and Lyashenko, V. (2018). FEATURES OF PLASTICS IN MODERN CONSTRUCTION USE. International
Journal of Civil Engineering and Technology, 9(4). 11.

4
Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

5
Net exports calculated as difference between production and EU plastics converter demand as reported in Plastics Europe (2018).

Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

6
Volumes of primary plastics production, demand, and use segments from Plastics Europe (2018). End-of-life volumes are based on latest available official numbers for end-of-
life treatment of collected plastics (Plastics Europe, 2018). These numbers, however, only covers the collected end of life plastics. An analysis of the stock-build up of plastics
looking at the use segments and mean lifetime of plastics in the economy (based on Geyer et al., 2017, and Plastics Europe, 2018) suggests that the actual end of life volumes of
plastics is almost 50% higher than the official numbers. The fate of the non-collected plastics waste is uncertain, but some ends up as mixed waste in municipal waste streams,
some is lost in the environment, etc. Of the collected plastics waste, 7.4 Mt of plastics was sent to recycling in 2016. Official numbers of actual volumes of plastics produced
through mechanical recycling are however not available. According to Deloitte and Plastics Recyclers Europe (2015), the recycling yield for different plastics resins is in the
range of 70-80%. Moreover, the quality losses in mechanical recycling means that recycled plastics often is used for lower-quality applications, meaning that the actual replace-
ment rate of primary plastics with recycled plastics is lower still. Our analysis suggests that the actual volumes of plastics produced through mechanical recycling was around 3.6
Mt in 2015. The total volume of incinerated plastics waste is estimated to be 20-30 million tonnes including plastics waste collected for incineration, residues from mechanical
recycling processes, and plastics waste incinerated in municipal waste streams. The extra-EU exports of plastics waste was 2.5 Mt in 2017 (Eurostat, 2019). This number has
however declined to 1.9 Mt in 2018 following China’s drastic cut-back on plastics waste imports (Brooks et al., 2018).

Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

Deloitte and Plastics Recyclers Europe (2015). Increased EU Plastics Recycling Targets: Environmental, Economic and Social Impact Assessment. http://www.plasticsrecyclers.
eu/sites/default/files/BIO_Deloitte_PRE_Plastics%20Recycling%20Impact_Assesment_Final%20Report.pdf.

Geyer, R., Jambeck, J. R. and Law, K. L. (2017). Production, use, and fate of all plastics ever made. Science Advances, 3(7). e1700782. DOI:10.1126/sciadv.1700782.

Eurostat (2019). EU Trade since 1988 by HS2-HS4 [DS-016894].

Brooks, A. L., Wang, S. and Jambeck, J. R. (2018). The Chinese import ban and its impact on global plastic waste trade. Science Advances, 4(6). eaat0131. DOI:10.1126/sciadv.
aat0131.

7
Analysis based on segments of plastics use (Plastics Europe, 2018) and mean lifetime of plastics per market sector (Geyer et al., 2017).

Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

Roland Geyer, Jenna R. Jambeck and Kara Lavender Law (2017). Supplymentary material for: Production, use, and fate of all plastics ever made. Science Advances, 3.
DOI:10.1126/sciadv.1700782.

8
Neelis, M. L., Patel, M., Gielen, D. J. and Blok, K. (2005). Modelling CO2 emissions from non-energy use with the non-energy use emission accounting tables (NEAT) model.
Resources, Conservation and Recycling, 2005(45). 226–50. https://dspace.library.uu.nl/bitstream/handle/1874/20683/NW&SE-2005-74.pdf?sequence=1.

9
IPCC Intergovernmental panel on climate change, Riitta Pipatti, Chhemendra Sharma, Masato Yamada, Virginia Carla Sena Cianci, et al. (2006). Chapter 2 Waste generation,
composition and management data. 2006 IPCC Guidelines for National Greenhouse Gas Inventories, 2006(Volume 5: Waste). https://www.ipcc-nggip.iges.or.jp/public/2006gl/
pdf/5_Volume5/V5_2_Ch2_Waste_Data.pdf.

10
Net extra-EU exports of plastics have been fluctuating between 9 Mt and 13 Mt between 2007 and 2017. We assume a stable continued export of 10 million tonnes per year un-
til 2050. Exports calculated as difference between EU28 + N/CH production and converter demand based on Plastics Europe (2006, 2007, 2009, 2010, 2011, 2012, 2013, 2015a,
2015b, 2016, 2017, 2018).

Plastics Europe (2006). The Compelling Facts About Plastics 2006.

Plastics Europe (2007). The Compelling Facts About Plastics

Plastics Europe (2009). The Compelling Facts About Plastics

Plastics Europe (2010). Plastics – the Facts 2010.

Plastics Europe (2011). Plastics – the Facts 2011.

Plastics Europe (2012). Plastics – the Facts 2012.

Plastics Europe (2013). Plastics – the Facts 2013.

Plastics Europe (2015a). Plastics – the Facts 2014/2015.

198
Plastics Europe (2015a). Plastics – the Facts 2015.

Plastics Europe (2016). Plastics – the Facts 2016.

Plastics Europe (2017). Plastics – the Facts 2017.

Plastics Europe (2018). Plastics – the Facts 2018.

11
Material Economics (2018b). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

12
While the world market for chemicals has grown by 230% percent, the EU’s share has declined over the last two decades, from 33% in 1996 to 15% in 2016. Demand is in-
creasing rapidly in China, India and other emerging economies, but slowly in Europe and North America, which are EU’s main sales markets. Moreover, plastics is a global com-
modity market and production is highly energy-intensive. Europe’s high energy costs has impact on competitiveness, compared to Middle East and North America who enjoys
domestic access to low-cost oil and gas feedstock. According to Cefic, ethylene production is three times costlier in Europe compared to the US or Middle East.

CEFIC (2018). Landscape of the European Chemical Industry 2018. http://www.chemlandscape.cefic.org/wp-content/uploads/combined/fullDoc.pdf.

Calculated as a weighted average of the emission factors of the most common plastics types (PE, PP, PVC, PET, PS, PUR) based on the Ecoprofiles published by Plastics
13

Europe (2019), and market share of different polymers (Plastics Europe, 2018).

Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

Deloitte and Plastics Recyclers Europe (2015). Increased EU Plastics Recycling Targets: Environmental, Economic and Social Impact Assessment. http://www.plasticsrecyclers.
eu/sites/default/files/BIO_Deloitte_PRE_Plastics%20Recycling%20Impact_Assesment_Final%20Report.pdf.

Plastics Europe (2019). Eco-profiles. https://www.plasticseurope.org/en/resources/eco-profiles.

14
The GHG emissions factor from incineration of plastics is calculated at 2 697 kg CO2e/t of plastic waste, based on IPCC (2006), using the formula: kg CO2 = kg waste for
incineration * oxidation factor of carbon in incinerator (0.98) * conversion factor of C to CO2 (3.67) * Σ(waste fraction (in %) * dry matter content * carbon content (g/g dry
weight)). The dry matter content of plastic waste is equal to 1. The carbon content of plastic waste is 0.75 (Gg C/Gg dry weight waste). Moreover, the end-of-life emissions vary
between different plastics types. The emissions are higher for incineration of e.g. polystyrene (PS) and PE (around 3 kg/kg plastics) and lower for e.g. PP and PUR (around 2.5
kg/kg plastics). For the purpose of this work, 2.7 kg CO2/kg plastics have been used for all incinerated end of life plastics.

IPCC Intergovernmental panel on climate change, Riitta Pipatti, Chhemendra Sharma, Masato Yamada, Virginia Carla Sena Cianci, et al. (2006). Chapter 2 Waste generation,
composition and management data. 2006 IPCC Guidelines for National Greenhouse Gas Inventories, 2006(Volume 5: Waste). https://www.ipcc-nggip.iges.or.jp/public/2006gl/
pdf/5_Volume5/V5_2_Ch2_Waste_Data.pdf.

15
European Parliament (2018). Circular economy: MEPs back plans to boost recycling and cut landfilling | News | European Parliament. 27 February. http://www.europarl.euro-
pa.eu/news/en/press-room/20180227IPR98710/circular-economy-meps-back-plans-to-boost-recycling-and-cut-landfilling.

16
Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org.

17
This study examines the CO2 emissions from both the production of plastics and their end-of-life handling. Both sources must be abated if the industry is to achieve net-zero
emissions. The extraction of oil and gas, the processing of polymers into finished plastics products as well as the use phase of plastics are not included in the scope of this analy-
sis. The outlined process in the exhibit shows the production of plastics from naphtha from crude oil, which is the most common feedstock in the EU today. Production of plastics
from e.g. ethane instead uses natural gas as input.

OECD (2018). Improving Markets for Recycled Plastics: Trends, Prospects and Policy Responses. OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264301016-en.

Ghanta, M., Fahey, D. and Subramaniam, B. (2014). Environmental impacts of ethylene production from diverse feedstocks and energy sources. Applied Petrochemical Re-
search, 4(2). 167–79. DOI:10.1007/s13203-013-0029-7.

Plastics Europe (2018). Plastics - the Facts 2018. www.plasticseurope.org..

Deloitte and Plastics Recyclers Europe (2015). Increased EU Plastics Recycling Targets: Environmental, Economic and Social Impact Assessment. http://www.plasticsrecyclers.
eu/sites/default/files/BIO_Deloitte_PRE_Plastics%20Recycling%20Impact_Assesment_Final%20Report.pdf.

Masnadi, M. S., El-Houjeiri, H. M., Schunack, D., Li, Y., Englander, J. G., et al. (2018). Global carbon intensity of crude oil production. Science, 361(6405). 851–53.
DOI:10.1126/science.aar6859.

18
CEFIC (2013). European Chemistry for Growth: Unlocking a Competitive, Low Carbon and Energy Efficient Future. http://www.cefic.org/Industry-support/.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

International Energy Agency (IEA) (2017). Energy Technology Perspectives 2017: Catalysing Energy Technology Transformations. International Energy Agency, Paris.

Energy Transitions Commission (ETC) (2018). Mission Possible - Reaching Net-Zero Carbon Emissions from Harder-to-Abate Sector by Mid-Century. http://www.energy-tran-
sitions.org/mission-possible.

199
19
There are few comprehensive assessments of this topic. The ones available tend to ask what would happen if all plastics had to be replaced, and this happening in the current
high-carbon energy and transportation system. Unsurprisingly, this leads to emissions increases, not least from increased transportation emissions. In assessing substitution po-
tential for this study, the approach is instead to ask what marginal replacement could take place, and what the CO2 impact would be in a future, low-carbon economy. This results
in significant net savings of resources, not least biomass. As discussed later in this chapter, producting plastics from the biomass routes investigated in this work require 1.9-3.5
tonnes of bio resource for every tonne product. Fibre-based products often also require a larger amounts of material than do plastics solutions, but have a much less punishing
ratio.

Franklin Associates, A Division of Eastern Research Group (ERG) (2014). Impact of plastics packaging on life cycle energy consumption & greenhouse gas emissions in the
United States and Canada - Substitution analysis. 19.

Franklin Associates, A Division of Eastern Research Group (ERG) (2018). Life Cycle Impacts of Plastic Packaging Compared To Substitutes in the United States and Canada -
Theoretical Substitution Analysis. 172.

Trucost, The American Chemistry Council (ACC) and Rick Lord (2016). Plastics and Sustainability: A Valuation of Environmental Benefits, Costs and Opportunities for Contin-
uous Improvement. www.trucost.com.

Material Economics (2018b). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

20
Materials substitution plays only a marginal role in current plastics and CO2 strategies. However, the EU parliament’s ban on single-use plastics products arguably is one such
example, where equivalent products will need to be produced from other materials instead, such as fibre- and wood-based alternatives or metals.

21
A detailed bottom-up analysis of the properties required in 35 packaging segments suggests that one quarter of plastics used in packaging could be replaced by fibre-based
materials without significant compromise (Material Economics, 2018a). This substitution comes in two main forms: in applications that do not utilise the properties where plas-
tics is uniquely suitable, such as transparency and barrier properties, and in applications where the plastics use can be reduced to a thin barrier while fibre comprises the bulk of
the packaging material.

Material Economics (2018a). Sustainable Packaging - The Role of Materials Substitution. http://materialeconomics.com/publications/publication/sustainable-packaging.

22
Material Economics (2018b). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

23
This assessment is based on Material Economcis modelling of polymer types and their mapping to plastics use and end-of-life flows, combined with data on recycling yields,
plastics ageing, and effective substitution rates for different applications.

24
This low recycling rate may be surprising. Official statistics often quote rates of 30% or more (e.g., European Parliament, 2018) , and higher still for individual segments
(Eurostat, 2018). A detailed account of the lower actual recycling rate is found in Material Economics (2018). In brief, there are three sources of difference (see also sources in
Endnote 6): 1) statistics only refer to waste identified as plastics, whereas consumption data and average lifetimes of plastics products make clear that the total volume of end-
of-life plastics is larger than what gets separately classified as such in waste statistics; 2) the official recycling rates refer to material sent for recycling, but the yield of recycling
processes is substantially lower; and 3) recycled plastics typically are not equivalent to new plastics in quality, which leads less than one-to-one replacement.

Eurostat (2018). Packaging waste statistics - Statistics Explained. https://ec.europa.eu/eurostat/statistics-explained/index.php/Packaging_waste_statistics.

Buhl, J. (2014). Revisiting Rebound Effects from Material Resource Use. Indications for Germany Considering Social Heterogeneity. Resources, 3(1). 106–22. DOI:10.3390/
resources3010106.

Zink, T. and Geyer, R. (2017). Circular Economy Rebound. Journal of Industrial Ecology, 21(3). 593–602. DOI:10.1111/jiec.12545.

For a detailed assessment, see Material Economics (2018b), which provides a detailed assessment of plastic types, end-uses, end-of-life streams, and options to increase the
25

quality and quantity of plastics recycling.

Material Economics (2018b). The Circular Economy - A Powerful Force for Climate Mitigation. www.materialeconomics.com.

26
40% of EU plastics demand is used in packaging applications, which almost exclusively can be categorised into single use. Other single-use plastics products include plastics
plates, cups and cutlery, straws, cotton swabs, etc.

EU Environment (2019). European Parliament votes for single-use plastics ban. Environment - European Commission, 8 January. https://ec.europa.eu/environment/efe/content/
european-parliament-votes-single-use-plastics-ban_en. Text.

27
Ellen MacArthur Foundation (2016). The New Plastics Economy: Rethinking the future of plastics & Catalysing action. https://www.ellenmacarthurfoundation.org/publica-
tions/the-new-plastics-economy-rethinking-the-future-of-plastics-catalysing-action.

28
The demand for recycled and primary plastics in 2015 was 53 Mt. The demand in a 2050 baseline scenario is estimated to be 62 Mt of plastics. Achieving a 30% replacement
of virgin plastics by mechanical recycling would require collection rates as high as 75% for the largest suitable end-of-life streams (around 20-30% today); improved sorting of
plastics waste so yield losses in sorting and processing are reduced; an increased number of use-cycles to 5 or more for major applications (1-2 today); and an effective replace-
ment of new plastics by recycled ones of 0.8. These all entail a step change from today’s practices. The fact that overall replacement rate is not higher than 30% is primarily
because many plastics are not technically recyclable through mechanical means; that there are several flows individually low volumes of speciality plastics; that recycled plastics
have a limited number of cycles before they are worn out; and that contamination and mixing make it impossible to substitute 1:1 for new plastics in all applications.

29
CEFIC (2013). European Chemistry for Growth: Unlocking a Competitive, Low Carbon and Energy Efficient Future. http://cefic.org/Industry-support/.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

30
Based on specific CO2-emissions for fuel use in steam crackers, and the representative yields for different feedstocks in steam crackers in Neelis et al (2005) and stakeholder

200
interviews carried out for this project.

Neelis, M. L., Patel, M., Gielen, D. J. and Blok, K. (2005). Modelling CO2 emissions from non-energy use with the non-energy use emission accounting tables (NEAT) model.
Resources, Conservation and Recycling, 2005(45). 226–50. https://dspace.library.uu.nl/bitstream/handle/1874/20683/NW&SE-2005-74.pdf?sequence=1.

31
Stefan Pauliuk, Tao Wang and Daniel B. Müller (2013). Steel all over the world: Estimating in-use stocks of iron for 200 countries. Resources, Conservation and Recycling, 71.
22–30. DOI:10.1016/j.resconrec.2012.11.008.resource management, capacity planning, and climate change mitigation within the steel sector. During their use phase, steel-con-
taining products provide service to people, and the size of the in-use stock of steel can serve as an indicator of the total service level. We apply dynamic material flow analysis
to estimate in-use stocks of steel in about 200 countries and identify patterns of how stocks evolve over time. Three different models of the steel cycle are applied and a full
uncertainty analysis is conducted to obtain reliable stock estimates for the period 1700–2008. Per capita in-use stocks in countries with a long industrial history, e.g., the U.S,
the UK, or Germany, are between 11 and 16tons, and stock accumulation is slowing down or has come to a halt. Stocks in countries that industrialized rather recently, such as
South Korea or Portugal, are between 6 and 10tons per capita and grow fast. In several countries, per capita in-use stocks of steel have saturated or are close to saturation. We
identify the range of saturation to be 13±2tons for the total per capita stock, which includes 10±2tons for construction, 1.3±0.5tons for machinery, 1.5±0.7tons for transporta-
tion, and 0.6±0.2tons for appliances and containers. The time series for the stocks and the saturation levels can be used to estimate future steel production and scrap supply.”,”-
DOI”:”10.1016/j.resconrec.2012.11.008”,”ISSN”:”0921-3449”,”title-short”:”Steel all over the world”,”journalAbbreviation”:”Resources, Conservation and Recycling”,”lan-
guage”:”English”,”author”:[{“literal”:”Stefan Pauliuk”},{“literal”:”Tao Wang”},{“literal”:”Daniel B. Müller”}],”issued”:{“date-parts”:[[“2013”]]}}}],”schema”:”https://github.
com/citation-style-language/schema/raw/master/csl-citation.json”}

32
Miljö- och energidepartementet (2018). Det går om vi vill. SOU 2018: Betänkande från Utredningen om hållbara plastmaterial (M 2017:06).

33
Miljö- och energidepartementet (2018). Det går om vi vill. SOU 2018: Betänkande från Utredningen om hållbara plastmaterial (M 2017:06).

Smet, M. D. and De-Smet, M: A circular economy for plastics. 244.

34
In the modelling for this study, the further processing of cracker by-products is represented through the production of methanol from methane and other by-products, which are
subsequently transformed into olefins via the methanol-to-olefins route. In actual chemical production settings, there may be more efficient routes available.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
35

European chemical industry. 168.

36
In the pyrolysis route, the plastics waste is processed into naphtha-like pyrolysis-oil through pyrolysis, which is used to produce HVC’s through steam cracking. As a transi-
tional solution, this could be done with conventional steam crackers, but in order to reach deep emission reductions and high yields, an electrified steam cracker would reduce
the fuel gas emissions associated with steam cracking. The fuel gas consists dominantly of methane, which can be further processed into methanol and olefins through MTO to
increase the yield. These steps result in a total yield of 0.9 kg plastics per kg plastics waste, and CO2 emissions of 0.3 kg per kg of plastics produced.

In the gasification route, plastics waste is gasified into sweet syngas, with addition of hydrogen, followed by methanol synthesis and subsequently production of plastics through
MTO (methanol-to-olefins). This route results in a total yield of 0.9 kg plastics per kg of plastics waste, and CO2 emissions of 0.15 kg CO2 per kg plastic waste, assuming low-
CO2 production of hydrogen.

The routes described in this chapter should be seen as representative. Different routes are better suited to different types of plastics waste, so there is not likely one single answer
that is suitable for all chemical recycling. Gasification is the more ‘heavy-duty’ route, with higher energy requirements primarily stemming from the production of hydrogen,
whereas pyrolysis is arguably a milder treatment, suitable for purer streams. Gasification on the other hand can be an option for more problematic plastics waste streams.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

37
This poor mass balance arises because of the chemical nature of bio-feedstock. In contrast to fossil feedstocks like naphtha, biomass such as cellulose consists of 40% or more
oxygen, whereas most polymers contain very little. Much of the mass therefore is lost. The oxygen-carbon ratio varies between different sources of biomass: it is higher in sugars,
starches and cellulose, and lower (more naphtha-like) in lignin and fats. This means some optimisation is possible.

38
In the anaerobic digestion route, biomass is processed into biogas and the sulfur is removed. Methanol is produced through catalytic methanation with the addition of hydrogen,
in this representation produced through solid-oxide electrolysis. Gasification of biomass produces methanol directly, and depending on the gasification temperature, also produces
aromatics. Combining these two routes, 2.7 tonnes of biomass is needed per tonne of HVCs, compared withto around 1.5–-1.8 tonnes of feedstock for cracking of naphtha or
ethane. Biomass is assumed to contain 30% moisture and have an energy value of 18.5 MJ/kg based on Ericsson (2017). There are also other routes of producing plastics from
biomass, such as fermentation of biomass into bioethanol which is further processed into bioethylene, which are not represented in this report.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

Ericsson, K. and Lunds universitet (2017). Biogenic Carbon Dioxide as Feedstock for Production of Chemicals and Fuels: A Techno-Economic Assessment with a European
Perspective. Miljö- och energisystem, LTH, Lunds universitet, Lund.

Keith, D. W., Holmes, G., St. Angelo, D. and Heidel, K. (2018). A Process for Capturing CO2 from the Atmosphere. Joule, 2(8). 1573–94. DOI:10.1016/j.joule.2018.05.006.

Research Institutes of Sweden (RISE) 2017.). Plaståtervinning - Utbyten via olika konverteringsvägar.

Sokoli, H. U. (2016). Chemical Solvolysis as an Approach to Recycle Fibre Reinforced Thermoset Polymer Composites and Close the End-of the Life Cycle. DOI:10.5278/vbn.
phd.engsci.00171.

Thunman, H. (n.d.). GoBiGas demonstration a vital step for a large-scale transition from fossil fuels to advanced biofuels and electrofuels. 130.

Thunman, H., Seemann, M., Berdugo Vilches, T., Maric, J., Pallares, D., et al. (2018). Advanced biofuel production via gasification - lessons learned from 200 man-years of
research activity with Chalmers’ research gasifier and the GoBiGas demonstration plant. Energy Science & Engineering, 6(1). 6–34. DOI:10.1002/ese3.188.

201
39
Weikl, M. C. and Schmidt, G. (n.d.). CARBON CAPTURE IN CRACKING FURNACES. 11.

40
Pemal, M. and Confederation of European Waste-to-Energy Plants (CEWEP) (2016). Waste-to-Energy in Europe in 2016. 1.

Endnote: One tonne of olefins produced via methanol-to-olefins requires 2.28 of methanol. Producing methanol from CO2 and hydrogen requires 11 MWh/t methanol, and the
41

methanol-to-olefins (MTO) process another 1.4 MWh/t olefins.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

42
In this regard, this study differs from the approach taken in the European Commission’s A Clean Planet for All, where there are substantial ‘negative emissions’ from the cap-
ture of CO2 for the production of plastic products. This would require both close to 100% recycling, so that every plastic product made is returned to make new plastics, as well
as close to 100% mass balance in the recycling process. The analysis carried out for this study suggests these are not viable assumptions.

43
The main exception to this principle is water electrolysis, where all studies agree on a significant reduction in capital cost in scenarios where the technology is deployed at
scale. This study uses an assumption of 450 USD / kW in 2050, which is in the middle of a range of literature estimates.

Chapter 3 - Ammonia
1
90% used for fertilizers: Average need for ammonia per tonne fertilizer in the European fertilizer composition is 1.27 tonne NH3 per average tonne fertilizer. Total demand in the
EU-28 was 12 Mt N.

International Fertilizer Association (IFA) (2016). Ammonia production and trade statistics.

2
Smil, V. (2001). Enriching the Earth: Fritz Haber, Carl Bosch, and the Transformation of World Food Production. MIT, Cambridge, Mass. London.

3
International Fertilizer Association (IFA) (2016). Ammonia production and trade statistics.

4
Fertilizers Europe. EU fertilizer market, key graphs. http://www.fertilizerseurope.com/fileadmin/user_upload/publications/statistics_publications/Stat_website.pdf.

5
Fertilizers Europe (2018). Industry Facts and Figures 2018.

6
Christian Egenhofer, Dr Lorna Schrefler, Vasileios Rizos, Federico Infelise, Dr Giacomo Luchetta, Dr Felice Simonelli, Wijnand Stoefs, Jacopo Timini and Lorenzo Colantoni
(2014). For the procurement of studies and other supporting services on commission impact assessments and evaluation. Centre for European Policy Studies, . 37.

7
Hydrogen Europe (2017). Hydrogen in Industry | Hydrogen. https://hydrogeneurope.eu/hydrogen-industry.

8
Asa, Y. I. (2018). Fertilizer Industry Handbook 2018. 97.

9
Christian Egenhofer, Dr Lorna Schrefler, Vasileios Rizos, Federico Infelise, Dr Giacomo Luchetta, Dr Felice Simonelli, Wijnand Stoefs, Jacopo Timini and Lorenzo Colantoni
(2014). For the procurement of studies and other supporting services on commission impact assessments and evaluation. Centre for European Policy Studies, . 37.

EEA (2018). Agricultural land: nitrogen balance. European Environment Agency. https://www.eea.europa.eu/airs/2018/natural-capital/agricultural-land-nitrogen-balance.
10

Briefing.

Eurostat (2015). Agri-environmental indicator - mineral fertiliser consumption - Statistics Explained. https://ec.europa.eu/eurostat/statistics-explained/index.php/Agri-environ-
11

mental_indicator_-_mineral_fertiliser_consumption.

EEA (2018). Agricultural land: nitrogen balance. European Environment Agency. https://www.eea.europa.eu/airs/2018/natural-capital/agricultural-land-nitrogen-balance.
12

Briefing.

13
Steffen, W., Richardson, K., Rockstrom, J., Cornell, S. E., Fetzer, I., et al. (2015). Planetary boundaries: Guiding human development on a changing planet. Science, 347(6223).
1259855–1259855. DOI:10.1126/science.1259855.

Baligar, V. C., Fageria, N. K. and He, Z. L. (2001). NUTRIENT USE EFFICIENCY IN PLANTS. Communications in Soil Science and Plant Analysis, 32(7–8). 921–50.
14

DOI:10.1081/CSS-100104098.

EEA (2018). Agricultural land: nitrogen balance. European Environment Agency. https://www.eea.europa.eu/airs/2018/natural-capital/agricultural-land-nitrogen-balance. Brief-
ing.

15
Eurostat (2019). Population on 1st January by age, sex and type of projection (proj_15npms).

6
An intriguing possibility is that ammonia would find new uses in a low-CO2 economy. If ammonia production can be rendered CO2-free, then ammonia itself is free of carbon,
and could be used not just as an input to fertiliser, but as a fuel. The main use would be in transportation, and in particular long-distance shipping, where it could be an alternative
to biofuels, or to synthetic fuels made from CO2. In this study, we have not speculated on this entirely new potential demand source, but the solutions for low-CO2 production
would be the same as those described here.

17
EU emission factor used for the calculations is 350 g CO2/kWh

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
European chemical industry. 168.

18
Brown, T. (2016). Ammonia production causes 1% of total global GHG emissions. AMMONIA INDUSTRY, 26 April. https://ammoniaindustry.com/ammonia-production-caus-
es-1-percent-of-total-global-ghg-emissions/.

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19
Zakkour, P. and Cook, G. (2010). CCS Roadmap for Industry: High-purity CO2 sources Sectoral Assessment – Final Report. DOI:10.13140/rg.2.1.3717.8722.

20
ICIS (2010). Urea Production and Manufacturing Process. Icis. https://www.icis.com/explore/resources/news/2007/11/07/9076560/urea-production-and-manufacturing-process.

21
Another option would be to change diets. As noted above, the amount of fertiliser required varies significantly between different foodstuffs, with meat among the most demand-
ing. Changes to diets happen continuously, and no doubt food intake in 2050 will look different from today. However, this study has deliberately focussed on solutions that do not
involve any perceived ‘sacrifice’ on the part of consumers, and as a conservative assumption it therefore does not make any of the pathways to net-zero emissions dependent on
behavioural change.

Eurostat (2015). Agri-environmental indicator - mineral fertiliser consumption - Statistics Explained. https://ec.europa.eu/eurostat/statistics-explained/index.php/Agri-environ-
22

mental_indicator_-_mineral_fertiliser_consumption.

23
Assuming 3 tonne food per hectare using 64 kg of fertilisers (wheat as approximation of yield per ha)

Baligar, V. C., Fageria, N. K. and He, Z. L. (2001). NUTRIENT USE EFFICIENCY IN PLANTS. Communications in Soil Science and Plant Analysis, 32(7–8). 921–50.
DOI:10.1081/CSS-100104098.

24
Stenmarck, Å., Jensen, C., Quested, T., Moates, G., Buksti, M., et al. (2016). Estimates of European Food Waste Levels. http://edepot.wur.nl/378674.

25
European Commission (2016). EU actions against food waste. Food Safety - European Commission, 17 October. https://ec.europa.eu/food/safety/food_waste/eu_actions_en.
Text.

26
Stenmarck, Å., Jensen, C., Quested, T., Moates, G., Buksti, M., et al. (2016). Estimates of European Food Waste Levels. http://edepot.wur.nl/378674.

27
Lammel, J. and Brentrup, F. (2017). Input from Yara to the public consultation on Ireland’s first national mitigation plan. 26.

28
EU Nitrogen Expert Panel (2015). Nitrogen Use Efficiency (NUE) - an indicator for the utilization of nitrogen in agriculture and food systems. http://www.eunep.com/wp-con-
tent/uploads/2017/03/Report-NUE-Indicator-Nitrogen-Expert-Panel-18-12-2015.pdf.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
29

European chemical industry. 168.

Ellen MacArthur Foundation (2015). Growth Within: A Circular Economy Vision for a Competitive Europe. Ellen MacArthur Foundation together with Stiftungsfonds für Um-
weltökonomie und Nachhaltigkeit (SUN) and McKinsey Center for Business and Environment. https://www.ellenmacarthurfoundation.org/assets/downloads/publications/Ellen-
MacArthurFoundation_Growth-Within_July15.pdf.

IEAGHG (2017). IEAGHG technical report 2017 - 03. https://ieaghg.org/exco_docs/2017-03.pdf.

30
IEAGHG (2017). IEAGHG technical report 2017 - 03. https://ieaghg.org/exco_docs/2017-03.pdf.

The estimated cost is 55-80% higher than the two main routes included in the pathways based on a biomass price of 40 Euro/MWh and CAPEX included for both the SM-
31

R+Haber-Bosch unit and a gasification plant for biomass.

32
IEAGHG (2017). IEAGHG technical report 2017 - 03. https://ieaghg.org/exco_docs/2017-03.pdf.

33
See Steel chapter for more discussion of hydrogen production routes.

DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V., Alexis Michael Bazzanella and Florian Ausfelder (2017). Low carbon energy and feedstock for the
34

European chemical industry. 168.

35
Global CCS Institute (2010). 3.1 High-purity CO2 sources | Global CCS Institute. https://hub.globalccsinstitute.com/publications/carbon-capture-and-storage-industrial-appli-
cations-technology-synthesis-report/31-high#c03_tbl_001.

36
Estimates this at 1.6 MJ/Nm3 H2 produced. Other options include switching low-temperature CO2 separation and membrane technology applied on the tail gases from the pres-
sure swing adsorption (PSA) process. This technology decreases natural gas consumption slightly and can increase production of H2. A third option is to switch to a H2 rich fuel
instead of natural gas as supplementary fuel for the SMR burners. Capturing just the process CO2 then gives a possible capture rate of ~64%. A final option is methane pyrolysis,
which is under development but less mature than other capture technologies.

IEAGHG (2017). IEAGHG technical report 2017 - 03. https://ieaghg.org/exco_docs/2017-03.pdf.

37
In contrast, energy for compression is required for many more hours per year, so is assumed to come at a higher price of €60 per MWh.

203
Chapter 4
1
Calculated based on a production volume of 167 Mt cementitious product per year based on WBCSD (2016) for EU 2015, an EU population of 508 million in 2015 according
to Eurostat (2015), and an average cement content of 10-15% in concrete, based on binder intensity data in Favier et al. (2018).

WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

Eurostat (2015). First population estimates: EU population up to 508.2 million at 1 January 2015. https://ec.europa.eu/eurostat/documents/2995521/6903510/3-10072015-AP-
EN.pdf/d2bfb01f-6ac5-4775-8a7e-7b104c1146d0.

Euroslag (2016a). Euroslag Statistics 2016. https://www.euroslag.com/wp-content/uploads/2019/01/Statistics-2016.pdf.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

2
Steel use in the construction sector is based on Eurofer (2018) and includes 100% of ‘Construction’, and about 50% of ‘Tubes’ and 10% of ‘Metalware’.

EUROFER (2018). European Steel in Figures 2018. European Steel Association (EUROFER). http://www.eurofer.org/News%26Events/PublicationsLinksList/201806-SteelFig-
ures.pdf.

3
This is the total production volume of cementitious products in the EU28 according to WBCSD (2016). It includes grey and white cementitious products.

WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

4
Direct added value of the cement industry is based on ‘gross value added to the economy’ for the cement sector based on CEMBUREAU (2017).

CEMBUREAU (2017). Key facts & figures. https://cembureau.eu/cement-101/key-facts-figures/.

5
There are around 200 cement kilns in the EU28 according to the EEA PRTR database by the European Environment Agency (2016). If including grinding plants, this number
would rise to about 343 according to Cemnet (2017).

Cemnet (2017). The Global Cement Report - Online Database of Cement Plants. CemNet.com the home of International Cement Review. https://www.cemnet.com/global-ce-
ment-report/. Cement statistics.

The European Environment Agency (EEA) (2016). E-PRTR. European Pollutant Release and Transfer Register. https://prtr.eea.europa.eu/#/facilitylevels. European pollutant
database.

6
The capital cost of a new cement plant is €196 million based on IEAGHG (2013). The study was done by the European Cement Research Academy.

IEAGHG (2013). Deployment of CCS in the Cement Industry. IEAGHG. https://ieaghg.org/docs/General_Docs/Reports/2013-19.pdf.

7
CEMBUREAU (2013). The Role of Cement in the 2050 Low Carbon Economy. http://lowcarboneconomy.cembureau.eu/.

8
The values for the concrete industry are based on CEMBUREAU (2017) and have been calculated by subtracting the value of the cement industry from the combined cement
and concrete industry since no data was given for only the concrete industry.

CEMBUREAU (2017). Key facts & figures. https://cembureau.eu/cement-101/key-facts-figures/.

9
The total production volume of 167 Mt cementitious product per year is based on WBCSD (2016) for EU 2015 while the split between different uses are based on Favier et al
(2018).

WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

10
WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

11
Material Economics analysis based on multiple sources, including:

WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

Betonginitativet and Fossilfritt Sverige (2018). Färdplan för klimatneutralkonkurrenskraft: Betongbranschen.

Current production is based on WBCSD (2016). Emissions include direct and indirect emissions from cement production. Direct emission factor of cement has been calculated
12

by using the direct emission factor and clinker-to-cement ratio from WBCSD (2016). Indirect emissions have been calculated by using electricity usage of cement based on

204
WBCSD (2016) and an average EU electricity CO2 emission factor of 0.35 tCO2/MWh based on the International Energy Agency (2017).

Future production is based on cement demand model that expects underlying cement demand to increase 10% from today until 2050, as described in Material Economics (2018).
Emission factor of cement in a baseline scenario is expected to decrease because of continuing energy efficiency improvements in the cement industry as well as decarbonized
power sector eliminating indirect emissions.

WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

International Energy Agency (2017b). World Energy Outlook 2017. www.iea.org.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation.

13
CEMBUREAU (2013). The Role of Cement in the 2050 Low Carbon Economy. http://lowcarboneconomy.cembureau.eu/.

European Commission (2011). COMMISSION STAFF WORKING PAPER Impact Assessment. Accompanying the document COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Energy
Roadmap 2050. https://ec.europa.eu/energy/sites/ener/files/documents/sec_2011_1565_part2.pdf.

14
Data is for all non-metallic minerals.

European Commission (2011). COMMISSION STAFF WORKING PAPER Impact Assessment. Accompanying the document COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Energy
Roadmap 2050. https://ec.europa.eu/energy/sites/ener/files/documents/sec_2011_1565_part2.pdf.

15
International Energy Agency (2017a). Energy Technology Perspectives 2017. www.iea.org/etp2017.

16
Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

Shanks, W., Dunant, C. F., Drewniok, M. P., Lupton, R. C., Serrenho, A. and Allwood, J. M. (2019). How much cement can we do without? Lessons from cement material flows
in the UK. Resources, Conservation and Recycling, 141. 441–54. DOI:10.1016/j.resconrec.2018.11.002.

John, V. M., Damineli, B. L., Quattrone, M. and Pileggi, R. G. (2018). Fillers in cementitious materials — Experience, recent advances and future potential. Cement and Con-
crete Research, 114. 65–78. DOI:10.1016/j.cemconres.2017.09.013.

Scrivener, K. L., John, V. M. and Gartner, E. M. (2018). Eco-efficient cements: Potential economically viable solutions for a low-CO 2 cement-based materials industry. Cement
and Concrete Research, . DOI:10.1016/j.cemconres.2018.03.015.

17
Material Economic analysis based on Material Economics (2018), Favier et al. (2018), Scrivener, John et al. (2018), Shanks et al. (2019), and WBCSD (2016).

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

Scrivener, K. L., John, V. M. and Gartner, E. M. (2018). Eco-efficient cements: Potential economically viable solutions for a low-CO 2 cement-based materials industry. Cement
and Concrete Research, . DOI:10.1016/j.cemconres.2018.03.015.

Shanks, W., Dunant, C. F., Drewniok, M. P., Lupton, R. C., Serrenho, A. and Allwood, J. M. (2019). How much cement can we do without? Lessons from cement material flows
in the UK. Resources, Conservation and Recycling, 141. 441–54. DOI:10.1016/j.resconrec.2018.11.002.

WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

18
The relevant standard is norm EN 206-1 and the national annexes to this. Most of the concrete used in the EU is subject to a minimum standard of 300 kg cement for common-
ly used exposure classes. See Müller (2012).

Müller, C. (2012). Use of cement in concrete according to European standard EN 206-1. HBRC Journal, 8(1). 1–7. DOI:10.1016/j.hbrcj.2012.08.001.

19
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

20
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

205
 Damineli, B. L., Kemeid, F. M., Aguiar, P. S. and John, V. M. (2010). Measuring the eco-efficiency of cement use. Cement and Concrete Composites, 32(8). 555–62.
21

DOI:10.1016/j.cemconcomp.2010.07.009.

22
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

23
John, V. M., Damineli, B. L., Quattrone, M. and Pileggi, R. G. (2018). Fillers in cementitious materials — Experience, recent advances and future potential. Cement and
Concrete Research, 114. 65–78. DOI:10.1016/j.cemconres.2017.09.013.

24
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

Damineli, B. L., Kemeid, F. M., Aguiar, P. S. and John, V. M. (2010). Measuring the eco-efficiency of cement use. Cement and Concrete Composites, 32(8). 555–62.
25

DOI:10.1016/j.cemconcomp.2010.07.009.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

John, V. M., Damineli, B. L., Quattrone, M. and Pileggi, R. G. (2018). Fillers in cementitious materials — Experience, recent advances and future potential. Cement and Con-
crete Research, 114. 65–78. DOI:10.1016/j.cemconres.2017.09.013.

Scrivener, K., Martirena, F., Bishnoi, S. and Maity, S. (2018). Calcined clay limestone cements (LC3). Cement and Concrete Research, 114. 49–56. DOI:10.1016/j.cemcon-
res.2017.08.017.

26
Müller, C. (2012). Use of cement in concrete according to European standard EN 206-1. HBRC Journal, 8(1). 1–7. DOI:10.1016/j.hbrcj.2012.08.001.

27
Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation.

28
See, for example Høibye and Sand (2018)

Høibye, L. and Sand, H. (2018). Circular Economy in the Nordic Construction Sector. http://norden.diva-portal.org/smash/get/diva2:1188884/FULLTEXT01.pdf.

29
Dunant, C. F., Drewniok, M. P., Eleftheriadis, S., Cullen, J. M. and Allwood, J. M. (2018). Regularity and optimisation practice in steel structural frames in real design cases.
Resources, Conservation and Recycling, 134. 294–302. DOI:10.1016/j.resconrec.2018.01.009.

Moynihan, M. C. (2014). Material Efficiency in Construction. UIT Cambridge.

Moynihan, M. C. and Allwood, J. M. (2012). The flow of steel into the construction sector. Resources, Conservation and Recycling, 68. 88–95. DOI:10.1016/j.rescon-
rec.2012.08.009.

30
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

31
Little firm data exist, but interviews with stakeholders confirmed the scope for significant reductions, as also indicated by a range of research publications:

Shanks, W., Dunant, C. F., Drewniok, M. P., Lupton, R. C., Serrenho, A. and Allwood, J. M. (2019). How much cement can we do without? Lessons from cement material flows
in the UK. Resources, Conservation and Recycling, 141. 441–54. DOI:10.1016/j.resconrec.2018.11.002.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

Material Economics (2018). The Circular Economy - A Powerful Force for Climate Mitigation.

32
Lotfi, S. and Rem, P. (2016). Recycling of End of Life Concrete Fines into Hardened Cement and Clean Sand. Journal of Environmental Protection, 07. 934. DOI:10.4236/
jep.2016.76083.

33
Bakker, M. and Hu, M. (2015). Closed-Loop Economy: Case of Concrete in the Netherlands. https://www.slimbreker.nl/downloads/IPG-concrete-final-report(1).pdf.

34
Oliver, C. D., Nassar, N. T., Lippke, B. R. and McCarter, J. B. (2014). Carbon, Fossil Fuel, and Biodiversity Mitigation With Wood and Forests. Journal of Sustainable Forest-
ry, 33(3). 248–75. DOI:10.1080/10549811.2013.839386.

35
Buildings Performance Institute Europe (BPIE) (2011). Europe’s Buildings under the Microscope - A Country-by-Country Review of the Energy Performance of Buildings.
Buildings Performance Institute Europe (BPIE). http://bpie.eu/wp-content/uploads/2015/10/HR_EU_B_under_microscope_study.pdf.

36
Hurmekoski, E. (2016). Long-term outlook for wood construction in Europe. Dissertationes Forestales, 2016. 1. DOI:10.14214/df.211.

37
Östman, B. and Källsner, B. (2019). National building regulations in relation to multi-storey wooden buildings in Europe.

38
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf.

39
WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

40
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf

206
European Coal Combustion Products Association (ecoba) (2016b). Production and Utilisation of CCPs in 2016 in Europe (EU 15) [kilo tonnes (metric)]. http://www.ecoba.com/
evjm,media/ccps/ECO_stat_2016_EU15_tab.pdf.
Euroslag (2016a). Euroslag Statistics 2016. https://www.euroslag.com/wp-content/uploads/2019/01/Statistics-2016.pdf.

41
European Commission (2011). COMMISSION STAFF WORKING PAPER Impact Assessment. Accompanying the document COMMUNICATION FROM THE COMMIS-
SION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS
Energy Roadmap 2050. https://ec.europa.eu/energy/sites/ener/files/documents/sec_2011_1565_part2.pdf.

42
Scrivener, K. L., John, V. M. and Gartner, E. M. (2018). Eco-efficient cements: Potential economically viable solutions for a low-CO 2 cement-based materials industry. Ce-
ment and Concrete Research, . DOI:10.1016/j.cemconres.2018.03.015.

43
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf

Lehne, J. and Preston, F. (2018). Making Concrete Change - Innovation in Low-Carbon Cement and Concrete. https://www.chathamhouse.org/sites/default/files/publica-
tions/2018-06-13-making-concrete-change-cement-lehne-preston-final.pdf.

44
Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf

CEMBUREAU (2013). The Role of Cement in the 2050 Low Carbon Economy. http://lowcarboneconomy.cembureau.eu/.

International Energy Agency (IEA) and The World Business Council for Sustainable Development (WBCSD) (2018). Technology Roadmap - Low-Carbon Transition in the
Cement Industry. http://www.iea.org/publications/freepublications/publication/TechnologyRoadmapLowCarbonTransitionintheCementIndustry.pdf.

Scrivener, K. L., John, V. M. and Gartner, E. M. (2018). Eco-efficient cements: Potential economically viable solutions for a low-CO 2 cement-based materials industry. Cement
and Concrete Research, . DOI:10.1016/j.cemconres.2018.03.015.

45
CEMBUREAU (2013). The Role of Cement in the 2050 Low Carbon Economy. http://lowcarboneconomy.cembureau.eu/.

46
WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

Bodil Wilhelmsson, Claes Kollberg, Johan Larsson, Jan Eriksson and Magnus Eriksson (2018). CemZero - A Feasibility Study Evaluating Ways to Reach Sustainable Cement
Production via the Use of Electricity. Vattenfall and Cementa.

International Energy Agency (IEA) and The World Business Council for Sustainable Development (WBCSD) (2018). Technology Roadmap - Low-Carbon Transition in the
Cement Industry. http://www.iea.org/publications/freepublications/publication/TechnologyRoadmapLowCarbonTransitionintheCementIndustry.pdf.

Favier, A., De Wolf, C., Scrivener, K. L. and Habert, G. (2018). A sustainable future for the European Cement and concrete industry. https://europeanclimate.org/wp-content/
uploads/2018/10/AB_SP_Decarbonisation_report.pdf

ECRA (2012). Technical Report. TR-ECRA-119/2012. ECRA CCS Project - Report on Phase III. ECRA, “Technical Report: TR-ECRA-119/2012. https://www.ecra-online.org/
fileadmin/redaktion/files/pdf/ECRA_Technical_Report_CCS_Phase_III.pdf.

International Energy Agency (IEA) and The World Business Council for Sustainable Development (WBCSD) (2018). Technology Roadmap - Low-Carbon Transition in the
Cement Industry. http://www.iea.org/publications/freepublications/publication/TechnologyRoadmapLowCarbonTransitionintheCementIndustry.pdf.

Vicente Luis Guaita Delgado (n.d.). DAPHNE - Project final report - Adaptive production systems and measurement and control equipment for optimal energy consumption and
near-to-zero emissions in manufacturing processes.

47
Today, post-combustion CCS in the EU cement industry is being tested at full scale in Norcem Brevik, Norway by Norcem, part of HeidelbergCement. The project started in
2013 and is testing different post-combustion capture technologies.

Liv Bjerge (2015). Norcem CO2 Capture Project. Norcem/ ECRA CCS Conference – 20. - 21. May 2015. https://www.norcem.no/en/system/files_force/assets/docu-
ment/6d/3c/4_-_liv_bjerge_-_norcem_co2_capture_project.pdf?download=1.

48
Direct separation CCS is being investigated by the LEILAC project.

Hills, T. P., Sceats, M., Rennie, D. and Fennell, P. (2017). LEILAC: Low Cost CO2 Capture for the Cement and Lime Industries. Energy Procedia, 114. 6166–70. DOI:10.1016/j.
egypro.2017.03.1753.

49
WBCSD Cement Sustainability Initiative (2016). Getting the Numbers Right (GNR) Project, Emission Report 2016. http://www.wbcsdcement.org/GNR-2016/index.html.

50
Håkan Stripple, Christer Ljungkrantz, Tomas Gustafsson and Ronny Andersson (2018). CO2 Uptake in Cement-Containing Products. IVL Swedish Environmental Research
Institute Ltd.

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 Industrial
Transformation 2050
Pathways to Net-Zero Emissions from EU Heavy Industry

There is intense debate about how to close the gap between current
climate policy and the aim of the Paris Agreement to achieve close to
net-zero emissions by mid-century. Heavy industry holds a central place
in these discussions. The materials and chemicals it produces are
essential inputs to major value chains: transportation, infrastructure,
construction, consumer goods, agriculture, and more. Yet their pro-
duction also releases large amounts of CO2 emissions: more than 500
Mt per year, or 14% of the EU total.

Policymakers and companies thus have a major task ahead. There

is an urgent need to clarify what it would take to reconcile a pro-
sperous industrial base with net zero emissions, and how to get there
in the 30 remaining years to 2050.

This study seeks to support these discussions. It characterises how

net zero emissions can be achieved by 2050 from the largest sources
of ‘hard to abate’ emissions: steel, plastics, ammonia, and cement.
The approach starts from a broad mapping of options to eliminate
fossil CO2-emissions from production, including many emerging inno-
vations in production processes. Equally important, it integrates these
with the potential for a more circular economy: making better use of
the materials already produced, and so reducing the need for new
production. Given the uncertainties, the study explores several dif-
ferent 2050 end points as well as the pathways there, in each case
quantifying the cost to consumers and companies, and the require-
ments in terms of innovation, investment, inputs, and infrastructure.

Material Economics Sverige AB 208

www.materialeconomics.com info@materialeconomics.com