How Industrial Clusters Can Help Achieve Clean Energy Goals
As world leaders from nearly 200 countries gather in Egypt this month for the UN climate summit COP27, discussions at the international climate conference will focus on ways to accelerate carbon reduction strategies to achieve economy-wide net zero goals by mid-century. Countries will only be successful in achieving clean energy goals collectively if optionality and cross-sector collaboration remain on the table.
With nearly 80% of the global economy now committed to net zero emissions, there is an urgent need to act to deliver on these ambitious commitments. A recent UN climate change report shows that the world is not on track to limit global temperature rise to 1.5 degrees Celsius by the end of the century. Despite widespread commitment, major governments and businesses are also struggling to meet planned targets in a cost-effective manner. Achieving net zero emissions globally cannot be achieved with a single technological breakthrough or approach. This will require broad collaboration across sectors around the world. Industrial clusters can play a key role in this effort.
Industrial clusters are geographical regions where businesses are concentrated. Since these industrial assets are close to each other, they can generate significant synergies, including the sharing of infrastructure, financial and operational risks, as well as natural and human resources. Net-zero industrial clusters are an attractive venture for policymakers around the world, in part because they account for 15-20% of global carbon dioxide emissions.
At COP26 last year, the World Economic Forum, together with EPRI and Accenture, launched an effort to help accelerate decarbonization hard-to-reduce industrial sectors — such as steel, cement and chemicals — while maximizing job creation and economic competitiveness.
Since the launch of industrial cluster initiative, 11 “hubs” have joined sites in the US, UK, Netherlands, Belgium, Australia and Spain. This includes the second-largest port in Europe, the largest hydrogen producer in the United States, as well as the largest and most carbon-intensive manufacturing cluster in the United Kingdom. These clusters will use a variety of clean energy combinations to decarbonize, including hydrogen, carbon capture and storage, renewables and/or nuclear.
In Spain, the initiative launched the Basque Net Zero Cluster to support more than 200,000 jobs in the basque country, participants are working to reduce CO2 emissions by 7.2 tonnes per year. The initial phase of this cluster is focused on decarbonizing oil refining, industrial manufacturing, steel, cement and paper by leveraging systemic efficiency and circularity, direct electrification, as well as renewable heat, hydrogen, and carbon capture, utilization and storage (CCUS).
Going forward, the initiative’s goal is to maximize the effectiveness of industrial clusters around the world. We know that regardless of the clean energy technologies used in a given industry cluster, a diverse toolbox of all available low-carbon options is key to success. A wide range of global solutions are needed, but the solutions and how they are deployed will vary by region, based on industry geography and other conditions. Leveraging synergies will be key to a transition to equitable and affordable clean energy.
As all economic sectors strive to reduce emissions in a precipitous manner, we need to embrace all the tools in our decarbonization toolkit, because there is no silver bullet to achieving net zero emissions. Cross-industry collaboration and opportunities to maximize efficiency – including these net-zero industry clusters – will be needed to continue scaling decarbonization solutions around the world.
Sean Bushart, Ph.D., is director of research and development at EPRI, currently on loan to the World Economic Forum as a project officer working to accelerate the transition of industrial clusters to net zero in North America.