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Industrial Decarbonization: A Guide to Cutting Carbon Emissions

This blog post discusses the challenge of industrial decarbonization, how states can tackle it, and the policies that are helping accelerate this vital transition.

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    Introduction to Industrial Decarbonization

    States are stepping up to address the challenge of reducing carbon emissions, not just from power plants, transport, and buildings but also from industry, which accounts for over a quarter of total emissions. While some states, such as Oregon, have started initiatives in this sector, the road ahead is fraught with complexity.

    The Blueprint for Industrial Decarbonization

    The U.S. Climate Alliance, a bipartisan group of 24 governors, has enlisted the help of ACEEE to create a guidebook for states striving to progress on industrial decarbonization. This guidebook, released today, examines the obstacles in the path of industrial decarbonization in the seven industries responsible for 80% of sector emissions. It highlights over 100 ongoing initiatives in leading states and provides an array of options for states looking to expedite their efforts in this increasingly significant policy area.

    Decarbonization Pillars: A Strategy for Reducing Emissions

    The challenges of industrial decarbonization stem from the sector’s complexity, the large capital investment required to switch to low-carbon or decarbonized technologies, and the long lifespan of infrastructures such as plants and equipment. According to the guidebook, there are five primary pillars of industrial decarbonization:

    • Efficiency
    • Process electrification
    • Low-carbon fuels and feedstocks
    • Carbon capture, utilization, and storage (CCUS)
    • Procurement of low-carbon materials and products

    These pillars pave the way to achieve net-zero greenhouse gas emissions in most industrial activities, with energy efficiency as the foundational pillar that sets an industry on the path to decarbonization while simultaneously leveraging further reductions from other pillars.

    Multi-Stakeholder Approach: A Must for Industrial Decarbonization

    Industrial decarbonization necessitates a multi-layered approach involving numerous stakeholders. Support from federal government policy interventions and investments, in combination with significant funding from acts such as the Inflation Reduction Act, the Energy Act of 2020, the Infrastructure Investment and Jobs Act of 2021, and the CHIPS Act of 2022, is indispensable. The guidebook reveals the essential role states play in assisting and speeding up this process by utilizing five key policy levers and establishing early precedents.

    Setting Goals and Creating Plans: The Preliminary Steps

    State planning is a critical first step. As of now, three states have set some form of target for reducing GHG emissions in the industrial sector. For instance, Oregon passed a law last year that has goals of at least 45 percent below 1990 emissions levels by 2035 and at least 80 percent below 1990 levels by 2050.

    From Research to Deployment: The Technology Trajectory

    Research, development, demonstration, and deployment (RDD&D) efforts are crucial for advancing industrial decarbonization technologies. States can complement federal efforts through direct investment in RDD&D programs and by supporting innovative companies with tax credits.

    Carbon Pricing: A Double-Edged Sword

    Carbon pricing policies can incentivize companies to invest in low-carbon fuels and energy-efficient practices and technologies. In some cases, proceeds from these programs have been used to directly support industries’ efforts to reduce emissions.

    Providing Incentives: Driving Decarbonization

    Economic incentives are common policy tools used to encourage decarbonization. Most state incentives for industrial decarbonization have focused on improving energy efficiency in the sector through financial and technical assistance.

    Read More: Oregon Solar Incentives

    Setting Standards: Regulations to Support Decarbonization

    Federal performance standards have been essential for reducing various air pollutants, including emissions from industry. In theory, states can develop standards to support all pillars of industrial decarbonization.

    The Road Ahead: A Call for Swift and Innovative Action

    The current industrial decarbonization policy landscape is in its nascent stages, but states are perfectly placed to take rapid and innovative action to assist the sector in achieving net-zero GHG emissions. The guidebook provides resources and tools for states to learn from their peers, seize collaborative opportunities, and progress in developing and implementing effective industrial decarbonization policies.

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