Achieving Net Zero Heavy Industry Sectors in G7 Members

Achieving Net Zero Heavy Industry Sectors in G7 Members is a new report by the International Energy Agency, focussing on implementation with respect to driving down CO2 emissions from heavy industries in G7 economies and beyond.

The report has been requested by the German Government as an input to its 2022 G7 Presidency. It is designed to inform policy makers, material producers, investors, leading sectoral initiatives and the research community in the lead up to the G7 Climate and Energy Ministerial in May 2022.

The work builds on analysis from the IEA’s Net Zero by 2050: A Roadmap for the Global Energy Sector to identify the opportunities and challenges of a net-zero transition in heavy industries and frame the key findings. The IEA’s Roadmap constitutes a pathway to net zero emissions by 2050, but it is not the only pathway. Irrespective of the pathway followed, three key challenges facing heavy industry sectors need to be overcome:

• Firstly, many technologies required for the industry sector transition are early stages in their development and are not yet ready for market deployment.
• Secondly, new production processes with substantially lower emissions intensities than incumbent technologies will – at least initially – have higher costs.
• Thirdly, the products of heavy industry sectors are traded internationally in competitive markets, leading to slim margins and a disincentive for first movers.

The report addresses two key topics that are integral to any efforts to overcome these challenges, with a focus on the steel and cement industries:

• The first is a toolbox of policies and financing mechanisms that may be used by G7 members and beyond to initiate and sustain the industry sector transition.
• The second is a series of common and practicable definitions as to what constitutes near zero emissions material production, which is a key ingredient to establishing future policy mechanisms.

For each of these components, an actionable set of recommendations are provided for G7 members to consider.