How industrial clusters can help reach clean energy targets

As world leaders from nearly 200 countries gather in Egypt this month at the UN climate summit COP27, discussions at the international climate conference will focus on ways to accelerate carbon reduction strategies to reach economy-wide net-zero targets by mid-century. Countries will only be successful in collectively reaching clean energy goals if optionality and cross-sector collaboration remain on the table.

With almost 80 percent of the global economy now committed to net-zero emissions, there is an urgent need for action to deliver on those ambitious commitments. A recent report from UN Climate Change shows 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 companies also struggle with how to cost effectivelymeet planned targets. Achieving net-zero emissions on a global scale cannot be achieved with a single technological breakthrough or approach. It will require broad collaboration across sectors worldwide. Industrial clusters can play a key role in this effort.

Industrial clusters are geographic regions where companies are concentrated. Since these industrial assets are near each other, they can yield 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 endeavor for decision-makers worldwide — in part, because they account for 15 to 20 percent of global carbon dioxide emissions.

At COP26 last year, the World Economic Forum, in collaboration with EPRI and Accenture, launched an effort to help accelerate the decarbonization of hard-to-abate industrial sectors — such as steel, cement and chemical industries — while maximizing job creation and economic competitiveness.

Since launching the industrial clusters initiative, 11 “hubs” have joined at locations in the U.S., the U.K., the Netherlands, Belgium, Australia and Spain. This includes Europe’s second-largest port, the U.S.’ biggest hydrogen producer, as well as the U.K.’s largest and most carbon-intensive manufacturing cluster.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 has launched the Basque Net Zero cluster to support more than 200,000 jobs in the Basque region, participants are working toward a 7.2-metric tons reduction in CO2 emissions 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, along with carbon capture, utilization and storage (CCUS).

Moving forward, the initiative’s goal is to maximize efficiencies in industrial clusters around the world. We know that — regardless of the clean energy technologies used at any given industrial cluster — a diverse toolkit of all available lower-carbon options is key for success. A broad suite of global solutions is needed, but which solutions and how they are deployed will vary regionally, depending on the industries’ geographies and other conditions. Leveraging synergies will be key to an equitable, affordable clean energy transition.

As all economic sectors work to reduce emissions precipitously, we must embrace all the tools in our decarbonization toolbox, as there is no silver bullet to reach net-zero emssions. Cross-industry collaboration and opportunities to maximize efficiencies — including these net-zero industrial clusters — will be needed to continue scaling solutions to decarbonize worldwide.

Sean Bushart, Ph.D., is a research and development director at EPRI, currently on loan to the World Economic Forum as a project fellow working to accelerate the transition of industrial clusters to net zero in North America.