NDC Opportunities in the Industry Sector

Industry is a broad sector that encompasses the production of goods and materials like cement, steel and chemicals, as well as the construction of buildings, roads, bridges and other infrastructure. Together, these activities represent one-fifth of global direct greenhouse gas (GHG) emissions. At the same time, industry is responsible for numerous other harmful impacts to people and the environment, such as hazardous chemical contamination and plastic pollution.

Decarbonizing the global industry sector is crucial to limiting dangerous warming while also improving public and environmental health. Countries can progress toward achieving these dual objectives by committing to ambitious targets to transform industry within their nationally determined contributions (NDCs).

Why the Industry Sector Matters

This is in large part because the production of products like steel and cement involves the mining of raw materials, which are then processed at high temperatures. The heat required, traditionally generated from fossil fuels, enables a chemical reaction which itself can generate process emissions. 

The challenge for decarbonizing industry is thus twofold: High-temperature heat is more difficult to electrify than low- and medium-temperature heat; and process emissions cannot be eliminated unless an alternative method to process the raw material is found, or unless the emissions are captured and stored. High-temperature heat is also needed to manufacture chemicals and produce feedstocks — raw materials used for non-energy purposes, which can also generate significant emissions. Feedstocks are particularly necessary for the production of plastics, one of the major sources of emissions in the chemicals industry.

But transforming the global industrial system from one where emissions are still growing to one aligned with limiting warming to 1.5 degrees C (2.7 degrees F) is possible. Jumpstarting this critical transition will require the following key shifts: 

	Manage the rate of demand growth for new industrial products by increasing material efficiency, improving circularity by limiting material waste, and reducing overconsumption.
	Improve energy efficiency across industrial processes.
	Electrify low- and medium-temperature-heat industrial processes that currently rely on fossil fuels, ensuring the power grid is simultaneously decarbonized.
	Invest in innovation, development and commercialization of new solutions needed to reduce GHG emissions from chemical reactions and high-heat industrial processes which cannot be readily electrified, such as for cement and steel production.
	Combine conventional technologies with carbon capture and utilization (CCU) and carbon capture and storage (CCS) to balance remaining process emissions and high-temperature heat-related emissions from the sector.

Recent Developments

The first-ever Global Stocktake in 2023 specifically called on countries to accelerate zero- and low-emissions technology uptake in hard-to-abate sectors like industry. While much progress is still needed, recent developments in reducing global industry emissions — from increased investment, to new supportive policies, to recently announced projects — invite optimism.

For example, in 2022, the International Finance Corporation — the largest global development institution focused on the private sector in emerging markets — made its first green loan for material manufacturing in Africa, to Senegal’s leading cement manufacturer. In the same year, India, home to one of the world’s fastest-growing industry sectors, announced the establishment of a carbon market scheme for aluminum and cement manufacturers, petroleum refineries and steel producers, which will help accelerate decarbonization of those industries.

Recent years have also seen the global steel capacity pipeline shift from production technologies that rely on coal to less emissions-intensive plants, with 28 new green hydrogen-related steel projects announced between 2021 and 2022 alone.

And, in a large policy change in the United States, the 2022 Inflation Reduction Act devotes several billion dollars toward a grant program aimed at supporting technology developers, industry actors, universities and others working to reduce pollution of heavy industry.

How to Incorporate Industry-Related Targets in NDCs

Building on recent momentum, the next round of NDCs — due in 2025 — provides an important opportunity for countries to communicate planned policies and actions to drive progress toward the transformations needed in the global industry sector.

Specifically, countries should ensure that industry emissions are included in their economy-wide GHG targets, while simultaneously setting ambitious GHG targets for the industry sector, such as reducing GHG emissions within the sector by a certain percentage by 2035 from a base year.

Countries can also strengthen or include non-GHG targets addressing the industry sector, such as:

• Targets that promote demand reduction (e.g., targets to increase circularity of industrial processes).
• Targets for minimum efficiency standards for key industrial processes.
• Targets for the electrification of low- and medium-temperature-heat industrial processes (e.g., ensuring a certain share of electricity in the industry sector’s final energy demand by a target date), coupled with targets to ensure decarbonization of electric power supply (see “Opportunities in the Power Sector” for more).
• Targets to lower the carbon intensity of high-emitting industrial processes (e.g., reducing the carbon intensity of global cement or steel production).
• Targets for retrofitting existing production facilities to reduce emissions, and development of new low-emissions industrial production facilities when expanding capacity, such as low-carbon steel or cement facilities.
• Targets to scale green hydrogen production to promote uptake of carbon-free feedstocks in emissions-intensive industrial processes (e.g., a target for total green hydrogen capacity by a specific year).
• Targets for fuel switching to alternative fuels where relevant, such as waste-derived fuel.
• Targets to scale up CCU and/or CCS deployment to balance residual emissions in hard-to-abate industrial sub-sectors.
• Targets to enhance policy measures which drive further industrial emissions reductions, such as green public procurement programs and sectoral carbon pricing.

_{Cover image by Ant Rozetsky/Unsplash}