Decarbonization of the U.S. Industrial Sector – A Roadmap for Global Impact
By Dr Samuel Gage
The United States has set an ambitious target to achieve net-zero greenhouse gas emissions by 2050. In 2020, the industrial sector accounted for 30% of U.S. primary energy-related CO2 emissions, or 1360 million metric tons of CO2. Other segments of the U.S. economy, such as residential and commercial buildings, transportation, and the electrical grid, have a clearer path to net-zero emissions through deployment and utilization of low-carbon electricity from renewable energy sources, such as wind and solar. The industrial sector presents unique decarbonization challenges. Considering the sheer magnitude of materials transformations undertaken in industry, from extraction of raw materials to the creation of intermediate and final products, decarbonization will require a wide range of technology solutions that will have a ripple effect across increasingly complex supply chains. This must be coupled with strong government policies and incentives that level the playing field to maintain a given industry’s competitiveness within the global economy. In short, decarbonization of the industrial sector requires a multi-component strategy for mitigation of difficult-to-abate industrial emissions.
As a Senior Principal Scientist at Energetics, I advise the United States Department of Energy (DOE) on the best course of action to tackle the daunting task of decarbonizing the industrial sector. Specifically, I work closely with DOE to facilitate engagement with industry stakeholders, identify technology gaps and opportunities, and execute decarbonization strategy through funding of innovative research & development projects and pilot scale demonstrations.
The United States is currently at an inflection point in its history. Recently passed legislation, including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act, have allocated billions of dollars toward decarbonization. This amount of Federal investment in decarbonization is truly unprecedented and represents an opportunity to spur economic growth in manufacturing, train the next generation of the workforce, and facilitate an equitable future for all people. New tax credits from these pieces of legislation are intended to incentive business owners to transition to more sustainable operations and drive the emergence of new markets. For example, tax credits 45Q and 45V incentive the adoption of carbon capture and clean hydrogen technology, respectively. Whereas restructured section 48 tax credits incentive clean energy production (e.g., solar energy) and manufacturing of advanced energy technology. We are already witnessing public sector funding and carbon capture tax credits take effect in Colorado with the launch of the direct air capture plant in Adams County this month. The Global Thermostat plant has the potential to remove 100,000 tons of carbon dioxide from the atmosphere annually.
These new Federal laws were designed to help U.S.-based small businesses, who are more greatly affected by inflation than larger corporations. Small businesses may receive tax credits that cover 30% of the cost of switch to renewable power, $5 per square foot to support energy efficiency improvements, and 30% of the purchase cost for clean commercial vehicles. These actions are intended to expand opportunities for small businesses by boosting American manufacturing and competitiveness, supporting local clean energy economies, and creating an equitable environment for rural and historically disadvantaged communities.
While I am in a unique position to see both the challenges and opportunities of industrial decarbonization from a high level, these strategies are U.S.-centric and have since their inception created some unexpected conflicts with our closest allies. The most notable example is the “Buy American” provisions in these new laws. Critics claim that the generous subsidies and tax breaks provided to U.S. companies will hurt our trade partners that sell goods and services to the U.S. market. The United States and its allies are individually contributing to the decarbonization narrative. However better dialogue among the international community (public and private sector) is needed to build upon each other’s experiences, draft similar objectives, and design harmonized decarbonization strategies that avoid harmful economic consequences.
Dr Samuel Gage is an IBCircle Member, a Board Member of the German American Chamber of Commerce Colorado Chapter and Principal Scientist at Energetics. He can be reached at shgage@energetics.com.