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Net-Zero

Industry Tracker

2022 Edition

JULY 2022

In collaboration

with Accenture

Net-Zero Industry Tracker 2

Contents

No part of this publication may be reproduced or

transmitted in any form or by any means, including

photocopying and recording, or by any information

storage and retrieval system.

Disclaimer

This document is published by the World Economic

Forum as a contribution to a project, insight area

or interaction. The ﬁndings, interpretations and

conclusions expressed herein are a result of a

collaborative process facilitated and endorsed by

the World Economic Forum but whose results do

not necessarily represent the views of the World

Economic Forum, nor the entirety of its Members,

Partners or other stakeholders.

Foreword 3

Executive summary 4

1 Mission and methodology 7

2 Cross-industry ﬁndings 13

2.1 Net-zero performance 14

2.2 Net-zero readiness 23

3 In-depth industry analysis 31

3.1 Steel 32

3.2 Cement 42

3.3 Aluminium 52

3.4 Ammonia 62

3.5 Oil 72

3.6 Natural gas 82

Appendix 92

A.1 Industry process overview 93

A.2 Industry demand overview 100

Contributors 107

Endnotes 109

Abbreviations and acronyms 110

Abbreviations

and acronyms

Net-Zero Industry Tracker 3

Foreword By 2050, the global economy is expected to

accommodate and serve 25% more people,1

50% more city dwellers,2 and 100% more

purchasing power in the global middle class.3

Such developments will have tremendous

repercussions for the global industries that

provide the basic materials and energy required

to sustain modern society, from housing to

consumer goods. These industries are today’s

most signiﬁcant contributors to anthropogenic

emissions. In business-as-usual scenarios,4,5

through 2050, demand for energy and

industrial products is projected to grow by

30-80%. Industries will continue to be vital

to our future; the effective decarbonization

of their processes and value chains is crucial

to achieving our climate objectives.

While efforts are under way and commitments

are being made, the reality of net zero for these

industries is lagging and extrapolating from

today’s speed of progress will fall far short.

Today’s gap is considerable, and building

transparency into this reality to elevate the

discussion on how to structurally solve the

challenge is key to addressing an under-served

portion of the transition. While it is encouraging

to see the adoption of standardization and

monitoring of sustainability metrics at national

levels in carbon-intensive sectors such as

power generation, buildings and transport,

signiﬁcant gaps remain in heavy industries.

There have been multiple challenges;

complex supply chains, multiple production

processes, global fragmentation, etc. It is time

to close the gaps with timely and consistent

monitoring of industrial decarbonization.

Progress tracking will help heavy industries

determine the trajectory of their transformations,

maintain a steady pace of progress and

inform necessary course corrections.

The World Economic Forum has benchmarked

countries’ energy transition through the

Energy Transition Index for ten years. We are

leveraging our experience to lay the foundation

of a robust cross-industry platform that will

track sectors’ journeys to net zero. Such a

platform is needed now more than ever. The

ongoing energy crisis, sky-high prices of energy

and materials, and persistent risk of supply

shortages are disrupting industrial value chains

down to end consumers. This is the time for

industries and governments to double down

on efforts to accelerate the decarbonization of

industrial processes, improve energy efﬁciency

and reduce their dependence on fossil fuels.

There is much to be done. International

standards need to deﬁne “low-emission”

industries. Low-carbon production technologies

need to demonstrate their value at commercial

scale. Consumer awareness and acceptance

must evolve to generate demand for low-

emission products. Infrastructures required to

develop and integrate low-carbon processes

must be developed. Economically viable low-

carbon markets need to emerge. Investments

must be “de-risked” to accelerate capital

inﬂows. Adequate policy frameworks can help

enable and incentivize transformation. These

and other objectives cannot be achieved

without a paradigm shift in multistakeholder

collaboration across extended industrial

ecosystems. Neither can they be achieved

without keeping equity and justice at the

heart of industries’ transformations. People’s

livelihoods and opportunities depend on it.

Industrial decarbonization may be one of

the most daunting challenges of the energy

transition. Yet, we want to be optimistic.

Industry pathways to net zero have been

charted; transparency is improving. If the global

ambition and collaborative spirit witnessed

at COP26 and at the 2022 World Economic

Forum Annual Meeting in Davos spark concrete

action, we could see this decade become

one of the major breakthroughs for net-zero

industries. The time for action is now.

Roberto Bocca

Head of Shaping the

Future of Energy, Materials

and Infrastructure, World

Economic Forum

Muqsit Ashraf

Senior Managing Director and

Lead, Energy Industry Sector,

Accenture

Contents

Abbreviations

and acronyms

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Net-ZeroIndustryTracker2022EditionJULY2022IncollaborationwithAccentureNet-ZeroIndustryTracker2Contents©2022WorldEconomicForum.Allrightsreserved.Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,includingphotocopyingandrecording,orbyanyinformationstorageandretrievalsystem.DisclaimerThisdocumentispublishedbytheWorldEconomicForumasacontributiontoaproject,insightareaorinteraction.Thefindings,interpretationsandconclusionsexpressedhereinarearesultofacollaborativeprocessfacilitatedandendorsedbytheWorldEconomicForumbutwhoseresultsdonotnecessarilyrepresenttheviewsoftheWorldEconomicForum,northeentiretyofitsMembers,Partnersorotherstakeholders.Foreword3Executivesummary41Missionandmethodology72Cross-industryfindings132.1Net-zeroperformance142.2Net-zeroreadiness233In-depthindustryanalysis313.1Steel323.2Cement423.3Aluminium523.4Ammonia623.5Oil723.6Naturalgas82Appendix92A.1Industryprocessoverview93A.2Industrydemandoverview100Contributors107Endnotes109Abbreviationsandacronyms110AbbreviationsandacronymsNet-ZeroIndustryTracker3ForewordBy2050,theglobaleconomyisexpectedtoaccommodateandserve25%morepeople,150%morecitydwellers,2and100%morepurchasingpowerintheglobalmiddleclass.3Suchdevelopmentswillhavetremendousrepercussionsfortheglobalindustriesthatprovidethebasicmaterialsandenergyrequiredtosustainmodernsociety,fromhousingtoconsumergoods.Theseindustriesaretoday’smostsignificantcontributorstoanthropogenicemissions.Inbusiness-as-usualscenarios,4,5through2050,demandforenergyandindustrialproductsisprojectedtogrowby30-80%.Industrieswillcontinuetobevitaltoourfuture;theeffectivedecarbonizationoftheirprocessesandvaluechainsiscrucialtoachievingourclimateobjectives.Whileeffortsareunderwayandcommitmentsarebeingmade,therealityofnetzerofortheseindustriesislaggingandextrapolatingfromtoday’sspeedofprogresswillfallfarshort.Today’sgapisconsiderable,andbuildingtransparencyintothisrealitytoelevatethediscussiononhowtostructurallysolvethechallengeiskeytoaddressinganunder-servedportionofthetransition.Whileitisencouragingtoseetheadoptionofstandardizationandmonitoringofsustainabilitymetricsatnationallevelsincarbon-intensivesectorssuchaspowergeneration,buildingsandtransport,significantgapsremaininheavyindustries.Therehavebeenmultiplechallenges;complexsupplychains,multipleproductionprocesses,globalfragmentation,etc.Itistimetoclosethegapswithtimelyandconsistentmonitoringofindustrialdecarbonization.Progresstrackingwillhelpheavyindustriesdeterminethetrajectoryoftheirtransformations,maintainasteadypaceofprogressandinformnecessarycoursecorrections.TheWorldEconomicForumhasbenchmarkedcountries’energytransitionthroughtheEnergyTransitionIndexfortenyears.Weareleveragingourexperiencetolaythefoundationofarobustcross-industryplatformthatwilltracksectors’journeystonetzero.Suchaplatformisneedednowmorethanever.Theongoingenergycrisis,sky-highpricesofenergyandmaterials,andpersistentriskofsupplyshortagesaredisruptingindustrialvaluechainsdowntoendconsumers.Thisisthetimeforindustriesandgovernmentstodoubledownoneffortstoacceleratethedecarbonizationofindustrialprocesses,improveenergyefficiencyandreducetheirdependenceonfossilfuels.Thereismuchtobedone.Internationalstandardsneedtodefine“low-emission”industries.Low-carbonproductiontechnologiesneedtodemonstratetheirvalueatcommercialscale.Consumerawarenessandacceptancemustevolvetogeneratedemandforlow-emissionproducts.Infrastructuresrequiredtodevelopandintegratelow-carbonprocessesmustbedeveloped.Economicallyviablelow-carbonmarketsneedtoemerge.Investmentsmustbe“de-risked”toacceleratecapitalinflows.Adequatepolicyframeworkscanhelpenableandincentivizetransformation.Theseandotherobjectivescannotbeachievedwithoutaparadigmshiftinmultistakeholdercollaborationacrossextendedindustrialecosystems.Neithercantheybeachievedwithoutkeepingequityandjusticeattheheartofindustries’transformations.People’slivelihoodsandopportunitiesdependonit.Industrialdecarbonizationmaybeoneofthemostdauntingchallengesoftheenergytransition.Yet,wewanttobeoptimistic.Industrypathwaystonetzerohavebeencharted;transparencyisimproving.IftheglobalambitionandcollaborativespiritwitnessedatCOP26andatthe2022WorldEconomicForumAnnualMeetinginDavossparkconcreteaction,wecouldseethisdecadebecomeoneofthemajorbreakthroughsfornet-zeroindustries.Thetimeforactionisnow.RobertoBoccaHeadofShapingtheFutureofEnergy,MaterialsandInfrastructure,WorldEconomicForumMuqsitAshrafSeniorManagingDirectorandLead,EnergyIndustrySector,AccentureAbbreviationsandacronymsContentsNet-ZeroIndustryTracker4ExecutivesummaryIndustrialsectorsaccountfornearly40%ofglobalenergyconsumption6andmorethan30%ofglobalgreenhousegasemissions.7Thetransformationofthesesectorsispivotaltoreachingnet-zeroemissionsby2050.ThisreportbytheWorldEconomicForum,incollaborationwithAccentureandsupportedbyexpertinputfromover40organizations,establishesanewframeworktomonitorandsupporttheprogressofheavyindustriestowardsnetzero.Thechallengesassociatedwithindustrialdecarbonizationaretypicallymorecomplexthanthoseofothercarbon-intensivesectors(e.g.power,transportation,buildings,etc.).Buttheyarealsorelativelylesswellunderstood.Gapsindataanddiscrepanciesinkeyterminologies,definitions,andindustryandemissionboundariescontributetoalackofvisibilityonprogress.Thistrackinginitiativeaimstoprovidecompanies,policy-makersandconsumerswiththenecessarytransparencytoensurethatactionandinvestmentsaretargetedandbalanced.Theframeworkfollowsaholisticapproachandisdesignedtoconcurrentlytrackindustries’“net-zeroperformance”and“net-zeroreadiness”.Itidentifiesasetofstandardmetricstoassessemissionsreductionandenergyefficiencytoevaluateperformance.Itproposesemissionintensitytargetstoinformsectoralnet-zerotransitionstrategiesandhighlightsinformationgapstoimprovetransparencyfurther.Whileindustriesdifferinproducts,processesandbusinessmodels,theirtransformationwillrelyontheevolutionofcommonenablersthatareoftenbeyondthecontrolofanysingleindustry.Theframeworkassessessectoralreadinessfornetzerobyevaluatingkeyenablerssuchasthereadinessoftechnology,accesstotheenablinginfrastructure,therobustnessofsupportingpolicyframeworks,thestrengthofdemandsignalsforlow-emissionproductsandtheavailabilityofcapitalforinvestmentsinlow-emissionassets.Effortstoimproveindustries’net-zeroreadinessacrossthesedimensionsarecriticaltoprogressindustries’net-zeroperformance.Thereportacknowledgesthatthereareeffortsunderway.Net-zerocommitments,decarbonizationstrategies,technologypartnerships,low-carbonpilotprojects,anddiscussionsaroundgreenproductsandpremiumshaveemerged.Despitethis,noindustryisanywherenearwhereitneedstobeby2050andcomplexchallengeswithinandacrosstheindustriesremain.Thereporthighlightssector-specificacceleratorsandprioritiesforsixindustries(steel,cement,aluminium,oil,naturalgasandammonia)andoutlinessevencross-sectoralrecommendationsforimmediateaction.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker53.Morefull-scaledemonstrationprojectsneedtobedevelopedtoacceleratethecommercialreadinessoflow-emissiontechnologies.Manylow-emissionproductiontechnologieshavealreadyreachedlargeprototypeandevendemonstrationphases,andcandrasticallyreduceemissions(e.g.-82%fornaturalgas,-95%forcementandsteel,and-100%forammonia).However,atthecurrentpace,thesetechnologieswon’tbecommerciallyreadyforindustryadoptionbeforethesecondhalfofthedecade(e.g.2025forsteel,12and2030orbeyondforcement13andaluminium14).Toacceleratethecommercializationofthesesolutionsanddrivecostsdown,industrialfirmsneedtodoubledownontheireffortstodevelopfull-scaledemonstrationorearlycommercialprojects.4.Broadadoptionoflow-emissiontechnologieswillbeatriskifthepaceofinvestmentsinenablinginfrastructuresdoesnotpickupdrastically.Mostindustrydecarbonizationpathwaysrelyonlow-carbonpower,cleanhydrogen(blueandgreen)andcarboncapture.Tomeettheprojectedneedsofthesixfocussectorsby2050,capacitiesofglobalCO2storageandcleanhydrogenproductioninfrastructuresneedtogrow64-foldand8-fold,respectively,fromwheretheyaretoday.Nearly1,700gigawatts(GW)ofcleanpowerwillneedtobeadded.Thiswillrequireapproximately$4.2trillionininfrastructureinvestmentsoverthenext30years.1.Industries’net-zerotransformationsrequireanewlevelofambitioninmultistakeholdercollaboration.Breakthroughsolutionsareseldomfoundwithinasinglefirmorevenindustry.That’swhyindustrialecosystemsneedtojoinforcesbeyondtraditionalpartnerships.Threearchetypalpartnerships,detailedintherecentlyreleasedFosteringEffectiveEnergyTransition2022report,8shouldbebuiltuponandreplicated:collaborationbetweencustomersandsuppliers(e.g.offtakeagreements);collaborationamongindustryandcross-industrypeers(e.g.CO2handlinginfrastructure);andcollaborationacrossthebroaderecosystemofindustrialstakeholders,includinggovernments,policy-makers,financiers,researchersandNGOs.2.Commonstandardsfor“low-emission”productionthresholdsneedtobeestablishedforindustrialcompaniestocalibratethetransformationoftheirkeyproductionprocesses.Net-zerotargetsarenecessarybutinsufficienttodrivetheyear-on-yearprogressrequired.Emissionintensitytrajectoriesataproductlevel(e.g.steel,cement)areessentialtoguideconsistentandtimelyprogress.Industrystandards(e.g.AluminiumStewardshipInitiative9orResponsibleSteel10),multistakeholdercollaboration(e.g.AchievingNetZeroHeavyIndustrySectorsinG7Membersreport11)andproductcertificationsystemswillbeessentialtodefinesuchtrajectories.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker65.Demandsignalsforlow-emissionproductsareemergingbutmustbestrengthenedandscaledup.Decarbonizingthesixindustriescouldrequireover$2.1trillionincapitalexpendituresinproductionassets.Suchinvestmentscanonlymaterializeifgreenpremiumsexisttograntproducersandinvestorsacceptablereturnsfortheirrisk.Understandingendconsumerdemandandpublicandprivatebuyers’commitmentswouldhelpprovideproducersvisibilityonlow-emissionproducts’offtakevolumeandprice(e.g.FirstMoverscoalition15).Establishingadequatecarbonfootprintproductlabellingstandardswouldhelpconsumersmakemoreinformeddecisionsandadvocatefornewtypesofproducts.6.Publicpolicycanreinforceallenablingdimensionsandsupporttheemergenceofdifferentiatedandeconomicallyviablelow-emissionmarketsforfirstmovers.Thetrade-exposednatureofcommoditymarketsisparticularlychallengingtodecarbonization.Stablepolicyframeworksarenecessarytoleveltheplayingfieldforfirstmoversthatarewillingtoinvestinhigher-cost,low-emissionproduction.Potentialapproacheslimitingtheriskofcarbonleakageincludebutarenotlimitedtoapriceoncarboncombinedwithaborder-adjustmentmechanism,carboncontractsfordifferences,preferentialpublicprocurement(e.g.CaliforniaBuyCleanAct16),materialmandates,orquotas.7.Adequaterisk-sharingmechanisms,supportingtaxonomiesandpublicfinancialsupportcanacceleratetheflowofprivatecapitalintolow-emissionindustries.Companies’investmentsinlow-emissionassetsareriskierduetotheirdependenciesonnewtechnologiesandinfrastructure.Collaborationacrossindustriesandvaluechainscanenablerisk-sharingwhileprovidingdirectmarketroutes.Favourabletaxonomiesandpublicfundingintheformofgrants,low-interestandconcessionalloans,etc.canalsoreducecompanies’riskexposure.Multilateralpublic-privatepartnershipstofinancelow-emissionprojectswouldhelpchannelthenecessarycapitalintothefirstcommercial-scaleassets.Establishingnet-zeroroadmapsforindustriesisessentialtokeepthe2050goalwithinreach.Soisappropriatelymeasuringprogressandimprovingtransparencyalongtheway.ThisfirsteditionoftheNet-ZeroIndustryTrackerreportsetstheWorldEconomicForum’sambitiontoestablisharobusttrackingplatformthatsupportstheemergenceoflow-carbonindustriesbythedecade’send.Thecurrentenergycrisispresentsanexcellentopportunitytopickupthepaceofindustrialdecarbonization.Nowisthetimetoact.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker7Missionandmethodology1AbbreviationsandacronymsContentsNet-ZeroIndustryTracker8Establishacomprehensivetrackerforallstakeholders(e.g.companies,investors,financialinstitutions,governments,policy-makers,etc.)tomonitorandacceleratethenet-zerotransformationofindustries.Supporttheglobaleffortaroundindustrynet-zerotransformationbyprovidingallstakeholders:Aframeworkandmethodologytounderstandindustrialemissionsdriversandnet-zerotransformationenablers.Quantitativeandqualitativescorecardstotrackindustryprogresstowardsnetzeroovertime.Priorityareasforindustriestoactuponandaccelerateprogress.missionstatementkeyobjectivesAbbreviationsandacronymsContentsNet-ZeroIndustryTracker91MissionandmethodologyTheNet-ZeroIndustryFrameworkcombinestwocomplementarylensestotrackindustries’progressontheground.Net-zeroindustryperformanceThefourdriversofindustrynetgreenhousegas(GHG)emissions:Net-zeroindustryreadinessThefiveenablingdimensionsofindustrynet-zerotransformation:Whatisproduced:IndustryproductionvolumeandmixHowitisproduced:ProductionprocessemissionandenergyintensityWhatitcontributesto:Scope3emissionsandoffsetsWhatenergyisused:TypesofenergysourcesconsumedNetGHGemissionsTechnologytodecarbonizeproductionprocessesInfrastructuretoenablelow-emissionproductionCapitaltotransformindustryassetbaseDemandtobuylow-emissionproductsatapremiumpricePoliciestosupportlow-emissionbusinessmodelsNet-zerotransformationenablersTechnologyPoliciesDemandCapitalInfrastructureAbbreviationsandacronymsContentsNet-ZeroIndustryTracker101MissionandmethodologyIndustries’progressisassessedagainstproductionemissionintensitytrajectoriesfromtheInternationalEnergyAgency(IEA)NetZeroby2050Scenario.KeymessagesForaluminium,ammonia,steelandcementsectors,“low-emission”isdefinedastheaveragescope1and2productionemissionintensityrequiredin2050intheIEANetZeroby2050Scenario.Foroilandgas,intheabsenceofcorrespondingdataintheIEANetZeroby2050Scenario,“low-emission”productionisdefinedbasedonthepotentialofthebestavailabletechnology(BAT)today.“Reducedemission”istheaverageproductionemissionintensityin2030intheIEANetZeroby2050Scenarioforallsixindustries.Emissionintensitythresholdsareindustryaveragevaluesandwillnotbemetbyallproduction,givenmultipleproductionroutesandgeographicalconstraints.Whilebestperformerswillbebelowaverage,someindividualsiteswillstillproduceaboveemissionintensitythresholds.Thesevaluesarealsosubjecttochangeasnet-zeroscenariosandprojectedindustries’emissionintensitytrajectoriesevolve.4Source:IEA,InternationalAluminiumInstitute(IAI)Basicmaterialsindustryemissionintensitytrajectory(2020-2050)(tCO2e/tproduction)5Energyindustryemissionintensitytrajectory(2020-2050)3(kgCO2e/bblandtCO2e/MMcf)6,716.102.451.870.951.900.920.110.590.450.220.030.430.102.200.50Aluminium1Ammonia2SteelCementNaturalgasOil20202030(“reducedemission”)20402050(“low-emission”)43973014.38.12.611.50Notes:1Basedonprimaryproductionroutesonly;2Basedonoverallprimarychemicalsindustrytrajectory;3Datafor2040foroilandgasisnotavailable,2050dataforoilandgasisbasedonbestavailabletechnologytoday;4IEAhasstartedtodevelop“near-zero”emissionintensitythresholdsforsteel(rangingfrom50-400kgCO2/tofsteeldependingonscrapsteelcontent),andcement(rangingfrom40-125kgCO2/tofcement),howeverforthisiterationofthereport,theIEANetZeroby2050emissionthresholdsareusedforgreaterconsistencyacrosstheindustries;5TonnesofCO2equivalent/tonneofproduction;6KilogramsofCO2equivalent/barrelofrefinedoil;7CO2equivalent/millioncubicfeet.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker111MissionandmethodologyTransformationenablersareassessedagainstfivestagesofreadiness.KeyreadinessquestionsTechnologyIsthetechnologytoproducelow-emissionproductatcompetitivecostavailable?InfrastructureIstheinfrastructuretoenableuseoflow-emissiontechnologiesavailable?DemandCanthemarketpaytherequiredgreenpremiumforthelow-emissionproduct?PoliciesAresupportingpoliciestoenablethegrowthofalow-emissionindustryinplace?CapitalArereturnssufficienttodriveinvestmentstowardslow-emissionassets?Thelow-emissionproductiontechnologiesarefullyavailableandcompetitivewithhigh-emissionalternatives.Thenecessaryinfrastructurerequiredbythelow-emissionindustryisfullyinplace.Thewholemarketcanpaytherequiredgreenpremium.Policiesfullycomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforallCapEx2toflowtowardslow-emissionproductionassets.Thelow-emissionproductiontechnologiesarelargelycommercialandcompetitivewithhigh-emissionalternatives.Thenecessaryinfrastructurerequiredbythelow-emissionindustryislargelyinplace.Mostofthemarketcanpaytherequiredgreenpremium.Policiesstronglycomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnformostCapExtoflowtowardslow-emissionproductionassets.Thelow-emissionproductiontechnologiesarelargelydemonstratedincommercialconditions.Thenecessaryinfrastructurerequiredbythelow-emissionindustryispartiallyinplace.Someofthemarketcanpaytherequiredgreenpremium.Policiesmoderatelycomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforsomeofCapExtoflowtowardslaw-emissionproductionassets.Thelow-emissionproductiontechnologiesarelargelyprototypedatscale.Thenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.Alimitedportionofthemarketcanpaytherequiredgreenpremium.Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.Thelow-emissionproductiontechnologiesarelargelyatconceptorearlyprototypestage.Thenecessaryinfrastructurerequiredbythelow-emissionindustryneedstobedevelopedalmostentirely.Onlyveryearlyadoptersinthemarketcanpaytherequiredgreenpremium.Verylimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.Notes:“Low-emission”productionisdefinedquantitativelyforeachindustryintermsofproductemissionintensity(scope1and2)asperIEANetZeroby2050Scenario;2CapitalExpenditure(CapEx).StageStageStageStageStageAbbreviationsandacronymsContentsNet-ZeroIndustryTracker121MissionandmethodologyThefollowingcriteriaareconsideredwhenassessingreadinessstagesfortransformationenablers.TechnologyInfrastructureDemandPoliciesCapitalAvailabilityoftechnology–Technologyoptionsforlow-emissionproduction–Technologyemissionabatementpotential–Technologyreadinesslevel(TRL)–TechnologymaturitytimelineCompetitivenessoftechnology–TechnologyimpactonproductioncostTechnologydeployment–Technologyadoption/deploymentlevelInfrastructurerequirements–Infrastructurecapacityrequiredby2050–Infrastructureinvestmentsrequiredby2050Infrastructuredeployment–InfrastructuredeploymentlevelMarketdynamics–Sizeofmarket–Historicalpricevolatility–Priceelasticityofdemand–Availabilityandscalabilityofsubstitutes–Greenpremiumfordirectcustomers/wholesalecustomers–GreenpremiumforendconsumersEffectivegreendemand–Marketshareoflow-emissionproducts–Volumeandstrengthofdemandsignals(e.g.regulation,publicprocurement)Industry/Productspecificpolicies–Productspecificationsstandards–Productusestandards–Publicprocurementstandards–Productemissionregulation/penaltiesGeneralpolicies–Carbonpricing–Carbonborderadjustmentmechanisms–Emissionregulation–Publicaction/projects–Taxbreaks–SubsidiesAbilitytoattractcapital–Availabilityofadequatetaxonomy–Profitability/Levelofreturns–Cashavailability–Creditrating–Costofcapital–Environment,sustainabilityandgovernance(ESG)ratingCapitaldeployment–Scaleofinvestmentsneeded–Numberofprojectsinvested–AmountofgreenCapEx–Amountofgreenbonds–AmountofR&Dinvestments–Amountofventurecapitalinvestments–AmountofgovernmentfundingNotes:Duetodataavailabilityconstraints,notallcriteriahavequantitativeindicatorsintheindustry-specifictrackers.Thislistisexpectedtoevolvefurtherwitheachiterationasdatabecomesavailable.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker13Cross-industryfindings2AbbreviationsandacronymsContentsNet-ZeroIndustryTracker142.1Cross-industryfindings:Net-zeroperformanceAbbreviationsandacronymsContentsNet-ZeroIndustryTracker152.1Net-zeroperformanceThereisnonetzerowithoutindustries;thedeepdecarbonizationofsixindustrialsectorsresponsiblefor80%ofindustrialemissionsisnecessary.KeymessagesIndustrialproduction-relatedemissions(scope3excluded)contributetoabout30%ofglobalman-madegreenhousegas(GHG)emissions.Sixsectorsareresponsibleforabout80%ofindustrialemissions3(scope3excluded).Whilescope3emissionsmustalsobeaddressed,particularlyfortheoilandgassector,industrialfirmsmustprioritizetheirscope1and2emissions,whichtheyhavethemostcontrolover.Source:IEA,IAI,WorldSteelAssociation(worldsteel),GlobalCementandConcreteAssociation(GCCA),AccentureanalysisGlobalGHGemissionsbysector(scope1and2)1Scope1and2vsscope3emissions2Legend:Scope1and2Scope3OilNaturalgasSteelCementAluminiumAmmoniaSize=VolumeofGHGemissions2.0GTCO2e40.5GTCO2eOilNaturalgasSteelOthersTransportAgricultureBuildingsCementAluminiumAmmoniaOtherindustries3~80%ofindustrialemissionsNotes:1Scope2emissionshavebeenallocatedwithinthevariousindustrialsectorstorepresenttheshareofproduction-relatedemissions,butnotintoothernon-industrialsectors;2Scope3emissionsarebasedonGHGprotocolscope3standardsforeachoftheseindustries;3Otherindustriesincludepetrochemicals,coalmining,paperandpulp,ceramicsandothers;4Gigatonnesofcarbondioxideequivalent(GTCO2e).AbbreviationsandacronymsContentsNet-ZeroIndustryTracker162.1Net-zeroperformanceFourleverscancutproduction-relatedemissions:demandandproductionoptimization,industrialprocessdecarbonization,energyefficiencyandenergysourcesdecarbonization.IndustryemissionreductionleversUnderstandingindustryemissionsHigh-levelcalculationIndustryscope1and2emissionsProductionemissionintensityProductionEnergy-relatedemissionsOtheremissionsEnergyneedEmissionintensityofenergyusedOptimizedemandandproduction1Decarbonizeindustrialprocess2Lowerenergyconsumption3Decarbonizeenergysources4AbbreviationsandacronymsContentsNet-ZeroIndustryTracker172.1Net-zeroperformanceDemandforindustrialproductsisexpectedtogrowsignificantlyby2050;significantdemand-sideefficiencygainsmustberealizedtooptimizeproductionvolumes.KeymessagesBasicmaterialsandenergyunderpinnumerousendproductsandservicesinmodernsociety.Demandforthesecommoditiesisexpectedtogrowsignificantlyby2050inindustrybusiness-as-usualscenariosduetopopulation,urbanizationandeconomicgrowth.DemandforbasicmaterialsincreasesintheInternationalEnergyAgency(IEA)NetZeroby2050Scenario.However,materialefficiency(e.g.designregulations,incentivestopromotelongerlifetimes,circularitymeasurestoimproverecycling),demandmanagementandsubstitutescouldhelpoptimizedemandandproductionlevels.Significantinvestmentswillberequiredtodecarbonizeconsumingsectorssuchastransport,buildings,industriesandpowertoachieveasubstantialreductioninfossilfueldemandandproductionastargetedbyIEANetZeroby2050Scenario.Sources:IEA,IAI,GCCAandworldsteel95Mt171Mt+16%Aluminium3Ammonia4SteelCementNaturalgasOil150Mt185Mt253Mt228Mt1.9Bt52.5Bt2.1Bt4.2Bt6.0Bt4.2Bt380Bcf/d6495Bcf/d169Bcf/d89Mb/d724Mb/d103Mb/d20202050-businessasusual12050-net-zeroemissions2+80%+37%+31%+43%+30%Productionincreasefrom2020to2050underbusiness-as-usual(BAU)andIEANetZeroby2050scenariosNotes:1BasedonIEAStatedPoliciesScenarioexceptforaluminium(InternationalAluminiumInstitute(IAI)2050BAU),2BasedonIEANetZeroby2050Scenarioforallexceptaluminium(IAl20501.5DegreeScenario),3Productionforaluminiumbasedon2019data,4AmmoniaprojecteddemanddoesnotincludetheuseofammoniaasanenergycarrierandisbasedontheoverallprimarychemicalsproductiongrowthinIEAscenarios;5Billiontonnes(Bt);6Billioncubicfeetperday(Bcf/d);7Millionbarrelsperday(Mb/d).DecarbonizeindustrialprocessOptimizedemandandproductionDecarbonizeenergysourcesLowerenergyconsumption1234AbbreviationsandacronymsContentsNet-ZeroIndustryTracker182.1Net-zeroperformanceFuturedemandformaterialsandenergydependsonthepaceoftransformationinthetransportation,buildings,agriculture,industriesandpowersectors.KeymessagesProductsfromthesixindustrieshaveawiderangeofendusesandareproducedinlargevolumes,preventingthemfrombeingeasilysubstituted.Thenet-zerotransformationofcities(buildingsandstructures)willbecriticalinshapingthefuturedemandforcementandsteel.Theagriculturejourneytowardsnetzerowilldeterminethefuturedemandforfertilizersandammonia.Thedecarbonizationoftransportandindustrieswillsignificantlyimpactoildemand.Asatransitionfuel,gascouldseedemandrisinginthepowerandindustrialsectorstoreplacecoalinthemediumterm.Sources:IEA,BP,OrganisationforEconomicCo-operationandDevelopment(OECD),StatistaPowerTransportIndustryBuildingsAgricultureCementAmmoniaNaturalgasOilAluminiumSteel52%100%31%17%24%50%26%70%30%5%29%66%21%39%40%End-useconsumptionbysectorDecarbonizeindustrialprocessOptimizedemandandproductionDecarbonizeenergysourcesLowerenergyconsumption1234AbbreviationsandacronymsContentsNet-ZeroIndustryTracker19SectorEnergyemissionsNon-energyemissionsSteel–Fossilfuels,includingcokeandnaturalgas,areusedtoreachthehightemperaturesrequiredinblastfurnacesanddirectreduction.Electricarcfurnacesrequiresignificantelectricpower.–Metallurgicalcokeandnaturalgasareusedasreducingagentstoproduceironfromironore,simultaneouslyreleasingCO2.Limeisalsoused.Cement–Coalandpetcokearetypicallyburnttoreachtherequiredhightemperaturesincementkilns,releasingCO2.–Energyemissionsaccountfor40%ofemissions.–Oxidationoflimestoneunderhighheatformscalciumoxide(thedesiredproduct)andreleasesCO2.–Processemissionsaccountfor60%ofemissions.Aluminium–Mostemissionsareduetotheenergyrequirementsofelectrolysistosmeltaluminium.–TheconsumptionofcarbonanodesduringelectrolysisalsoreleasesCO2.Ammonia–Coalandnaturalgasareconsumedincoalgasificationandsteammethanereformingprocessestoprovideenergy.–Inthesameprocesses,methane,coalandwaterareconvertedintohydrogengas,releasingCO2.Oil–Fossilfuelsareusedintheextractionandtransportationofoil.–Refiningrequiressignificantenergytoprocesscrudeoil,typicallypoweredbyfossilfuels.–Ventedandfugitivemethaneemissionsform34%ofoilindustryemissions.–H2productionandotherrefiningprocessesalsoreleaseCO2emissions.Naturalgas–Energyisusedtoextract,process,andtransportnaturalgas,typicallyfromburningoilandgas.–Ventedandfugitivemethaneemissionsform66%ofnaturalgasindustryemissions.–CO2canalsobereleasedfromrawgasstreams.2.1Net-zeroperformanceDecarbonizingextractiveandmanufacturingprocessesishighlycomplexduetothediversityandintensityofemissionsources.KeymessagesThesesixsectorsareconsidered“hardtoabate”duetotheircomplexandhighlyenergy-intensiveindustrialprocesses.Asaresult,asignificantshiftfromexistingproductionroutestoinnovativenewlow-emissionroutesisrequired.Sources:IEA,IAI,worldsteel,GCCA,Companyreports,AccentureanalysisDecarbonizeindustrialprocessOptimizedemandandproductionDecarbonizeenergysourcesLowerenergyconsumption1234AbbreviationsandacronymsContentsNet-ZeroIndustryTracker202.1Net-zeroperformanceLow-emissionproductiontechnologiesareemergingandcansharplyreduceindustries’emissionintensity.KeymessagesAlthoughatdifferenttechnologicalmaturityandcommercialreadiness,newlow-emissionproductionrouteshavebeenidentifiedforthesixsectors.Thesenewproductionroutescanbringemissionsinlinewiththenetzeroby2050goal.Recyclingsteelandaluminium(secondaryproduction)generatessignificantlyfeweremissionsthanprimaryproduction.Secondarysteelandaluminiumproductioncouldreachnear-zeroemissionsiffullypoweredbyrenewableelectricity.Around85%ofsteeland75%ofaluminiumarerecycledattheendoftheirusefullifecycle.Sources:IEA,MissionPossiblePartnership(MPP),IAIMaximumpotentialabatementRemainingemissionsSteel2-95%Cement3-95%Aluminium4-90%Ammonia5-100%Oil6-69%Naturalgas6-82%Steel-95%Aluminium-94%Maximumpotentialemissionintensityreduction:primaryproduction1Maximumpotentialemissionintensityreduction:secondaryproductionNotes:1Emissionabatementisestimatedbasedonthebesttechnologyexpectedtobecommerciallyavailableby2030(formaximumemissionreductionregardlessofcostlevel)versusmostcommontraditionalproductionroute;onlyincludesprimaryproductionforsteelandaluminium;includesscope1and2emissions;2Withdirectreducediron-electricarcfurnace(DRI-EAF)usingcarboncaptureandstorage(CCS);3Carboncapturewith95%CO2captureefficiency;4Greenpower,inertanodesandhydrogenboilers;5Electrolysiswithgreenpower;6Oilandgasroutesrequirecarboncapture,electrificationandmethaneemissionsreductiontechnologies.DecarbonizeindustrialprocessOptimizedemandandproductionDecarbonizeenergysourcesLowerenergyconsumption1234AbbreviationsandacronymsContentsNet-ZeroIndustryTracker212.1Net-zeroperformanceImprovingenergyefficiencyandadoptinglow-carbonenergysourcescanhelpcompaniesreduceemissions.KeymessagesToday,allsixsectorsrelyonfossilfuelsasenergysources,feedstockorreducingagents.Furtherenergyefficiencygainscanberealized,butthenatureofcertainproductionprocessesmayeventuallycapprogress.Fossilfuelemissionscanbemitigatedthroughsubstitutionwithlow-carbonenergysources(e.g.switchingfromcoaltobiomassfromagriculturalwaste)Electrificationofplantsandequipmentwhereverpossibleandgreeningthegridcanalsoeliminatesignificantemissionsfromfossilfuels.Sources:IEA,IAI,GCCA,worldsteel,USEnergyInformationAdministration(EIA)CoalOilNaturalgasElectricityOthersOilandgasFuelmixintensity(kgCO2/GJ)2Electriﬁcationoffuelmix(%)Cement1AluminiumAmmoniaSteel44639085Datanotavailable59–13%–3%25%371194Energyconsumptionbysector(exajoules(EJ))Notes:1Coalcategoryforcementincludespetcoke;2Gigajoule(GJ).DecarbonizeindustrialprocessOptimizedemandandproductionDecarbonizeenergysourcesLowerenergyconsumption1234AbbreviationsandacronymsContentsNet-ZeroIndustryTracker222.1Net-zeroperformanceBesidesaluminium,allsectorsremainfarfromtheemissionintensitylevelrequiredtoalignwiththe2030milestonesoftheIEANetZeroby2050Scenario.KeymessagesThankstosecondaryaluminiumproduction(33%oftotalproduction)andahighshareofhydropowerinprimaryaluminiumproduction(25%),65%ofglobalaluminiumproductiontodayisalreadybelowIEA2030emissionintensitythreshold.Thankstosecondarysteelproduction(22%oftotalproduction),19%ofglobalsteelproductiontodayisalreadybelowIEA2030emissionintensitythreshold.Thedevelopmentofblueandgreenammonia,andcarboncapture,utilizationandstorage(CCUS)incementareencouragingsignsfortheseindustries’trajectorytonetzero,however,adoptionremainsverylimited.Althoughoilandgasproductionvolumesshrinkby73and55%,respectivelyintheIEANZE2050Scenario,allproducersshouldaimtomeetthe2030and2050emissionintensitymilestones.Low-emissionproducerscouldbenefitfromastrategicmarketadvantageinthecomingdecades.Sources:IEA,IAINotes:1Low-emissionintensityisbasedonIEANetZeroby2050Scenariotrajectoryforallexceptaluminium(IAI2050NetZero)),andoilandgas(bestavailabletechnology)for2050emissionintensity;2Basedonbothprimaryandsecondaryproduction;3Basedonbothprimaryandsecondaryproduction.-24%-95%-56%-69%-43%-82%Steel2CementAmmoniaOilNaturalgasAluminium3-52%-94%-40%-97%-23%-96%Productionemissionintensity(EI)(%)100%Productionvolume(%)100%0%2030EIthreshold2050EIthresholdSizeofboxindicatesindustryGHGemissionsin:Legend:202020302050Today’sproductionmeeting"reducedemission"intensitythreshold1Today’sproductionmeeting"low-emission"intensitythreshold1DecarbonizeindustrialprocessOptimizedemandandproductionDecarbonizeenergysourcesLowerenergyconsumption1234CurrentindustryperformanceagainstIEANetZeroby2050trajectoryfortotalemissions,emissionintensityandproductionvolumeAbbreviationsandacronymsContentsNet-ZeroIndustryTracker232.2Cross-industryfindings:Net-zeroreadinessAbbreviationsandacronymsContentsNet-ZeroIndustryTracker24Stage1Stage2Stage3Stage4Stage5Readinessstages:SteelIndustriesEnablersCementAluminiumAmmoniaOilNaturalgasTechnologytodecarbonizeproductionprocessesInfrastructuretoenablelow-emissiontechnologiesDemandtopurchaselow-emissionproductsatpremiumpricePoliciestosupportlow-emissionbusinessmodelsCapitaltotransformindustryassetbase2.2Net-zeroreadinessLow-emissiontechnologieshaveemerged,anddemandsignalsarerising;however,moredecisiveactionisrequiredtoprogresstheinfrastructure,policiesandcapitalenablers.KeymessagesWithineachindustry,unlockingawide-scaledecarbonizationmovementfirstrequireskeyenablingdimensionstoreachahighstageofreadinesssignifyingthatmajorbarrierstotransformationhavebeenlifted.Goodmomentumisseeninthedevelopmentoflow-emissiontechnologies;demandsignalsforlow-emissionproductsarealsoemergingandcouldscalerapidlyinthecomingdecade.Thescaleofthenecessaryenablinginfrastructureiscolossal,andthepaceofdevelopmentisgreatlyinsufficient–thiscouldleadtobottlenecksinthefuture.Themostpressingissueisacceleratingcapitalinflowsintofull-scaledemonstrationandearlycommercialprojects;supportingpoliciesstillneedtosignificantlyimprovethebusinesscaseforinvestmentsinlow-emissionindustriesandenableacceleration.Source:AccentureanalysisHeatmapofnet-zeroreadinessstagesacrossindustriesandtransformationenablersNote:“Low-emission”isdefinedinthe“Missionandmethodology”sectionofthisreport.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker252.2Net-zeroreadinessTechnologiestoenablelow-emissionproductionareexpectedtoreachcommercialreadinessby2030;drivingcostsdowntoacceleratewide-scaleadoptionisthepriority.KeymessagesTechnologiestodecarbonizethenaturalgasvaluechainarematureandlargelycommerciallycompetitivetoday(particularlyupstreamfugitivemethanecaptureandventingeliminationtechnologies).Oilproductioncanbedecarbonizedtoday,buttechnologytoeliminateemissionsfromrefiningrequiresfurtherdevelopment.Inothersectors,mosttransformativetechnologiesareeitheryettobeprovenatfullcommercialscaleortoocostlycomparedtoexistingalternatives.Theyareonlyexpectedtoreachcommercialreadinessafter2025.Sources:MPP(EnergyTransitionCommission)(ETC),AluminiumforClimate,GlobalCCSInstitute,SustainableGasInstitute,IEA,GCCA,DetNorskeVeritas(DNV)Today20252030NaturalgasSteelAluminiumCementOil3Ammonia2Combinationoftechnologiesrequired(seenaturalgastechnologypage)BluehydrogenDRI-EAFwithcarboncaptureCarboncaptureforcementkilnsCarboncaptureforreﬁneries(2030+)InertanodesHydrogenfurnacesYearbywhichindustriescouldcommerciallydeploytechnologiesenablingthemtoreachtheir2050low-emission1intensitythresholdNotes:1“Low-emission”isdefinedinthe“Missionandmethodology”sectionofthisreport;2Onlysmall-scalegreenhydrogenproductionisexpectedby2025.3Referstorefinedpetroleumproducts.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker262.2Net-zeroreadinessInfrastructuretoenablelow-emissionproductionmustgrowsignificantlytomeetindustryneeds–risksofbottlenecksexistifinvestmentslag.KeymessagesMostindustries’low-emissionproductiontechnologiesinvolveeitherlow-emissionpower,cleanhydrogen(greenandblue)orcarboncapture.Toensureindustriescanrapidlydeploythesetechnologiesoncematureandcompetitive,significantnewcapacityoflow-emissionpowergeneration,cleanhydrogenproductionandCO2storagemustbemadeavailable.Almost290gigawatts(GW)ofrenewablepowercapacitywasaddedin2021,atrendexpectedtoaccelerate,withChinaaloneexpectedtocontributeatotalof1,200GWofwindandsolarphotovoltaics(PV)by2026.Deploymentofcarboncaptureandstorage(CCS)facilitieshasbeenslow,averagingonly3milliontonnesperannum(MTPA)lastdecade.TheparadigmshifttowardsCCSnetworksledtosignificantmomentumlastyear,withcapacityindevelopmentincreasingfrom75MTPAin2020to111MTPAbySeptember2021,a48%increase.Sources:IEA,Accentureanalysis2021globalcapacityTotalrequiredfornetzeroindustries(2050)OilNaturalgasSteelCementAluminiumAmmonia402,5351652205301,37015010093,6761,66518479212324477280431210Notapplicable3DatanotavailableCleanhydrogen(MTPAH2)Carboncapturetransportandstorage(MTPACO2)Cleanpower1,2(GW)Enablinginfrastructurecapacityrequirementsfornet-zeroindustriesby2050Notes:1Includesnuclear,hydropowerandotherrenewables;2Basedontoday’scleanpowerloadfactorof35%;3Hydrogenisnotapplicableastheproductionofhydrogenispartoftheammoniaproductionprocess.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker272.2Net-zeroreadinessEnablinginfrastructurefornet-zeroindustrieswillrequiretwiceasmuchinvestmentasproductionassets.KeymessagesIndustrieswillneedtoinvest$2.1trillioninlow-emissionproductionassetstodecarbonizeproductioninlinewithnet-zerorequirements.Inaddition,$4.2trillionofinvestmentisneededtodeveloplow-emissionpower,hydrogenproduction,andCO2transportationandstoragetoenablethelow-emissionproductiontechnologies/assets.Thisismorethantwotimestheglobalinvestmentsinenergyof$1.9trillionin2021.2Inspecificsectorssuchassteel,theinvestmentsrequiredintheenablinginfrastructuredwarfsthoserequiredinproductionassetsandcanbeamoresignificantobstacletothetransformation.Sources:IEA,AccentureanalysisTotalOilNaturalgasSteelCementAluminiumAmmonia2.0x0.2x1.1x7.3x0.6xDatanotavailable1.9x1171107205004503002,0801292835458612,2264,161DatanotavailableInindustryassets($billion)Inenablinginfrastructure($billion)InfrastructuretoassetinvestmentratioCleanpowerCleanhydrogenCO2transportandstorageAdditionalinvestments1requiredtoreachnetzeroNotes:1Additionalinvestmentsrefertoinvestmentsinadditiontobusiness-as-usualCapEx.InvestmentsestimatedbasedondemandrequirementsinIEANetZeroby2050Scenario;2BasedonIEAestimates.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker282.2Net-zeroreadinessUnlockingdemandforlow-emissionproducts–despitegreenpremiums–iscriticaltoincentivizeinvestments.KeymessagesIfassettransformationcostswerefullypasseddownthevaluechain,theB2Bgreenpremiumswouldrangefrom7-67%,whileendconsumerpremiumscouldbesmallerfrom1-25%.Inisolation,2endconsumerpremiumsaremanageableoverdecades;however,aggregatedpremiumsin“fullgreen”products(e.g.acarwithgreensteel,greenaluminium,andanelectricengine)couldbemuchhardertoabsorb.Increasesinfertilizerandenergycostswillsignificantlyimpactfoodandenergysecurity,andgovernmentswillhavetocarefullymonitorandbalancethesecostincreasesforajusttransition.MoreeffortisrequiredtoincentivizeB2Bcustomersandendconsumerstodemandlow-emissionproducts.Sources:GCCA,Aluminium-stewardship,IEA,AccentureanalysisPerbarrelofoil+10%+$7+6%+$0.1+1%+$2<1%+$300+3%+$32K<1%+$150+25%+$150+$0.3+$612+$47+$950+$400+7%+38%+67%+40%+55%PerMMbtu3ofnaturalgasPertonneofsteelPertonneofcementPertonneofaluminiumPercarPercarPerMWhPerlitreofgasolinePerhousePertonneofammoniaPertonneoffertilizerAverageB2Bgreenpremium1,2AverageendconsumergreenpremiumNotes:1PriceanalysisbasedonaveragecostspaidbyUSconsumersin2021;2Greenpremiumshavebeencalculatedbasedontheestimatedproductioncostincreaseusinglow-emissiontechnologieswhilemaintainingthesamelevelofmarginsonsoldproducts;3MillionBritishthermalunit(MMbtu).AbbreviationsandacronymsContentsNet-ZeroIndustryTracker292.2Net-zeroreadinessTargetedpolicyactionbysectorisrequiredtoleveltheplayingfieldforlow-emissionproducers.KeymessagesThefigureillustratesthecarbonpricesconsiderednecessarytoincentivizethedevelopmentoflow-emissionproductiontechnology(alignedwith2050net-zerorequirements).Tailorednon-pricingpolicymeasuresbysector(e.g.increasingtheuseofscrapsteel,changingbuildingconstructionstandardstoallowlow-emissioncementandpublicprocurementforspecificmaterials)canhelpachievetheadequatelevelofincentivesforeachindustry.Playingfieldsbetweencompetitorscanbedistortedduetodifferentgeographiccarbonprices,andcarbonborderadjustmentmechanismscouldhelppreventcarbonleakage.Sources:Accentureanalysis,WorldBankSteelOil2AluminiumAmmoniaCementNaturalgasEU:70US:upto18China:upto5Actuals2702472101988525Japan:2.6Carbonpricerequiredtoleveltheplayingfieldforlow-emissionproductionvsactualcarbonprices1($/tCO2e)Notes:1Basedontheestimatedcarbonpricenecessarytomake“low-emission”productpricescompetitivewithtraditionalproductprices;2Referstorefinedpetroleumproducts.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker302.2Net-zeroreadinessCapitalofabout$2.1trillionisneededtotransformindustries’assetbasefornetzero,butinvestmentbusinesscasesaregenerallytooweaktoattracttherequiredprivatefunding.KeymessagesDevelopinglow-emissionproductionassetswillrequiresignificantamountsofcapitalontopofbusiness-as-usualinvestments,rangingfrom20%ofthecurrentnetproperty,plantandequipment(PPE)assetvalueinoilandgastorecapitalizationofnearlyseventimesfortheammoniaindustry.Thecurrentstateoftechnology,infrastructure,demandandpolicyenablersgenerallyleadtoinvestmentbusinesscasesthatarenotfavourableforinvestmentsinlow-emissionassets.Greenbondsandotherfinancingmechanismsareneededtoattractcapital;however,sector-specificcriteriaareoftenyettobedeveloped,withonly1%ofCertifiedClimateBondsissuedin2020fromthesesixindustries.1Additionally,publicfinancingsupportcanplayacrucialroleinreducingriskexposureforcompaniesandhelpattractprivatecapitalinfull-scaledemonstrationorearlycommercialprojects.Sources:Refinitiv,ClimateBondInitiative,AccentureanalysisCumulativeinvestmentNetPPE(2021)Aluminium151DatanotavailableInvestmentneedstoindustrynetPPEratioOilandgas8304,2000.2xSteel3007230.4xAmmonia450656.9xCement5003101.6xTotal2,0805,2980.4xGreenbondsissuedOthersectorsSixindustries3063042AdditionalCapExrequiredvsnetproperty,plantandequipment(PPE)2,3($billion)Certifiedclimatebonds20201($billion)Notes:1CertifiedbyClimateBondInitiative,athird-partylabellingschemetoaligngreendebtwitha1.5DegreeScenario;2NetPPEaccountsfordepreciation;3Excludesenablinginfrastructure;InvestmentsestimatedbasedondemandrequirementsinIEANetZeroby2050Scenario.AbbreviationsandacronymsContents31In-depthindustryanalysis3Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms323.1SteelindustryNet-zeroindustrytrackerSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms333.1In-depthindustryanalysisSteelKeyhighlightsMostofthemarketcanpaytherequiredgreenpremium.DemandThenecessaryinfrastructurerequiredbythelow-emissionindustryneedstobedevelopedalmostentirely.InfrastructureVerylimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.PoliciesLow-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.CapitalNet-zeroindustryreadinessReadinessstageThelow-emissionproductiontechnologiesarelargelyprototypedatscale.TechnologyNet-zeroindustryperformance-52%-94%Productionemissionintensity(EI)(%)100%Productionvolume(%)100%0%SizeofboxindicatesindustryGHGemissionsin:202020302050Today’sproductionmeeting"reducedemission"intensitythreshold1Today’sproductionmeeting"low-emission"intensitythreshold12030EIthreshold2050EIthresholdProductiongrowthSteelisthelargestemittingmanufacturingsector,generating7%ofallman-madeemissions.Steeldemandcouldincreaseupto30%by2050(~10%inIEANetZeroby2050Scenario),riskingacorrespondingriseinemissions.Threepathwaysexisttodecarbonizeprimarysteelmaking:carboncapture,hydrogenandelectrochemistry.Giventhehighcostsofcleantechnologies,low-emissionsteelisexpectedtocomewithagreenpremiumof25-50%forsteelbuyers.Morethan$2trillionwillneedtobeinvestedinlow-carbonpower,cleanhydrogenandCO2handlinginfrastructuretoenablecleantechnologiesinsteelproduction.Demandsignalsfromsteelbuyersandpoliciessupportinglow-emissionsteelproductionmustimprovedrasticallytoincentivizeinvestments.SteelCementAluminiumAmmoniaOilNaturalgasNotes:1Asdefinedinthe“Missionandmethodology”sectionofthisreport.Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms34Steelisafundamentalmaterialofmodernsociety;itisusedextensivelyinmanysectors,includingconstruction(50%),automobiles,shipping,aviation,machineryandcountlessmetallicconsumergoods–therearenoscalablesubstitutesforsteelasoftoday.Manufacturingsteelrequireshighlyenergy-intensiveprocessestoextractironfromironoreandturnironintosteel–morethan85%oftheenergyusedcomesfromfossilfuels.Morethan50%ofsteelismadeinChina.Thesteelindustrygeneratesabout7%ofallman-madeemissions–itisthelargestemittingmanufacturingsector.Steeldemandisprojectedtorise30%by2050.BesidesChina,mostregions,particularlyIndia,AfricaandSouth-EastAsia,willseeanincreaseindemand.Secondarysteelproductioncanbenearlycarbon-neutralifpoweredbyrenewableelectricity;itwillplayasignificantroleindecarbonizingsteelsupply.Primarysteelwillcontinuetoberequiredtomeet60%ofsteelneedsby2050andmustbedecarbonized.Threepathwayshavebeenidentifiedtodecarbonizeprimarysteelmaking:carboncapture,hydrogenandelectrochemistry.Today,steelmakingusinggreenhydrogenisseeingthemostsubstantialmomentum,withmultipleprojectsunderdevelopmentworldwide.Technologycostsforcarboncaptureandhydrogenuseinthesteelindustryareexpectedtodecreaseoverthedecadebutshouldremainatleast25-50%higherthantraditionalroutesby2030.Steelmakingviaelectrochemicalprocessesisyettobeprovenatscaleandisnotexpectedtobecomecommerciallyavailablebefore2035.Besidesinvestmentsinproductionassets,thetechnologiesunderpinningthesethreepathwayswillrequireatleast$2trillionininfrastructureinvestmentsingreenhydrogenproduction,carbontransportandstorage,andlow-emissionpowergeneration–thelatterisestimatedat921GW,whichisequivalenttotoday’sEuropeanUniontotalcapacityfromallpowersourcescombined.Low-emissionsteelisexpectedtoreachthemarketby2025withagreenpremiumofaround25-50%tosteelbuyersandbelow1%toendconsumersofsteelproducts.Toincentivizeinvestments,demandsignalsfromsteelbuyersarecritical.Thiswillrequirestrengtheningsteelbuyers’confidenceintheirabilitytopassthepremiumtoendconsumers.Publicpolicyandinternationalcooperationoncarbonpricing,carbonbordertaxadjustmentsorproductspecificationstandardscanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmoversintothelow-emissionsteelindustry.Investmentstodecarbonizethesteelindustryareestimatedat$300billionontopofbusiness-as-usualinvestments,i.e.approximately$10billionperyearuntil2050.However,thecurrentbusinesscaseandreturnsonlow-emissionassetsdonotencouragemainstreaminvestmentsfromtheindustry.Weemphasizefiveprioritiesforthesteelsector:1Implementefficiencyleverstomaximizeemissionreductioninexistingprocesses.2Boostthenumberoflow-emissionprojectstoacceleratethelearningcurve,drivecostsdownandbringforwardthecommercialreadinessofcleansteeltechnologies.3Developtherenewablepowercapacity,greenhydrogenproductionandCO2transportandstorageinfrastructurerequiredtoenablelow-emissionsteelproduction.4Multiplydemandsignalsforgreensteeltoincentivizeproducersandinvestorstodirectcapitaltowardslow-emissionproductionassets.5Developpoliciestosupportthefourprioritiesaboveandstrengthenthebusinesscaseforlow-emissionsteelproduction.SteelCementAluminiumAmmoniaOilNaturalgas3.1In-depthindustryanalysisSteelExecutivesummaryNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms35Steelisthelargestemittingmanufacturingsector,generating7%ofallman-madeemissions.Morethan85%ofitsenergyconsumptioncomesfromfossilfuels.3.1.1SteelperformancetrackerSteelPerformancetrackerSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsTotalCCS(GtCO2e)TotaloffsetsWhatsteelemits,capturesandoffsetsScope1,2,and3GHGemissions(GtCO2e)0.71.1Includesscope1non-CO2GHGemissions0.0Datanotavailable0.00082.6Scope1Scope3Scope2FulldataVisualClickheretoseethefulldata:36TechnologyPoliciesCapital+25-50%$180-360/tCO2e$300billion2025Thelow-emissionproductiontechnologiesarelargelyprototypedatscale.Verylimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.Productioncostincreaseforlow-emissionproductiontodayCarbonpriceequivalentrequiredtolevelcompetitivelandscapeCapExrequiredtotransformindustryassetbaseby2050(~$10billion/year)Expectedyearofcommercialreadinessoffirstlow-emissionproduction.ReadinessstageReadinessstageReadinessstageKeymessagesLow-emissionproductiontechnologiesareincreasinglyavailablebutfarfromcommerciallycompetitivetobedeployedatscale.Thecostoftransformingsteelassetsisdwarfedbythecostofinfrastructureneeded–asignificantbottleneckriskexists.Thegreenpremiumforendconsumersislow,butsteelbuyersneedtobeincentivizedtogeneratedemandforproducers.Furtherdecisivepolicyactioncanincentivizesteelplayersintolow-emissionproduction.Furtherde-riskingandbetterreturnswillbeneededtoreorientlargerinvestmentflowtowardsthelow-emissionindustry.Steelbenefitsfrompromisingtechnologicalpathways,butmoredecisiveactionisrequiredtoboostdemandandinvestmentsingreensteel.3.1.2SteelreadinesstrackerSteelSummaryClickontheenablersbelowtofindoutmore.Infrastructure$1,750billion$222-586billion$35-109billionThenecessaryinfrastructurerequiredbythelow-emissionindustryneedstobedevelopedalmostentirely.Investmentsrequiredinlow-emissionpowergenerationInvestmentsrequiredinlow-emissionhydrogenproductionInvestmentsrequiredinCO2transportandstorageReadinessstageDemand+25-50%+0.5-1%Mostofthemarketcanpaytherequiredgreenpremium.ExpectedgreenpremiumforsteelbuyersExpectedgreenpremiumforendconsumersReadinessstageSteelCementAluminiumAmmoniaOilNaturalgasSummaryHomeNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms37Thelow-emissionproductiontechnologiesarelargelyprototypedatscale.HomeSummaryThreepathwaysexisttodecarbonizeprimarysteelmaking:carboncapture,hydrogenandelectrochemistry.Greensteelproductioncostscouldstillbe25-50%higherby2030.KeymessagesScrap-basedEAFproductionusing100%renewableelectricityistheclosestroutetolow-emissionsteel.However,60%ofprimarysteelisstillexpectedtobeneededtomeet2050demand.DRI-EAFwithCCSisalreadyavailablebutnotatahighcarboncaptureefficiency.Otherprocessesleveragingcarboncapture,hydrogenorelectrochemistryarebeingdeveloped.DRI-EAFwithgreenhydrogenisseeingthemostsubstantialmomentum.Mosttechnologiesarefarfrombeingcommerciallycompetitivetoday.Costsareexpectedtodecreaseoverthedecadebutwillremain25-50%higherthantraditionalroutesin2030.Sources:MPP(ETC),GreenSteelTracker,GlobalCCSInstitute,Accentureanalysis3.1.2SteelreadinesstrackerSteelTechnologySteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsBF-BOFwithCCUS(2028)BF-BOFwithBECCS(2028)BF-BOFwithCCS(2028)DRI-Melt-BOF100%greenH2(2028)DRI-EAF100%greenH2(2028)DRI-Melt-BOFwithCCS(2028)Scrap-basedEAFwithgreenpower(available)SmeltingreductionwithCCS(2028)Electrowinning-EAF(2035)Electrolyser-EAF(2035)TechnologyreadinesslevelMatureEarlyadoptionDemonstrationLargeprototypeSmallprototypeConcept1234567891011DRI-EAFwithCCS(2025)FulldataVisualClickheretoseethefulldata:383.1.2SteelreadinesstrackerSteelInfrastructureMorethan$2trillionwillneedtobeinvestedinlow-carbonpower,greenhydrogenandCO2handlinginfrastructuretoenablelow-emissiontechnologies.Thenecessaryinfrastructurerequiredbythelow-emissionindustryneedstobedevelopedalmostentirely.HomeSummaryKeymessagesMorethan$2trillionisrequiredtoscalethenecessarylow-carbonpower,greenhydrogenandCO2storageinfrastructureoverthenext30years.Thesteelindustrywillrequireamassivecapacityoflow-carbonpowergenerationby2050–nearlyequivalenttotheEU’stotalelectricityconsumptiontoday.CapExforlow-emissionpower,greenhydrogenandcarbonstorageareexpectedtogodownwiththelearningcurve;thiscouldacceleratethedevelopmentoftheinfrastructureneededbythesteelindustry.Sources:MPP(ETC),GlobalCCSInstitute,AccentureanalysisSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsTotal222-58635-109Investmentsrequiredforenablinginfrastructure($billion)Low-emissionpowergenerationLow-emissionhydrogenproductionCO2transportandstorageCO2H21,7502,007-2445FulldataVisualClickheretoseethefulldata:393.1.2SteelreadinesstrackerSteelDemandToboostdemandsignals,buildingsteelbuyers’confidenceintheirabilitytopasstheir25-50%greenpremiumtoendconsumersisessential.Mostofthemarketcanpaytherequiredgreenpremium.HomeSummaryKeymessagesThereisnolow-emissionsteelavailableonthemarkettoday.Low-emissionsteelisexpectedtoarrive(inscarcequantity)onthemarketwithapricepremiumofupto50%andwillbeonlyavailabletobuyersthathavesecuredsupplyupfrontwithproducers(e.g.bilateralofftakeagreements).Providedlow-emissionsteelcomesinallnecessarygrades,productsmadeof“greensteel”couldbemadeavailabletoendconsumersataminimalgreenpremium(+0.5-1%)whileofferingastrongcompetitivemarketingadvantagetosellers.Sources:MPP(ETC),GlobalCCSInstitute,AccentureanalysisSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsProducerPertonneofsteel+25-50%Percar+0.5%GreenpremiumsMarketpenetrationConsumerEndconsumer99%Low-emissionOther<1%B2BB2CFulldataVisualClickheretoseethefulldata:403.1.2SteelreadinesstrackerSteelPoliciesFurtherrobustpolicymeasurescanhelptocreateadifferentiatedandeconomicallyviablemarketforfirstmoversintolow-emissionsteel.Verylimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.HomeSummarySteelCementAluminiumAmmoniaOilNaturalgasKeymessagesPoliciesvarywidelyacrossgeographies,andonlyexamplesofcriticalpoliciesthathavebeenrecentlyintroducedareincludedinthissection.Toleveltheplayingfieldforlow-emissionproducers,anequivalentcarbonpriceof$180-360/tCO2eneedstobeaddedtohigh-emissionproducts.Anequivalentcarbonpricecanbeachievedthroughpricingpoliciesornon-pricingpoliciessuchasproductstandards,publicprocurementstandardsorcarbonbordertaxadjustments.Currentcarbonpricesaretoolowtoincentivizearapidgrowthofalow-emissionindustry.Sources:MPP(ETC),WorldBank,ETC,governmentreports,AccentureanalysisNote:1Basedontheestimatedcarbonpricenecessarytomake“low-emission”productpricescompetitivewithtraditionalproductprices.Net-ZeroIndustryTrackerContentsAbbreviationsandacronymsMajorproducersandconsumersofsteel(percentageofglobalproduction/consumption)US4%5%5%5%57%56%ChinaIndia4%4%Japan7%7%EuropeChina1.1-4.6Averagecarbonpricerequiredtoleveltheplayingﬁeldforlow-emissionproductionvsactualcarbonprices1($/tCO2e)270US0-18EU70FulldataVisualClickheretoseethefulldata:413.1.2SteelreadinesstrackerSteelCapitalAnadditional$300billionisnecessarytotransformthesteelindustryassetbase,butthecurrentbusinesscasedoesnotencourageinvestments.Low-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.HomeSummaryKeymessagesAdditionalinvestmentsofaround$10billionperyeartill2050arerequiredtotransformtheindustryassetbasevsbusiness-as-usualinvestments.Majorinvestmentdecisionsforsteelplantsoccurevery20-30yearsonaverage(e.g.relining),providingrareopportunitiestorealizedecarbonizationinvestments.Halfofallsteelplantsgloballyareduefortheirnextmajorinvestmentdecisionby2030.Missingtheseopportunitiesmayextendthelifeofhigh-emissionassetsto2050.Thebusinesscaseneedstoimprovesignificantlytoattractanddrivecapitalintolow-emissionsteelassets.Sources:MPP(ETC),Refinitiv,AccentureanalysisSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms=AssetsandinvestmentsDebtissued(2020bonds)InvestmenttoPPEmultiple0.4Other100%Transformationinvestmentrequired$300billionIndustrynetproperty,plantandequipment(PPE)$723billion0%GreenbondsNon-greenbondsFulldataVisualClickheretoseethefulldata:423.2CementindustryNet-zeroindustrytrackerCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms433.2In-depthindustryanalysisCementKeyhighlightsNet-zeroindustryperformance-24%-95%Productionemissionintensity(EI)(%)100%Productionvolume(%)100%0%2030EIthreshold2050EIthresholdProductiongrowthSizeofboxindicatesindustryGHGemissionsin:202020302050Today’sproductionmeeting"reducedemission"intensitythreshold1Today’sproductionmeeting"low-emission"intensitythreshold1Cementisthesecondlargestemittingmanufacturingsector–generating6%ofallman-madeemissions.Demandforcementcouldincreaseupto45%by2050(0%inIEANetZeroby2050Scenario),riskingacorrespondingriseinemissions.Carboncaptureisessentialtothenet-zeropathwayforcement,butelectrificationandhydrogencouldplaysupportingroles.Givenhighcostsofcarboncapture,low-emissioncementisexpectedtocomewithagreenpremiumabove50%.Morethan$185billionwillneedtobeinvestedinCO2handlinginfrastructureandcleanhydrogenproductiontoenablelow-emissionproductionincementplants.Toincentivizeinvestments,demandsignalsfromcementbuyersandsupportingpoliciesmustimprovedrastically.CementAluminiumAmmoniaOilNaturalgasSteelThenecessaryinfrastructurerequiredbythelow-emissionindustryneedstobedevelopedalmostentirely.InfrastructureLow-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.CapitalNet-zeroindustryreadinessReadinessstageAlimitedportionofthemarketcanpaytherequiredgreenpremium.DemandLimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.PoliciesThelow-emissionproductiontechnologiesarelargelyprototypedatscale.TechnologyNotes:1Asdefinedinthe“Missionandmethodology”sectionofthisreport.Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms44Cementisthesecondmostconsumedmaterialintheworldafterwater,withnoscalablesubstitutestoday.Morethan50%ismadeinChina.ManufacturingcementcreatestwosourcesofCO2emissions,about40%comesfromtheburningoffossilfuelstoheatkilnsat1300-1450oC,andabout60%isreleasedduringthethermaldecompositionoflimestoneintocarbondioxideandlime,anessentialelementofclinkerwhichisthemainingredientofcement(about70%).With6%ofallman-madeemissions,cementisthesecondlargestemittingmanufacturingsectoraftersteel.Societalneedsandurbanizationareexpectedtoincreasecementdemandby45%by2050.AligningwiththeNetZeroby2050pathwaybyIEA,however,requireslimitingtheincreasetotoday’slevels.Withoutimplementingtransformativetechnologies,thecementsectorcanalreadycutemissionstodaywithefficiencyandcircularityleverssuchasreducingclinker-to-cementratioandusingwastefromotherindustriesasalternativefuels.DeployingCCUStechnologyistheonlyknownpathwaytobringingsectoralemissionsnearzero.Today,itsadoptioncouldleadtoa50-85%productioncostincrease.Thetechnologyisexpectedtoreachcommercialstageby2030.Besidesinvestmentsincarboncaptureonproductionassets,investmentsofatleast$185billionareneededtodeveloptheCO2transportandstorageinfrastructuretohandle1,370MTPAofCO2(themostsignificantneedafterbluehydrogenintheIEANetZeroby2050Scenario),aswellasthelow-emissionpowerandhydrogenproductioninfrastructure.Duetothehighcostofcarboncapture,low-emissioncementisexpectedtoreachthemarketwithagreenpremiumabove50%,whichwouldleadtoa1-3%increaseinhousingprices.Demandsignalsforlow-emissioncementfromthecementbuyersarecriticaltoincentivizeinvestments.Thiswillrequirestrengtheningcementbuyers’confidenceintheirabilitytopassthepremiumtoendconsumers.Internationalcooperationandmorerobustpolicymeasuressuchascarbonpricing,carbonborderadjustmentmechanisms,circularityorproductspecificationstandardscanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmoversintothelow-emissioncementindustry.Theindustrywillrequire$500billiontoimplementcarboncapturetechnologiesby2050,i.e.$16billionperyearontopofbusiness-as-usualinvestments.Accesstogreenbondsthroughadequatetaxonomyandamplepublicfinancingsupportwillbeinstrumentaltoimprovingthebusinesscase.Weemphasizefiveprioritiesforthesector:1Implementefficiencyleverstomaximizeemissionreductioninexistingprocessesandfosterconcreterecycling.2Boostthenumberofcarboncaptureprojectstoacceleratethelearningcurve,drivecostsdownandbringforwardthetechnology’scommercialreadiness.3DeveloptheCO2transportandstorageinfrastructurerequiredtoenablelow-emissioncementproduction.4Multiplydemandsignalsforlow-emissioncementtoincentivizeproducersandinvestorstodirectcapitaltowardslow-emissionassets.5Developpoliciestosupportthefourprioritiesaboveandstrengthenthebusinesscaseforlow-emissioncementproduction.CementAluminiumAmmoniaOilNaturalgasSteel3.2In-depthindustryanalysisCementExecutivesummaryNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms45Accountingfor6%ofallman-madeemissions,cementisthesecondlargestemittingmanufacturingsectoraftersteel.3.2.1CementperformancetrackerCementPerformancetrackerCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsWhatcementemits,capturesandoffsetsScope1,2,and3GHGemissions(GtCO2e)0.7-0.82.40.2Scope2Scope3Scope1TotalCCS(GtCO2e)TotaloffsetsDatanotavailable<0.0001FulldataVisualClickheretoseethefulldata:46TechnologyPoliciesCapital+50-85%$60-110/tCO2e$500billion2030Thelow-emissionproductiontechnologiesarelargelyprototypedatscale.Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.Productioncostincreaseforlow-emissioncement.Carbonpriceequivalentrequiredtolevelcompetitivelandscape.CapExrequiredtotransformindustryassetbaseby2050.Expectedyearofcommercialreadinessoffirstlow-emissionproduction.ReadinessstageDemand+50-85%+1-3%Alimitedportionofthemarketcanpaytherequiredgreenpremium.Greenpremiumforcementbuyers.Greenpremiumforendconsumers.ReadinessstageReadinessstageReadinessstageKeymessagesAsoftoday,carboncaptureistheonlytechnologythatcanbringthesectorclosetoemissionscompatiblewithanet-zeroeconomy.Morethan$185billionwillberequiredtodevelopthesector’scarbontransportandstorageneeds.Low-emissioncementcouldreachthemarketwithasignificantgreenpremiumforcementbuyers.Whilelowerforendconsumers,itcouldstillrepresentasubstantialamountinabsolutetermsforhouseholdsandpublicspendinglimitingdemand.Moredecisivepolicyactionisneededtoincentivizecementplayersintolow-emissionproduction.Technologycostsandlackofpolicy/demandsupportresultinunattractivereturns,withlimitedCapExforcommercial-scalecementplantstoday.ThepathtonetzerorequiresinvestingconsiderablymoreinCCUStechnologiesandCO2handlinginfrastructure,boostingdemandandimprovingsupportingpolicies.3.2.2CementreadinesstrackerCementSummaryClickontheenablersbelowtofindoutmore.HomeSummaryInfrastructureDatanotavailable$75-140billion$110-240billionThenecessaryinfrastructurerequiredbythelow-emissionindustryneedstobedevelopedalmostentirely.Investmentsrequiredinlow-emissionpowergeneration.Investmentsrequiredinlow-emissionhydrogenproduction.InvestmentsrequiredinCO2transportandstorage.ReadinessstageCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms47Thelow-emissionproductiontechnologiesarelargelyprototypedatscale.CementAluminiumAmmoniaOilNaturalgasSummaryHomeEfficiencyleverscancutemissionsby25%,butonlycarboncapturecanbringthemnearzeroforaproductioncostpotentially50-85%higher.KeymessagesThecementsectorcancutemissionsby25%todayusingefficiencyleversinclinkerproduction,cementproductionanddecarbonizingpowergenerationforquarrying,crushing,grindingandblending.Togettolow-emissioncement,carboncaptureistheonlyviablepathwaytoday,butmostprojectsarepilots/demonstrationswithcommercializationonlyexpectedin2030.Producinglow-emissioncementisexpectedtoresultina+50-85%productioncostincrease.By2040,electrickilnsandgreenhydrogencouldhalvecarboncapturerequirementstoprocessemissionsonly(byeliminatingenergy-relatedemissions).Sources:GCCA,GlobalCCSInstitute,Energies,Accentureanalysis3.2.2CementreadinesstrackerCementTechnologySteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsCementplantwithCCUS(2030)Kilnelectriﬁcation(2040)GreenH2forheating(2040)TechnologyreadinesslevelMatureEarlyadoptionDemonstrationLargeprototypeSmallprototypeConcept1234567891011FulldataVisualClickheretoseethefulldata:48Thenecessaryinfrastructurerequiredbythelow-emissionindustryneedstobedevelopedalmostentirely.HomeSummaryCarboncaptureadoptioncouldreach85%ofcementproductionby2050–providedmorethan$185billionisinvestedinenablingCO2handlingandcleanhydrogeninfrastructure.KeymessagesThewidespreaddeploymentofcarboncapturewillrequiretransportandstorageoflargevolumesofCO2,withaninfrastructureinvestmentof$110-240billionneeded.Currently,lessthan1%ofthisinfrastructurehasbeendeveloped.By2040,toreducethecementsector’scarboncapturerequirements,investmentswillalsoberequiredingreenpowerandlow-emissionhydrogeninfrastructure($75-140billion).Infrastructureforconcreterecyclingandefficiencylevers,suchasalternativefuelsavailabilityordecarbonizedrawmaterialsispartiallyinplacebutneedsfurtherinvestments.Thesedonothavethepotentialtobringtheindustrytonear-zeroemissionswithoutCO2handlinginfrastructure.Sources:GCCA,IEA,GlobalCCSInstitute,Accentureanalysis3.2.2CementreadinesstrackerCementInfrastructureCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsTotalDatanotavailable75-140185-380Investmentsrequiredforenablinginfrastructure($billion)110-240Low-emissionpowergenerationLow-emissionhydrogenproductionCO2transportandstorageCO2H2FulldataVisualClickheretoseethefulldata:493.2.2CementreadinesstrackerCementDemandToincentivizeinvestments,buildingcementbuyers’confidenceintheirabilitytopasstheir50%+greenpremiumtoendconsumersisessential.KeymessagesGiventhehighcostofCCUStoday,thefirstlow-emissioncementisexpectedtoreachthemarketwithasignificantgreenpremiumabove50%forcementbuyers.Thegreenpremiumsonhousingandinfrastructurecouldbesignificantlylower–below3%,butthiscouldstillrepresentalargeamountinabsolutetermsforhouseholdsandpublicsectors,limitingdemand.Sources:Bloomberg,GCCA,IEA,GlobalCCSInstitute,AccentureanalysisAlimitedportionofthemarketcanpaytherequiredgreenpremium.HomeSummaryCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsProducerPertonneofcement+50-85%Housing1-3%GreenpremiumsMarketpenetrationConsumerEndconsumer100%Low-emissionOther0%B2BB2CFulldataVisualClickheretoseethefulldata:503.2.2CementreadinesstrackerCementPoliciesFurtherpolicymeasurescanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmoversinlow-emissioncement.KeymessagesPoliciesvarywidelyacrossgeographies,andonlyexamplesofkeypoliciesthathavebeenrecentlyintroducedareincludedinthissection.A$60-110/tCO2ecarbonpriceorequivalentpolicies(e.g.productstandards,bordertaxadjustments)arerequiredtolevelthecompetitivelandscape.Changestobuildingcodes,concretestandards/recipesandpublicprocurementcouldboostdemandforlow-emissioncement/concrete.PublicprocurementasdetailedintheLow-CarbonConcreteandConstructionreport1couldserveasamodeltoprovidedisclosureofembodiedcarbonandcreateincentivesforlow-carbondesign.Sources:GCCA,GlobalCCSInstitute,WorldBank,MissionPossiblePartnership(MMP),Variousgovernmentreports,Accentureanalysis,EuropeanCementAssociationNotes:1MissionPossiblePartnership(MPP),Low-CarbonConcreteandConstruction:AReviewofGreenPublicProcurementProgrammes,2022;2Basedontheestimatedcarbonpricenecessarytomake“low-emission”productpricescompetitivewithtraditionalproductprices.Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.HomeSummaryCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsMajorproducersandconsumersofcement(percentageofglobalproduction/consumption)US2%2%8%8%54%54%ChinaIndia2%2%VietNam7%7%EuropeChina1.1-4.6Averagecarbonpricerequiredtoleveltheplayingﬁeldforlow-emissionproductionvsactualcarbonprices2($/tCO2e)85US0-18India0EU70FulldataVisualClickheretoseethefulldata:513.2.2CementreadinesstrackerCementCapitalFivehundredbilliondollarsisnecessarytotransformtheindustryassetbasewithCCUS–currentreturnsonlow-emissionassetsdonotencourageinvestments.KeymessagesInvestmentstotransformassetbaseareestimatedat$500billiontoretrofitcementplantswithcarboncapture.Theindustrywillalsorequirecapitaltoimproveemissionefficiency(e.g.alternativefuels,thermalefficiency).Anadequatetaxonomyforthecementindustryinvestments(equityandgreenbonds)isrequiredtoattractmorecapitalfortheindustrytransformation.Targetedpublicfinanceandinternationalcooperationcouldhelplowerthefinancialrisksassociatedwithlow-emissiontechnologiesandcontributetotheemergenceofthelow-emissioncementindustry.Sources:GlobalCCSInstitute,Refinitiv,DialogueonEuropeanDecarbonizationStrategies,AccentureanalysisLow-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.HomeSummaryCementAluminiumAmmoniaOilNaturalgasSteelClickheretoseethefulldata:Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms=AssetsandinvestmentsDebtissued(2020bonds)InvestmenttoPPEmultiple1.6Transformationinvestmentrequired$500billion$310billion3Other100%0%GreenbondsNon-greenbondsIndustrynetproperty,plantandequipment(PPE)FulldataVisualClickheretoseethefulldata:523.3AluminiumindustryNet-zeroindustrytrackerCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms533.3In-depthindustryanalysisAluminiumKeyhighlightsNet-zeroindustryperformance-40%-97%Productionemissionintensity(EI)(%)100%Productionvolume(%)100%0%2030EIthreshold2050EIthresholdProductiongrowthSizeofboxindicatesindustryGHGemissionsin:202020302050Today’sproductionmeeting"reducedemission"intensitythreshold1Today’sproductionmeeting"low-emission"intensitythreshold1Aluminiumisoneofthemostemission-intensivemanufacturingsector–generating2%ofallman-madeemissions.Aluminiumdemandisprojectedtoincreasebyupto80%by2050(about60%inInternationalAluminiumInstitute(IAI)NetZeroScenario),riskingacorrespondingriseinemissions.Themainpathwaytodecarbonizealuminiumproductionisacombinationofelectrification,transitiontohydrogenandinertanodes–however,carboncaptureisalsobeingexplored.Giventhehighcostofcleantechnologies,low-emissionaluminiumisexpectedtocomewithagreenpremiumupto40%towholesalebuyersand1-2%toendconsumers.Morethan$510billionwillneedtobeinvestedinlow-carbonpower,cleanhydrogenandCO2infrastructuretoenablecleantechnologies.Toincentivizeinvestments,demandsignalsfromaluminiumbuyersandsupportingpoliciesmustimprovedrastically.CementAluminiumAmmoniaOilNaturalgasSteelThenecessaryinfrastructurerequiredbythelow-emissionindustryispartiallyinplace.InfrastructureLow-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.CapitalNet-zeroindustryreadinessReadinessstageVerylimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.PoliciesThelow-emissionproductiontechnologiesarelargelyprototypedatscale.TechnologyMostofthemarketcanpaytherequiredgreenpremium.DemandNotes:1Asdefinedinthe“Missionandmethodology”sectionofthisreport.Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms54Aluminiumisalightweight,corrosion-resistant,highlymalleableandinfinitelyrecyclablematerialwhichfindsusageinmultipleindustries,includingconstruction(25%),transport(25%),electricalequipment,machineryandpackaging;ithasnoscalablesubstitutestoday,anditsuseintherenewableenergyindustrymakesitacriticalmaterialforachievingnetzero.Manufacturingaluminiumrequireshighlyenergy-intensiveprocessestoextractaluminafrombauxiteandturnitintoaluminium.Morethan70%oftheenergyusedcomesfromfossilfuels,largelytoproducecaptiveelectricitytorunsmelters(primaryaluminium)andelectricinductionfurnaces(recycledaluminium).Almost50%ofaluminiumismadeinChina.Thealuminiumsectorgeneratesabout2%ofallman-madeemissions–aluminiumisoneofthemostemission-intensiveindustrialmaterialstoday(seventimesthatofsteel).Partlybecausealuminiumisboundtoplayaroleinreducingemissionsofothersectors(suchaslight-weightingcarsandtrucks),itsdemandisprojectedtoriseby80%by2050.Aluminiumrecycling,i.e.secondaryaluminiumproduction,canbenearlycarbon-neutralifpoweredbyrenewableelectricity;henceitwillbeessentialtodecarbonizeelectricitysupply.Demandcannotbemetwithrecycledaluminiumalone.Primaryaluminiumisprojectedtomeetatleast50%ofaluminiumdemandin2050andmustbedecarbonized.Thechallengeforprimaryaluminiumistwofold:decarbonizeenergyforrefiningandsmeltingandpreventCO2releasetotheatmosphereduringthesmeltingprocess.Thedecarbonizationpathwaycombinestwobuildingblocks:electrificationwithlow-carbonpowerforrefiningandsmelting,andhydrogenuseforhighheat.Carboncaptureisalsobeingexploredbutfacessignificantchallenges(e.g.lowCO2concentration).Today,decarbonizingpowercanalreadycutemissionsby60%,andupto85%couldbeachievedwithfutureelectricboilersandinertanodes.Costestimatesforaluminiumlow-emissiontechnologiesarelargelyunknownduetotheirearlystageofmaturity,exceptfortheuseofCCUSforthermalenergyandprocessemissions,whichisestimatedtoraiseproductioncostsby40%.Besidesinvestmentsinproductionassets,atleast$510billionininfrastructureinvestmentsinlow-emissionpowergeneration,hydrogenproduction,andcarbontransportandstoragewillberequired.Low-emissionaluminiumisexpectedtoreachthemarketby2030withagreenpremiumofupto40%.Toincentivizeinvestments,demandsignalsforlow-emissionaluminiumfromwholesalebuyersshouldbemultiplied.Thiswillrequirestrengtheningaluminiumbuyers’confidenceintheirabilitytopassthepremiumtoendconsumers,whichshowsencouragingsigns.Publicpoliciesandinternationalcooperationoncarbonpricing,carbonborderadjustmentmechanismsorproductspecificationstandardscanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmoversintothelow-emissionaluminiumindustry.Thelowmaturityofmosttechnologiesmakesithardtosizetheinvestmentrequiredtotransformtheindustryassetbase.Moreover,currentbusinesscaseandprojectedreturnsonlow-emissionassetsdonotencouragemainstreaminvestments.CementAluminiumAmmoniaOilNaturalgasSteelWeemphasizefiveprioritiesforthesector:1Promoteandfurtherexpandaluminiumrecyclingnetworks.2Boostthenumberoflow-emissionprojectstoacceleratethelearningcurve,drivecostsdownandbringforwardthecommercialreadinessofcleantechnologies.3Developthelow-emissionpowercapacity,cleanhydrogenproductionandCO2transportandstorageinfrastructurerequiredtoenablelow-emissionaluminiumproduction.4Multiplydemandsignalsforgreenaluminiumtoincentivizeproducersandinvestorstodirectcapitaltowardslow-emissionproductionassets.5Developpoliciestosuportthefourprioritiesaboveandstrengthenthebusinesscaseforlow-emissionaluminiumproduction.3.3In-depthindustryanalysisAluminiumExecutivesummaryNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms55Aluminiumisoneofthemostemission-intensivemanufacturingsectors–generating2%ofallman-madeemissions.Morethan70%ofitsenergyconsumptioncomesfromfossilfuels.3.3.1AluminiumperformancetrackerAluminiumPerformancetrackerCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsWhataluminiumemits,capturesandoffsetsScope1,2,and3GHGemissions(GtCO2e)1.08Includesscope1non-CO2GHGemissions0.04Scope3Scope1and20.03TotalCCS(GtCO2e)TotaloffsetsDatanotavailable0.00FulldataVisualClickheretoseethefulldata:56TechnologyPoliciesCapital+38%$210/tCO2e2030Thelow-emissionproductiontechnologiesarelargelyprototypedatscale.Verylimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.Productioncostincreaseforlow-emissionaluminiumproduction.Carbonpriceequivalentrequiredtolevelcompetitivelandscape.CapExrequiredtotransformindustryassetbaseby2050.Expectedyearofcommercialreadinessoffirstlow-emissionproduction.ReadinessstageReadinessstageReadinessstageKeymessagesDecarbonizingelectricityalreadyprovidesanimmediateoptiontoeliminatemostsectoralemissions;thepotentialisevenmoresignificantwiththeadditionofelectricboilersandinertanodes.Aluminiumdecarbonizationwouldrequireaminimuminvestmentof$510billionindecarbonizedpower,cleanhydrogencapacityandCO2transportandstorage.Thegreenpremiumforendconsumersislow,butaluminiumbuyersneedtobeincentivizedtogeneratedemandforproducers.Moredecisivepolicyactionisneededtoincentivizealuminiumplayersintolow-emissionproduction.Furtherde-riskingandbetterreturnswillbeneededtore-orientinvestmentflowtowardsthelow-emissionindustry.Aluminiumbenefitsfromasizeableimmediatedecarbonizationopportunity:low-carbonpower.Moredecisiveactionisrequiredtoboostdemandandinvestmentsingreenaluminium.3.3.2AluminiumreadinesstrackerAluminiumSummaryClickontheenablersbelowtofindoutmore.HomeSummaryDatanotavailableDemand38%1-2%Mostofthemarketcanpaytherequiredgreenpremium.Greenpremiumforaluminiumbuyers.Greenpremiumforendconsumers.ReadinessstageCementAluminiumAmmoniaOilNaturalgasSteelInfrastructure$62-109billion$439billion$12-26billionThenecessaryinfrastructurerequiredbythelow-emissionindustryispartiallyinplace.Investmentsrequiredinlow-emissionpowergeneration.Investmentsrequiredinlow-emissionhydrogenproduction.InvestmentsrequiredinCO2storageandtransport.ReadinessstageNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms57Thelow-emissionproductiontechnologiesarelargelyprototypedatscale.HomeSummaryThemainpathwaytodecarbonizeprimaryaluminiumcombineselectrification,hydrogenandinertanodes.KeymessagesScrap-basedsecondaryaluminiumproductionusing100%low-carbonpowerelectricfurnacesistheclosestroutetolow-emissionaluminium.Primaryaluminiumisstillexpectedtobeneededtomeetatleast50%of2050demand.Low-carbonpowercandecarbonizethesectorbyupto62%ofemissions.Itcouldreduceupto86%ifelectricboilersandinertanodesbecomeavailable.Besidespowerdecarbonizationandfurtherplantelectrification,hydrogenandCCUSpathwaysarealsobeingexploredforfurtherresults.Costswillbecomemoreapparentastechnologiesmature.Currently,costscanonlybeestimatedfortheCCUSpathway,wherelow-emissionproductioncouldcost38%more–however,thispathisthemostunlikely.5Sources:IAI,AFC,BloombergNEF,HongqiaoGroup,Accentureanalysis3.3.2AluminiumreadinesstrackerAluminiumTechnologyCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsTechnologyreadinesslevelElectricboilers(unknown)Decarbonizationofelectricity(available)Inertanodes3(2025)Mechanicalvapourrecompression(unknown)MatureEarlyadoptionDemonstrationLargeprototypeSmallprototypeConcept12345678910CCUS5(2030)Hydrogen(2030)11FulldataVisualClickheretoseethefulldata:58Thenecessaryinfrastructurerequiredbythelow-emissionindustryispartiallyinplace.HomeSummaryMorethan$510billionwillneedtobeinvestedinlow-carbonpower,cleanhydrogenandCO2handlinginfrastructuretoenablelow-emissiontechnologies.KeymessagesHydroelectricityalreadypowers25%ofprimaryaluminiumproduction.Additionallow-carbonpowercapacityof231GWisrequired,whichwillrequireaminimuminvestmentof$439billion.Withoutelectricboilersandmechanicalvapourrecompression,replacingfossilfuelsforrefiningthermalenergywithlow-emissionhydrogenwouldrequireaminimumof$60billionincleanhydrogenproductioninfrastructure.CO2transportandstorageinfrastructuremaynotbeneededifinertanodesandhydrogentechnologiesareprovencommerciallysuccessful.Source:IAI,GlobalCCSInstitute,IEA,Accentureanalysis3.3.2AluminiumreadinesstrackerAluminiumInfrastructureCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsTotal62-10912-26513-574Investmentsrequiredforenablinginfrastructure($billion)Low-emissionpowergenerationLow-emissionhydrogenproductionCO2transportandstorageCO2H2439FulldataVisualClickheretoseethefulldata:59Mostofthemarketcanpaytherequiredgreenpremium.HomeSummaryBuildingaluminiumbuyers’confidenceintheirabilitytopasstheir38%greenpremiumtoendconsumersisessentialtoboostdemandsignals.KeymessagesThereisnolow-emissionaluminiuminlinewithIEANetZeroby2050Scenarioavailabletoday.However,appetiteisgrowingforreducedemissionaluminium(madeusinggreenpower),leadingtominorgreenpremiumsaround1-2%toendconsumers.Ifsuchatechnologypathwaymaterializes,CCUS-basedlow-emissionaluminiumcouldarriveinthemarketwithapricepremiumofupto38%by2030.Theextensivepriceelasticityofdemandinrecentyearssuggestsaluminiumbuyerscouldtakeanapproximate40%greenpremiumandpassitontoendconsumersthroughamarginalpricebumpbelow2%onfinishedproducts.Sources:HARBORAluminium,LME,S&PGlobal,EuropeanAluminium,Accentureanalysis3.3.2AluminiumreadinesstrackerAluminiumDemandCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsProducerGreenpremiumsMarketpenetrationConsumerEndconsumer100%Low-emissionOther0%B2BB2CPertonneofaluminium+38%<1%PercarFulldataVisualClickheretoseethefulldata:60Verylimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.HomeSummaryMorerobustpolicymeasuresareneededtocreateadifferentiatedandeconomicallyviablemarketforfirstmoversintolow-emissionaluminium.KeymessagesPoliciesvarywidelyacrossgeographies,andonlyexamplesofcriticalpoliciesthathavebeenrecentlyintroducedareincludedinthissection.ThecarbonpriceisonlyreflectiveoftheCCUStechnologycostinsmeltingduetolowmaturitylevelsandR&Dconfidentialityofothertechnologies.Acarbonpriceof$210/tofCO2isrequiredtoincentivizetheuseofCCUSinsmelting.Thisissignificantlyhigherthanthecurrentcarbonpricesinmajorconsumingcountries.Thiscouldbeachievedthroughpricingpoliciesornon-pricingpoliciessuchasproductstandards,publicprocurementstandardsorcarbonbordertaxadjustmentswhichwillrequireinternationalcooperation.Sources:WorldBank,ASI,Accentureanalysis3.3.2AluminiumreadinesstrackerAluminiumPoliciesCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsMajorproducersofaluminium(percentageofglobalproduction)Canada5%6%6%57%RussiaChinaIndia10%EuropeChina1.1-4.6210US0-18India0EU70Averagecarbonpricerequiredtoleveltheplayingﬁeldforlow-emissionproductionvsactualcarbonprices($/tCO2e)FulldataVisualClickheretoseethefulldata:61Low-emissioninvestmentsgeneratesufficientreturnforbarelyanyCapExtoflowtowardslow-emissionproductionassets.HomeSummaryItisstillunclearhowmuchcapitalwillberequiredtotransformtheindustryassetbase,butthecurrentbusinesscasedoesnotencourageinvestments.KeymessagesCurrenttechnologymaturityoflow-emissionproductionroutesistoolowtoestimateCapExrequirementsbeyondelectricitydecarbonization.Thebusinesscasestillneedstoimprovesignificantlytobecomeattractiveanddrivecapitalintolow-emissionaluminiumassets.Sources:Refinitiv,Lightmetalage3.3.2AluminiumreadinesstrackerAluminiumCapitalCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsIndustrynetproperty,plantandequipment(PPE)=AssetsandinvestmentsDebtissued(2020bonds)InvestmenttoPPEmultipleTransformationinvestmentrequiredDatanotavailable$151billionOther100%0%GreenbondsNon-greenbondsDatanotavailableFulldataVisualClickheretoseethefulldata:623.4AmmoniaindustryNet-zeroindustrytrackerSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms633.4In-depthindustryanalysisAmmoniaKeyhighlightsNet-zeroindustryperformance-23%-96%Productionemissionintensity(EI)(%)100%Productionvolume(%)100%0%2030EIthreshold2050EIthresholdProductiongrowthSizeofboxindicatesindustryGHGemissionsin:202020302050Today’sproductionmeeting"reducedemission"intensitythreshold1Today’sproductionmeeting"low-emission"intensitythreshold1Ammoniaisthechemicalsector’slargestemittingproduct,generating1.3%ofallman-madeemissions.Ammoniademandforfertilizerandindustrialuseisprojectedtoincreaseupto37%by2050(23%intheIEANetZeroScenario),riskingacorrespondingriseinemissions.Thepathwaytodecarbonizeammoniaproductionreliesondevelopingblueorgreenhydrogentechnologies.Giventhehighcostsoftechnologies,low-emissionammoniaisexpectedtohaveagreenpremiumofupto100%.Morethan$850billionwillneedtobeinvestedinlow-carbonpowerandCO2infrastructuretoenablegreenandbluehydrogenproduction.Demandsignalsfromammoniabuyersandsupportingpoliciesmustimprovedrasticallytoincentivizeinvestments.SteelCementAluminiumAmmoniaOilNaturalgasLow-emissioninvestmentsgeneratesufficitentreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.CapitalNet-zeroindustryreadinessReadinessstageOnlyveryearlyadoptersinthemarketcanpaytherequiredgreenpremium.DemandThenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.InfrastructureLimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.PoliciesThelow-emissionproductiontechnologiesarelargelydemonstratedincommercialconditions.TechnologyNotes:1Asdefinedinthe“Missionandmethodology”sectionofthisreport.Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms64Ammoniaisaprimarychemicalusedasanintermediateandend-productforthefertilizerindustry(70%)andotherindustries(30%).Ammoniaiscriticalfortheagriculturesectorandglobalfoodsecurity.Ithasalsobeenidentifiedasanenergycarrierforcleanhydrogeninthefuture.Morethanhalfoftheworld’sammoniaiscurrentlyproducedinfourcountries:China,US,IndiaandRussia.99%ofammoniaproductionreliesoncoalgasificationandsteammethanereformingtomakehydrogen.Hydrogenproductiongenerates90%oftotalammoniasynthesisemissions.With1.3%ofallman-madeemissions,ammoniaisthelargestemittingproductofthechemicalsector(450MtCO2),aheadofhigh-valuechemicals(250MtCO2)andmethanol(220MtCO2).Demandforammoniaisprojectedtorisenearly40%by2050,drivenbydemandforfertilizersinAfrica,LatinAmerica,theMiddleEastandSouth-EastAsia.AligningwiththeIEANetZeroby2050requireslimitingtheincreaseto23%.Twomainpathwaysforlow-emissionammoniaexist,CCUSandelectrolysis;bothtechnologiesareavailabletoday,however,blueandgreenhydrogenproductioncoststypicallyrange10%and40%higher,respectively,andrequirefurthercostreduction.Methanepyrolysisandbiomassgasificationarealsoemergingaspotentialtechnologicalalternatives.Besidesinvestinginproductionassets,a50/50green/blueammoniasupplyin2050willrequiremorethan$850billionininvestmentsindecarbonizedpowerandCO2infrastructuretobedeployed–nearly12timestheannualvalueoftheammoniamarket.Buildingammoniaandfertilizerproducers’confidencetopassagreenpremiumover10%tofarmersisessentialtounlockdemandandincentivizeinvestments.Governmentsshouldbecautiousoftheimpactonfoodpriceandfoodsecurityduetothewidespreaduseofmineralfertilizersandlowmarginsinfarming.Morerobustpolicymeasuresandinternationalcooperationoncarbonpricing,carbonbordertaxadjustmentsorpublicprocurementcanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmoversintothelow-emissionammoniaindustry.$450billionisnecessarytotransformtheammoniaindustryassetbase–nearlyseventimesthevalueofthecurrentassetbase.Thisisexpectedtodecreaseoverthecomingdecadeasthecostofelectrolysersandgreenpowerfalls.Weemphasizefiveprioritiesforthesector:1Boostthenumberofgreenandblueammoniaprojectstoacceleratethelearningcurve,drivecostsdownandincreasethecompetitivenessoflow-emissionammoniatechnologies.2Preventinfrastructurebottlenecksbydevelopingthelow-emissionpowercapacity,andtheCO2transportandstoragerequiredtoenablegreenandbluehydrogenproduction.3Multiplydemandsignalsforlow-emissionammoniaandfertilizerstoincentivizeproducersandinvestorstodirectinvestmentstowardslow-emissionproductionassets.4Developpoliciestosupportlow-emissionplants,infrastructureanddemand,andstrengthenthebusinesscaseforlow-emissionammoniaproduction.5Ensuredecarbonizationofammoniaandfertilizerproductiondoesnotimpactfoodsecurityforpoorerhouseholds.SteelCementAluminiumAmmoniaOilNaturalgas3.4In-depthindustryanalysisAmmoniaExecutivesummaryNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms65Accountingfor1.3%ofallman-madeemissions,ammoniaproductionisthelargestsourceofemissionswithinthechemicalsector.3.4.1AmmoniaperformancetrackerAmmoniaPerformancetrackerSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsWhatammoniaemits,capturesandoffsetsScope1,2,and3GHGemissions(GtCO2e)0.80Scope30.45Scope1Scope20.04Includesscope1non-CO2GHGemissionsDatanotavailableTotalCCS(GtCO2e)TotaloffsetsDatanotavailable0.0036FulldataVisualClickheretoseethefulldata:66TechnologyPoliciesCapital10-100%$36-360/tCO2e$450billionAvailableThelow-emissionproductiontechnologiesarelargelydemonstratedincommercialconditions.Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.Productioncostincreaseforlow-emissionproductiontoday.Carbonpriceequivalentrequiredtolevelcompetitivelandscape.CapExrequiredtotransformindustryassetbase.Expectedyearofcommercialreadinessoffirstlow-emissionproduction.ReadinessstageReadinessstageReadinessstageKeymessagesLow-emissionproductionmethodsareemerging,includingelectrolysis,methanepyrolysisandcarboncapture.DelaysindevelopinginfrastructureriskcreatingbottlenecksindeployingelectrolysisandCCUStechnologies.Increasesinfertilizercostscouldsignificantlyimpactfoodsecurityaroundtheworld;governmentswouldneedtotakemeasurestolessentheeffectofgreenpremiums.Morerobustpoliciescansupportadifferentiatedandviablelow-emissionammoniamarket.Furtherde-riskingandbetterreturnswillbeneededtore-orientinvestmentflowtowardsthelow-emissionindustry.Low-emissionammoniaisarealitytoday,however,furthercostreduction,strongerdemandsignalsandsupportingpoliciesareneededtoaccelerate.3.4.2AmmoniareadinesstrackerAmmoniaSummaryClickontheenablersbelowtofindoutmore.HomeSummarySteelCementAluminiumAmmoniaOilNaturalgasInfrastructure$8-18billion$849billionThenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.Investmentsrequiredinlow-emissionpowergeneration,transmissionanddistribution.InvestmentsrequiredinCO2transportandstorage.ReadinessstageDemand+10-100%+5-60%Onlyveryearlyadoptersinthemarketcanpaytherequiredgreenpremium.Greenpremiumforammoniabuyers.Greenpremiumforendconsumers.ReadinessstageNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms67Thelow-emissionproductiontechnologiesarelargelydemonstratedincommercialconditions.HomeSummaryCCUSandelectrolysistechnologiesareavailabletoday,butproductioncostsremainatleast10%and40%higher,respectively.KeymessagesProducinglow-emissionammonia3willleadtocostincreasesof+10-100%.6Low-emissionammoniaproductionmethodsareemerging,includingelectrolysis,methanepyrolysis,andbiomassgasification.Whilefossil-basedrouteswithCCUSarecurrentlyavailable,adoptionremainslimited.Theseemergingroutesaretypically10-100%moreexpensivepertonneofammonia,dependingonenergypricesandotherregionallyvaryingfactors.However,costsareexpectedtodropsignificantlyasthetechnologymatures.Currentcommercialproductionthroughsteammethanereforming(SMR)canberetrofittedwithCCUS,whilenew-buildplantswithCCUSwillbeautothermalreforming(ATR)based.Sources:IEA,GlobalCCSInstitute,Accentureanalysis3.4.2AmmoniareadinesstrackerAmmoniaTechnologySteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsElectrolysis(2025)SMR/ATRwithCCUS(available)MatureEarlyadoptionDemonstrationLargeprototypeSmallprototypeConcept12345678910Technologyreadinesslevel11Methanepyrolysis(2025)Biomassgasiﬁcation(unknown)FulldataVisualClickheretoseethefulldata:683.4.2AmmoniareadinesstrackerAmmoniaInfrastructureA50/50green/blueammoniasupplyin2050willrequiremorethan$850billionininvestmentsindecarbonizedpowerandCO2transportandstorageinfrastructure.Thenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.HomeSummaryKeymessagesMorethan$850billionneedstobeinvestedinCO2transportandstorageinfrastructureandgreenpowercapacityby2050topreventbottlenecksinthedeploymentofelectrolysisandCCUStechnologies.Onlyasmallfraction(~1%)oftherequiredgreenpowerhasbeendevelopedfortheammoniaindustry.Thecostoflow-carbonpowerandCO2transportandstorageisprojectedtodecrease,favouringinfrastructuredevelopment.Sources:IEA,AccentureanalysisSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms8-18Total849857-867Investmentsrequiredforenablinginfrastructure($billion)Low-emissionpowergenerationCO2transportandstorageCO2FulldataVisualClickheretoseethefulldata:693.4.2AmmoniareadinesstrackerAmmoniaDemandAgreenpremiumover10%istoohightobepassedontofarmersandconsumerswithoutimpactingfoodsecurity;furthercostreductionisrequiredtounlockadditionaldemand.Onlyveryearlyadoptersinthemarketcanpaytherequiredgreenpremium.HomeSummaryKeymessagesLow-emissionammoniacouldarriveonthemarketwitha10-100%premium4forammoniabuyersdependingonregionsandproductionroutes.Passingthegreenpremiumtoendconsumerscouldresultina5-60%increaseinfertilizercost.Thiscouldcauseariseinfoodpricesby3-26%,giventhewidespreaduseoffertilizersandthelowmarginsinagricultureandfarming.Governmentswillneedtoputcross-subsidiesandothermeasurementsinplacetoprotectthefoodsecurityofpoorerhouseholds.Sources:IEA,InternationalFertilizerAssociation(IFA),PolishAcademyofSciences,LeibnizUniversityofHannover,AccentureanalysisSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsPertonneofammonia+55%changeinprice~$400+25%changeinprice~$150+15%changeinprice~$0.15perdayPertonneoffertilizerPertonneoffoodB2BB2CGreenpremiumsMarketpenetration99%Low-emissionOther1%FulldataVisualClickheretoseethefulldata:703.4.2AmmoniareadinesstrackerAmmoniaPoliciesSignificantpolicymeasuresareneededtocreateadifferentiatedandeconomicallyviablemarketforfirstmovers.Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.HomeSummaryKeymessagesPoliciesvarywidelyacrossgeographies,andonlyexamplesofcriticalpoliciesthathavebeenrecentlyintroducedareincludedinthissection.A36-360/tCO2ecarbonpriceequivalentisrequiredtolevelthecompetitivelandscape,dependingontechnologiesandgeographies,and“carbonborderadjustmentmechanisms”throughinternationalcooperationcanhelptopreventcarbonleakage.Long-termpoliciesandfinancingmechanismscansupportthedeploymentofcarboncaptureandelectrolyserstoproducelow-emissionammoniaandcreateaviablelow-emissionammoniamarket.End-usepoliciescanoptimizefertilizerandapplicationmethodsandmanagethedemandforammonia-basedfertilizers.Sources:WorldBank,IEA,AccentureanalysisSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsMajorproducersandconsumersofammonia(percentageofglobalproduction/consumption)US9%9%8%8%11%11%28%28%RussiaChinaIndia9%10%EuropeChina1.1-4.6Averagecarbonpricerequiredtoleveltheplayingﬁeldforlow-emissionproductionvsactualcarbonprices1($/tCO2e)198US0-18EU70FulldataVisualClickheretoseethefulldata:713.4.2AmmoniareadinesstrackerAmmoniaCapitalTotransformtheammoniaindustryassetbase,$450billionwouldbeneeded.Despitetheuncertaintyonreturns,someinvestmentmomentumexists.Low-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.HomeSummaryKeymessagesCurrentammoniaproductioncostswithlow-emissiontechnologiesaretoohightoincentivizeinvestments.Furtherde-riskingandbetterreturnswillbeneededtore-orientinvestmentflowtowardsthelow-emissionindustry.Morethan$450billionisrequiredtotransformtheindustry,thisisnearlyseventimesmorethanthevalueofthecurrentassetbase.However,thisrequiredinvestmentisexpectedtofalltogetherwithrenewableandelectrolysercosts.Nogreendebtwasissuedbythefertilizerindustryin2020asthebasicchemicalspecificcriteria/taxonomyhasyettobedeveloped.Sources:MPP(ETC),Refinitiv,AccentureanalysisSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms=AssetsandinvestmentsDebtissued(2020bonds)InvestmenttoPPEmultiple6.9Transformationinvestmentrequired$450billion$65billionOther100%0%GreenbondsNon-greenbondsIndustrynetproperty,plantandequipment(PPE)FulldataVisualClickheretoseethefulldata:723.5OilNet-zeroindustrytrackerSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms733.5In-depthindustryanalysisOilKeyhighlightsNet-zeroindustryperformance-56%-69%Productionemissionintensity(EI)(%)100%Productionvolume(%)100%0%2030EIthreshold2050EIthresholdSizeofboxindicatesindustryGHGemissionsin:202020302050Today’sproductionmeeting"reducedemission"intensitythreshold1Today’sproductionmeeting"low-emission"intensitythreshold1Theoilsectorisasignificantconsumeroffossilfuelsandreleasesmethane–generatingdirectly6%ofallman-madeemissions.Oildemandisprojectedtoincreaseby17%by2050asperIEAStatedPoliciesScenario,butshoulddecreaseby73%fortheworldtoreachnet-zerointheIEANetZeroby2050Scenario.Decarbonizingtheoilsectorrequirescuttingmethaneandflaringemissions,energy-relatedemissionsupstream,andenergyandprocess-relatedemissionsinrefining.35%ofoilsectoremissionsaremethane,70%ofwhichcanbeabatedatzeroorminimalcoststoday.Technologiestodecarbonizeupstreamaremature,butCCUS,hydrogenandelectrificationpathwaysarestillbeingexploredinrefining.Somesubstitutesforoilproductsareavailable;however,theiravailabilityandaffordabilityremainasignificantconcern.SteelCementAluminiumAmmoniaOilNaturalgasNet-zeroindustryreadinessLow-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.CapitalThenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.InfrastructureLimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.PoliciesSomeofthemarketcanpaytherequiredgreenpremium.DemandThelow-emissionproductiontechnologiesarelargelydemonstratedincommercialconditions.TechnologyReadinessstageNotes:1Asdefinedinthe“Missionandmethodology”sectionofthisreport.Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms74Oilhasbeenadriveroftheglobaleconomyforthelast150years.Itisconsumedasanenergysourceinthetransportationsector(65%),industries(7%),buildings(5%)andusedasfeedstock(17%)inmanyindustriesincludingpetrochemicalsandplastics.Today,productionisrelativelyconcentratedwiththeUS,SaudiArabia,RussiaandCanadaproducingnearly50%oftotalsupply.Theoilindustryreliesonhighlyenergy-intensiveprocessestoextractcrudeoilandrefineitintooilproducts.Nearlyalltheenergyconsumedisfossilfuel.Theextractionofoilalsoreleasesmethaneintheatmosphere–35%oftheseemissionsareinvoluntary(fugitivemethane)and65%partofoperationalprocesses(vented).Thecombustionofoilproductsreleasesaboutfourtimesmoreemissions(scope3)thanproduction(scope1and2).Includingscope3,oilisresponsiblefor30%ofallman-madeGHGemissions.Howeveronlyafifth(6%oftotal)isdirectlyemittedbytheindustry–35%intheformofmethane.IntheIEAStatedPoliciesScenario,oildemandisprojectedtoriseby17%by2050,withdevelopingcountriesinAfrica,theMiddleEastandAsia-PacificseeingasharpincreasewhileChina,EuropeandtheUSseeingadecline.However,aligningwithIEANetZeroby2050Scenariorequiresadecreaseinoilconsumptionby73%.Scope3emissionsaside,theoilindustryneedstoaddressfoursourcesofemissions:fugitiveandventedmethane,flaring,energyuseinwelldeliveryandproduction,energyuseandprocessesinrefining(e.g.steammethanereformingforhydrogenproduction).Technologiesexisttoreduce70%ofmethaneemissionsatnoorminimalcosttotheindustryconsideringthemonetizationofcapturedmethane.Zeroflaringtechnologiesarecommerciallyavailable.Welldeliveryandproductioncanbeelectrifiedwithlow-carbonpower.Reducingrefiningemissionsremainsatechnologicalchallenge;CCUSiswell-placedandcanbesupportedbyelectrificationandhydrogentechnologies.Overall,knowntechnologiescanreduceoilindustryscope1and2emissionsbyupto70%foranincreasedproductioncostof8-10%.Besidesinvestinginproductionassets,suchtechnologieswillrequiremorethan$100billioninfrastructureinvestmentsinlow-emissionpowergeneration,cleanhydrogenproductionandcarbontransportandstorage–suchamountsarerelativelysmallcomparedtotheover$300billionspentontheupstreamoilindustryeveryyear.Lowscope1and2emissionoilproductsareexpectedtoreachthemarketwithagreenpremiumof6-10%.Toincentivizeinvestments,demandsignalsfortheseproductsarecritical.Governmentswillneedtostrengthenproducers’confidenceintheirabilitytopassthepremiumtoendconsumers,andinparallel,preventpoorerhouseholdsfrombeinghitbyrisingsustainabilitycosts.Policymeasuresandinternationalcooperationonmethanefees,flaringbansandcarbonpricingcanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmoversintothelow-emissionoilindustry.Investmentstodecarbonizetheoilindustryareestimatedat$720billionontopofbusiness-as-usualinvestments,i.e.approximately$25billionperyearuntil2050,whichisalsoaminoramountcomparedtoannualindustryCapEx.Thebusinesscasetoinvestinlow-emissionassetsisalreadyattractiveinupstreambutremainschallengingontherefiningside.Weemphasizefiveprioritiesforthesector:1Rapidlydeployexistingtechnologiestodrasticallycutventedandfugitivemethaneandflaringemissions.2Boostthenumberoflow-emissionprojectsinrefiningtoacceleratethelearningcurve,drivecostsdownandbringforwardtechnologycommercialreadiness.SteelCementAluminiumAmmoniaOilNaturalgas3Developtherenewablepowercapacity,cleanhydrogenproductionandCO2transportandstorageinfrastructurearoundproductionassets.4Multiplydemandsignalsforlow-emissionoiltoincentivizeproducersandinvestorstodirectcapitaltowardslow-emissionproductionassets.5Developpoliciestosupportthepreviousfourprioritiesandstrengthenthebusinesscaseforlow-emissionoilproduction.3.5In-depthindustryanalysisOilExecutivesummaryNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms75Theoilsectorgeneratesdirectly6%ofallman-madeemissions–35%comesfrommethaneemissions.3.5.1OilperformancetrackerOilPerformancetrackerSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsWhatoilemits,capturesandoffsetsScope1,2,and3GHGemissions(GtCO2e)12.3Scope3Scope1and2Includesscope1methaneemissions41.13.2TotalCCS(GtCO2e)TotaloffsetsDatanotavailable~0.002FulldataVisualClickheretoseethefulldata:76TechnologyPoliciesCapital8-10%$247/tCO2e$720billionThelow-emissionproductiontechnologiesarelargelydemonstratedincommercialconditions.Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.Productioncostincreaseforlow-emissionproductiontoday.Carbonpriceequivalentrequiredtolevelcompetitivelandscape.CapExrequiredtotransformindustryassetbase.Expectedyearofcommercialreadinessoffirstlow-emissionproduction.ReadinessstageReadinessstageReadinessstageKeymessages70%reductioninmethaneemissionscanoccurateffectivelynocosttotheoilcompanies(monetizationofcapturedmethane).Atleast$90billionarerequiredtoscalethenecessarylow-carbonpower,greenhydrogenandCO2handlinginfrastructureoverthenext30years.Passingthe10%costincreaseofswitchingtolow-emissionproductionwillresultina6-10%greenpremiumtoendconsumers.Duetothehighcostofabatementinrefining,ahighcarbonpriceof$247/tofCO2isrequiredtolevelthecompetitivelandscapeforthelow-emissionoilindustrytoday.$720billionisneededtodecarbonizeoilproduction(scope1and2)inlinewiththeprojecteddemandofIEANetZeroby2050Scenario.Theoilsectorbenefitsfromanimmediateopportunity:cuttingmethaneemissions.Moredecisiveactionisrequiredtoboostdemandandinvestmentsinlow-emissionoilproduction.3.5.2OilreadinesstrackerOilSummaryClickontheenablersbelowtofindoutmore.HomeSummaryInfrastructure$53-93billion$13-29billion$35billionThenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.Investmentsrequiredinlow-emissionpowergeneration.Investmentsrequiredinlow-emissionhydrogenproduction.InvestmentsrequiredinCO2transportandstorage.ReadinessstageDemand+10%6-10%Someofthemarketcanpaytherequiredgreenpremium.Greenpremiumforlow-emissionoilbuyers.Greenpremiumforendconsumers.ReadinessstageSteelCementAluminiumAmmoniaOilNaturalgasDatanotavailableNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms77Low-emissionproductiontechnologiesarelargelydemonstratedincommercialconditions.SteelCementAluminiumAmmoniaOilNaturalgasHomeSummaryUpstreamdecarbonizationtechnologiesarematureandcompetitive;however,thepathwayforrefiningremainsachallenge;low-emissionoilproductioncouldcost8-10%more.KeymessagesProducingandrefiningabarrelofoilthroughalow-emissionprocesscouldcost8-10%morewithtoday’stechnologies.Reducingfugitiveandventedmethaneisthefastestandmostcost-effectivewayfortheindustrytocutemissions–a70%reductioncanoccurateffectivelynocostconsideringthevaluegeneratedfromrecoveredgas.Upstreamdecarbonizationtechnologiesarealreadymature,whilerefininglow-emissiontechnologiesarestillunderdevelopment.CCUSislikelytobeaprimarysolutioninrefineriesbecauseoftheabilitytotargetemissionsfromburningwastefuelgasesandpetcoke(by-productsofrefining).Sources:IEA,WorldResourcesInstitute(WRI),DNVGLoilandgas,RystadEnergy,UniversityofWyoming3.5.2OilreadinesstrackerOilTechnologyNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsCCUS(unknown)Hydrogen(unknown)Electriﬁcation(unknown)ReﬁningMatureEarlyadoptionDemonstrationLargeprototypeSmallprototypeConcept12345678910TechnologyreadinesslevelWelldeliveryandproductionelectriﬁcation(available)Fugitivemethanecaptureandventingelimination(available)Zeroﬂaringtechnologies(available)Welldeliveryandproduction11FulldataVisualClickheretoseethefulldata:78Thenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.HomeSummaryToenablelow-emissiontechnologies,$100-160billionwillneedtobeinvestedinlow-carbonpower,cleanhydrogenandCO2handlinginfrastructure.KeymessagesLow-emissionhydrogeninfrastructurewillcost$53-93billionininvestments,whileCO2transportandstorageinfrastructurewillrequire$13-29billionininvestments.TheinfrastructureinvestmentrequirementsarelessthantheannualCapExoftheindustry,howeveronlyasmallfractionexiststoday.ThefiguresinthetablearealignedwithIEANetZeroby2050Scenario(i.e.24mb/dproduction).Ifthisdrasticdecreaseinproductionlevelsisnotreached,furtherinfrastructureinvestmentswillberequired.Sources:IEA,UniversityofWyoming,UniversityofGeorgia,GlobalCCSInstitute,DNVGLoilandgas3.5.2OilreadinesstrackerOilInfrastructureSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsTotal3553-9313-29101-157Investmentsrequiredforenablinginfrastructure($billion)Low-emissionpowergenerationLow-emissionhydrogenproductionCO2transportandstorageCO2H2FulldataVisualClickheretoseethefulldata:79Someofthemarketcanpaytherequiredgreenpremium.HomeSummaryGovernmentswillneedtostrengthenproducers’confidenceintheirabilitytopassa6-10%greenpremiumtoendconsumerswhileprotectingpoorerhouseholds.KeymessagesLow(scope1and2)emissionoildoesnotexistonthemarkettoday–excludingtheuseofoffsets.Onceavailable,thegreenpremiumforendconsumersisexpectedtobe6%-10%.Atthispricepoint,substituteslikebio-dieselwithamuchloweroverallemissionfootprint(becausealsoreducingscope3)willbemoreattractive(~15%premiumonly)providedtheyareavailableatscale.Thelimitedpriceelasticityofdemandseeninrecentyearssuggestsoilbuyerscouldtakea10%greenpremiumintheshortterm,butitmightaffectglobalproductvolumesinthelongrun.Sources:Refinitiv,Accentureanalysis3.5.2OilreadinesstrackerOilDemandSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsPerbarrelofoil+10%changeinprice+$7+6%changeinprice+$0.1PerlitreofgasolineB2CGreenpremiumsMarketpenetration100%Low-emissionOther0%FulldataVisualClickheretoseethefulldata:80Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.HomeSummaryStrongerpolicymeasuresareneededtocreateadifferentiatedandeconomicallyviablemarketforfirstmovers.KeymessagesPoliciesvarywidelyacrossgeographies,andonlyexamplesofkeypoliciesthathavebeenrecentlyintroducedareincludedinthissection.Thecostofcarbonabatementintheoilproductionvaluechainisthehighestinrefining.Acarbonpriceof$247pertonneofCO2eisrequiredtoincentivizetheuseoflow-emissiontechnologyinrefineries(alowerpricecouldbesufficienttoincentivizeupstreamlow-emissionproduction).Inadditiontocarbonpricing,methanefeescouldalsoincentivizeoilcompaniestoeliminatemethaneemissions.Sources:WorldBank,Variousgovernmentreports,Accentureanalysis3.5.2OilreadinesstrackerOilPoliciesSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsMajorproducersandconsumersofoil(percentageofglobalproduction/consumption)Canada6%5%12%4%15%19%19%RussiaChinaIndia13%SaudiArabiaJapanUS4%15%EuropeChina1.1-4.6Averagecarbonpricerequiredtoleveltheplayingﬁeldforlow-emissionproductionvs.actualcarbonprices1($/tCO2e)247US0-18EU70FulldataVisualClickheretoseethefulldata:81Low-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.HomeSummaryApproximately$25billionisneededannuallytotransformtheindustryassetbaseby2050.Thebusinesscaseisattractiveinupstreambutremainschallengingforrefining.KeymessagesOverall,$720billionisneededtotransformcurrentoilproductiontolow-emission(assumingoildemandreductioninlinewithIEA2050NetZeroScenario)Todecarbonizeupstream,$300billion(approximately$10billionperyear)isrequired.Thisrepresentsonly3%additionalinvestmentsonannualCapExof$350billionspentinupstreamin2021,whichcanreduceindustryemissionsby60%.Investmentsinlow-emissionproductioninupstreamprovideastrongbusinesscasewithsufficientprofitsrecoveredfromthesaleofcapturedmethane.Businesscasesareweaktodayforinvestmentsinlow-emissionrefineries.Sources:Refinitiv,Accentureanalysis,IEA,Statista,UniversityofWyoming,DNVGLoilandgas3.5.2OilreadinesstrackerOilCapitalSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms=AssetsandinvestmentsDebtissued(2020bonds)InvestmenttoPPEmultiple0.2Other99.88%Transformationinvestmentrequired$720billion$4.2trillionGreenbondsNon-greenbonds0.12%Industrynetproperty,plantandequipment(PPE)FulldataVisualClickheretoseethefulldata:823.6NaturalgasNet-zeroindustrytrackerSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms833.6In-depthindustryanalysisNaturalgasKeyhighlightsNet-zeroindustryperformance-43%-82%Productionemissionintensity(EI)(%)100%Productionvolume(%)100%0%2030EIthreshold2050EIthresholdSizeofboxindicatesindustryGHGemissionsin:202020302050Today’sproductionmeeting"reducedemission"intensitythreshold1Today’sproductionmeeting"low-emission"intensitythreshold1Thegassectorisamajorconsumeroffossilfuelsandreleasesmethane–generatingdirectly4%ofallman-madeemissions.Gasdemandisprojectedtoincreaseby30%by2050inbusiness-as-usualscenario(IEAStatedPoliciesScenario),however,itwouldneedtodropby55%toreachnetzeroaccordingtoIEANetZeroby2050Scenario.Methanemakesup65%ofemissionswithinthegassector,ofwhich70%canbeabatedatzeroorminimalcoststoday.Maturetechnologiesexisttoabate80%ofgassectoremissionsforabouta7%increaseinproductioncost.Agreenpremiumof1-3%toendconsumerscouldsufficeincentivizelow-emissionproduction.Policiestosupporttheemergenceofalow-emissiongasmarketareneededtoaccelerateinvestments.SteelCementAluminiumAmmoniaOilNaturalgasNet-zeroindustryreadinessLow-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.CapitalMostofthemarketcanpaytherequiredgreenpremium.DemandThenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.InfrastructureLimitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.PoliciesThelow-emissionproductiontechnologiesarelargelycommercialandcompetitivewithhighemissionalternatives.TechnologyReadinessstageNotes:1Asdefinedinthe“Missionandmethodology”sectionofthisreport.Net-ZeroIndustryTrackerContentsAbbreviationsandacronyms84Naturalgasisamajorenergysourceofmodernsocietyusedinpowerplants(40%),industries(35%),residentialandcommercialbuildings(21%)andasfeedstockforpetrochemicals(4%).Today,productionisrelativelyconcentrated,withtheUS,Russia,IranandQatarproducingover50%oftheglobalsupply.Thenaturalgasindustryreliesonhighlyenergy-intensiveprocessestoextract,processanddelivergastocustomers–nearlyalltheenergyusedisfossilfuel-based.Thecombustionofgas(scope3)releasesfourtimesmoreemissionsthanitsproduction(scope1and2).Includingscope3,naturalgasisresponsiblefor20%ofallman-madeGHGemissions.However,onlyafifth(4%oftotal)isdirectlyemittedbytheindustry–65%intheformofmethane.45%ofmethaneemissionsareinvoluntary(fugitive),and55%arepartofoperationalprocesses(vented).Inthebusiness-as-usualscenario,gasdemandisprojectedtoriseby30%by2050,withdevelopingcountriesinAfrica,theMiddleEastandAsia-PacificseeingasharpincreasewhileEuropeandtheUSremainstable.However,aligningwiththeIEANetZeroby2050requiresadecreaseinnaturalgasconsumptionby55%by2050,withthesharpestdropsinNorthAmerica(-55%),Europe(-96%)andAsia-Pacific(-71%).Scope3emissionsaside,thegasindustryneedstoaddressfoursourcesofemissions:fugitiveandventedmethane,energyusedinextraction,energyusedingasprocessingandenergyusedinliquifiednaturalgas(LNG)processes.Technologiesexisttoreduce70%ofmethaneemissionsatnoorminimalcosttotheindustry,consideringthemonetizationofcapturedmethane.Extraction,gasprocessingandLNGprocessescanbeelectrifiedwithlow-carbonpower,andCCUSisalsowell-placedtoprovideanalternativesolutionforgasprocessingemissions.Overall,knowntechnologiescanreducegasindustryscope1and2emissionsbyupto80%foraproductioncost7%higher.Besidesinvestinginproductionassets,suchtechnologieswillrequiremorethan$100billionofinfrastructureinvestmentsinlow-emissionpowergenerationandcarbontransportandstorage,assumingtheproductionlevelalignswithIEANetZeroby2050Scenario(moreifdemandishigher)–suchanamountisrelativelysmallcomparedtothemorethan$300billionspentintheupstreamoilandgasindustryeveryyear.Lowscope1and2emissionnaturalgascouldreachthemarketwithagreenpremiumofabout7%.Toincentivizeinvestments,demandsignalsforlow-emissiongasarecritical.Thereareencouragingsignsasthegreenpremiumforendconsumersisexpectedtorangefrom1-3%,arelativelysmallimpactthatmostendconsumerscouldeasilyabsorb.However,governmentswillneedtopreventpoorerhouseholdsfrombeinghitbyrisingcosts.Policymeasuresandinternationalcooperationonmethanefees,carbonpricing,emissionstandards,methanemeasurementandtrackingregulationscanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmoversintothelow-emissiongasindustry.Investmentstodecarbonizethegasindustryareestimatedat$110billionontopofbusiness-as-usualinvestments,i.e.approximately$4billionperyearuntil2050,whichisalsosmallcomparedtotheannualoilandgasindustryCapEx.Thebusinesscasetoinvestinlow-emissionassetsisincreasinglyattractive;however,strongerdemandandpolicyincentivesarerequiredtoaccelerateinvestments.Weemphasizefiveprioritiesforthesector:1Deployexistingtechnologiesatscaletodrasticallycutventedandfugitivemethaneemissions.2Boostthenumberoflow-emissionprojectstocontinuetoacceleratethelearningcurveanddrivecostsdown.3DeveloptherenewablepowercapacityandCO2transportandstorageinfrastructurerequiredtoenableelectrificationandCCUSforlow-emissionproduction.4Multiplydemandsignalsforlow-emissiongastoincentivizeproducersandinvestorstodirectcapitaltowardslow-emissionproductionassets.5Developpoliciestosupportthefourpreviousprioritiesandstrengthenthebusinesscaseforlow-emissiongasproduction.SteelCementAluminiumAmmoniaOilNaturalgas3.6In-depthindustryanalysisNaturalgasExecutivesummaryNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms85SteelCementAluminiumAmmoniaOilNaturalgasThenaturalgassectordirectlygenerates4%ofallman-madeemissions–65%inmethaneemissions.3.6.1NaturalgasperformancetrackerNaturalgasPerformancetrackerNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsWhatnaturalgasemits,capturesandoffsetsScope1,2,and3GHGemissions(GtCO2e)Scope3Scope1and2Includesscope1methaneemissions31.47.62.1TotalCCS(GtCO2e)TotaloffsetsDatanotavailable0.0285FulldataVisualClickheretoseethefulldata:86TechnologyPoliciesCapital+7%$20-30/tCO2e$110billionThelow-emissionproductiontechnologiesarelargelycommercialandcompetitivewithhighemissionalternatives.Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.Low-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.Productioncostincreaseforlow-emissionnaturalgas.Carbonpriceequivalentrequiredtolevelcompetitivelandscape.CapExrequiredtotransformindustryassetbaseby2050.Expectedyearofcommercialreadinessoffirstlow-emissionproduction.ReadinessstageReadinessstageReadinessstageKeymessages70%reductioninmethaneemissionscanoccurateffectivelynocosttooilandgascompanies(monetizationofcapturedmethane).Morethan$100billionisrequiredtoscalethenecessarylow-carbonpowerandCO2handlinginfrastructureoverthenext30years.Passingthe7%costincreaseofswitchingtolow-emissionproductionwilllikelyresultinaminorgreenpremiumof1-3%toendconsumers.Moredecisivepolicyactioncanincentivizegasplayersintolow-emissionproduction.$110billionisneededtodecarbonizegasproduction(scope1and2)inlinewiththeprojecteddemandofIEANetZeroby2050Scenario.Thegassectorbenefitsfromanimmediateopportunity:cuttingmethaneemissions.Moredecisiveactionisrequiredtoboostdemandandinvestmentsforlow-emissiongasproduction.3.6.2NaturalgasreadinesstrackerNaturalgasSummaryClickontheenablersbelowtofindoutmore.HomeSummaryInfrastructure$18-38billion$89billionThenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.Investmentsrequiredinlow-emissionpowergeneration.InvestmentsrequiredinCO2transportandstorage.ReadinessstageSteelCementAluminiumAmmoniaOilNaturalgasAvailableDemand+7%+1-3%Mostofthemarketcanpaytherequiredgreenpremium.Greenpremiumforlow-emissionnaturalgasbuyers.Greenpremiumforendconsumers.ReadinessstageNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms87Thelow-emissionproductiontechnologiesarelargelycommercialandcompetitivewithhigh-emissionalternatives.SteelCementAluminiumAmmoniaOilNaturalgasHomeSummaryDecarbonizationtechnologiesarelargelymatureandcompetitive,anddeploymentcouldleadonlytoa7%increaseinproductioncost.KeymessagesLow-emissiontechnologyiscurrentlyavailableandcouldresultina7%increaseinproductioncost.Fugitiveandventedmethanedrive65%ofnaturalgasemissionsacrosstheentirevaluechain.Reducingtheseemissionsisthequickestandmostcost-effectivewayfortheindustrytocutemissions.70%reductioncanoccurateffectivelynocostwhenalsoconsideringthevaluegeneratedfromrecoveredgas.DecarbonizationtechnologiesforgasprocessingandLNGincludeCCUSandelectrification,whicharealreadycommerciallyavailableandcanbedeployedatlittleincrementalproductioncosts.Sources:SustainableGasInstitute,IEA,WorldBank3.6.2NaturalgasreadinesstrackerNaturalgasTechnologyNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsWelldeliveryandproductionelectriﬁcation(available)Fugitivemethanecaptureandventingeliminationtechnologies(available)Carboncapture(available)LNGelectriﬁcation(available)MatureEarlyadoptionDemonstrationLargeprototypeSmallprototypeConcept1234567891011TechnologyreadinesslevelFulldataVisualClickheretoseethefulldata:88Thenecessaryinfrastructurerequiredbythelow-emissionindustryisemerging.HomeSummaryMorethan$100billionwillneedtobeinvestedinlow-carbonpowerandCO2handlinginfrastructuretoenablelow-emissiontechnologies.KeymessagesUndertheIEANetZeroby2050emissionscenario,naturalgasproductionisexpectedtodropfrom380to169Bcf/dfromtodayto2050.Thelow-carbonpowerandCO2infrastructurerequiredtodecarbonizetheremaininggasproductionisemergingandwillneedatleast$100billionofinvestmentsby2050.Nearly30MtofCCScapacityhasalreadybeendevelopedfornaturalgas.TheinvestmentrequiredtodecarbonizewillbeproportionatelyhigherifgasproductionlevelsdonotfalltotheIEANetZeroby2050Scenariolevels.Sources:GlobalCCSInstitute,IEA,Accentureanalysis3.6.2NaturalgasreadinesstrackerNaturalgasInfrastructureSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsLow-emission2powergenerationCO2transportandstorageCO218-38107-12789TotalInvestmentsrequiredforenablinginfrastructure($billion)FulldataVisualClickheretoseethefulldata:89Mostofthemarketcanpaytherequiredgreenpremium.HomeSummaryProducerscouldpassagreenpremiumof1-3%toendconsumers;however,governmentsshouldbecautiousofthiscostimpactonpoorerhouseholds.KeymessagesLow-emissionnaturalgas(scope1and2)doesnotexistinthemarkettoday(excludingtheuseofoffsets).Onceavailable,thegreenpremiumforwholesalegasbuyersisexpectedtobeabout7%.Passingthis7%premiumtoend-userswillresultinapriceincreaseof1-3%.Thelimitedpriceelasticityofdemandseeninrecentyearssuggestsbothwholesaleandend-usegasbuyerscouldtaketheseminorgreenpremiums.Still,governmentsshouldprotectthepoorerhouseholdsasnecessary.Sources:IEA,EIA,Refinitiv,Accentureanalysis3.6.2NaturalgasreadinesstrackerNaturalgasDemandSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsPerMMbtuofnaturalgas+7%changeinprice+$0.3+1%changeinprice+$2PerMWhofelectricityB2CGreenpremiumsMarketpenetration100%Low-emissionOther0%FulldataVisualClickheretoseethefulldata:90Limitedpoliciescomplementcurrentenvironment(technology,infrastructure,demand,capital),tosupportgrowthofthelow-emissionindustry.HomeSummaryPolicymeasurescanhelpcreateadifferentiatedandeconomicallyviablemarketforfirstmovers.KeymessagesPoliciesvarywidelyacrossgeographies;onlyexamplesofcriticalpoliciesthathavebeenrecentlyintroducedareincludedinthissection.Theabatementcostinthegasproductionvaluechainisthehighestforgasprocessing.Acarbonpriceof$20-30/tCO2eisrequiredtoincentivizelow-emissiontechnologyingasprocessing.Inadditiontocarbonpricing,methanefeescouldalsoincentivizeoilandgascompaniestoeliminatemethaneemissions.Sources:IEA,WorldBank,VariousgovernmentandUNreports,Accentureanalysis3.6.2NaturalgasreadinesstrackerNaturalgasPoliciesSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsMajorproducersandconsumersofnaturalgas(percentageofglobalproduction/consumption)5%8%24%22%6%6%China18%12%RussiaIranUS5%13%EuropeChina1.1-4.6Averagecarbonpricerequiredtoleveltheplayingﬁeldforlow-emissionproductionvsactualcarbonprices1($/tCO2e)25US0-18EU70FulldataVisualClickheretoseethefulldata:91Low-emissioninvestmentsgeneratesufficientreturnforaminorityofCapExtoflowtowardslow-emissionproductionassets.HomeSummaryApproximately$4billionisneededannuallytotransformtheindustryassetbaseby2050–insomelocations,returnsonlow-emissionassetsarealreadyattractiveforinvestments.Keymessages$110billionisneededtotransformcurrentproductionassetsintolow-emissionassets,inlinewithIEA2050NetZeroScenario’sdemandforgas.Returnsfromrecoveringfugitive/ventedmethanearesufficientforcompaniestotakeactiontoeliminateemissionsfrom43%ofassets,withregulationsinsomeregionsfurtherincentivizingemissionreduction.Oilandgascompaniesraised$380millioningreendebtin2020,afractionofthetotaldebtissued.$6.5billionforrenewableenergywasraisedinthesameperiod.Sources:Refinitiv,EIA,Accentureanalysis3.6.2NaturalgasreadinesstrackerNaturalgasCapitalSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms=AssetsandinvestmentsDebtissued(2020bonds)InvestmenttoPPEmultiple0.03Transformationinvestmentrequired$110billion$4.2trillionOther99.88%0.12%GreenbondsNon-greenbondsIndustrynetproperty,plantandequipment(PPE)FulldataVisualClickheretoseethefulldata:Net-ZeroIndustryTracker92AppendixAbbreviationsandacronymsContentsNet-ZeroIndustryTracker93A.1IndustryprocessoverviewAbbreviationsandacronymsContents94Steelisusedextensivelyinmanysectorsandhasnoscalablesubstitute.Itismanufacturedthroughenergy-intensiveprocesses,and50%ismadeinChina.SteelCementAluminiumAmmoniaOilNaturalgasA.1IndustryprocessoverviewSteelProcessoverviewSteelconsumptionCastingandfinishingSteelproductionIronproductionMining/scrapsortingIndustryboundaries–valuechainEndconsumersectors(global)SourceofemmissionsIronoreisamixtureofironoxides.Magnetite(Fe3O4)andhematite(Fe2O3)arethemostcommon.Scrapsteeliscollected,sortedandsentforremelting.Emissionscomefromdieselandfueloilcombustiontoextractandhaultheminedoreandwaste.Emissionscomefromtheelectricitygeneratedtorunsorting,crushingandgrindingequipment.Emissionscomefromtheuseofcokeasreducingagentandfuelcombustiontoheatandreducetheironore.Emissionscomefromtheuseofnaturalgasasreducingagentandfuelcombustionforheat.Ironoreisreducedtopigironinablastfurnaceat1400-1500oCusingcarbonasareducingagent.Inthedirectreducedironprocess,ironoreisreducedintoironusingareducinggasatahightemperature.Notapplicable.Inthebasicoxygenfurnace,oxygenisinjectedtolowerthecarboncontentofpigirontoproducethedesiredgradeofsteel(scrapisalsoadded).Reducedironismeltedinanelectricarcfurnacewithoxygeninjectiontoproducesteel.Scrapismeltedinelectricarcfurnaces,sometimeswithdirectlyreducediron.Emissionsmostlycomefromburningdissolvedcarboninthepigiron(hotmetal).Emissionscomefromtheelectricitygeneratedtoruntheelectricarcfurnace,electrodesconsumptionandslagformers.Emissionscomefrombothfuelandelectricityuseincastingandfinishing.BF-BOF1route(88%ofindustryscope1and2emissions)Scrap-EAF(8%ofindustryscope1and2emissions)DRI-EAF2route(4%ofindustryscope1and2emissions)Liquidmetalispurified,alloyedtospecificationandthencastintoslabs,billetsandblooms.Therearemorethan3,500differentgradesofsteelwithmanydifferentphysical,chemicalandenvironmentalpropertiesusedinvarioussectorsandapplications.Halfoftheworld’ssteelisusedtoconstructbuildingsandinfrastructure.Theothermajorconsumingsectorsareequipmentmanufacturing,automobilesandothertransport,andmetalproducts.Construction52%Transport17%Mechanicalequipment16%Metalproducts10%Others5%Notes:1Referstoblastfurnace-basicoxygenfurnace;2Referstodirectreducediron-electricarcfurnace.Sources:worldsteel,IEA,StatistaDescriptionNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms95–Rawmaterials(limestone,clay,marl)arequarriedandtransported.CementconsumptionCementgrindingClinkercalcinationRawmaterialpreparationQuarrying,crushingandgrindingCementisthesecondmostconsumedman-maderesourceintheworldafterwater;itsproductionreleasesbothenergy-related(40%)andprocess-relatedCO2emissions(60%).A.1IndustryprocessoverviewCementProcessoverviewIndustryboundaries–valuechainEndconsumersectors(global)DescriptionSourceofemissions–Emissionscomefromdieselandpowerusedfortrucksandotherheavyequipment.–Emissionscomefromtheelectricityusedtopowerheavymachinerytoblendmaterials.–Rawmaterialsarehomogenizedthroughanelectricgrindingmill,crushersandotherequipment.–Thelimestoneandclaymixtureisheated/sinteredinarotatorykilntoformclinker(1,300-1,450oC).Emissionscomefrom:–Energy(~40%):coalandpetcokearetypicallyburnttoreachtherequiredhightemperatures,releasingCO2.–Process(~60%):theheatingdecarbonizeslimestonetoformcalciumoxide(desiredproduct)andCO2,whichisreleasedintotheatmosphere.–Emissionscomefromtheelectricityusedformachineryanddieselfortransport.–Clinkerisfurthergroundintopowder,andotherconstituents(gypsum,blastfurnaceslag)areaddedtogivedifferentproperties,formingordinaryPortlandcement.–Cementispacked,thentruckedorshipped.Cementisusedasabinderforconcreteandotherconstructionmaterials(e.g.grout,mortar).Forconcrete,cementismixedwithwatertoformapastewhichbindstheaggregateformedbysand,gravelorcrushedstone,whichcanalsoberecycledfromconcretewastes.Onecubicmetreofconcreteconsistsofapproximately280kgofcement,175litresofwaterandtwotonnesofaggregates.Acrossallendusesofconcrete,alowerboundestimateisthatapproximately20%ofCO2releasedintotheatmospherecanbereabsorbedbyconcreteinarecarbonationprocess.1Infrastructure47%Structures45%Industrialequipment8%Notes:1Tier1oftheIVLmethodologyallowsfor20%uptakeintheusephaseofconcrete.Sources:IEA,OECD,SwedishEnvironmentalResearchInstituteCementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms96–Bauxiteisminedintropicalandsub-tropicalareassuchasAustraliaandtheWestIndies.–Aluminiumscrapissortedandthensentforremelting.AluminiumconsumptionCastingandsemisproduction(1%ofscope1and2emissions)Aluminiumproduction(82%ofscope1and2emissions)Aluminaproduction(16%ofscope1and2emissions)Mining/scrapcollection(1%ofscope1and2emissions)Aluminiumisusedextensivelyinmanysectorsandhasnoscalablesubstitute.Itismanufacturedthroughenergy-intensiveprocesses,and50%ismadeinChina.A.1IndustryprocessoverviewAluminiumProcessoverviewIndustryboundaries–valuechainEndconsumersectors(global)DescriptionSourceofemissions–Emissionscomefromdieselfuelandfueloilcombustiontoprovidetheenergyrequiredtoextractandhaultheminedore.–Emissionscomefromtheelectricityusedtorunmagnetsandothersortingequipment.–Emissionsduringtherefiningprocesscomefromfuelcombustiontogenerateheat.–Alumina(aluminiumoxide)isextractedfrombauxitethrougharefiningprocess.–Stepnotrequiredinsecondaryaluminiumproductionprocessusingscrapaluminium.–Primaryaluminiumisproducedbyanelectrolyticprocesscalledsmelting,whichreducesaluminiumoxidetoliquidaluminium.–Secondaryaluminiumisproducedbyremeltingaluminiumscrap.–Themajorityofemissionscomefromtheenergyusedtoproduceelectricityandheatforsmelting.Theremainingisreleasedduringtheconsumptionofcarbonanodes.–Emissionscomefromtheenergyusedtoheatscrapinremelting.–Emissionsincastingcomefromfuelcombustiontomeltaluminiumandfitintocasts.–Emissionsinsemi-finishedproductioncomefromfuelcombustiontoheataluminiumcastsalongwithelectricityrequiredtorunrollingandotherequipment.–Liquidmetalispurified,alloyedtospecificationandthencastintoingots.–Ingotscanbedirectlysenttoend-usersorturnedintosemi-finishedproductssuchassheets,strips,wires,tubes,plates,rodsandbars.Aluminiumisalightweight,corrosion-resistant,highlymalleableandinfinitelyrecyclablematerialwhichfindsusageinmultipleindustries.Halfoftheworld’saluminiumisusedintheconstructionandtransportsectors.Othermajorconsumingsectorsaremachinery,electricalequipmentandconsumergoods.Transport26%Construction24%Machinery11%Electrical11%Packaging8%Foilstock8%Consumerdurables6%Others6%Source:IEACementAluminiumAmmoniaOilNaturalgasSteelNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms97–Thefossilfuelindustryextractsnaturalgasandcoal.AmmoniaconsumptionAmmoniaproduction(~10%ofscope1emissions)Hydrogenproduction(~90%ofscope1emissions)NaturalgasandcoalproductionAmmoniaisacriticalfeedstockusedforfertilizersandotherchemicals.Itrequiresproducinghydrogenasamainprocess.A.1IndustryprocessoverviewAmmoniaProcessoverviewIndustryboundaries–valuechainEndconsumersectors(global)DescriptionSourceofemissions–Methaneemissionsarereleasedacrossthenaturalgasvaluechainandduringcoalminingoperations.–Energy-relatedemissionsintheextractionprocessalsocontributetoalesserextent.–Significantprocessandenergyemissionsarereleased:–Incoalgasification,coalisoxidizedwithwaterandoxygentoproduceCO2andH2.–Insteammethanereforming,naturalgasisreactedwithwaterreleasingH2andCO2.–Differentroutesexisttoproducehydrogen–commonroutesarecoalgasificationandsteammethanereforming(SMR),whilewaterelectrolysisisanascenttechnology.–ReleasedCO2maybecapturedtobeusedtoproduceurea(CO2andammoniacombination).–AtmosphericnitrogenisreactedwithhydrogentoformammoniaintheHaberprocess.–Ammoniaistransportedtobefurtherprocessedintofertilizerorindustrialchemicals.–Limitedemissionscomefromenergyrequirementstopowermotorsandequipmentforcompressionandcooling(theexothermicreactionitselfmaintainshightemperaturesof400-500oC).Mostammoniaisusedtomanufacturenitrogenfertilizers1(ureaisthemostcommon)orissoldtospecialitychemicalcompaniesforotheruses(e.g.explosives).Fertilizeristransportedanddistributedtofarmers,andemissionsarereleasedwhenfertilizerisapplied–CO2isreleasedwhenureaisapplied;additionally,excessivefertilizerleadstoN2Obeingreleased.Theagricultureindustrytransitioningawayfromureafertilizerwillleadtodecreasesinfertilizerscope3emissions.Nitrogenfertilizer-70%Industrialuses-30%Notes:1Fertilizerplantsmaybecollocatedwithammoniaandhydrogenproduction.Source:IEASteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms98–Oilwellsaredrilledtoextractoilandputonproductionusingeitherthenaturalpressureofreservoirorartificiallift.Oilproductsconsumption(fourtimestotalscope1and2emissions)Oilproductsdistribution(4%ofscope1and2emissions)Refining(34%ofscope1and2emissions)Crudetransportandstorage(6%ofscope1and2emissions)Welldeliveryandproduction(56%ofscope1and2emissions)Oilisusedextensivelyinmanysectors;itsproductionconsumesconsiderablefossilenergyandreleasesmethaneintotheatmosphere.A.1IndustryprocessoverviewOilProcessoverviewIndustryboundaries–valuechainEndconsumersectors(global)DescriptionSourceofemissions–Ventedandfugitivemethaneaswellasflaringarethetwomainsourcesofemissionsinthisphase.–Otheremissionscomefromenergyusedtopowerdrillingequipment,productionpumps,waterinjectionandtheuseofsteamandelectricity.–Pipelinepumpsandfuelsfortrucksandshipsgeneratethebulkofemissionsduringthisphase.–Extractedcrudeoilistransportedtorefineriesandstoragedepotsmostlyusingpipelines,sometimestrucks,andshipsincaseofinternationalmarinemovements.–Crudeoilisrefinedintoendconsumeruseproductssuchasdiesel,gasoline,jetfuelbyusingmultipleprocessesincludingdistillation,cracking,cokingandreforming.–Around70%ofemissionsinrefiningstagecomefromfuelcombustionforheating,andfromthedisposalofwastefuelgeneratedduringrefining.–Around30%processemissionscomefromcatalystregeneration,hydrogen,electricityandsteamproduction,withemissionsvaryingbytypeofcrudeoil.–Emissionscomefromthefueluseintransportation.–Afterrefining,oilproductsaredistributedtothegasstationsorairportsforenduse.Preferredmodeoftransportisgenerallyrailorroadtransport.Almosthalfoftherefinedoilisusedinroadtransportintheformofgasolineanddiesel.Aviationandshippingarethesecondandthirdbiggestusersofenergyproductsfromoil.Someoftherefinedoilproductsarealsousedfornon-energyusessuchasfeedstockforpetrochemicalsindustryorbitumenforroadsconstruction.Emissionsfromcombustion(scope3)arefourtimesscope1and2emissions.Roadtransport49%Non-energyuse17%Aviation8%Shipping8%Industry7%Residential5%Others5%Source:IEA,BPSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronyms99–Wellsaredrilledtoextractnaturalgasfromundergroundgasreservoirs.–Gascanalsobeproducedjointlyfromoilreservoirs(associatedgas).Naturalgasconsumption(fourtimestotalscope1and2emissions)LNG1processes(7%ofscope1and2emissions)Pipelinetransportandstorage(31%ofscope1and2emissions)Processing(33%ofscope1and2emissions)Welldeliveryandproduction(29%ofscope1and2emissions)Naturalgasisprimarilyusedasasourceofelectricalandheatenergy.Itsproductionconsumesconsiderablefossilenergyandreleasesmethaneintotheatmosphere.A.1IndustryprocessoverviewNaturalgasProcessoverviewIndustryboundaries–valuechainEndconsumersectors(global)DescriptionSourceofemissions–Mostmethaneemissionscomefromoperationalprocesses(vented)orinvoluntaryleaks(fugitive)inequipmentsuchasstoragetanksorcompressorseals.–Otheremissionscomefromenergyusedtopowerdrillingequipment,productionpumps,waterinjection,andsteamandelectricity.–CO2formsthebulkofemissions;itcomesfromfossilenergytoprocessgasandfromtheCO2presentinrawgasstreams.–Ventedandfugitivemethaneemissionscontributetoalowerextentinthisphase.–Rawnaturalgasispipedtoprocessingplantstoremoveimpurities,contaminantsandhighermasshydrocarbonsbeforeitisreadytobetransportedinpipelines.–Pneumaticpumpstransportprocessednaturalgasacrosspipelinesextendinglongdistancesdirectlytoconsumers.–Naturalgascanalsobestoredundergroundbeforefinalconsumptioninsomecases.–Ventedandfugitivemethaneemissionscontributetothebulkoftotalemissionsinthisphase.–Emissionsareenergy-related.Theenergy-intensivethermodynamicrefrigerationcyclesinliquefactionplantsarepoweredbynaturalgas.–Naturalgasisliquifiedinliquefactionplantsthroughcryogenicheatexchangebeforebeingtransportedinlargeshipsandre-gasifiedatthedestinationporttoexportnaturalgasacrossoceans.Powergeneration40%Industry25%Residentialandcommercial21%Oilandgasindustry10%Others4%Naturalgasiscombustedtogenerateelectricityandproducethermalenergy,withpowerplantstypicallyconsuming40%ofnaturalgas.25%ofnaturalgasisconsumedbyindustrialplants,withabout4%usedasfeedstockforchemicals,mainlyammoniaandmethanol.Source:IEASteelCementAluminiumAmmoniaOilNaturalgasNote:1Liquifiednaturalgas.Net-ZeroIndustryTrackerContentsAbbreviationsandacronymsNet-ZeroIndustryTracker100A.2IndustrydemandoverviewAbbreviationsandacronymsContents101KeymessagesDemandforsteelisprojectedtoincreaseby30%by2050intheMPPbusiness-as-usualscenario.TheMPPhighcircularityscenarioprojectsademanddecreasingby21%by2050andanincreaseincircularitytoachievenetzero.1India,South-EastAsiaandAfricaeconomiesareexpectedtoseethelargestincreaseindemandforsteel.Producingsecondarysteelfromscrapwillplayacrucialroleinreducingindustryemissions,itisfourtimeslessemissivethanprimarysteeltodayandcouldachievenearcarbonneutralityifpoweredwithgreenelectricity.Secondarysteelislimitedbyscrapavailability.Scrapshareinsteelmakingisexpectedtoincreasefrom30%todayto40%by2050inMPPbusiness-as-usualscenario,butitrisesto70%inthehighcircularityscenarioenabledbyalowerdemandandgreaterscraprecirculation.Todayaround85%ofsteelisrecycledattheendofitsusefullifecycle.Chinaisprojectedtoseeamajorjumpinsteelrecyclingdrivenbytheincreasedavailabilityofscrapsteelinthecountry.Sources:MPP(ETC),AccentureanalysisSteeldemandcouldrise30%by2050pulledbyIndia,AfricaandSouth-EastAsia.Recyclingwillbekeybutinsufficienttocurbindustryemissions.SteelCementAluminiumAmmoniaOilNaturalgasA.2IndustrydemandoverviewSteelDemandNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsCrudesteeldemandvsaveragerecycledcontent(Mt)AveragerecycledcontentCrudesteeldemand2050business-as-usualscenario240%2,545202030%1,950NetZeroScenario31,50770%2050FulldataVisualClickheretoseethefulldata:102Cementdemandcouldriseby45%by2050,buttheIEANetZeroby2050Scenariocallsforittoremainsteady.KeymessagesDemandforcementisexpectedtoincreaseby45%by2050inthebusiness-as-usualscenarioduetorisingpopulation,urbanizationpatternsandinfrastructuredevelopmentneeds,butaligningwiththeIEANetZeroby2050pathwayrequireslimitingdemandtotoday’slevels.WhileChinahastheexcesscementproductioncapacityandisexpectedtocutback,Indiaandotherdevelopingcountriesaresettoincreasedomesticproduction.Optimizingconcretedemandthroughefficiencyindesignandconstructionisacrucialleverinreducingtheneedfornewconcreteandcement.Sources:USGeologicalSurvey,IEA,GCCACementAluminiumAmmoniaOilNaturalgasSteelA.2IndustrydemandoverviewCementDemandNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsCementproduction(Mt)2050business-as-usualscenario16,0004,20020204,100NetZeroScenario22050FulldataVisualClickheretoseethefulldata:103Aluminiumdemandcouldrise80%by2050,partlypulledbytheneedsoftheenergytransitionitself–recyclingwillbecrucialbutinsufficienttocurbindustryemissions.KeymessagesDemandforaluminiumisexpectedtoincreaseby80%by2050intheIAIbusiness-as-usualscenariobutaligningwiththeIAI1.5DegreeScenariorequireslimitingtheincreaseto60%.Producingsecondaryaluminiumfromscrap(recycling)willplayacrucialroleinreducingindustryemissions.Recycledaluminiumismorethantentimeslessemissivethanprimaryaluminiumtodayandcouldnearcarbonneutralityifpoweredwithdecarbonizedelectricity.However,recycledaluminiumislimitedbyscrapavailability.Around75%ofaluminiumisrecycledattheendofitsusefullifecycle.Averagerecycledcontentintotalaluminiumproductionisprojectedtorisefrom34%todaytonearly50%by2050.Sources:IAI(demandpredictionsbasedonIAIReferenceScenarios),CRUCementAluminiumAmmoniaOilNaturalgasSteelA.2IndustrydemandoverviewAluminiumDemandNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsAluminiumdemandvsaveragerecycledcontent(Mt)AveragerecycledcontentAluminiumdemand2050business-as-usualscenario12019NetZeroScenario215054%17149%9534%2050FulldataVisualClickheretoseethefulldata:104Ammoniademandcouldriseby37%by2050.AligningwiththeIEANetZeroby2050Scenariorequireslimitingtheincreaseto23%.KeymessagesIncreaseddemandfornitrogenfertilizers,drivenbypopulationgrowthandhigherproteinconsumption,seesammoniaproductiongrow37%by2050inthebusiness-as-usualscenario(IEAStatedPoliciesScenario).AligningwiththeIEANetZeroby2050requiresalimitedincreaseofonly23%.Currently,productionisdominatedbyAsia-Pacific(47%),withChinaaloneaccountingfor30%ofglobalproduction.InIEANetZeroby2050,Asia-Pacificsharedeclinesto42%,withChinareducingto16%,Indiagrowingto15%,andSouth-EastAsiareaching8%oftotalproduction.Theammoniamarketcouldevolvedrasticallywiththeuseofblueorgreenammoniaasahydrogenfuelcarrierformultiplesectorssuchasshippingorthepowersector(notincludedinthisammoniaindustrytracker).Source:IEAA.2IndustrydemandoverviewAmmoniaDemandSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsAmmoniaproduction(Mt)2050business-as-usualscenario22532282020185NetZeroScenario32050FulldataVisualClickheretoseethefulldata:105Oildemandcouldincreaseby17%by2050pulledbyAsia-Pacific,AfricaandtheMiddleEast,butdemandmustdecreasesharplyfortheworldtoreachnetzero.1KeymessagesOildemandisprojectedtoincreaseby17%in2050intheIEAStatedPoliciesScenario.Whilethedemandindevelopedcountriesisexpectedtodecrease,theoverallnetincreaseindemandoriginatesfromtherisingneedsofdevelopingcountriesinAfrica,theMiddleEastandAsia-Pacific.TheIEANetZeroby2050pathwaycallsforadecreaseinoilconsumptionby73%,withthebiggestdropsrequiredintheUS(-82%),Europe(-90%)andChina(-74%).ShareofOPECinglobaloilproductionisexpectedtoincreasefrom37%to52%by2050(IEANetZeroScenario).Productionofsubstituteslikebiofuelsandsustainablesyntheticfuelsmustalsoincreasefromcurrent0.1thousandbarrelsofoilequivalentperday(mboe/d)to6.2mboe/dby2050toachievenetzero.Source:IEA,BPA.2IndustrydemandoverviewOilDemandSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsCrudeoildemand(Mb/d)2050business-as-usualscenario1103.0202087.9NetZeroScenario224.32050FulldataVisualClickheretoseethefulldata:106Naturalgasdemandcouldincrease29%by2050undertheIEAStatedPoliciesScenariobutwillrequireasteepdecreasefortheworldtoreachnetzero.KeymessagesIntheIEAStatedPoliciesScenario,naturalgasdemandisprojectedtoincreaseby29%in2050.WhiledemandinEuropeandNorthAmericaisexpectedtoremainstable,theincreaseindemandoriginatesfromtherisingneedsofemergingcountriesinAfrica,theMiddleEastandAsia-Pacific.However,aligningwiththeIEANetZeroby2050Scenariorequiresadecreaseingasconsumptionby55%,withthemostsignificantdropsrequiredinNorthAmerica(-55%),Europe(-96%)andAsia-Pacific(-71%).IntheIEANetZeroby2050Scenario,nonewoilandnaturalgasfieldsarerequiredbeyondthoseapprovedfordevelopment.ProductionisrelativelyconcentratedinafewmajorproducingcountriessuchastheUS,Russia,IranandQatar,representingover50%ofglobalproduction.Source:IEAA.2IndustrydemandoverviewNaturalgasDemandSteelCementAluminiumAmmoniaOilNaturalgasNet-ZeroIndustryTrackerContentsAbbreviationsandacronymsNaturalgasdemand(Bcf/d)2050business-as-usualscenario14952020380NetZeroScenario21692050FulldataVisualClickheretoseethefulldata:Net-ZeroIndustryTracker107ContributorsMuqsitAshrafSeniorManagingDirectorandLead,EnergyIndustrySector,AccentureRobertoBoccaHeadofShapingtheFutureofEnergy,MaterialsandInfrastructure,WorldEconomicForumDatasourcesProjectsponsorsProjectteamTrackerdatasheetAluminiumStewardshipInitiative,AluminiumForClimate,BloombergNEF,CRUGroup,DetNorskeVeritas(DNV),EnvironmentalProtectionAgency,EnergyInformationAdministration,EuropeanAluminium,GlobalCementandConcreteAssociation,GlobalCCSInstituteworldsteel,GreenSteelTracker,HARBORAluminium,InternationalAluminiumInstitute,InternationalEnergyAgency,InternationalFertilizerIndustryAssociation,InternationalRenewableEnergyAgency,LeibnizUniversityofHannover,Lightmetalage,LondonMetalExchange,MissionPossiblePartnership,OECD,PolishAcademyofSciences,Refinitiv,Statista,SustainableGasinstitute,S&PGlobal,SwedishEnvironmentalResearchInstitute,UniversityofGeorgia,UniversityofWyoming,USGeologicalSurvey,WorldResourcesInstitute,WorldBank,VariouscompanyreportsAccentureMaximeHavardSeniorManager,StrategyandConsulting,EnergyJonathanLowManager,StrategyandConsultingDavidRableyManagingDirectorandGlobalEnergyTransitionLead,OilandGasPankajSharmaManager,StrategyandConsultingWorldEconomicForumLuciaFuselliProgramAnalyst,Energy,Materials,andInfrastructurePlatformEspenMehlumHeadofEnergy,MaterialsandInfrastructureProgramme,BenchmarkingandRegionalActionHarshVijaySinghManager,EnergyTransitionBenchmarkingProgramme,Energy,MaterialsandInfrastructurePlatformStudioMikoLaurenceDenmarkCreativeDirectorMarthaHowlettEditorOliverTurnerDesignerClickheretoaccessdetailedsourcesforalldatapointsinthereportAbbreviationsandacronymsContentsNet-ZeroIndustryTracker108AdvisoryboardmembersMorganBazilianProfessorofPublicPolicy,DirectorofPayneInsititute,ColoradoSchoolofMinesLinBoqiangDean,ChinaInstituteforStudiesinEnergyPolicy,XiamenUniversityDominicEmeryChiefofStaff,bpRabiaFerroukhiDirector,Knowledge,PolicyandFinanceCenter,InternationalRenewableEnergyAgencyBertrandMagneSeniorEconomist,InternationalAtomicEnergyAssociationAndreaMercanteGlobalHeadofLong-termStrategy,EniJohnScottHead,SustainabilityRisk,ZurichInsuranceDavidVictorProfessor,UniversityofCalifornia,SanDiego(UCSD)RigobertoArielYepez-GarciaManager,InfrastructureandEnergyDepartment,Inter-AmericanDevelopmentBankExpertsMarleneArlensSeniorManager,Associations-EuropeandGlobal,HeidelbergCementPabloBarcenaHeadofCorporateStrategy,EcopetrolChrisBaylissDirectorofStandards,AluminiumStewardshipInitiativeJeremyBenthamVicePresident-GlobalBusinessEnvironment,ShellClareBroadbentHeadofSustainability,WorldSteelAssociationChristopheChristiaenData,Innovation,andImpactLead,OxfordSustainableFinanceProgrammeCedricdeMeeusVicePresident,GroupPublicAffairsandGovernmentRelations,LafargeHolcimAsaEkdahlHead,EnvironmentandClimateChange,WorldSteelAssociationCaroleFergusonManagingDirector,IndustryTrackerAraceliFernandezHeadofTechnologyInnovationUnit,InternationalEnergyAgencyAndrewGaddSeniorAnalyst,Steel,CRUGroupMatthewGrayCo-CEOandCofounder,TransitionZeroThomasGuillotChiefExecutive,GlobalCementandConcreteAssociationNatalieGuptaDirector,Bunkering,ValueChainPartnerships,YaraCleanAmmonia,YaraInternationalASAIkhwanHamzahBAzizanHead(CorporateProjects),CorporateSustainability,PETRONASSofiaHedevagVicePresident,Sustainability,GrängesABAnthonyHobleyCo-ExecutiveDirector,MissionPossiblePlatformDavidKearnsPrincipal,CCSTechnologies,GlobalCCSInstituteShivakumarKuppuswamyPolicyandImpactsDirector,ResponsibleSteelPeterLevi,EnergyAnalyst,InternationalEnergyAgencyClaudeLoreaCementDirector,GlobalCementandConcreteAssociationFelipeMacielDataManagementSpecialist,WorldSteelAssociationErikaMinkHeadofGovernmentAffairs,ThyssenKrupppPernelleNunezDeputySecretaryGeneral,Director,Sustainability,InternationalAluminiumInstituteFredericNyssenSeniorManager,CorporateStrategy,BASFSEFredericPicardDirector,ClimateChange,RioTintoAndrewPurvisDirector,Safety,Health,andEnvironment,WorldSteelAssociationAdamRauwerdinkSeniorVP,BusinessDevelopment,BostonMetalMattRogersCEO,MissionPossiblePlatformWanSayutiHead(StrategyandPolicy),PETRONASAndrewSpencerVPCorporateAffairs,SustainabilityandEnterpriseRisk,CemexSriyaSundaresanCo-CEOandCofounder,TransitionZeroEdgarVandeBrugProgrammeManager,ClimateAction,IKEAFoundationNandovanKleeffProgrammeManager,ClimateFinance,IKEAFoundationMatthewWenban-SmithPolicyandStandardsDirector,ResponsibleSteelMariaXimenaAlvarezBarrioDirector,ESG,EcopetrolAlexZapantisGeneralManager,AdvocacyandCommunications,GlobalCCSInstituteTheWorldEconomicForumacknowledgesandthankstheexpertswithoutwhosesupporttheNet-ZeroIndustryTracker2022editionwouldnothavebeenpossible.Thisreportdoesnotreflecttheviewsofthesecompaniesandindividuals.Expertadviceispurelyconsultativeinnatureanddoesnotimplyanyassociationwiththetakeawaysorconclusionspresentedwithinthisreport.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker109EndnotesEndnotesfromForewordandExecutivesummaryonly1.TheWorldBank,TotalPopulation(Country:World;Series:Population,Total;Time:2050),[Graph],https://databank.worldbank.org/source/population-estimates-and-projections.2.TheWorldBank,UrbanPopulation(Country:World;Series:UrbanPopulationTime:2050),[Graph],https://databank.worldbank.org/source/population-estimates-and-projections.3.Basedon:Kharas,Homi,TheUnprecedentedExpansionoftheGlobalMiddleClass,TheBrookingsInstitution,2017,https://www.brookings.edu/wp-content/uploads/2017/02/global_20170228_global-middle-class.pdf.4.InternationalEnergyAgency(IEA),WorldEnergyModel,StatedPoliciesScenario(STEPS),2021,https://www.iea.org/reports/world-energy-model/stated-policies-scenario-steps.5.“1.5DegreesScenario:AModelToDriveEmissionsReduction”,InternationalAluminiumInstitute(IAI),2021,https://international-aluminium.org/resource/1-5-degrees-scenario-a-model-to-drive-emissions-reduction/.6.IEA,TrackingIndustry2021,2021.https://www.iea.org/reports/tracking-industry-2021.7.Production-relatedemissionsonly.“SectoralAnalysis”,BreakthroughEnergy,n.d.,https://www.breakthroughenergy.org/go-deeper/sectoral-analysis.8.WorldEconomicForum,Accenture,FosteringEffectiveEnergyTransition2022,11May2022,https://www3.weforum.org/docs/WEF_Energy_Transition_Index_2022.pdf.9.AluminiumStewardshipInitiative,https://aluminium-stewardship.org/.10.ResponsibleSteel,https://www.responsiblesteel.org.11.IEA,AchievingNetZeroHeavyIndustrySectorsinG7Members,2022,https://www.iea.org/reports/achieving-net-zero-heavy-industry-sectors-in-g7-members.12.MPP,Net-ZeroSteelSectorTransitionStrategy,2021,https://missionpossiblepartnership.org/wp-content/uploads/2021/10/MPP-Steel-Transition-Strategy-Oct-2021.pdf.13.GlobalCementandConcreteAssociation(GCCA),ConcreteFuture–GCCA2050CementandConcreteIndustryRoadmapforNetZeroConcrete,October2021,https://gccassociation.org/concretefuture/.14.MissionPossiblePartnership(MPP),ClosingtheGapforAluminiumEmissions:TechnologiestoAccelerateDeepDecarbonizationorDirectEmissions,2021,https://missionpossiblepartnership.org/wp-content/uploads/2021/12/Closing-the-Gap-for-Aluminium-Emissions.pdf.15.“FirstMoversCoalition”,WorldEconomicForum,n.d.,https://www.weforum.org/first-movers-coalition.16.“BuyCleanCaliforniaAct”,CaliforniaDepartmentofGeneralServices,n.d.,https://www.dgs.ca.gov/PD/Resources/Page-Content/Procurement-Division-Resources-List-Folder/Buy-Clean-California-Act.AbbreviationsandacronymsContentsNet-ZeroIndustryTracker110AbbreviationsandacronymsAFCAluminiumforClimateASIAluminiumStewardshipInitiativeASTMAmericanSocietyforTestingandMaterialsATRAutothermalreformingAUDAustraliandollarBATBestavailabletechnologyBAUBusiness-as-usualBBLBarrelofcrudeoilBcf/dBillioncubicfeetperdayBECCSBioenergywithcarboncaptureandstorageBF-BOFBlastfurnace-basicoxygenfurnaceBoe/dBarreloilequivalentperdayBPBritishPetroleumBtBilliontonneCADCanadiandollarCapExCapitalexpenditureCCSCarboncaptureandstorageCCUSCarboncapture,utilizationandstorageCISCommonwealthofIndependentStatesCO2CarbondioxideCO2eEquivalentcarbondioxideDNVDetNorskeVeritasDRI-EAFDirectreducediron-electricarcfurnaceEAFElectricarcfurnaceEBITDAEarningsbeforeincometax,depreciationandamortizationEIAUSEnergyInformationAdministrationEPAUSEnvironmentalProtectionAgencyEScertsEnergysavingcertificatesESGEnvironment,socialandgovernanceETSEmissionstradingschemeEUEuropeanUnionGCCAGlobalcementandconcreteassociationGHGGreenhousegasesGJGigajouleGreenH2HydrogenproducedfromelectrolysisusingrenewableelectricityGtGigatonneorbilliontonneGWGigawattGWP100Globalwarmingpotentialover100yearsH2HydrogenIAIInternationalAluminiumInstituteIEAInternationalEnergyAgencyIFAInternationalFertilizerAssociationIRSInternalRevenueService(USA)kgKilogramsLDARLeakdetectionandrepairLMELondonMetalExchangeLNGLiquifiednaturalgasMb/dMillionbarrelsperdayMboe/dMillionbarrelsoilequivalentperdayMMBtuMillionBritishthermalunitMMcfMillioncubicfeetMnMillionMPPMissionPossiblePartnershipMPP(ETC)MissionPossiblePartnership(EnergyTransitionCommission)MRVMeasurement,reportingandverificationMtMilliontonnesMTPAMilliontonnesperannumMVRMechanicalvapourrecompressionN2ONitrousoxideNH3AmmoniaPPEPlant,propertyandequipmentR&DResearchanddevelopmentS&PStandard&Poor’sS1,S2,S3Scope1,scope2,scope3emissionsSDSIEAsustainabledevelopmentscenarioSMRSteammethanereformingSTEPSIEAStatedPoliciesScenariotMetrictonnetCO2TonnesofcarbondioxidetCO2eEquivalenttonneofcarbondioxideTnTrillionTRLTechnologyreadinesslevelUNUnitedNationsWACCWeightedaveragecostofcapitalWRIWorldResourcesInstituteBackContentsWorldEconomicForum91–93routedelaCapiteCH-1223Cologny/GenevaSwitzerlandTel.:+41(0)228691212Fax:+41(0)227862744contact@weforum.orgwww.weforum.orgTheWorldEconomicForum,committedtoimprovingthestateoftheworld,istheInternationalOrganizationforPublic-PrivateCooperation.TheForumengagestheforemostpolitical,businessandotherleadersofsocietytoshapeglobal,regionalandindustryagendas.

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