Preparing For A Net-Zero Future: What Are The Options?

The year 2019 might well go into the history books as the moment that the world finally woke up to the threats of climate change. The U.K. government, for example, has ramped up its ambitions by legislating a net-zero target for 2050. While businesses have been aware of the need to act for quite some time, the net-zero target has significantly raised the urgency to act now and with more drastic measures. The alarm bells are going off in the boardrooms: climate change will be a major disruptor and business-as-usual is no longer viable. But what are the options for “deep decarbonization” and will these be viable any time soon?

The story so far

Much has been written about the greening of the electricity system by scaling up renewables, improving energy efficiency of buildings and the electrification of mobility for electric vehicles. Germany, for example, has decided to phase out all its coal-fired power plants by 2038—a bold decision perhaps but doable given alternative technologies have matured sufficiently to replace them. All major car companies are also now offering electric models or will launch them soon. Their share of total car sales is going up, so it’s fair to say a transition is under way.

But what about other parts of the economy with no obvious zero-carbon alternatives, such as heavy industry? Many industrial sectors simply do not have the options at hand to be fully independent of fossil fuels. For them, a zero-carbon economy still sounds like a green utopia. That’s why policymakers set targets for “net-zero” or “carbon-neutrality” sufficiently far into the future, hoping that technological progress will come to the rescue. But how realistic is this? Will “zero-carbon” be possible in heavy industry? And if the answer is no or not any time soon, where will the “net” of net-zero come from?  

Innovation is the way forward, but it’s not always met with open arms

Innovation is key to achieving zero-carbon. Electrification is most talked about as the solution for emissions from transportation. But what about electrifying cement or steel production? A large chunk of the carbon emissions in heavy industry comes from heat production. Replacing fossil fuels as feedstock would mean a change in the production processes by scaling up the use of electric furnaces, for example. Scenario analyses from McKinsey show that electrification of industrial processes could become cost-effective once the growth of renewables has sufficiently brought down the price of zero-carbon electricity. But this will be a long-term transition. Moreover, it will meet quite some resistance from industry as changing the production process is a costly and complex matter and not all processes can be electrified.

Viable alternatives

Fossil fuels are also used as feedstock for chemical processes, which means that electrification won’t feasibly be an option. Hydrogen will be a potential alternative here. Pilot projects are underway to use hydrogen instead of coke to extract steel from iron ore. Yet, producing “green hydrogen” also heavily depends on a massive increase in the generation of green electricity and thus won’t be cost-effective anytime soon.

Using natural gas for “grey hydrogen” production is more easily scalable, but this would beat the purpose of achieving net-zero. A more viable alternative will be “blue hydrogen” which still depends on fossil fuels but is now combined with carbon capture, utilization and storage (CCUS). Initiatives are under way to create zero-carbon hydrogen clusters, such as HyNet in the North West and H21 North of England, which both revolve around using hydrogen to replace natural gas for industry and homes.

Carbon removal technology

Clearly, innovation cannot happen without involving some form of compensation, at least in the mid-term. This is where the “net” of net-zero comes into play. CCUS is the obvious option, but not an easy one. It really depends on the location of industry to determine its viability because it’s reliant on underground storage being available. Industry is also looking into creating “negative emissions” using carbon removal technology. For example, companies like Carbon Engineering and Climeworks have developed “Direct Air Capture” technology that absorbs CO₂ from the sky and store it or use it for the production of synthetic fuel. This technology is not as dependent on location but also lacks sufficient scale—for now. Moreover, any carbon capture technology uses significant amounts of energy, so their real impact on achieving net-zero might be modest unless green electricity is involved in the process.

It’s vital we review all the options

But what climate campaigners are even more worried about is that any form of compensation would allow industry to continue business-as-usual. So long as unavoidable carbon emissions can be offset, a radical rethinking of industrial processes can be put on hold.

Ironically, the CO₂ that is captured is now used in the oil industry to extract more oil out of wells. Carbon removal could thus very well be extending the oil industry’s lifespan. Another worry is that pouring lots of money into such radical innovations like carbon capture, storage or removal is that it directs funding away from more immediate solutions such as renewables. While these worries are justified, starting the exploration of the technological options for “deep decarbonization” now through research and development and pilot projects is important, if even to establish what options will be viable, or not, and under what conditions.

The climate urgency is so pressing that casting a wide net to better understand what our options are to achieve a net-zero target seems wise.

Professor Jonatan Pinkse, executive director of the Manchester Institute of Innovation Research at Alliance Manchester Business School