EU 'ignoring' industry climate-neutral technology

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The EU must shift its focus to investments in climate-neutral technology in the steel, cement and chemical industries if it is to achieve its climate goals, energy think-tank Agora Energiewende said in a report published this week.

The European Commission recently recommended raising the bloc's greenhouse gas (GHG) reduction target for 2030 to 55pc compared with 1990 levels, from 40pc currently. The EU is also expected to enshrine into law a goal to reach net zero emissions by 2050.

But the EU's lack of discussion about climate-neutral technologies for energy-intensive industries is "jeopardizing its long-term climate goals", Agora said.

"The European Commission has so far almost completely ignored the use of climate-neutral technology in steel, cement and chemical factories," instead focusing on implementing process efficiency at conventional plants, Agora said.

Investments in climate-neutral technologies by energy-intensive industries covered by the EU's emissions trading system (ETS) could reduce the bloc's CO2 emissions by 145mn t by 2030, according to Agora, surpassing the 140mn t reduction needed across these sectors for the EU to achieve its 55pc GHG cut target.

In the steel industry, coal-fired blast furnaces could be replaced at the end of their operational life with direct reduction plants, which could at first run on natural gas and later transfer to climate-neutral hydrogen, Agora said.

And in the chemical industry, electrical heat generation could be used in place of natural gas-fired boilers. While a carbon capture and storage infrastructure is "crucial" to achieving climate-neutral production in the cement sector.


Immediate investment

But companies must start investing in such technology now if EU climate goals are to be achieved, or risk opening unsustainable conventional factories with long life spans that will become stranded assets by the 2040s, Agora said.

The think-tank is urging the EU to put support in place for climate-neutral investment, warning that failure to do so is likely to lead to carbon leakage.

"Industrial companies are showing increasing interest in climate-neutral technology. What they lack is framework conditions for a climate-neutral business model. It is up to the EU to create such a framework for investment in climate-neutral innovation," Agora deputy director Frank Peter said.

"Under current conditions, there is a high probability that they will shift their investments to countries with lower environmental requirements. As a result, industrial emissions elsewhere will increase, and European industrial sites will close."

Cement clinker production generated around 7.6pc of total verified emissions under the EU ETS last year. Steel production accounted for 6.4pc, while bulk chemicals made up 2.1pc.

By Victoria Hatherick

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