Moving European industry towards a net-zero economy – addressing the Innovation gap

Transitioning to a prosperous and decarbonised European economy will require heavy lifting from European industry. Starting the conversation about challenges ahead and ideas for overcoming them is critical for getting Europe on the path to net-zero. Innovation will be central for limiting warming and ensuring a safe operating space for business, society and the environment.

Climate change is the biggest threat to humankind. For the first time in history, we have a global framework for averting the worst of the climate crisis.

In 2015, the Paris Agreement outlined global aspirations for driving GHG emissions down to limit global warming to well-below 2°C, with efforts to keep warming to 1.5°C. Since then, over 195 countries have signed the Agreement – and are working to progress on their initial targets, while increasing ambition for stronger targets in the runup to 2020.

Factory emitting pollutants (credit Patrick Hendry/Unsplash)

It’s no secret that getting the whole world on board and moving in the right direction has been, and continues to be, a major challenge.

To bring the global economy in line with the objectives of the Paris Agreement, businesses, governments and civil society must work together, fostering innovations to mitigate the adverse impacts of climate change. Doing so is the only way to ensure economic growth and prosperity. Industry will be a critical component of success – in the EU and around the world.

According to the UNFCCC, industry represented 21% of the EU’s total GHG emissions in 2016. In addition, electricity consumption in European industries accounts for 36% of total consumption, indicating high level of indirect emissions. These facts indicate that industry could hold the key to driving emissions down across the entire EU, and in turn, around the world.

The recent report commissioned by the European Climate Foundation, “Industrial Transformation 2050 – Towards an Industrial strategy for a climate neutral Europe,” highlights the importance of heavy industry in Europe’s journey towards net-zero and sketches out a blueprint for an industrial strategy towards climate neutrality. The report aims to adopt an integrated structure that scrutinises a broad set of policy instruments and provides ideas for making these as tangible as possible.

Industrial Transformation 2050 Report (credit European Climate Foundation)

In addition, the research illustrates that transforming Europe’s basic materials industry to climate neutrality within 30 years will be a substantial task, particularly when accounting for the long investment cycles of these industries. This transition will happen in a highly competitive and dynamic international environment, with many of the basic materials industries being part of a global market.

The report seeks to address the key challenges for basic materials industries and their value chains to successfully move ahead with such a transition. It stresses that innovation will be a defining element of the transition to net-zero emissions by 2050, but that innovation gaps from basic research and development (R&D) towards the deployment of new technologies must be addressed.

The report finds that there’s been important progress in research and development (R&D) around new industrial processes with significantly lower CO2 emissions. This already allows the identification of the most relevant technology pathways for an industrial climate-neutral transition.

However, there are still important basic R&D challenges to be addressed. These include developing enabling technologies that would allow important progress across different industries, as well as demand side innovation which could encompass new business models, digital solutions for material flows tracking, automation of materials handling, dismantling end-of-life products and new lead markets for low-CO2 products.

Innovation challenges therefore apply not only to specific industries but to the wider value chains that rely on them. They also extend to the energy system in place which will feed them.

The DEEDS-project (DialoguE on European Decarbonisation Strategies) Industry workshop taking place in Brussels on 13 May, coordinated by the World Business Council for Sustainable Development (WBCSD), will focus on the innovative solutions needed to achieve long-term decarbonization of the European Union, with a particular focus on heavy emitting sectors such as steel, cement and other hard-to-abate sectors. It will consider how certain policies and investments could accelerate and scale the deployment of suitable solutions.

 

By Karl Vella, World Business Council for Sustainable Development (WBCSD)