This is an extract from a recent paper “Transitioning Industrial Clusters towards Net Zero: National Policy Enablement for Industrial Decarbonization – Part II” published by the World Economic Forum.
Industrial clusters have become a focal point for governments worldwide, leading to a rise in initiatives to tackle industrial carbon emissions. Government commitment and institutional alignment serve as key enablers for accelerating action. It is observed that EU policies, such as the Carbon Border Adjustment Mechanism, have a strong influence on industrial decarbonization in other nations including the United Arab Emirates, Brazil and South Africa. Among countries in Asia, Japan and India are leading in terms of policy frameworks for hydrogen. Meanwhile, in emerging economies, policy frameworks for carbon capture, utilisation and storage are still in the early stages of development. With the diversity in policy emphasis, it is critical to note the importance of the local context in each country’s transition journey and to read this paper with due respect and consideration of this dimension.
This paper reviews the legislated policies driving industrial decarbonization in a selection of ten nations across the Americas, Europe, Asia-Pacific, Middle East and Africa, as well as the enabling mechanisms to promote a collaborative, market oriented industrial clusters approach.
In this extract we specifically focus on the European countries of Sweden and Portugal:
Sweden
Sweden’s decarbonization efforts will focus on the industrial and transport sectors to meet 2045 goals. Sweden’s electricity and heating sector is predominantly fossil-free, given the country’s early adoption of carbon-neutral resources. As a result, the focus for decarbonization now rests on the industry and transport sectors.
In 2020, Sweden launched an ambitious target of becoming a “fossil-free welfare state by 2045”, targeting net-zero emissions for the entire economy. For its industrial sector, representing about 40% of total final energy consumption and about 30% of total CO2 emissions, the target is to have negative emissions by 2045. This would entail a reduction of more than 16 Mt CO2 . Twenty-two industries have already provided roadmaps for going fossil free or climate-neutral by 2045 via electrification, biofuels, circularity and energy efficiency measures. The development of the fossil-free roadmaps was overseen by Fossil Free Sweden, a government initiative led by a national coordinator, facilitating a bottom-up sector-led effort, mostly through industry associations. This spotlights the importance of industrial associations and their role in facilitating a highly collaborative approach towards the development of sector decarbonization roadmaps.
Existing industrial clusters provide an established ecosystem for expanding the scope of industrial symbiosis and support economic value creation. For instance, increased integration of the energy system between industrial facilities within the Stenungsund industrial cluster alone could represent cost savings of approximately SEK 200 million.
Sweden’s clean energy policy development: The oil crisis of the 1970s led Sweden to adopt less carbon-intensive sources in its power sector. Biomass is the main mode of decarbonization in the heating and industry sectors due to the prevalence of district heating networks and abundant access to biomass from forestry. At the Stockholm+50 meeting in June 2022, Sweden reinforced its commitment and focus on decarbonization. Industrial clusters present sizable economic and decarbonization opportunities in Sweden to achieve national targets, primarily through expanding the scope of industrial symbiosis within established ecosystems. Energy-intensive industries such as steel, cement and concrete have identified electrification as one of the key means of achieving carbon neutrality in their respective industry roadmaps.
Industriklivet “Industrial Leap”, 2018: The “Industrial Leap” made available a total of €80.6 million in 2022, and projects that run until 2029 can be funded. These funds support feasibility studies, research, pilot and demonstration projects and investments to reduce GHG emissions, contribute to permanent negative emissions and influence other sectors of society to achieve the 2045 climate neutrality goals. Supported areas of exploration include improving the efficiency of industrial processes, negative emissions and “strategically important” industrial initiatives focused on new low-emissions technologies with applications outside of heavy industry. This policy is part of the European Recovery and Resilience Facility as well as the NextGenerationEU transformation programme. It is set to support Sweden’s alignment with national and European net-zero targets.
Strategy for fossil free competitiveness, 2020: This policy outlines roadmaps for 22 industries to transition to fossil-free or climate-neutral operations by 2045. It sets ambitious targets for industrial clusters, including for the heating sector to become fossil free by 2030 and the goal of generating 3 GW of electrolysis-powered hydrogen by 2030, with a subsequent target of 8GW by 2045. Many proposed initiatives by Fossil Free Sweden need to be implemented before the European Hydrogen Backbone infrastructure reaches Sweden by 2030.
Portugal
The Portuguese industrial sector is rapidly moving forward to reduce its emissions by 30% to achieve GHG emissions targets by 2030. The latest data from the Portuguese Environment Agency show that Portugal is meeting its progressive reduction targets for GHG emissions. GHG emissions without land use, land-use change and forestry (LULUCF) totalled around 56.5 Mt CO2 equivalent (Mt CO2 e) in 2021, 2.8% less than the previous year and 34.8% less than in 2005.
Portugal has made significant progress in its net zero ambitions, driven by government funding in green hydrogen initiatives and decarbonization of the industrial sector. The government sees industrial clusters as an opportunity to scale up renewable gas and has allocated capital to support the development of these projects. With access to European funding to further increase from 2025, Portugal should see its Portuguese Recovery and Resilience Plan pay off in its support for renewable gas production and decarbonization. The government plans to allocate €185 million towards green hydrogen production and €715 million towards decarbonization of industry from 2021-2029. Efforts to decarbonize industry and move towards a more sustainable future will drive significant economic and environmental impact as renewable energies are projected by 2050 to meet emissions neutrality goals.
Portugal’s clean energy policy development: The Portuguese government has aligned with the Paris Agreement and embraced ambitious European emissions reduction goals, taking proactive steps to make catalysing funding accessible in the marketplace. There are no national funding mechanisms for carbon capture investments yet, but increasing support for hydrogen, renewable gas and industrial decarbonization has been provided by the National Energy and Climate Plan (PNEC), with financial support through the Portuguese Recovery and Resilience Plan.
Portuguese Recovery and Resilience Plan (PRRP): The Portuguese Recovery and Resilience Plan (PRRP) is a nationwide programme until 2026 that will implement a set of reforms and investments (€16.6 billion), allowing the country to resume sustained economic growth. The PRRP highlights the investment of €3.06 billion in energy transition, with €370 million in hydrogen and renewables, of which €185 million are allocated to hydrogen and renewable gases, and €715 million in industry decarbonization. The PRRP execution is under way, with 10% of the funds committed to energy transition already having been distributed. Selected technology demonstration projects to be funded within the hydrogen and renewable gases allocation include electrolysis, thermochemical/ hydrothermal, biogas enrichment and methanation. Further to hydrogen market maturity, a target of 264 megawatts (MW) in renewable gas production capacity was defined.
Access the paper here.
