Market-driven decarbonisation: The role of demand-led innovation in supporting emission reductions in foundation industries

In the quest for a sustainable future, addressing emissions in foundation industries like steel, cement, and glass is crucial. A recent policy briefing by the Cambridge Institute for Sustainability Leadership (CISL) sheds light on the potential of demand-led innovation to accelerate decarbonisation in these core sectors. By fostering market demand for low-carbon products and materials, significant emissions reductions can be achieved.

The decarbonisation of the UK steel industry is a pressing need in the transition towards a sustainable future. To achieve this goal, strong demand-side signals and collaborative efforts across various sectors are required. This article delves into the innovative solutions and policy mechanisms that can support the effective and efficient decarbonisation of the UK steel sector.

Innovations for Decarbonisation:

1. Circular business models and supply chain collaboration: Maximizing material efficiency through minimalist designs, increased product lifetimes, and enhanced recycling can reduce steel demand significantly. To achieve this, new business models that prioritize closed-loop material circularity and foster collaboration across value chains are essential.

2. High-quality scrap recycling competence: The UK has a significant opportunity to leverage the scrap-EAF route for steel production. Investments in research and development for advanced scrap recycling technology can improve the collection, decontamination, and quality of scrap, thus enhancing the sustainability of steel manufacturing.

3. Renewable energy capacity and industrial process flexibility: Shifting from fossil-based thermal energy to renewable electricity poses challenges in managing variable energy sources. Developing energy storage solutions and enhancing industrial process flexibility are crucial to effectively integrate renewable energy into steel production processes.

4. Scaling up IOW-CO2 (Iron Ore-Reduction with Carbon Capture and Storage) technologies: Investment in low-carbon steel production projects is necessary to validate their viability and build investor confidence. Embracing hydrogen-based Direct Reduced Iron (DRI) processes, such as the H2-DRI-EAF route, can significantly reduce emissions and contribute to cost-effective steel production.

5. Establishing transnational green steel supply chain alliances: Collaborating with countries at the forefront of low-carbon steel production can facilitate the offshoring of certain steel production processes while ensuring adherence to emission standards and fostering trade relationships.

Policy Recommendations:

1. Targeted procurement policies: Governments and private sector clients must prioritize the procurement of low-carbon steel, considering embodied carbon values. Mandating the use of low-carbon steel in infrastructure projects and implementing measures to protect the local industry against cheap imports are crucial steps.

2. Consistent, cross-border carbon pricing: A level playing field for steel producers can be achieved through a consistent carbon price mechanism. Domestic climate policies should also consider trading partners to ensure competitiveness and prevent carbon leakage. Implementing a Carbon Border Adjustment Mechanism (CBAM) could impose penalties on imported products based on their embodied carbon content.

3. Fair and visible lifecycle emissions accounting: Standardizing global emissions accounting methods and enforcing embodied carbon certification within steel products are essential. Transparent supply chain information should be made publicly available, ensuring a comprehensive understanding of the emissions associated with steel production.

4. Capping industrial electricity tariffs: To enhance competitiveness and enable sustainable steel production, fair pricing of electricity is crucial. Reforming the electricity market and providing affordable renewable energy supply will support the transition to electricity-intensive steelmaking processes.

The decarbonisation of the UK steel industry requires a comprehensive approach that encompasses both innovative solutions and supportive policy measures. By embracing circularity, renewable energy, advanced technologies, and collaborative alliances, the steel sector can embark on a sustainable path, reducing emissions and promoting a low-carbon economy.

Flats | Domestic | Apr 23, 2021

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