Energy-intensive industries can help to tackle climate change, new report finds

Energy-intensive industries and the products they make can play a considerable role in the global effort to tackle climate change, according to a new report from the World Bank Group, CLASP and Carbon Trust.

Making them part of the solution while helping them stay competitive is a key challenge for policy makers, the report highlighted.

‘Climate-friendly technologies’

The report, A greener path to competitiveness: Policies for climate action in industries and products helps chart the way for industries to remain competitive while implementing greener, more climate-friendly technologies and strategies.

“The unprecedented task presented at COP21 in Paris to decarbonize globally introduces challenges but also enormous opportunities for industries as they seek a greener path to production while remaining globally competitive. Now is the time for companies and countries to act.” said Cecile Fruman, director of the Trade & Competitiveness Global Practice at the World Bank Group.

Industries contribute more than one-third of direct and indirect global greenhouse gas (GHG) emissions, according to the report. Certain sectors, including iron and steel, cement, chemical, and aluminium manufacturing, are the primary contributors to climate change due to their inherent requirement for large amounts of energy.

New technologies can be critical to industry efforts to reduce GHGs, but aren’t always cost effective. Technology solutions must be complemented by institutional frameworks and policies that counter competitive disadvantages.

‘Clean revolution’

Michael Rea, chief operating officer at the Carbon Trust, said: “If we are to meet our global ambitions on climate change then we need a clean revolution in industrial production. Taking the long view, there is an incredibly strong business case for the transition to a low carbon economy.

“Many of the technologies we need to achieve this already exist today. But to capture this value, it is imperative that governments and energy intensive sectors work together to put in place a market framework that will help to maintain competitiveness at the same time as delivering the step change in carbon emissions from industrial output which is both possible and necessary.”

A greener path to competitiveness recommends that industries continue to focus on cost-effective energy efficient options that have short payback periods, low transaction costs, and easy-to-access finance. While many of these options have been implemented by leading companies already, it is estimated that significant economic potential, around 60 percent, for future energy efficiency savings still remains.

To decrease GHG emissions while remaining competitive, the report calls on industry, government and consumers to also focus on technologies and interventions that are on the cusp of cost-effectiveness. Energy efficiency standards and labelling are one solution to reduce energy usage and GHG emissions. According to the report, adopting the most stringent minimum energy performance standard could reduce 9% of the global total energy consumption.

Comprehensive price on carbon

The report also suggests that governments should pursue policies such as removing distorting production subsidies or trade tariffs and putting a comprehensive price on carbon. Technology incentive programs can also be developed to find solutions that currently have a weak business case, for example, in the adoption of large-scale and capital-intensive carbon abatement technologies.

“The report shows that appliance energy efficiency policies can simultaneously reduce energy use and improve competition,” said Christine Egan, executive director and CEO at CLASP. “CLASP knows from years of experience that these policies are powerful tools for reducing energy use and greenhouse gas emissions and, therefore, are an essential part of any climate change mitigation strategy.”

This article was written by Liz Gyekye, editor of Biofuels International and Bioenergy Insight.