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27.09.2022 · Lukas Hermwille

Linking the Challenges of Industry Transformation from the Global to the Local Level

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The challenges of transforming the North Rhine-Westphalia (NRW), the industrial power-house of Germany, into the first climate-neutral industrial region in Europe were discussed recently at a two-day conference “Science meets Business” in Essen, Germany. Aptly, the conference, which was co-hosted by Wuppertal Institute, was held at the headquarters of ThyssenKrupp Steel, Germany’s leading steel manufacturer.

While many of the challenges discussed at the conference exist at the local level, the transformation does not happen in isolation. The success of industrial transformation in NRW also hinges on global developments. And, conversely, global decarbonization objectives will only be achieved if successful strategies developed in places like NRW can be replicated elsewhere.

Consequently, one of the plenary sessions was dedicated to the global context of industrial transformation. It discussed challenges and opportunities for trade, development and competitiveness. The session featured five international experts including key inputs from the NDC ASPECTS project.

Tiffany Vass, senior industry energy analyst of the Energy Technology Policy Division at the International Energy Agency, presented insights into the IEA’s work highlighting what needs to happen and what is already happening globally to achieve industrial decarbonization? According to her, a key strategy is to first push on incremental GHG reduction, especially in the next few years, while simultaneously working on breakthrough technologies so that they can be deployed from 2030 onwards.

Rana Ghoneim, lead of UNIDO’s Energy Systems and Infrastructure Division, highlighted that many promising technologies exist, but not yet at commercial scale. Their initial application is expensive and companies making such investments have to compete with others still using the old technology. UNIDO is working to create incentives by nurturing demand for green steel. A prerequisite for this is to adopt definitions for low-carbon steel, cement, etc. The UNIDO’s Industrial Deep Decarbonization Initiative (IDDI) is working to establish comparability of different standards developed by industry. But more importantly, they work with governments globally to leverage public procurement for green materials as a major source of demand.

Prof. Sebastian Oberthür of Vrije Universiteit Brussels presented research results from NDC ASPECTS. He highlighted that the international governance landscape is growing dynamically with ever more governance initiatives being created. Two areas still remain relatively underdeveloped: firstly, rules and standards deployed at international level including to avoid carbon leakage are still missing. Also, much is to be done on the topic of market creation and international standards and labels for green materials. And secondly, much more investment in technology cooperation is required as most growth of heavy industry sectors will happen in developing countries. A minilateral climate club bringing together the most important players in key industries may help to overcome this governance gap.

Hilton Trollip of the University of Cape Town made a very clear case for how decarbonization may become a driver for industrial modernization and development in his home country South Africa. Together with his colleagues and NDC ASPECTS partners he developed a concept to convert some of South Africa’s coal-based steel industry to a hydrogen-based producer of green primary iron utilizing the country's vast renewable energy potential. The green iron can then be exported to places like Europe and used there to produce final steel products drastically reducing carbon emissions there. Essentially, this would allow South Africa to export its sunshine embodied in an industrial intermediate product.

Finally, Dr. Markus Oles, Head of the Carbon2Chem Center of Decarbonization at ThyssenKrupp Steel, highlighted his company’s decarbonization commitments and strategies. To achieve climate neutrality by 2045, ThyssenKrupp is going to invest in hydrogen-based direct reduction units to replace its current blast furnaces. Residual CO2 emissions will be captured and handed over to the chemical industry as a raw material for production (Carbon2Chem).

The following discussions revealed the uncertainty about whether parts of the steel value chain will be relocated such as in the South African example, or whether hydrogen will become a global commodity and iron-making will continue in places like Duisburg, where ThyssenKrupp is currently producing in Germany’s largest integrated steel plant. Yet all panelists agreed that international cooperation can help to build partnerships, foster mutual capacity building, and ultimately shape zero carbon futures.

Lukas Hermwille is the Co-Head of Research Unit Global Climate Governance at the Wuppertal Institute for Climate, Environment, Energy (profile page)