Allianz+绿色工业革命-欧洲工业部门脱碳的投资途

PhotobyAntRozetskyonUnsplash

04

Thestartingpoint

21

Aluminumindustryandothernon-

ferrousmetals

08

Theoptionsforthenet-zerorace

24

Foundries

12

Cementindustry

andothernon-

metallicminerals

27

Pulpandpaper

15

Chemicals

30

Food,drinkand

tobacco

18

Iron,steeland

aluminum

AllianzResearch

05April2023

Thegreen

industrialrevolution

InvestmentpathwaystodecarbonizetheindustrialsectorinEurope

AllianzResearch

2

Executive

Summary

MarkusZimmer

SeniorEconomistESG

markus.zimmer

@

ArneHolzhausen

HeadofInsurance,WealthandTrendResearch

arne.holzhausen

@

PatrickHoffmann

ResearchFellow

•Theindustrialsectorisresponsibleforroughlyonequarterofglobal

greenhouse-gas(GHG)emissions.Amixofmeasures,includingenergy-

efficiencyimprovements,usinghydrogenandbiomassasfeedstockor

fuel,producingheatthroughelectricmeansandadoptingcarbon-capturetechnologies,canreducethesector’scarbondioxideemissionstoalmostzero.Todecarbonizetheindustrysectorgloballywillrequirecumulative

investmentsofEUR2.7trnuntil2050.Ofthis,theEUneeds8%orEUR210bn,andhalfofthisforelectrificationinvestmentsalone.Therestisalmost

equallysplitbetweenhydrogenuse,innovativeproductionprocessesandnewtechnologies.Additionally,atEUR330bnuntil2050,theEUindustry’stotalinvestmentneedsforcarboncaptureandstorage(CCS)arealmost60%higherthantheinvestmentsinallotherindustrydecarbonization

measurescombined.

•Tomeettheseneeds,theEU28countriesneedtoinvestEUR3bnperyearbetween2020and2030,andEUR9bnannuallyfrom2030to2050,whentechnologieswillbereadyforfull-scaledeployment.Thepulp&paperindustryrequiresthelargestoverallinvestments–EUR78.4bnuntil2050

–followedbyiron&steel(EUR55.4bn)andcement(EUR37.6bn).Theseinvestmentswouldcutemissionsby265MtCO2(-92%),whichyieldsanaverageabatementinvestmentofEUR790pertCO2.

•Inthiscontext,governmentsshouldusetheinstrumentsattheirdisposal(e.g.subsidies,carbontaxes)toeffectivelyalignsectorpathwayswith

overarchingnet-zerotransitiongoals.

StefanLandau

ResearchAssistant

stefan.landau

@

AnandPamar

ResearchAssistant

anand.pamar

@

3

BilllionEUR

0

05April2023

Figure1:Investmentneedsintheindustrysectortoachievenet-zeroemissionsintheEU28

120

Others

100

Paperandpulp

Non-metallicminerals

80

Non-ferrousmetals

60

Ironandsteel

Foundries

40

Chemicals

20

2030

2050

Sources:IndustryPLAN,AllianzResearch.Note:BATreferstobestavailabletechnologies.IncludesEU+UK.SeeAppendixfordecompositionofinvestmentsbycountry.

Whatdoesittaketolimitglobalwarmingto1.5°C?

Checkoutourfivesectorpathwaysalreadypublished:

Thegreatgreenrenovation:buildingssectortransitionpathway

ACarbonfarming:Atransitionpathforagriculture&forestry

TheEUutilitytransition:Apathwaypoweredbysolarandwind

Jostlethecolossalfossil:Apathtotheenergysectortransition

TransportinazerocarbonEU:Pathwaysandopportunities

AllianzResearch

4

PhotobySolonUnsplash

Thestartingpoint

Overthepastfewdecades,theindustrysectorhas

madesignificantprogresstowardsreducingits

emissionsandimprovingenergyefficiency.By2010,Europeanindustryalonehadreduceditsemissionsby-29%,andby-39%by2020comparedto1990levels.¹Despiteintenseinternationalcompetition,Europeanindustryhasmanagedtoadjustitsbusinesspracticesandmodelstoalignwiththecontinent’sclimateandenergygoals,allwhilemaintainingaviableeconomicapproach.

Nonetheless,thesectorisstillresponsiblefor650MtofCO2emissions–withCO2accountingforover90%of

directGHGemissionsfromindustryin2020.Thecement,ironandsteelandchemicalssectors(seeFigure2)arethelargestcontributorstoCO2emissionsandindustrialenergyconsumption:Thethreesectorsgeneratedthree-quartersofindustrialemissionsintheEU-28in2020.

¹

EEA(2021).Dataviewerongreenhousegasemissionsandremovals

5

Othermachinery&equipment

Motorvehicles

2%

1%

Other

manufacturing

2%

Electricalequipment,

electronics,optics1%

Fabricatedmetal2%

Textiles1%

Basic

pharmaceuticals1%

Rubber&plastic

products

2%

05April2023

Figure2:EU-28industrialCO2emissionsin2020

Food,beverages,

tobacco

9%

Pulp,paper

5%

Chemicals

22%

Cement&non-metallic

minerals

28%

Other

12%

Iron&steel

22%

Aluminum,non-

ferrousmetals

2%

Sources:Eurostat,AllianzResearch(excludingemissionsfromrefineries).

Toaddtothis,allthreesectorsalsoproducesizeable

processemissions,rangingfrom25%to50%(seeFigure3).Thismattersbecauseindustrialprocessemissions

areparticularlyhardtoabate.Asaconsequence,eveninthenet-zerotransitionscenario,onlythree-quartersoftheseemissionsareexpectedtobeavoidedinthe

EU.Incontrast,otherindustrialsectorssuchasfoodandtobacco;paper,pulp,andprintandnonferrousmetals,

generatemainlyindirectanddirectemissions(Figure3),

withtheformerresultingmostlyfromcentrallyproduced

electricityandthelattermostlyfromheatgeneration.Thesearemoreorless“automatically”reducedbydecarbonizingenergyandheatgeneration.Forexample,nearly55%

ofCO2emissionsinthesesectorsresultfromtheuseof

centrallyproducedelectricity,primarilyfromnaturalgasandcoalforlow-andmedium-temperatureheatdemand.

6

GtCO2peryear

AllianzResearch

Figure3:GlobalCO2emissionsindifferentindustriesbyemissionsource(inGtCo2/yr)

0.90.7

2

0.5

0.8

0.3

1.3

0.3

1.1

0.1

0.3

3.6

2.9

0.1

0.1

0.1

0.1

Cement,

othernon-

metallic

minerals

IronandChemicalsOther

steelindustries

(incl.con-struction)

Processemissions

Indirect,machinedrive

andotheremissions

High-temperatureheat

(>500°C)

Medium-temperature

heat(100-500°C)

Low-temperatureheat

(<100°C)

Directemissions(mostly

heat)

Sources:

McKinsey(2018),

AllianzResearch.

Figure4illustratesthegargantuantaskofbringing

theindustryinlinewiththenet-zeropath:By2050,

emissionsmustbereducedby92%,withsomesectorsevengeneratingnegativeemissions,i.e.capturingmoreCO2emissionsthantheyproduce.ThefigurecomparestheNetworkforGreeningtheFinancialSystem(NGFS)

projectionswiththeEuropeanCommission(EC)

assessmentfortheEUGreenDeal.Thetwosourcesusedifferentdefinitionsfortheboundariesofthesectors

shown,aswellasfortheallocationofprocessemissionsandenergyemissions.Asaresult,thesectoralemissionsdifferandtheNGFSbaselineisslightlyhighersince

theOtherIndustriescategoryisbroader.Thetrendforfollowinga1.5°Cpathissimilarinbothassessmentsandnetemissionsin2050arecomparableaswell,

thoughNGFSexplicitlyreportsnegativeemissions.

Figure5showsthedevelopmentofthefinalenergyuseintheindustrialsectorsindifferentscenarios.Whiletherelativecompositionbetweenindustriesisnotexpectedtochangedramatically,cement,steelandchemicals

areexpectedtohavelowerenergy-savingpotential

thantheotherindustries.By2050,finalenergydemandintheCurrentPoliciesscenarioisexpectedtoincreaseby+14%relativetothe2020baseline,whileitisprojec-tedtodecreaseby-35%intheNetZero2050scenario.

MtCO2/year

NGFSBaseline

ECBaseline

NGFSCurrentPol.

ECCurrentPolicies

NGFSBelow2°C

NGFSNZ2050

ECNZ2050(MIX)

NGFSCurrentPol.

ECCurrentPolicies

NGFSBelow2°C

NGFSNZ2050

ECNZ2050(MIX)

EJ/yr

-100

2050

2020

0

05April2023

Figure4:EUindustrialCO2emissionsscenariocomparison

700

600

500

400

300

200

100

0

Otherindustries(NGFS)

Otherindustries(EC)

Textiles

Engineering

Food,beverage&tobacco

Pulp,paper&printing

Non-ferrousmetals

Cement,othernon-met.m.

Chemicals

Iron&steel

Processemissions

2030

Sources:NGFS,EuropeanCommission,AllianzResearch.

Figure5:Finalenergyusebysectorandscenario

Cement

14

Chemicals

Steel

12

Other

10

8

6

4

2

Baseline

2020

CurrentPolicy

Below2˚C

2030

1.5°CNetZero

CurrentPolicy

Below2˚C

2040

1.5°CNetZero

CurrentPolicy

Below2˚C

2050

1.5°CNetZero

Sources:NGFS,AllianzResearch.

7

8

PhotobyClaytonCardinalliUnsplash

AllianzResearch

Theoptionsfor

thenet-zerorace

Thedifferentoptionsfordecarbonizationcanbe

broadlygroupedtogetherunderenergyefficiency,

fossil-fuelsubstitutionthroughsustainablefuelsor

electrificationandCCS.However,energyefficiency

andelectrificationoftengohand-in-handsince

theyarethetwosidesofthesamecoin.Takeheat

pumps,forexample,oneofthemaintechnologiesforelectrification,whichincreasetheefficiencyofenergyuseaswell.Whenevercoolingisneeded,heatwill

becreatedasaby-product,andtheoppositeistrueaswell.Heatpumpsmakeuseofthisrelationship

andreducewastedenergyinheatingorcooling

processes.Whiletheyarecurrentlyrelativelycommoninresidentialsettings,theyarefarlessestablishedforindustrialpurposes.Largeindustrialheatpumps(IHP)canrunonrenewableenergyorsourcewasteenergyfrombuildingsandprocesses.Theycanbeinstalledin

thermalprocesses,forexampleinthefood,paperor

chemicalsectors.²Forinstance,inthedairyindustry,

milkmustbecooledbeforetransportandconsumption,whileheatisneededforthepasteurizationprocess.Thewasteheatfromthecoolingprocesscanberecoveredandusedasaheatsourceforpasteurization.However,asignificantchallengeinmanyindustriesisthatsteamistypicallyusedtotransferheatacrossasite,resultinginhigh-temperaturesystemdesigns.Switchingto

airorliquidwaterrequiresnewpipes,pumpsand

processdesigns,whichentailhighinvestmentcostsandpotentialdisruptions.³

²

IEA(2014).ApplicationofIndustrialHeatPumps

³Forexamplesofpracticalapplicationsofheatpumpsinindustry,see

U.S.Dept.ofEnergy(2003)IndustrialHeatPumpsforSteam

;

Forthemethodologicalapproachtoemissionsavings,seeFfE(2019).

Small-scalemodelingofindividualGHGabatementmeasures

intheindustry

05April2023

9

CostofCO2abatement(2021$/tCO2saved)

Automotive

Pulp&Paper

SoybeanOil

Canesugarrefining

Meatprocessing

Beetsugar

Cannedfruits

Cannedvegetables

Dairy

Cornwet-milling

Beer

Textilewet-processing

Textileweaving

Heatpumpsleveragethepositiveeffectsofagreenerenergymix.Witheveryinstalledheatpump,overall

energyefficiencyisincreased.However,theneteffectofaheatpumpdependsonwhereitselectricitycomesfrom.Studieshaveshownthatinstallingaheatpumpthatrunsonelectricityfromfossilfuelsinsteadof

creatingheatfromgashasanegativenet-carbon

impact.Heatpumpsaremorecarbon-efficientthanelectricalresistanceheatersbecauseoftheirhigher

efficiency.Forexample,aheatpumpwithaCOP3.5⁴emitslessCO2perkWhthcomparedtonatural-gas-condensingboilerswhentheelectricitygridfactor

isbelow740gCO2/kWh,andoil-condensingboilers

whentheelectricitygridfactorisbelow980gCO2/

kWh.⁵Atthesametime,however,thismeansthat

installingmanyheatpumpsleveragesthepositiveneteffectsofgreenelectricity.Asrenewableenergytakesovertheenergymix,moreinstallingmoreheatpumpswillpushdowncarbonintensityfasteracrosssectors.

ThecostsofreducingCO2emissionsthroughheat

pumpsvarywidelyacrossindustries.AcomprehensivestudybyZuberi,HasanbeigiandMorrowanalyzesthe

abatementcostassociatedwiththeuseofheatpumpsindifferentindustries.⁶TheauthorsdevelopedCO2

abatementcostcurvesandenergy-conservationcost

curvesandestimatedthepotentialreductioninCO2

emissionsandenergysavingsfromtheapplicationof

IHPs.Theirresultsindicatethatelectrifyinghotwater

andsteam-generationsystemsin13industrialprocessescouldreduceannualCO2emissionsbyapproximately

17MtCO2inthebaseyear2021,witha100%adoptionrateofIHPapplications.However,withthecontinued

decarbonizationofelectricitygrids,thetotalCO2

abatementpotentialisexpectedtoreach54.5MtCO2

peryearin2035and57MtCO2in2050,equivalent

to5%oftotalgreenhouse-gasemissionsfromUS

manufacturingtoday,asshowninFigure6.Furthermore,theCO2abatementcostsareexpectedtorangefrom

USD55toUSD175pertCO2in2035(USD50toUSD155in2050),dependingontheindustrialprocess.FurtherdetailsonthecostsassociatedwithenergysavingscanbefoundinAppendix:industrialheatpumps.

Figure6:CO2abatementpotentialsthroughheatpumpsinUSmanufacturing

250

225

200

175

150

125

100

75

50

25

0

2035

2050

051015202530354045505560

CumulativeannualpotentialCO2abatement(MtCO2)

Sources:LawrenceBerkeleyNationalLaboratory,AllianzResearch.

⁴COP(CoefficientofPerformance)isdefinedastherelationshipbetweenthepower(kW)thatisdrawnoutoftheheatpumpascoo-lingorheat,andthepower(kW)thatissuppliedtothecompressor.ACOPof3.5reflectsthecurrentstateoftechnology.

⁵

WBCSD(2020).Heatpumptechnologies

⁶

LawrenceBerkeleyNationalLaboratory(2022).ElectrificationofU.S.ManufacturingWithIndustrialHeatPumps

AllianzResearch

10

Regardlessofhowlargetheeffortsinelectrification

andotherareasoftheenergytransitionare,itishighlyunlikelythatcumulativecarbonemissionsbetweennowand2050willbeconsistentwiththelevelsoftheNet-

Zero1.5°Cscenario.⁷Sectorssuchascementandsteelhavelimitedpotentialforemission-reductionsincesomelevelofCO2productionsimplycannotbeavoided.In

othersectors,decarbonizationeffortsaretechnicallypossiblebutonlyataprohibitivelyhighcost.Insuchsectors,CarbonCaptureandUtilizationorStorage

(CCUS)willplayavitalroleasaneconomicallyviabletechnologythatcanhelpsectorsreachtheirnet-zerogoals.

Usingtoday’stechnologies,CO2captureratesofover90%aretechnicallyfeasible.Carboncaptureand

storage(CCS)isaprocessthatinvolvescapturing

theCO2frompowergenerationoranotherindustrial

activity,transportingitandthenstoringitinrock

formationsdeepunderground.CCUSaddsthepotentialcommercialsaleanduseofthecapturedCO2.There

ispotentialforcarboncapturingwheneverfossil-or

biomass-basedfuelsarecombustedorevenbefore

combustion,forinstanceforblueorturquoisehydrogen.Itcanalsobeappliedintheammonia,iron,steelor

cementindustries.

TheimplementationofCCUShastwomajoruse-cases

acrossallindustries.Themoststraightforwardapplicationhappensinthecontextofcarbonremoval.Here,

technologiesforDirectAirCarbonCaptureandStorage

(DACCS)andBioenergywithCarbonCaptureandStorage(BECCS)playamajorrole.Bothtechnologiesresultin

theremovalofemissions,so-called“negativeemissions”,whenthecapturedcarbonispermanentlystored.

Secondly,CCUScanbeappliedtocaptureemissions

inindustrialprocesses.Thefocusherewilllieonthose

sectorswhereemissionscannotcompletelyberemoved

fromtheindustrialprocessandalternativenon-CO2

emittingprocessesarenotavailable,suchascement,steelorchemicals.

Figure7ashowstheaverageCCSinvestmentand7b

thecumulativeCCsinvestment,comparingtwodifferentsources.WhileETCprovidesadecompositionbyCCS

technologybysector,aswellasadditionalinvestment

needsinrenewableenergytosupplypowertoDACC,theNGFSanalysisshowsdetailsontheregionalsplitofCCSinvestments.Around17%oftotalinvestmentsoccurin

theEU.Notably,investmentinNature-BasedSolutions

(NBS)arenotincludedbuthavebeenaddressedinour

previousCarbonFarmingReport(see

AllianzResearch

(2022).CarbonFarming:Atransitionpathforagriculture

&forestry

).DACCtechnologiesare,however,usually

deployedatorinclosevicinitytopermanentstoragesites.Investmentintransportation(andstorage)willthusbe

significantlylowerforDACC.

⁷

ETC(2022).CarbonCapture,UtilisationandStorageintheEnergyTransition:VitalbutLimited

11

AverageyearlyinvestmentbnUSD

inadditionalcapturingcapacity

CumulativeinvestedbnUSD

incapturingcapacity

105

05April2023

Figure7a:CCSaverageglobalinvestments,USDbnperyear

250

200

150

100

50

0

NGFSCCSEU

NGFSCCSROW

214

RenewablePowerforDACC

DACC

Iron&Steel

Power

FossilFuelProcessing

142

BlueHydrogen

Cement

BECC

114

105

102

Transport

89

Storage

75

44

31

14

2

ETCNGFS

2020-2025

ETCNGFS

2025-2030

ETCNGFS

2030-2035

ETCNGFS

2035-2040

ETCNGFS

2040-2045

ETCNGFS

2045-2050

Sources:ETCbasescenario,NGFSNetZero2050scenario,AllianzResearch.

Figure7b:CCScumulativeglobalinvestments,USDbn

3,500

3,000

2,500

2,000

1,500

1,000

500

0

3,083

Storage

Cement

BlueHydrogen

FossilFuelProcessing

Transport

BECC

Power

2,015

Iron&Steel

DACC

RenewablePowerforDACC

1,304

735

291

71

202520302035204020452050

Sources:ETC,AllianzResearch.

12

PhotobyAlexLvrsonUnsplash

AllianzResearch

Cementindustryand

othernon-metallicminerals

Afterwater,concreteisthesecondmost-consumed

substanceintheworld⁸,andaccountsfor7%ofglobalemissions.Withoutconcrete,ourinfrastructurewouldcrumblesoontheroadtoanet-zeroglobaleconomy,thereisnowayaroundmakingitclean.Whilethenon-metallicmineralssectorconsistsofavarietyofdifferentproductssuchasglass,ceramics,bricksandgypsum,

cementandlimeproductiondominateemissions.Thisincludes1)theprocessemissionsfromthechemical

reactionthatturnslimestoneintocement;2)theenergyemissionsfromtheenergyusedtocreatethehigh

temperaturesneededincementproductionand3)toalowerextent,emissionsfromcementtransport.

Decarbonizingthecementsectorisachallengingtaskmainlyduetoprocessemissions,whicharedifficult

toavoid.Partofthesolutionliesindevelopingnew

cementchemistries.Tomeettheambitionofachievingnet-zeroemissionsby2050inthecementsector,the

clinker-to-cementratio⁹needstobereducedand

innovativetechnologiesdeployed,suchascarbon

captureandstorageandclinkersmadefromalternative

rawmaterials.10Theglobalaverageclinker-cement

ratioisabout0.81,withthebalancecomprisinggypsumandadditivessuchasblastfurnaceslag,flyashand

naturalpozzolana.Asclinkerproductionisthemost

energy-intensiveandCO2-emittingstepofthecement-makingprocess,reductionsintheclinker-cement

ratio(throughtheuseofclinkersubstitutes)would

lowerenergyuseandprocessCO2emissions.Anotherpossiblewaytoreduceenergyandprocessemissionsincementproductionistoblendcementswithincreasedproportionsofalternative(non-clinker)feedstocks,suchasvolcanicash,granulatedblastfurnaceslagfromironproductionorflyashfromcoal-firedpowergeneration.GovernmentscanstimulateinvestmentandinnovationintheseareasbyfundingR&Danddemonstrations,

creatingdemandfornear-zero-emissioncement

andadoptingmandatoryCO2emission-reduction

policies.ReducingCO2emissionswhileproducing

enoughcementtomeetdemandwillbechallenging,especiallyasdemandgrowthisexpectedtoresumeasthepotentialslowdowninChineseactivityisoffsetbyexpansioninothermarkets.11

⁸Gagg2014.Cementandconcreteasanengineeringmaterial:Anhistoricappraisalandcasestudyanalysis.EngineeringFailureAnalysis.

/10.1016/j.engfailanal.2014.02.004

⁹Cementisabindingagentthatsetsandhardenstoadheretobuildingunitssuchasstones,bricksortiles.Clinkerisanodularmate-rialwhichisusedasthebinderincementproducts.Theprimaryuseofclinkeristomanufacturecement.

10

UNClimateTechnologyCentre&Network(2010).Clinkerreplacement

11IEA(2022).Trackingreport-Cement

13

Ontheotherhand,carbonemissionsfromheatused

incementproductioncouldbereducedthrougha

switchfromcoaltogas,andeventuallyfullyeliminatedthroughheatelectrification,andtheuseofbiomass

orhydrogen.However,eachoftheseoptionswillentailsignificantadditionalcosts.

Lastbutnotleast,reducingcarbonemissionsfrom

cementwillalsorequirebetterdemandmanagement.

Theuseoftimberasasubstituteforbuildingmaterial

isnotwithoutitschallenges.Therefore,globalcementproductionisexpectedtocontinuetogrowworldwide:whileitisprojectedtostagnateinEuropebetween2030and2050,itwillincreaseinIndia,otherdeveloping

AsiancountriesandAfrica.However,demandgrowthcouldbesloweddownviagreatermaterialefficiencyinbuildingdesign,wastereduction,maximizingthe

lifeofbuildingsandinfrastructureandsomematerialscircularity.

CementemissionsarebeingaddressedbytheEU

EmissionsTradingSystem(ETS)andseveralother

countries,includingCanada,SouthKoreaandChina,havealsointroducedpricingschemes.Additionally,

theEUisdevelopingacarbonborderadjustment

mechanismforindustries,includingcement,whichaimsatlimitingcarbonleakageandincentivizingstronger

emissionsmeasuresinforeigncountries.12Many

governmentsandorganizationshavealsoreleasedroadmapsfordecarbonizingthecementsectorandreachingnetzeroby205013.

05April2023

Forthis,itiscrucialtocommercializeCCSby2030.

Therefore,governmentsmustplanandconstruct

infrastructuretotransportandstorecapturedCO2asthelackofsuchinfrastructurecancausesignificantdelaysintechnologicaldeployment.Transporting

CO2throughpipelinesisthemostsuitableway,andgovernmentsmustgainpublicsupportforbuildingthesepipelinesandCO2storagefacilities.

AnextensiveanalysisoftherequiredabatementcostsassociatedwiththeimplementationofthenecessarymeasuresfromelectrificationtoCCScanbeconducted

usingtheIndustryPLAN14model(Johannsen&

Mathiesen2023).Employingabottom-upapproach,

themodeldefinesspecificmeasuresforthesectorwithadjustableimplementationrateparametersandyieldsresultsonenergysavingsandinvestmentsforthe

EU+UK.TheaggregateandaveragedinvestmentspertonofCO2abatedforthenon-metallicmineralssector(cement,ceramicsandglass)showsarelativelystablerelationshipatvariouslevelsofemissionintensityof

energyuse,witharoundEUR615/tCO2(Figure8a).In

theothersectorsanalyzed,averageinvestmentneedswillrisemorestronglysincemarginalcostincreasesforthelastmeasurestoreachzeroemissionsaretypicallyhigherthanforthe“low-hangingfruits”implementedfirst.AsseeninFigure8a,implementingthesuggestedmeasuresfromtheIndustryPLAN15modelisestimatedtoresultinadecreaseoftheemissionintensityfrom

41.7tCO2/MJin2030to6.6tCO2/MJby2050.AnalyzingtheMaterialEconomics(2019)resultsforthecement

sector(Figure8b)andaggregatingtheresultsyieldsanaverageglobalinvestmentofaroundEUR250/tCO2toreduceemissions.16

12IntheterminologyoftheEuropeanCommission,‘carbonleakage’doesnotonlyrefertoemissionsjustbeingemittedinanother

countryinsteadoftheEU,whichwouldn’thelptheglobalclimateambition.Rather‘carbonleakage’alsoreferstothevalueadded

lfodgueAppendixGCCARoadmap.Anotherroadmap

isthe

IEACementTechnologyRoadmap

whichbuildsonthelong-standingcollaborationoftheIEAwiththeCementSustainabilityInitiative(CSI)oftheWorldBusinessCouncilforSustainableDevelopment(WBCSD).

14IndustryPLANchoosesthedecarbonizationactionsinabottom-upapproachfromamerit-orderoftechnologyoptions.

15MoreonthebackgroundofthetechnologiesandmitigationpotentialscanbefoundinAppendix:Industryemissionreductionpotentials.

16Caution:ThestatedIndustryPLANnumbersrefertoreducingtheemissionintensityofenergyuse(tCO2/MJ)whiletheMaterial

Economicsmodelnumbersrefertoreducingemissions(%CO2totalemissionreduction).ThedotsintheMaterialeconomicsgraph

showtheactualcalculatedaverageabatementcostsinthemodelatdifferingemissionreductionlevels,whilethelineshowstheOLSestimatederivedfromthecalculatedvaluesshownasdots.

14

AverageCAPEX/Abatement(EUR/tCO2)

AverageCAPEX/Abatement(EUR/tCO2)

AllianzResearch

Figure8a:Averageinvestmentinthecement/non-metallicmineralsmetalssector(EUR/tCO2)neededtoreachemissionintensitytargetsonthepathtonetzero

618

617

616

615

614

613

612

611

610

609

608

41.7tCO2/MJ(2030)6.6tCO2/MJ(2050)

NetZeropathwaycompliantemissionintensityofenergyinrespectiveyear

Sources:IndustryPLAN,AllianzResearch.Notes:CoverageEU+UK.Non-metallicmineralsincludecement,ceramicsandglass.

Figure8b:Averagecementsectorinvestment(inEUR/tCO2)relativetoemissionreductiontarget

300

250

200

150

100

50

0

0%20%40%60%80%100%

EmissionReduction

Sources:MaterialEconomics,AllianzResearch.Notes:CoverageisEU.

15

PhotobySonikaAgarwalonUnsplash

05April2023

Chemicals

ThechemicalsectorplaysacrucialroleintheEuropeaneconomy,withchemicalsbeingintegraltomajor

Europeanvaluechainssuchaspharmaceuticals,

electronics,batteriesforelectricvehiclesand

constructionmaterials.TheEU-27isthesecond-largestchemicalsproducerglobally,generatingEUR499bn

insalesin2020andaccountingforaround7%of

manufacturingoutputbyturnover,whichmakesitthe

fourth-largestindustryintheEU.Thechemicalindustry

employshighlyskilledworkersandboasts67%greater

laborproductivitythanthemanufacturingsectoraverage.

WhilechemicalproductionintheEU-27hasjumpedby+47%,GHGemissionshavedecreasedby-54