The latest green transition move by the U.S. government is to invest in the decarbonisation of hard-to-abate industries. The White House has announced that it will provide funds for companies across several industries to increase the use of renewable energy and clean technologies to power and run plants, aimed at reducing greenhouse gas emissions. It will also incorporate carbon capture and storage (CCS) technology into operations to reduce the CO2 emitted into the atmosphere. This is expected to spur greater private investment in the sector and encourage other companies to follow suit.
The Biden administration has awarded $6 billion in funding to decarbonise U.S. industry facilities across several sectors. Industry in the U.S. contributes around a quarter of the country’s emissions, and it is extremely hard to abate, with companies countrywide continuing to rely heavily on fossil fuels to run operations. Public funds come from the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) and will be distributed across a range of companies and projects in industries including iron, steel, aluminium, food and beverage, concrete and cement.
Energy Secretary Jennifer Granholm explained that the funds will go to technologies that are “replicable”, “scalable”, and will “set a new gold standard for clean manufacturing in the United States and around the world”. Granholm stated that the project marks “the single largest industrial decarbonization investment in American history.” She acknowledged that it will not massively reduce U.S. emissions but could demonstrate novel technologies that can scale up rapidly for other industry players to incorporate into operations.
The funds will be allocated to a wide range of projects across several industries, aiming to demonstrate that it is possible to decarbonise hard-to-abate industries and encourage more private investment in the sector. Todd Tucker at the Roosevelt Institute stated, “Getting this off the ground with these first few projects is going to be really useful for convincing industry that this transition is possible, and also, importantly, convincing Wall Street that this transition is possible.” He added, “The first trick is showing it’s viable in one project. Once you do that, then the private and public sectors can come up with strategies for the rest of the problem.”
Constellium, an aluminium manufacturer, is expected to be awarded up to $75 million in funds. It will use the investment to launch a first-of-its-kind net-zero aluminium casting plant at its facilities in Ravenswood, West Virginia. It plans to install low-emissions furnaces that can be powered with clean fuels, such as hydrogen. Many of the components manufactured by Constellium are used to produce cars and planes.
One company attracting a high level of attention is the U.S. food major Kraft Heinz, which plans to install heat pumps, electric heaters and electric boilers in its food production facilities. Kraft is expected to be awarded up to $170.9 million in public funding. It will roll out the technologies at 10 plants, including its mac and cheese production facility in Holland, Michigan. The funding will support the company’s aim to achieve net-zero carbon emissions by 2050. It will contribute to “The Delicious Decarbonization Through Integrated Electrification and Energy Storage” project, helping the ten facilities reduce annual emissions by over 99 precent from 2022 levels, according to Kraft.
In Ohio, Cleveland-Cliffs Steel Corporation, the largest supplier of steel to the U.S. automotive industry, will be awarded up to $500 million. It will use the funds to retire one blast furnace, install two electric furnaces, and introduce hydrogen-powered ironmaking technology. It aims to reduce its emissions by around one million tons a year. Meanwhile, Heidelberg Materials U.S. Inc. intends to construct a CCS system to store CO2underground at its Mitchell, Indiana plant. The company hopes to capture around 95 percent of the carbon dioxide produced from its cement manufacturing operations, decreasing its carbon emissions by around two million tons are year.
While the investment demonstrates the government’s dedication to decarbonising hard-to-abate industries, experts are sceptical that it will be able to achieve the desired effects. Heavy industry continues to rely heavily on coal and gas to create the heat required to produce steam, temper glass or turn iron into steel. Cement producers must transform limestone into cement while chemical producers use oil and gas as raw materials to produce petrochemicals, which are still widely used. While many of the technologies being funded could help cut emissions, they are unlikely to decarbonise operations entirely.
Morgan Bazilian, a professor of public policy at the Colorado School of Mines, explained, “It’s different from the electricity sector, where widely available alternatives to fossil fuels like wind, solar and batteries have come down dramatically in cost… With industry, we haven’t yet seen clear winners emerge at the price needed.” However, as companies invest in cleaner (even if not completely green) operations, it could make the use of renewable energy and clean technologies the industry standard, making cleaner industry companies more competitive to consumers.
By Felicity Bradstock for Oilprice.com
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