Industrial decarbonization strategies for the energy transition

Dominated by fossil fuels, industry accounts for more than 30 percent of all greenhouse gas emissions and 40 percent of all energy consumption, according to the International Energy Agency (IEA) – in large part due to processes that use high temperatures and chemical reactions producing emissions as a byproduct. As the global economy and population grow, so too will demand for more cement, steel, plastics and other industrial goods. Left unchecked, the impact on our climate will only increase. Effective energy transition strategies to decarbonize industry are crucial for a sustainable future. 

Click on the video and watch how hydrogen is supporting the decarbonization of industries

Major headway can be made with energy efficiency measures designed to optimize operations and energy use. Plus, electrification of industrial processes with today’s latest electric technologies can further slash emissions by shifting from fossil fuels to renewable energy.

But industrial decarbonization can’t be achieved through clean energy alone. Emissions from industrial processes as well as aviation and shipping (where liquid drop-in fuels are needed) remain a major hurdle and require a rapid scale-up of alternative fuels like green hydrogen.

Digitalization can take your sustainability efforts a step further, using data analytics to reduce resource consumption and boost energy efficiency to even greater levels. And Carbon Capture, Utilization and Storage (CCUS) can tackle industrial processes with unavoidable emissions. In fact, with the right measures in place, industry can reduce its yearly emissions by over five gigatons, according to the Intergovernmental Panel on Climate Change (IPCC), the equivalent of removing over a trillion cars from the road each year. At the same time, these strategies offer a path to growth – opening the door to new markets, increasing resilience, and positioning industry to thrive in a low-carbon economy.

Energy efficiency is the first step in reducing industrial emissions. According to the IEA, energy consumption in the industrial sector is projected to increase by 30 percent by 2040 if no action is taken. By optimizing processes and upgrading equipment, industries can lower their energy consumption and reduce emissions by up to 20 percent. It’s also one of the quickest and most effective measures.

Energy efficiency is also crucial in transitioning the industrial sector away from fossil fuels, such as coal, oil and natural gas, especially when done using technologies that act as a bridge to a near zero-emissions future – for example, using renewable electricity without relying on fossil fuels by harnessing production waste to power high-efficient steam turbine generator sets.

Improving energy efficiency doesn’t just reduce emissions – it can significantly lower fuel costs and operating expenses, helping businesses protect their margins. And with a rapid return on investment, efficiency becomes a strategic lever for both sustainability and long-term financial performance.

Electrification is another key step in decarbonizing industry. Converting industrial processes from fossil fuels to electricity, especially from renewable energy sources, can drastically cut greenhouse gas emissions. Electrification replaces technologies or processes that use fossil fuels with their electrical equivalents, such as electrically driven turbocompressors or turbo heaters and steam recompression systems. This includes the use of enhanced batteries to power shipping and transportation.

For example, in an ethylene plant for Shell in Moerdijk, Netherlands, Siemens Energy is about to replace its older fossil-powered steam boiler and steam turbine with electric motors, reducing the plant’s carbon dioxide emissions by 230 kilotons per year and its overall energy consumption by 75 percent. What’s more, the electrical machines are quieter, reduce emissions of particulate matter and nitrogen, and decrease residual heat loss. Electrification is one of the most important strategies in cutting CO₂ emissions in the IEA’s Net Zero by 2050 plan – which calls for electricity to make up to 27 percent of all final energy use by 2030. 

Hydrogen is a game-changer in industrial decarbonization. Hydrogen can replace fossil fuels in various industrial applications, particularly in hard-to-decarbonize sectors like iron and steel production. And it can be used as the basis for low-carbon and carbon-free engine-ready fuels for shipping and aviation. But how hydrogen is produced matters. Today, hydrogen is primarily produced using coal and natural gas, resulting in significant emissions. However, when produced using renewable energy and water through a process called “electrolysis”, the resulting hydrogen is entirely carbon-free and categorized as “green hydrogen”. Green hydrogen has great potential to decarbonize sectors such as steelmaking, shipping, fertilizer production, and aviation – especially in processes that can’t be electrified.

At Siemens Energy, our hydrogen solutions have already helped petrochemical manufacturer  Braskem cut emissions by 40 percent and setup a co-firing hydrogen-rich cogeneration plant for Braskem’s production of thermoplastics in Brazil. What’s more, our Gigawatt Electrolyzer Factory in Berlin is helping to scale up the production of green hydrogen to industrial levels. Starting with one gigawatt of production capacity, the factory can provide as much as three gigawatts of electrolysis capacity. An installed electrolysis capacity of three gigawatts can produce enough hydrogen to reduce CO₂ emissions equivalent to a city of a quarter of a million people. 

Digitalization takes electrification a leap forward with the Internet of Things (IoT) and Big Data to increase margins, extend asset lifespans and reduce environmental impact. By leveraging data analytics and IoT technologies, companies can gain new insights into their energy consumption patterns and identify areas for improvement. Digitalization also paves the way for predictive maintenance to forecast when parts might fail, leading to more efficiency and fewer emissions.

Moreover, digitalization unlocks new opportunities to decarbonize with process automation, using artificial intelligence and robots to streamline systems. Process automation minimizes errors and improves quality in complex industrial tasks, saving costs and further improving energy use. According to the World Economic Forum, digital solutions can reduce emissions by up to 20 percent in hard-to-abate sectors.

Carbon Capture, Utilization and Storage (CCUS) prevents CO₂ emissions from entering the atmosphere by capturing them and either using them for other industrial purposes, such as feedstock in chemicals or building materials, or storing them permanently in the ground. CCUS can be retrofitted to existing power plants and industrial facilities that use either fossil fuels or biomass as a fuel. Retrofitting existing assets with CCUS helps companies avoid stranded assets as climate regulations tighten. Particularly in hard-to-abate industries like cement, steel and chemical, CCUS can remove most emissions that are currently unavoidable due to technological limitations or because they are a key part of certain processes. The three main methods for capturing CO₂ are post-combustion, pre-combustion and oxy-fuel combustion. In post-combustion, CO₂ is captured in the flue gas after the fuel has been burned, making it easier to integrate into already existing facilities, and reduce emissions by 90 percent.

CCUS can also capture CO₂ directly from the atmosphere by using Direct Air Capture (DAC), which passes air through chemicals that react with and trap emissions. Both the IEA and the IPCC have underscored the need for CCUS and DAC to play a pivotal role in reaching net zero.

Decarbonizing the industrial sector is essential to a sustainable future. By focusing on energy efficiency, electrification, hydrogen, digitalization and carbon capture utilization and storage, we at Siemens Energy are driving the long-term vision for decarbonization. We’re increasing the production capacity for hydrogen technologies and are a leading partner in low-carbon solutions for industry, with highly efficient gas turbines and co-firing hydrogen upgrades, enhanced electrical components and applications that take advantage of analytics and intelligence for a digital industrial revolution. Many of these solutions can also be retrofitted into existing infrastructure, helping businesses decarbonize without leaving assets stranded.