01 POWER ISLAND / 02 H2+NH3 / IEA 2022 NetZeroby2050-ARoadmapfortheGlobalEnergySector

The path to net zero emissions could be facilitated by early government action to help move several technologies that provide power system flexibility through the demonstration phases and bring them to market. Expanding the set of energy storage technologies to complement batteries and addressing emerging needs for longer duration seasonal storage would be of particular value. Technical solutions to support the stability of power grids with high shares of solar and wind would also benefit from research and development (R&D) support.

There are three important sets of decisions to be made concerning nuclear power: lifetime extensions; pace of new construction; and advances in nuclear power technology. In advanced economies, decisions need to be made about new construction and the large number of nuclear power plants that may be retired over the next decade absent action to extend their lifetimes and make the required investment. Without further lifetime extensions and new projects beyond those already under construction, nuclear power output in advanced economies will decline by two thirds over the next two decades (IEA, 2019). In emerging market and developing economies, there are decisions to be made about the pace of new nuclear power construction. From 2011 to 2020, an average of 6 GW of new nuclear capacity came online each year. By 2030, the rate of new construction increases to 24 GW per year in the NZE. The third set of decisions concerns the extent of government support for advanced nuclear technologies, particularly those related to small modular reactors and high temperature gas reactors, both of which can expand markets for nuclear power beyond electricity.

Figure 3.14 Additional global alternative capacity needed in a Low Nuclear and CCUS Case

Sharply reducing the roles of nuclear power and carbon capture would require even faster growth in solar PV and wind, making achieving the net zero goal more costly and less likely

Note: The Low Nuclear and CCUS Case assumes that global nuclear power output is about 60% lower in 2050 than in the NZE due to no additional lifetime extensions or new nuclear projects in advanced economies and no expansion of the current pace of construction in emerging market and developing economies, and that the amount of coal and gas fired capacity equipped with CCUS is 99% lower than in the NZE.

3.5Industry

3.5.1Energy and emission trends in the Net Zero Emissions Scenario

As the second largest global source of energy sector CO2 emissions, industry has a vital contribution to make in achieving the net zero goal. Industrial CO2 emissions6 (including from energy use and production processes) totalled about 8.4 Gt in 2020. Advanced economies accounted for around 20% and emerging market and developing economies for around 80%, although complex global supply chains for the production of materials and manufacturing mean that advanced economies generally consume far more finished goods than they produce.

Three heavy industries – chemicals, steel and cement – account for nearly 60% of all industrial energy consumption and around 70% of CO2 emissions from the industry sector. Production is highly concentrated in emerging market and developing economies, which account for 70 90% of the combined output of these commodities (Figure 3.15). China alone was responsible for almost 60% of both steel and cement production in 2020. These bulk materials are essential inputs to our modern way of life, with few cost competitive substitutes; the challenge is to carry on producing these materials without emitting CO2.

The outlook for global materials demand in the NZE is one of plateaus and small increases. This is in stark contrast with the growth seen during the last two decades when global steel

demand rose by 2.1 times, cement by 2.4 times and plastics (a key group of material outputs from the chemical sector) by 1.9 times in response to global economic and population expansion. When economies are developing, per capita material demand tends to rise rapidly to build up stocks of goods and infrastructure. As economies mature, future demand stems primarily from the need to refurbish and replace these stocks, the levels of which tend to saturate. In the NZE, flattening or even declining demand in many countries around the world leads to slower global demand growth. Some countries such as India see higher growth in steel and cement production, while production in China declines considerably following its industrial boom period after the turn of the millennium.

Figure 3.15 Global CO2 emissions from industry by sub-sector in the NZE

IEA. All rights reserved.

The majority of residual emissions in industry in 2050 come

from heavy industries in emerging market and developing economies

Note: Other includes the production of aluminium, paper, other non metallic minerals and other non ferrous metals, and a series of light industries.

Certain segments of material demand increase rapidly to support the required expansion of energy related infrastructure in the NZE, notably renewable electricity generation and transport infrastructure. The additional infrastructure required for these two segments by 2050 relative to today alone contributes roughly 10% of steel demand in 2050. But co ordinated cross sectoral strategies, including modal shifts in transport and building renovation, as well as other changes in design, manufacturing methods, construction practices and consumer behaviour, more than offset this increase. Overall, global demand for steel in 2050 is 12% higher than today, primary chemicals is 30% higher and cement demand is broadly flat.

CO2 emissions from heavy industry decline by 20% by 2030 and 93% by 2050 in the NZE. Optimising the operational efficiency of equipment, adopting the best available technologies for new capacity additions and measures to improve material efficiency play an important

Box 3.1 Investment cycles in heavy industry

For heavy industry, the year 2050 is just one investment cycle away. Average lifetimes of emissions intensive assets such as blast furnaces and cement kilns are around 40 years. After about 25 years of operation, however, plants often undergo a major refurbishment to extend their lifetimes.

The challenge is to ensure that innovative near zero emissions industrial technologies that are at large prototype and demonstration stage today reach markets within the next decade, when around 30% of existing assets will have reached 25 years of age and thus face an investment decision. If these innovative technologies are not ready, or not used even if ready, this would have a major negative impact on the pace of emissions reductions or risk an increase in stranded assets (Figure 3.17). Conversely, if they are ready, and if existing plants are retrofit or replaced with them at the 25 year investment decision point, this could reduce projected cumulative emissions to 2050 from existing heavy industry assets by around 40%. The critical window of opportunity from now to 2030 should not be missed.

Figure 3.17 CO2 emissions from existing heavy industrial assets in the NZE

Intervening at the end of the next 25-year investment cycle could help unlock 60 Gt CO2, around 40% of projected emissions from existing heavy industry assets

The energy mix in industry changes radically in the NZE. The share of fossil fuels in total energy use declines from around 70% today to 30% in 2050. The vast majority of fossil fuels still being used then are in heavy industries, mainly as chemical feedstock (50%) or in plants equipped with CCUS (around 30%). Electricity is the dominant fuel in industrial energy demand growth, with its share of total industrial energy consumption rising from 20% in 2020 to 45% in 2050. Some 15% of this electricity is used to produce hydrogen. Bioenergy plays an important role, contributing 15% of total energy use in 2050, but sustainable supplies are

limited, and it is also in high demand in the power and transport sectors. Renewable solar and geothermal technologies to provide heat make a small but fast growing contribution (Figure 3.18).

Figure 3.18 Global final industrial energy demand by fuel in the NZE

IEA. All rights reserved.

Fossil fuel use in industry is halved by 2050, replaced primarily by electricity and bioenergy

furnaces gain pace in the mid 2020s, building on pilot projects testing the practice today. After 2030, the bulk of emission reductions come from the use of technologies that are under development, including hydrogen based DRI and iron ore electrolysis. Several CCUS equipped process technologies are deployed in parallel, including innovative smelting reduction, natural gas based DRI production (particularly in regions with low natural gas prices) and innovative blast furnace retrofit arrangements in regions with relatively young plants.

Producing a tonne of cement today generates around 0.6 tonnes CO2 on average, two thirds of which are process emissions generated from carbon released from the raw materials used. Fossil fuels – mostly coal plus some petroleum coke – account for 90% of thermal energy needs.

Increased blending of alternative materials into cement to replace a portion of clinker (the active and most emissions intensive ingredient), lower demand for cement and energy efficiency measures deliver around 40% of the emissions savings in 2030 compared with 2020. Through use of blended cements, the global clinker to cement ratio declines from 0.71 in 2020 to 0.65 in 2030. The ratio continues to decline after 2030, but more slowly, reaching 0.57 in 2050 (blended cements could reach a clinker to cement ratio as low as 0.5, but market application potential depends on regional contexts). Limestone and calcined clay are the main alternative materials used in blended cements by 2050. Since 0.5 is the lowest technically achievable clinker to cement ratio, other measures are needed to achieve deeper emission reductions.

After 2030 in the NZE, the bulk of emissions reductions come from the use of technologies that are under development today. CCUS is the most important, accounting for 55% of reductions in 2050 relative to today. In many cases, it is more cost effective in the NZE to apply CCUS to fossil fuel combustion emissions than to switch to zero emissions energy sources. Coal use is eliminated from cement production by 2050, when natural gas accounts for about 40% of thermal energy (up from 15% today), biomass and renewable waste for a further 35% (up from less than 5% today), hydrogen and direct electrification for just about 15%, and oil products and non renewable waste for the remainder. Constraints on the availability of sustainable biomass supplies prevent it from claiming a higher share. Direct electrification of cement kilns is at the small prototype stage today, and so only starts to be deployed after 2040 on a small scale. From the 2040s, hydrogen provides around 10% of thermal energy needs in cement kilns, although blending of small amounts begins earlier. Innovative types of cement based on alternative binding materials that limit or avoid the generation of process emissions, and even enable CO2 capture during the curing process, are either still at much earlier stages of development relative to other options like CCUS, or have limited applicability.

much smaller. About 5% of heat demand is satisfied by direct use of renewables, including solar thermal and geothermal heating technologies.

Energy efficiency also plays a critical role in these manufacturing industries, notably through increased efficiency in electric motors (conveyers, pumps and other driven systems). By 2030, 90% of the motor sales in other industries are Class 3 or above.