Powered for change

In brief

• While the world is working to hit net-zero goals, the scale of progress and investment falls short. A new era of collaboration and action is needed.
  
  
• Our research has identified three imperatives and outlined a three-year action plan that unlocks new economic models for the decarbonization of heavy industries.
  
  
• If businesses act on these imperatives now, in only three years they could set the foundations for new economic pathways on the road to net zero.

It's time to accelerate industrial decarbonization

As the world faces increasing climate challenges, the need for industries to reduce their carbon emissions has become urgent. While much has been achieved in the decade since the signing of the Paris Agreement, heavy industry has made little progress. The world relies on these heavy industries (steel, metals and mining, cement, chemicals and freight and logistics) as their products and services feed into the supply chains of virtually all others. But, so do their emissions. The Scope 1 and 2 emissions of heavy industry become the Scope 3 emissions of their customers. If we can’t decarbonize heavy industry, we can’t decarbonize any industry. And with the first major deadlines for the Paris Agreement coming in 2030, it’s clear that action needs to be taken. But how?

We’ve set out to answer just that question in our latest report, which draws on extensive research, including a global survey of executives and advanced economic modeling. We’ve identified three imperatives that businesses need to action, immediately, and an action plan for speeding up the reduction of industrial carbon emissions. Let’s get started.

The need for quick action 

Industries are under pressure to balance economic growth with environmental responsibilities. To decarbonize heavy industry, we need to consider three factors:  

1. Certainty of supply of affordable, low-carbon power and hydrogen.
   
   
2. An economic model that supports the development of green products: certainty over green demand, which allows them to commit to low-carbon power and hydrogen and kickstarts a cycle of investment.
   
   
3. The ability to scale decarbonization to drive down the cost to light industry and, most importantly, a path to price parity with higher-carbon products.  

This requires the value chain to collectively work together. Right now, we are seeing siloed approaches, with leaders focusing on their own organizations, rather than actively working across the wider value chain. And while it’s important to see where you stand in the race to achieve net-zero goals, it’s created an investment standoff, where everyone is waiting for others to move first.

Using S-Curve modeling to unlock new business models

A key driver for decarbonization is financial. Often, this takes the form of a blocker—it can be incredibly expensive to decarbonize. But what if we could unlock new financial and business models around decarbonization? We’ve done extensive S-curve modeling for decarbonizing heavy industry that shows we can pull low-carbon price parity forward by four to nine years compared to current market estimates, as shown in figure 1 below. We’ve outlined how to do this in our action plan, but in a nutshell, it requires collaborative action over the next three years and a strong digital core and new ways of working. The pathway to rapid cost reduction across low-carbon industrial infrastructure and low-carbon power and hydrogen is clear. This model shows that with the right investment and scaling, technologies like green hydrogen and renewable energy can become cost-effective much faster than expected.

A plan for decarbonization and economic growth

There is a clear path to industrial decarbonization. It starts with resolving a small number of the most difficult barriers to decarbonization. Tackling these barriers in the next three years will set heavy industry on the path to hitting its net-zero targets. Addressing these three imperatives will boost the revenue potential of green products and reduce the costs of low-carbon power generation and low-carbon production:

1. Target green premiums to finance the initial phase of industrial decarbonization.
   
   
2. Accelerate scaling low-carbon power and hydrogen to guarantee affordable, secure, green power supply.
   
   
3. Drive down capital and operating expenses of low-carbon infrastructure. 

These imperatives should be addressed at the same time. And while all stakeholders have a responsibility to deliver on all three, different industries should take the lead on each. Once the power of innovation and investment is unlocked, efficiency will follow, creating opportunities and momentum for the next three years.

Braskem shows us this can be done

Braskem, the largest petrochemical company in Latin America, shows that this can be done. Individualized decarbonization plans were built for Braskem's six main facilities. These plans outlined business cases and implementation strategies for 18 proactive decarbonization pathways. A Roadmap Prioritization Tool was developed to consolidate decarbonization data, providing insights on project maturity and cost-effectiveness.​

At the end of the engagement, more than 160 initiatives were approved for Braskem's 2050 net-zero roadmap. Seventy of these have been prioritized for its 2030 goals, where an estimated 30% reduction in carbon emissions is expected at the company's six major complexes. One of these initiatives involves the management of more than 5,500 hectares of eucalyptus plants to help power one of its main facilities. It is designed to use renewable steam energy sourced from plant biomass to reduce emissions at the site by about 50% annually.​

Through its partnership with Accenture, Braskem is setting a new standard for the sector, creating new economic models while also promoting sustainability in the petrochemical industry and positively impacting the world.

The scope of our research

This research has recommendations for multiple segments that are part of the industrial value chain:

• Oil, gas and power providers.

• Steel, metals and mining, cement, chemicals and freight and logistics; we refer to them as heavy industry.

• Pulp and paper, aerospace and defense, automotive, industrial equipment, life sciences and consumer goods; we refer to them as light industry.

To better understand the opportunities and the actions that will create impact, we conducted significant research:

• A global survey with 1,000 executives across key industries in April and May 2023. The aim was to understand the near-term challenges and priorities of industrial decarbonization, expectations for Scopes 1 to 3 emissions, key revenue and cost levers for improving the financial business case for selected decarbonization solutions, regional priorities and partnership plans.
  
  
• Qualitative interviews with 18 executives and middle management from selected industries
  
  
• Techno-economic modelling leveraging Accenture’s proprietary S-curve methodology to quantify cost drivers, so that industry can achieve the greatest savings with Energy Transition Technologies including wind, solar, battery storage, green hydrogen, green steel, green ammonia and green construction.

Based on these imperatives, Powered for change lays out a bold, three-year action plan for accelerated industrial decarbonization. It demonstrates how, in a new era of collaboration, we can spark confidence across the value chain. Those who are successful will create a sustained source of competitive advantage for decades to come.