Decarbonizing industry: If Industrial Clusters win, we all win
June 21, 2022
June 21, 2022
Article Key Points:
As our world continues to wrestle with how to decarbonize the economy while protecting jobs and industry, we find ourselves with a unique vantage point as leaders of global organizations. At COP26 the business community showed up in force to support and drive net zero declarations. Today, at least 130 countries have pledged to be net zero by 2050. One of the biggest challenges to delivering on these commitments is decarbonizing industry.
Industry contributes approximately 30% of total global CO2 emissions. Often with highly diverse industry representation, areas of industrial concentration or “Industrial Clusters” present one of our world’s most promising avenues for rapid, job-positive, market-positive decarbonization.
The System Value Analysis of Europe, conducted by our organizations in collaboration with over 20 partners, identifies decarbonizing industrial clusters as a key mechanism to deliver a just energy transition. This analysis estimates that systemic efficiency, direct electrification, hydrogen, and carbon capture and sequestration within industrial clusters can reduce emissions by over 300 million metric tonnes (MT) by 2030.
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In March 2021, Accenture and the World Economic Forum’s Energy and Materials Platform, along with 38 partners across multiple industries, published a first-of-its-kind report exploring the opportunity to reduce industrial emissions while creating jobs. The research shows that the system value of the energy transition for industrials can be maximized through industrial clusters with a cross-technology approach. This approach must be anchored in strong partnerships, policies, financing mechanisms, and technology strategies.
Alongside Electric Power Research Institute (EPRI), we launched the Transitioning Industrial Clusters towards Net Zero at COP26. This initiative equips public, private and governmental agencies with the tools and knowledge-sharing platforms to steer low carbon targets. We launched the initiative alongside CEOs of industrial clusters from the UK, Australia and Spain.
Since then, four more industrial clusters in the Netherlands, Belgium and the USA have joined the initiative. This brings the total scope addressed to 344 MT CO2 (roughly equivalent to the emissions of France). So too, 1.1 million jobs have been protected and $182 billion has been contributed to global GDP.
We aim to host 100 industrial clusters with aggregate emissions reduction potential of 1.6 billion tonnes of CO2 (5 % of global CO2 emissions). This could contribute $2.5 trillion toward global GDP and protect 17.8 million jobs.
Our initiative partners with companies and governments in fit-for-purpose engagements to support clusters in taking full advantage of the diversity of political and economic climates across geographies.
The Basque Industrial Supercluster Opportunity
At the Basque Industrial Supercluster, we worked alongside the Basque Government and leaders from Iberdrola and Petronor (Repsol) to analyze the cluster's value opportunity and execution plan.
The first phase of the collaboration focused on maturing clean refining, cement, iron and steel, foundry, and paper industries within the cluster. A multi-year collaborative roadmap was created to promote decarbonization. It still acts as the blueprint for the initiative.
US Infrastructure Investment and Jobs Act (IIJA) Optimized Utilization
In February 2022 we hosted a workshop on maximizing the return of infrastructure funding to the US market. Over 140 participants from developing clusters and the US Department of Energy attended the event.
We began the workshop by asking, “How can USD $1 of public funding turn into $100 of private investment?” and explored private sector participation in cases like the UK offshore wind industry. The initiative’s signatory clusters anchored the event with additional perspectives shared by UK authorities.
We are currently working with more than 10 developing clusters in the USA, all of whom plan to apply for hydrogen and CCUS funding from IIJA once applications open.
In 2022 we brought together the initiative’s signatory clusters, 10+ developing industrials clusters and key corporates at our first cluster gathering in Bilbao and Annual Meeting in Davos. Our signatories shared powerful messages on their collaborative decarbonization journeys, including:
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A willingness to act and comply with policy frameworks such as the European Green Deal were highlighted as key drivers for the initiative. We also discussed the importance of geography and co-location of supply and demand in key ecosystems that drive success. In pursuit of key milestones, we will continue to progress through market-leading research, partnership building, public-private dialogues and digital asset development.
Accenture is building digital twins of select clusters and has launched a research project with Trancik Lab at Massachusetts Institute of Technology on how demand optimization can be applied at the industrial cluster level.
EPRI is a key technology partner and brings deep expertise to the initiative. Through its knowledge base and operational-level experience with the energy sector, EPRI works with the clusters to explore best-fit technologies inside of each cluster’s unique policy, financing, partnership, and geographic characteristics.
The cross-industry, cross-regional, cross-technology perspective of the collaboration uniquely positions us to create net zero clusters, protect and create jobs, and ensure economic development.
CEO, Accenture Europe
Managing Director, World Economic Forum
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This blog originally appeared on The World Economic Forum's site.