Industrial Decarbonization: Targeted Strategies for Heavy Industries

Industrial decarbonization is the process of significantly reducing or eliminating carbon dioxide and other greenhouse gas emissions from industrial activities.

This is crucial for mitigating climate change, as the industrial sector currently accounts for nearly one-third of global carbon emissions as per the World Economic Forum. Key industries like steel, cement, and chemicals are major contributors to these emissions, necessitating a transition to cleaner production methods.      

Each industry requires tailored approaches to achieve significant emission reductions and support a sustainable future.

Types of Emissions from Heavy Industry

Industrial decarbonization encompasses efforts to reduce greenhouse gas (GHG) emissions across three scopes, as depicted below:

Source: Environment Energy Leader

Different Methods for Decarbonization

Source: WRI

Industrial decarbonization involves a range of methods to significantly reduce greenhouse gas (GHG) emissions from industrial processes. These methods include:

  • Switching to Low-Carbon Fuel/Energy Supply like Clean Hydrogen and Non-Fossil Fuels: This approach involves using alternative low-carbon fuels such as hydrogen (including green, blue, and biohydrogen), biomass (both waste and virgin biomass, and biomass fuels), or low-carbon electricity. These alternatives help reduce the carbon footprint of industrial energy consumption.
  • Carbon Capture, Use, and Sequestration (CCUS): CCUS technology captures CO2 emissions from industrial processes and combustion. The captured emissions are then stored underground or utilized in other processes, preventing them from entering the atmosphere and contributing to global warming. You can read more about carbon capture and storage in our previous newsletter.
  • Alternative Low-Carbon Novel Processes: Certain industrial commodities can be produced using alternative and innovative production methods that save emissions. Examples include secondary aluminum production and microwave drying in paper production. These novel processes often involve fuel switching to further reduce emissions.
  • Facility Retirement/Retrofits: Retiring outdated facilities and retrofitting existing ones with advanced low-carbon technologies can significantly reduce emissions.
  • Material and Energy Efficiency: Material and Energy Efficiency aims to reduce emissions by using fewer raw materials, such as through recycling, or by enabling the use of emissions-free materials. They also focus on reducing energy consumption in the production process.
  • Electrification with Renewables: Replacing fossil fuel-based energy sources with renewable electricity can drastically cut emissions. This includes electrifying processes that traditionally rely on fossil fuels.
  • Material Efficiency and Circularity: Implementing practices that promote material efficiency and circularity, such as recycling and reusing materials, reduces the need for raw materials and minimizes waste.

Key Solutions for each industry:

Source: WEForum

We will be covering solutions for the steel, cement, aluminium and ammonia industries below as solutions for transport and energy emissions are covered in our earlier newsletters.

Steel Industry

Key Emissions Sources:

  • Energy-related Emissions: Primarily from coal used in blast furnace-basic oxygen furnace (BF-BOF) and electric arc furnace (EAF) processes.
  • Process-related Emissions: From the use of coke or natural gas as a reducing agent to convert iron ore into iron.

Key Solutions:

  • Direct Reduced Iron-Electric Arc Furnace (DRI-EAF) with Carbon Capture: Uses direct reduced iron as feedstock in electric arc furnaces powered by clean electricity, reducing emissions by avoiding the high carbon footprint of coke.
  • Carbon Capture: Captures CO2 emissions from steel production processes and stores or utilizes them to prevent atmospheric release.

Cement Industry

Key Emissions Sources:

  • Energy-related Emissions: From fossil fuels used for kiln heating, material grinding, and machinery operations.
  • Process Emissions: From chemical reactions during the conversion of raw materials to clinker, notably through limestone calcination.

Key Solutions:

  • Carbon Capture for Cement Kilns: Captures CO2 emissions from kiln operations and other cement production processes to prevent their release into the atmosphere.

Aluminum Industry

Key Emissions Sources:

  • Energy-related Emissions: From fossil-based electricity consumption during smelting and thermal energy consumption during refining.
  • Process Emissions: From the use of carbon-based anodes during smelting.

Key Solutions:

  • Inert Anodes: Developed for use in smelting processes to reduce process emissions by eliminating CO2 production associated with traditional carbon anodes.
  • Hydrogen Furnaces: Uses clean hydrogen as a reducing agent and energy source, reducing reliance on carbon-intensive fuels like coal.

Ammonia Industry

Key Emissions Sources:

  • Energy-related Emissions: From fossil fuels used in traditional ammonia production processes.

Key Solutions:

  • Blue Hydrogen Production: Involves generating hydrogen from natural gas through steam methane reforming (SMR) or autothermal reforming (ATR), while capturing and storing the carbon dioxide emissions using carbon capture, utilization, and storage technologies.

Industrial decarbonization is critical for mitigating climate change and achieving global climate goals. Tailored solutions across key sectors can significantly reduce emissions, fostering a sustainable future.

Ostara in the News

  1. Ahead of the Union Budget 2024, we spoke to CNBC-Awaaz and shared our views on the expectations of the Indian startup ecosystem from the budget. See the full video released on July 20, 2024 here.

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Sources:

Environment+Energy Leader

Net-Zero Industry Tracker

World Resources Institute

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Mukund Ranganathan

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Mukund is a seasoned investment banker with 27 years of experience in advising companies on M&A and capital raising transactions. He has served most recently as Joint Managing Director at Motilal Oswal Investment Banking, where he worked from June 2014 to January 2021. During his career, he has facilitated over 70 strategic financial transactions including Motherson Sumi’s acquisition of PKC Group (Finland), sale of Aurangabad Electricals to Mahindra CIE, Siemens’ sale of Bangalore Airport, sale of Spicejet, Aegis’ acquisition of PeopleSupport (USA), sale of Air Deccan among others. Mukund has extensive experience in raising private equity funding as well as in the capital markets including IPOs, follow-on offerings, GDRs and ADRs for L&T Finance, Indostar, Dixon Technologies, Bharat Financial Inclusion, Tata Consultancy Services (TCS), Wipro, GAIL, etc.

Mukund has earlier worked for 9 years at Edelweiss Financial Services and started his career in 1996 with a 9-year stint at Morgan Stanley. Mr. Ranganathan holds a B.Tech degree in Electrical Engineering from Indian Institute of Technology Madras (1994) and a PGDM from Indian Institute of Management, Ahmedabad (1996).

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She has previously worked at Citibank, where she was responsible for setting up & expanding Citi’s India’s ‘Private Equity and Hedge Fund’ coverage vertical, ICICI Bank’s Treasury Division & the Product Technology Group and boutique investment banking firms and made her debut in the Top 20 on the All-India M&A League Tables in late-2018. In 2023, Vasudha was felicitated by India Energy Storage Alliance (IESA) as one of the Top 40 ‘Women leaders driving Energy sector in India’.

After an illustrious career in the Banking sector where she was known for her business acumen as well as her intrapreneur skills, she honed in on Climate-Tech as the vertical she wanted to make a mark in. Vasudha founded Ostara Advisors in 2015 to catalyze global capital flows into the clean mobility and climate-tech ecosystem in India. Taking a thought-leadership approach in these sectors, the firm is today an early mover in institutionalizing fund-raising in these sectors with a focus on growth stage fund-raising and M&A transactions.

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Shanx is a founding member and former CEO of Oracle Financial Services Software, (formerly known as i-flex Solutions, the company was acquired by Oracle in 2006). Shanx retired in 2011 as the Chief Operating Officer, Oracle Financial Services Global Business Unit (FSGBU). As a technology leader, he has also been profiled in leading trade and industry publications. In 2008, Shanx was selected as one of the 50 Outstanding Asian American business leaders. This accolade celebrates Asian business leaders and recognizes their pivotal roles in Corporate America. Shanx is an engineering graduate from the Indian Institute of Technology, Chennai, and has an MBA in Management from the Indian Institute of Management, Ahmedabad, India.
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