The emissions from the EU manufacturing sector fell by 37% between 1990 and 2017. Noticeably, process emissions, which in 1990 contributed a third of total GHG emissions, decreased much slower (-22%) than emissions from energy consumption in the industry sector (-45%). The 1.5°C compatible scenarios show a wide range of decarbonisation pathways for the sector. According to the scenarios with high reliance on carbon dioxide removal (CDR), process emissions will decrease much faster than emissions from energy consumption – by 78% and 19% respectively. Most of the remaining scenarios, e.g. high energy demand, low CDR, see slightly faster reduction in emissions from energy consumption (around 30%) than process emissions (19%). Almost all scenarios analysed in this project show a significant reduction in total emissions from the industry sector in the subsequent decades, with close to full decarbonisation of energy demand reached between 2040 and 2048. The analysed 1.5°C pathways show an almost doubling of electrification rate of EU’s industry sector, from 33% in 2019 to at least 63% in 2050. In May 2021, the EU published an updated industrial strategy however not providing concrete measures which would lead to higher electrification but rather ‘designing’ transition pathways for the sector.
In the EU, the industry sector is covered by the Emissions Trading System (EU ETS), however, the sectors that could potentially be affected by carbon leakage receive a portion of their emissions allowances for free. The implementation of a Carbon Border Adjustment Mechanism, as recently suggested by the European Commission, if implemented, would result in a steady removal of free allowances. When combined with the funding for deployment of low carbon technologies in the framework of the Innovation Fund, removing the free allowances may result in a significant reduction in emissions from this sector in this decade.
While technologies to almost completely decarbonise some of the most carbon intensive sectors exist, such as steel production using green hydrogen, the speed of their deployment is uncertain, despite some positive developments.