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1、The drive to decarbonise industryA how-to guide for companies November 2023AcknowledgementsSustainable Markets InitiativeFounded by His Majesty King Charles III in 2020,as Prince of Wales,the Sustainable Markets Initiative has become the worlds“go-to”private sector organisation on transition.Launche
2、d in 2021,the Terra Carta serves as the Sustainable Markets Initiatives mandate with a focus on accelerating positive results for Nature,people and planet through real economy action.Energy Transition Task ForceBy invitation,executives from some of the worlds largest and most influential industrial,
3、energy,and financial companies have come together to form the Energy Transition Task Force.This task force is charged with determining how companies from across the energy value chain,individually and collectively,can play a leading role in driving and accelerating the transition to a sustainable fu
4、ture.The Decarbonising Industry Working Group is one of multiple Energy Transition Task Force working groups that serve as a collaborative platform for member companies to identify and develop carbon emission abatement solutions.The Decarbonising Industry Working Group is focused on three of the har
5、dest-to-abate industries steel,aluminium,and mining.Besides companies from these industries,the working group also includes selected energy and technology companies that are interested in supporting carbon emissions abatement efforts in these industries.In total,there are 11 members in the working g
6、roup:Mining companies Anglo American and Rio Tinto,aluminium producer Emirates Global Aluminium(EGA),steelmaker Tata Steel,metals producer and trader Glencore,renewable energy producers Masdar,Orsted,OctopusEnergy,and ReNew,technology company Siemens Energy,and global energy corporation bp.Oliver Wy
7、man supported Masdar in leading this working group.Working group membersMasdar CEO IntroductionMohamed Jameel Al Ramahi,Chief Executive Officer,MasdarAs the energy transition continues to gain traction,there still remains a number of obstacles preventing it from accelerating,something that we know i
8、s needed in order to contain global emissions to 1.5 degrees Celsius in line with the goals of the Paris Agreement.One of those obstacles is the decarbonisation of critical hard-to-abate sectors such as steel,aluminium,and mining.Altogether,these sectors contribute approximately 12%of global carbond
9、ioxide emissions,representing a tremendous opportunity to significantly drive down emissions.1,2With that goal in mind,Masdar,a global clean energy pioneer,is proud to be leading the Decarbonising Industry Working Group as part of the Sustainable Markets Initiatives Energy Transition Task Force.Afte
10、r bringing together leading companies from across the energy and hard-to-abate sectors,the Decarbonising Industry Working Group is now ready to launch our first deliverable“How-to Guide,”focused on exploring tangible solutions for decarbonisation.I am thankful to colleagues from across the working g
11、roup for sharing insights and seeking meaningful collaboration opportunities,the Sustainable Markets Initiative leadership for bringing us together,and Oliver Wyman for their support.This work demonstrates the potential that renewable energy,energy efficiency,carbon capture,green hydrogen,and other
12、solutions can offer in greening industries across their value chains.And it highlights the obstacles we still need to overcome to get there.One thing is clear:Thedecarbonisation journey can only be successful through partnership.This is what makes therole of the Sustainable Markets Initiative so imp
13、ortant.As we prepare for COP28 in the United Arab Emirates,where developing actionable solutions to ensure the world meets its climate commitments will be front and centre,this guide offers a timely and informative view from industry leaders on how we can overcome what is,in many ways,one of the“fin
14、al frontiers”of climate change:Decarbonising hard-to-abate sectors.Oliver Wyman CEO IntroductionNick Studer,Chief Executive Officer,Oliver Wyman and Interim Chair,Sustainable Markets Initiatives Energy Transition Task ForceSteel,aluminium,and mining contribute directly to around 12%of global carbon
15、dioxide emissions.3 Business leaders in these carbon-intense industries are faced with a once-in-a-generation opportunity toinnovate and collectively shape the transition to a more sustainable future.The Decarbonising Industry Working Group within the Sustainable Markets Initiative brings together m
16、arket leaders in the energy,steel,aluminium,mining,and technology sectors to work together to accelerate the transition to net zero across hard-to-abate industries.The premise of this group is that organisations will make greater and more efficient strides towards sustainability through collaborativ
17、e efforts than by pursuing initiatives alone.These hard-to-abate industries face numerous challenges to decarbonise,including securing access to renewable energy and green hydrogen at affordable scale,navigating an evolving global marketplace,and being able to rely on a sufficient and consistent reg
18、ulatory frameworkto enact change.During 2023,the working group has sought to overcome those challenges by identifying opportunities to decarbonise the steel,aluminium,and mining industries.Through open discourse and sharing expertise,several decarbonisation topics have been identified that havethe p
19、otential to reduce carbon emissions materially in each of the three sectors.After further exploration and testing,the group intends to develop pilots that could transform theirown operations and inspire their sectors towards swifter progress.To succeed in a forum like the Sustainable Markets Initiat
20、ive,all industry participants must ensure strategic alignment with counterparties,bring the full force of their organisation to thetable,engage with trust and openness,avoid wasting energy on duplicative initiatives,andbring in other entities where partnerships provide a faster pace of execution.At
21、Oliver Wyman,we are proud to support this“How-to Guide”and the work of the Sustainable Markets Initiative,which we believe will be helpful in delivering decarbonisation across industrial sectors.Contents1.Executive summary 12.The Decarbonising Industry Working Group 33.Carbon abatement challenges an
22、d opportunities 53.1.Steel 83.2.Aluminium 163.3.Mining 234.Prioritising action 305.A call for action 37Acronym table 41Table of figures 42Endnotes 4311.Executive summaryAs part of the Sustainable Markets Initiatives Energy Transition Task Force,its Decarbonising Industry Working Group was created to
23、 focus on the decarbonisation needs of three industries aluminium,steel,and mining.Its membership includes 11 companies spanning the energy,steel,aluminium,mining,and technology sectors,with a collective mission to identify,develop,and undertake potential emissions abatement pilot projects and studi
24、es within the three designated hard-to-abate industries.Together,the group developed a mutual understanding of priority regions,value chain steps,and activities for decarbonisation within the three sectors.The most promising and relevant abatement solutions were then reviewed in expert interviews an
25、d workshops and assessed based on their potential to produce significant reductions,given factors such as technological maturity and scalability.The outcome was a series of collaboration topics that address critical sustainability challenges within the respective sectors.These topics,which are outli
26、ned in this document,have the potential to be further developed into pilot projects that accomplish key decarbonisation milestones.Enabling and accelerating decarbonisation requires enhanced collaboration and action between multiple stakeholders:Governments,financial institutions,investors,the targe
27、t industries and enterprises that support their operations,technology developers,and customers.1.Global frameworks for regulation and policy on emissions abatement must be developed to ensure a level playing field across regions and industries.More alignment on carbon accounting practices across ind
28、ustries and countries is needed.2.Demand for green products is picking up but needs to be supported with policies and incentives.Policymakers need to implement incentives and regulations that encourage sustainable procurement practices across industries and countries.23.Energy infrastructure and cap
29、acities need to be scaled up rapidly.Policymakers need to ensure subsidies,incentives,and regulatory frameworks in place are supportive of such an ambition.4.Transformational investments are needed to move towards low-carbon practices at scale.Policymakers must establish funding programs,grants,subs
30、idies,and low-interest loans specifically targeted at supporting the adoption of low-carbon solutions across sectors.5.More funding of research and development is needed.Governments can support the adoption and advancement of low-carbon technologies by further increasing the funding and incentives f
31、or green technology-related research,patents,and piloting.The simple bottom line:The pace of transformation in hard-to-abate industries needs to accelerate to comply with the 2015 Paris Agreements target of net zero by 2050 to keep the planets temperature increase to around 1.5 degrees Celsius.Heavy
32、 industry faces a unique challenge as demand for its products many fundamental to the global green transformationcontinues to rise.Platforms like the Sustainable Markets Initiative are workingto provide the strategies and technologies to accelerate industrial progress,eveninhard-to-abate sectors.The
33、 aim of this guide is to provide a roadmap for all industries and companies on how to step up to the decarbonisation challenge and provide sufficient resources to build towards a more sustainable future.32.The Decarbonising Industry Working Group4Group objectivesAs part of the Energy Transition Task
34、 Force,the Decarbonising Industry Working Groups objective is to accelerate emissions reduction efforts and provide strategic breakthroughs for hard-to-abate industries.Achieving net-zero targets in steel,aluminium,and mining requires significant process and business model transformations,and this w
35、orking group aims to drive this effort by cultivating collaboration among key industrial,energy,finance,and technology players.This working group set out to determine feasible alternative technologies,processes,and raw materials that would accelerate decarbonisation pathways and identify collaborati
36、ve initiatives and studies that might foster faster decarbonisation through potential pilot projects.The guide is intended to serve as a useful resource for stakeholders in hard-to-abate industries.It provides details on the emissions profiles,technical,and geographical challenges,key abatement path
37、ways,and pressing topics for each of the three profiled industries.It also demonstrates an approach to cross-company collaboration for leaders with similar ambitions tofollow and captures lessons learned from earlier efforts.Additionally,the guide highlights the need for multiple stakeholders to get
38、 involved in decarbonisation discussions to accelerate innovation and partnerships.Collaboration is crucialfor achieving the necessary transformation,and the guide emphasises that no single company can achieve this transformation alone.The working group plans to continue this engagement after the re
39、lease of this guide with the goal of developing the collaboration agreements further and conducting feasibility and pilot studies.53.Carbon abatement challenges and opportunities6Steel,aluminium,and mining collectively contribute to around 12%of global carbon dioxide emissions.4,5 Theseindustries we
40、re specifically prioritised by the Sustainable Markets Initiative because of their potential to significantly reduce global emissions,their importance to the global economy,and the relative difficulty of curbing the carbon intensity of their operations and processes.Thissection outlines the emission
41、 abatement challenges and opportunities in eachindustryandshows why they are considered hard to abate.Exhibit 1:Direct global carbon dioxide emissions in 2022In percentage of global carbon dioxide emissionsGlobal carbon dioxide emissions36.8 GtAluminium2%Steel8%Mining2%Note:Mined materials in scope
42、include coal,copper ore,usable iron ore,nickel,zinc,and bauxite and figures exclude fugitive methane emissions.Sources:IEA(2023),Net Zero Roadmap:A Global Pathway to Keep the 1.5 C Goal in Reach,IEA,Paris License:CC BY 4.0,Oliver Wyman analysis7Deep DiveThe biggest emissions challengesWhat makes the
43、 steel,aluminium,and mining industries hard to abate?Seven prevalent economic,regulatory,and technical themes across the three sectors underscore the magnitude of the challenge in curtailing carbon emissions.1The inherent carbon intensity of the processesKey processes and activities in hard-to-abate
44、 industries often entail carbon dioxide generation through essential chemical reactions and high-temperature operations that demand substantial energy input,necessitating transformational technology to address them effectively.2Increasing production volumes along with economic growthThe industries i
45、n scope are foundational for economic growth and development whether it involves consumers such as construction,automotive,energy infrastructure,or consumer goods.With future economic growth and increased demand of these building-block components for the energy transition,production volumes and subs
46、equent carbon emissions will only increase if nothing changes.3Lack of easy alternativesAlthough low-carbon alternatives may exist,these sustainable technologies may not have reached commercial scale or are not yet cost competitive in a global marketplace making swift decarbonisation across hard-to-
47、abate industries difficult.4Reliance on other industries to decarboniseHard-to-abate industries cannot decarbonise alone.To eliminate emissions from operations,they depend on the availability of reliable and scalable renewable power,supporting infrastructure such as the grid and energy storage,and a
48、ccess to critical input materials such as green hydrogen and high-quality iron ore.5Long investment cycles and high investment requirementsThe complexity,scale,and global interdependence of hard-to-abate industries leads to large upfront capital investment.Companies are reluctant to alter their tech
49、nologies and infrastructure before they have realised returns on their past investments unless they are confident it will result in significant emissions reduction,cost savings,or higher prices for green products.6Competitive dynamicsHard-to-abate industries require clear market demand signals for g
50、reen products to inform investment decisions.However,these industries today are lacking the necessary offtake agreements from customers for green products,especially those that come at a premium.7Regulatory uncertaintyHard-to-abate industries will rely on governments in the short-to medium-term to m
51、ake their net zero transition possible.Negative sentiment around regulatory uncertainty puts existing or potential sustainable investments at risk,especially if companies are competing in a global marketplace with an uneven playing field.83.1.Steel1.9 billiontonnesof primary and secondarysteel produ
52、ced annually8%of global carbon dioxideemissions attributable tosteel production2 tonnesof carbon dioxide producedper tonne ofsteelAccess to green hydrogen and renewable power for crude and secondarysteel productionReducing emissions from blast furnaces in the medium-termImproving scrap recycling,col
53、lecting,and sorting infrastructureKey figuresKey technicalchallengesSteels direct carbon footprint(Scope 1 and 2)comprises around 8%of global carbon dioxide emissions,and for each tonne of steel produced,nearly two tonnes of carbon dioxide(CO2)are emitted on average.6Over the last few years,just und
54、er two billion metric tonnes of steel have been produced annually with emerging markets leading the growth in demand.7 These projections underscore the need for greater efforts by the industry to adopt sustainable practices and minimise steels environmental impact,given its current emissions-intensi
55、ve profile.Exhibit 2:Global steel demand growth by regionIn billion tonnes20180.90.40.20.10.11.00.40.20.10.11.00.40.20.10.11.00.50.20.10.11.81.91.92.01.92.0200302020South AmericaNorth AmericaMiddle East and AfricaEuropeChinaAsia PacificAfricaWorld forecast 20301.10.40.20.10.1Sources:World
56、 Steel Association(2022),Total production of crude steel,World total 2022,Oliver Wyman analysis9Carbon dioxide emissions profileBlast furnace basic oxygen furnaceThe steel production industry primarily follows three steel production pathways,with the most prevalent being the blast furnace-basic oxyg
57、en furnace(BF-BOF)route,accounting for 63%of global steel production capacity and emitting 2.2 tonnes of carbon dioxide per tonne of steel produced on average.8The primary energy input for the BF-BOF process is coking coal,which is used to generate the heat inside of the blast furnace and chemically
58、 react with the iron ore.Coking coal,as a pure form of carbon,is used rather than regular coal because of its strength which is needed in a blast furnace operation as well as its high carbon content which aids in the reduction of the iron ore.The process of making coking coal,which involves baking c
59、oal in an oven for 12 to 36 hours at almost 1,100 degrees Celsius,also produces emissions.This process reduces impurities,but it also creates CO2 and methane,another greenhouse gas with as much as 80 times the warming potential of CO2 over 20 years.Additional CO2 emissions are released when pure oxy
60、gen is injected into the basic oxygen furnace to convert the pig iron into steel by reducing its carbon content.Scrap-based electric arc furnaceScrap-based electric arc furnaces(EAF)are the second most prevalent steel production method.In an EAF where heat is generated from an electric arc between t
61、wo graphite electrodes which melts the scrap steel and iron ore.The graphite also acts as a reducing agent,which liberates the oxygen atoms from the iron ore.Average emissions from electric arc furnaces are considerably lower than the BF-BOF route at 0.4 tonnes of CO2 per tonne of steel(tCO2/t of st
62、eel)as seen in the chart below since the recycled scrap just needs to be remelted and purified.9 Per tonne emissions from electric arc furnaces can reach as low as 0.1 tCO2/t of steel if powered by renewable energy;however,EAFs typically rely heavily on on-site power generation and local electricity
63、 grids.Depending on the energy mix of the power generation,carbon emissions from these sources can be significant.Direct reduced iron electric arc furnace and electric smelting furnaceProcesses using direct reduced iron(DRI)account for seven per cent of global steel capacity.10 The DRI process reduc
64、es high quality iron ore pellets directly in solid form at lower temperatures to produce hot briquetted iron(HBI)without the need for blast furnaces and coking coal.Depending on the HBI quality,the material is transferred to an EAF or electric smelting furnacefor melting and steel production.10If th
65、e DRI shaft utilises green hydrogen,emissions from the production of the iron can be near zero.However,most of DRI facilities in use today are powered by natural gas or coal,which emit CO2 through the reduction of the DR iron ore grade in the shaft furnace.Total emissions from DRI-based processes ca
66、n range from1.3 tonnes of CO2 per tonne of steel produced when using natural gas to over 2.5 tonnes of CO2 in the case of coal-based DRI.11Exhibit 3:Principal steel production pathwaysCoalCoke plantPre-processingIron makingSteel makingProcessingBF-BOFEAFScrap-basedDRI-EAF/ESFwith natural gasCokeIron
67、 oreSinter plantSinter plant67%Iron orePellet plantPellet plantScrapNatural gasIron sinterpelletsIron sinterpelletsBlast furnacePig ironScrapBOFElectricityEAFEAF/ESFHBIShaft furnaceCrude steelprocessingCrude steelprocessingCrude steelprocessing2.2tonnes of CO2per tonne of steelO0.4tonnes of CO2per t
68、onne of steel1.3tonnes of CO2per tonne of steel0.20.20.20.20.20.21.20.60.165 milliontonnesof primary and secondaryaluminium producedannually2%of global carbon dioxide emissions attributable toaluminium production16 tonnesof carbon dioxide producedper tonne ofprimaryaluminiumKey figuresKey technicalc
69、hallengesReliable,cost-effective renewable energy for locations without hydropowerElectrifying alumina refining processes in conjunction with renewable energyDeveloping commercialscale inert anodesAluminium production emits an average of over 16 tonnes of carbon dioxide emitted per tonne of primary
70、aluminium.Thus,the aluminium industrys direct contribution to annual carbon dioxide emissions is about two per cent.14By tonnage,aluminium is the second largest manufactured metal,with its primary consumers in the transport and construction industries which account for about half of total demand,and
71、 global demand is expected to increase further over the coming decades as standards of living rise around the world.A sizeable portion of the anticipated growth is expected to be driven by demand for the materials required for the industry transition,such as solar photovoltaic(PV)panels.Furthermore,
72、aluminiums lightweight and robust properties make it a crucial enabler for othersectors such as aviation to reduce their carbon footprints.Exhibit 7:Global aluminium consumptionIn million tonnes2030South AmericaNorth AmericaAsia excluding China2030 World forecastMiddle East and AfricaEuropeChina78.8
73、20181.23.86.37.062.57.836.5201961.91.13.86.37.37.635.8202063.31.04.06.17.47.537.3202165.21.23.96.47.57.538.8202266.61.33.76.47.77.040.4Sources:International Aluminium(2022),Primary Aluminium Production,Oliver Wyman analysis 17Carbon dioxide emissions profileAbout 70%of all aluminium production invol
74、ves the process of refining bauxite,aluminiums base raw material,into alumina and smelting the alumina into primary aluminium.15 Secondary aluminium production involves the recycling of scrap aluminium and remelting it to purify the material for re-processing.As shown in Exhibit 8,approximately 85%o
75、f the Scope 1 and 2 emissions generated during the production of primary aluminium come from the refining and smelting phases(including anode production).16 Bauxite mining and aluminium casting combined account for a fraction ofthe Scope 1 and 2 emissions generated during the production of primary a
76、luminium.Exhibit 8:Direct and electricity-related greenhouse gas emissions of primary aluminium productionIn tonnes of carbon dioxide equivalent per tonne of aluminium produced(tCO2 Eq/tAl)RefiningAnode productionSmeltingCastingTotal(primary aluminium)Scope 1 emissionsScope 2 emissions2.00.90.40.12.
77、410.30.110.70.15.4Note:Scope 1 emissions includes CO2 and perfluorocarbon(PFC)emissions;emissions calculated as full lifecycle(cradle-to-gate)emissions.Sources:International Aluminium(2021),Greenhouse Gas Emissions Intensity-Primary Aluminium,Oliver Wyman analysis18SmeltingThe high average carbon in
78、tensity of aluminium production primarily stems from the electricity demand of smelting alumina,generally by means of the Hall-Hroult process,accounting for over 80%of aluminium productions Scope 1 and 2 emissions.17 In fact,the combined electricity consumption from smelting globally is greater than
79、 the total electricity consumption of entire countries such as Brazil,or the United Kingdom.Of the emissions from smelting,around 19%are direct emissions derived from the use of carbon-based anodes.The production of the carbon anodes needed for electrolysis alone generates 0.9 tonnes of CO2 per tonn
80、e of aluminium(tCO2/tAl)because of the energy required to refine coking coal into anodes.Moreover,during electrolysis,significant CO2 and perfluorocarbon emissions are released as the anodes react with the oxygen atoms freed from the alumina.On average,the Scope 1 emissions from the smelting totals
81、around 2.4 tCO2/tAl.The bulk of smelting emissions are electricity-related emissions derived from the energy generation needed to power the smelters the global power mix supplying these smelters remains heavily reliant on fossil fuels.In 2022,55%of the power supplied to smelters came from coal and 1
82、0%from natural gas.18 However,the dependence on fossil fuels is notably higher in China,Oceania,and the rest of Asia,while the Americas and Europe rely mostly onhydropower(see Exhibit 9).Exhibit 9:Smelting power mix by power sourceIn percentage of total powerCoalNorth AmericaSouth AmericaEuropeAfric
83、aGCCAsia(excluding China)OilNatural gasNuclearHydroRenewableOther non-renewableChinaOceaniaWorld average955594625838573110211113 93168221Sources:International Aluminium(2022),Primary Aluminium Smelting Energy Intensity,Oliver Wyman analysis 19RefiningIn addition to smelting,the refining p
84、rocess requires high temperatures during alumina hydrate calcination and large amounts of hot steam for the Bayer process and calcination where steam and heat are typically generated using fossil fuels.Refining bauxite into alumina ready for smelting is the second most emissions-intensive phase of a
85、luminium production,accounting forapproximately 15%of the industrys Scope 1 and 2 emissions.19Of the 2.4 tCO2/tAl emitted across the refining process,83%are Scope 1 emissions made up of thermal energy,non-CO2 emissions and ancillary materials.The remaining 17%of emissions from the refining processes
86、 are Scope 2,with the Bayer process and calcination typically powered by fossil fuels.In North America,Europe,and the Middle East,alumina refining relies on natural gas to generate 95%to 100%of the energy needed,while in Australia,around 60%isderived from gas with the remainder from coal.20Geographi
87、c diversityThe aluminium industry must contend with unique geographical constraints in each region.One shared concern is the emissions from electricity consumption used in primary aluminium production where access to renewable energy resources,effective storage,and energy management is vital.The loc
88、ation of aluminium production,and specifically the smelters location,significantly influences the total greenhouse gas emissions.For instance,the emissionsfactor of the South African power grid,primarily coal-powered,is around 20timeshigher than Norway where most power is generated from hydropower.2
89、1Also,since secondary aluminium has a significantly lower energy and carbon intensity than primary aluminium,regions with access to robust recycling infrastructure,sorting facilities,and large scrap quantities fare far better in terms of average carbon intensity fromaluminium production.Expanding se
90、condary aluminium in the Middle East Secondary aluminium requires only five per cent of the energy needed for primary aluminium production.EGA,in partnership with leading waste management companies,formed the Aluminium Recycling Coalition to embed recycling practices and infrastructure in the Middle
91、 East economy.EGA is also planning to build the largest recycling facility in the United Arab Emirates with acapacity of over 150,000 tonnes per annum.20Exhibit 10:Primary aluminium production carbon dioxide emissions by region in 2022In million tonnes of carbon dioxide10South America10North America
92、50Europe60Middle East and Africa80Asia Pacificexcluding ChinaChina450Note:Bubble sizes indicative.Sources:International Aluminium(2022),Primary Aluminium Production,Oliver Wyman analysis Abatement pathways and challengesAluminium is considered a hard-to-abate industry because of the relative technol
93、ogical immaturity of the necessary solutions and substantial financial commitment of transitioning to decarbonised technology.The large and constant energy demand of smelters is at odds with the intermittency of renewable energy.Nonetheless,with accelerated and sustained efforts,decarbonisation is p
94、ossible,and progress is being made as many of the necessary technologiesapproach commercial maturity.21SmeltingThe greatest opportunity for reducing aluminiums carbon dioxide emissions rests with renewable power generation as more than 60%of the industrys carbon dioxide emissions is a consequence of
95、 electricity consumption.With one-third of the 200+worldwide smelters reliant on grid power,the rate of decarbonisation will be mostly determined by the speed at which the grid transitions to a more renewable energy mix.22However,the increasing variable renewable energy in local power grids can caus
96、e transmission congestion,limiting the impact that renewables can have.To limit grid congestion in networks,regulators must provide innovative frameworks to encourage the direct integration of variable renewable energy and heavy industry which can circumvent congestion at scale and at pace with lowe
97、r societal cost from transmission infrastructure and reserve reimbursement.Placing investments in renewables where they are needed the most The scale of renewable expansion over the next two decades will be unprecedented.Vast amounts of new renewable generation capacity will need to come online to s
98、upport heavy industry decarbonisation for hydrogen electrolysers,aluminium smelters,electric arc furnaces,and newlyelectrified processes.The Decarbonising Grids Working Group,also within Energy Transition Task Force,is seeking to increase grid capacity and flexibility in key African markets by combi
99、ning public and private funding and bringing the right stakeholders together to create a regulatory and policy framework to support external investment.The increased prevalence of renewable power purchase agreements offers some bargaining leverage for quicker adoption of renewable power through the
100、grid,but the market remains immature in several key regions.In many countries,demand far outstrips supply.For the remaining two-thirds of the worlds smelters that use producer-generated energy,two principal solutions are increased renewable power generation,including hydroelectric power,hydrogen,and
101、 other renewables,and/or increased use of carbon capture,utilisation,and storage(CCUS)technologies.Alongside increasing renewable energy usage,the development of inert anode technology is critical to achieving carbon-free aluminium.Inert anodes eliminate the Scope 1 emissions by replacing the carbon
102、 anodes with another material that can remove the oxygen atoms from thealumina without releasing carbon dioxide.22RefiningPathways to cut alumina refinings Scope 1 and 2 emissions require a transition to renewable power,and electrification of refining processes.Since most traditional calciners are f
103、ossil-powered,the industry requires an electric or hydrogen-powered calciner to take advantage of fossil-free energy.Also,there are opportunities for heat recapture and process efficiency in the Bayer process through various technologies.If previously wasted thermal energy in the form of uncontamina
104、ted steam can be reutilised from electric calcination,emissions from power generation and steam production can be reduced.However,the steam requirements for the Bayer process will require further energy input.To produce the additional steam,processes must be adapted to use renewable energy,such as c
105、ondensed solar and photovoltaic.Key Takeaways1.Although a decarbonised power supply and increased secondary aluminium are critical to achieving net zero,the aluminium industry will require several other developing technologies to work in tandem with each other.2.Customer and producers require a clea
106、rer regulatory framework for carbon accounting,carbon pricing,and subsidies to incentivise further investments in decarbonisation.Regional variations in access to renewable energy and technological development must be considered.3.Access to renewable energy and secondary aluminium varies widely acro
107、ss the globe;regulators must strike a careful balance while incentivising green production.4.Customers of the aluminium industry have a crucial role to play in giving long-term offtake agreements with clear demand and price signals to producers to incentivise futureinvestments in low-carbon aluminiu
108、m.22233.3.MiningKey figures15.6 billiontonnesof key metals andminerals mined per year2%of global carbon dioxideemissions attributableto mining activities0.6 billion tonnesof carbon dioxide producedby the mining industry(Scope 1,2)annuallyKey technicalchallengesFurther developingzero-carbon alternati
109、vesto haulage and transportTransition to renewable energy and electrification for processingDeveloping low-carbon shipping fuels forseaborne transportThe core mining activity extracting and moving billions of metric tonnes of material and equipment makes it easy to understand why the mining industry
110、 is one of the major contributors of emissions,accounting for less than two per cent of global carbon dioxide emissions(not including fugitive emissions).This figure only accounts for extraction and basic on-site processing of the six key mined commodities(coal,copper ore,iron ore,nickel,bauxite,and
111、zinc),with production,manufacturing,and end use resulting in further Scope 3 emissions.These indirect emissions can be up to 10 times greater than those emitted at the mine site and must therefore be targeted during the decarbonisation process of the entire value chain.23Scope 1 and 2 carbon dioxide
112、 emissions across the industry are primarily driven by diesel-powered haulage,and on-site processing which usually relies on natural gas,diesel generators,or electricity either supplied from the grid or off-grid sources.Each power source represents anadditional sourceof emissions,requiring tailored
113、decarbonisation solutions.Carbon dioxide emissions profileA closer look at industry-wide emissions reveals significant heterogeneity in the carbon intensity of mining operations.The industry produces a broad range of minerals and metals,mostly extracted through either open pit or underground mining.
114、The emissions intensity of any one operation is determined by product type,grade of ore,location,mining method,process efficiencies,as well as types and age of equipment and energy supply.For example,the average mining emissions intensity to produce one tonne of nickel is around five tCO2 per tonne
115、of nickel,whilethe same metric for iron ore is below 0.1 tCO2 per tonne.24 Significant differences in emissions canexist even for the same metal or mineral,depending on the factorsmentioned above.24Role in the energy transitionMining is a key industry needed to support the energy transition.However,
116、the challenges are complex and require a rethinking of how the industry conducts business.First,there is expected to be an increase in demand for most mined commodities.Part of this demand is generated by the energy transition itself,and part is the product of global economic growth,especially in em
117、erging markets.Demand for mined resources to support the energy transition is projected to surge because oftheir significant role in expanding renewable energy generation,infrastructure,and storage.By 2050,the global demand for nickel,lithium,cobalt,and graphite is forecasted to at least double,whil
118、e demand for clean technologies is expected to quadruple,driven in part by the global expansion of electric vehicle(EV)production.25Nickel,lithium,cobalt,and graphite are key elements in EV batteries.26 The intensifying demand for such resources,and the required increases in mining activities to sat
119、isfy it,makes the need to decarbonise mining operations even more urgent if we are to supply these critical commodities in a sustainable fashion.This pressure to expand production must be balanced against the urgent need to cut emissions at a pace that will push the industry to net zero by 2050.Exhi
120、bit 11:Global demand for lithium,nickel,and cobaltIn million tonnes0.10.61.32.94.86.20.20.40.5LithiumNickelCobalt20222050 low scenario2050 high scenario+110%+900%+200%Sources:IEA(2023),Critical Minerals Market Review 2023 IEA,Paris License:CC BY 4.0,Oliver Wyman analysis25Power supplyOn-site mining
121、operations,such as processing(for example,washing,crushing,grinding)of extracted metals or minerals,are mostly powered by electricity either sourced from local grids(not always available in remote locations)or from on-site power generation.If sourced from local grids,this exposes mining companies to
122、 the emission intensity of the respective power grid,which can vary by region.In Australia,for example,22%of the mining sectors energy needs are met by a grid that is 71%is powered by fossil fuels.27“Off-grid”mines depend upon on-site power generation from diesel and natural gas.The key issue with a
123、 transition to renewable sources remains the intermittency of renewable power from solar and wind when mining operations need an around-the-clock reliable energy supply.In-mine operationsHeavy haulage operations,a key driver of carbon dioxide emissions,are almost exclusively diesel-powered today.Thr
124、ee options to decarbonise this activity seem most viable in the long term:The transition to battery-powered electric haulage vehicles,hydrogen-powered haulage vehicles,or advanced biofuel-powered haulage vehicles.While all solutions are in development,there is limited proof that either option works
125、effectively in a real-world mining context which requires high power density and long run times before refuelling.Fugitive emissionsFugitive methane emissions from coal mining are a significant contributor to greenhouse gas emissions.These emissions in mining pertain to the unintentional and frequen
126、tly uncontrolled release of gases or particulate matter into the atmosphere during mining operations.Managing and containing these emissions,particularly methane,is a challenging task in underground and open pit coal mining.The challenge is primarily rooted in the absence of technologically advanced
127、 infrastructure capable of efficiently capturing and controlling these fugitive emissionsduring mining operations.According to the International Energy Agency,around 40 million tonnes of fugitive methane were released from coal mines in 2022 which correlate to a carbon dioxide equivalent of 1.28bill
128、ion tonnes per year over 100 years larger than direct emissions from all other miningactivities combined.2826Long-haul transportTransporting mined products is another major driver of Scope 3 emissions,with the movement of extracted minerals and metals from often remote locations on fossil fuel-power
129、ed rail,trucks,and/or cargo ships.The feasibility of integrating low-carbon solutions into the transport process is being investigated but is so far proving challenging because of the scale of operations,the investment required to make the transition,the often-remote locations of mining operations,a
130、nd the relative immaturity of some of the technologies for industrial applications.Geographic diversityMinings diverse geographical footprint creates both abatement challenges and opportunities,and any decarbonisation solution must be tailored to the unique requirements of each mine and location.Bec
131、ause of high production volumes and complex mining activities for key metals and minerals such as iron ore,coal,bauxite,lithium,copper,and zinc,Asia Pacific is accountable for approximately 70%of global Scope 1 and 2 emissions from mining.Of these,China alone is estimated to account for over 40%,wit
132、h Australia also a key contributor given its significant mining operations.In Australia,mines are often located in edge-of-grid or off-grid areas,resulting in operations being powered by on-site generators operated by independent vendors or the mining companies themselves.Exhibit 12:Primary carbon d
133、ioxide emissions from mining activities by region in 2022In million metric tonnes of carbon dioxide30Europe50North America40South America30Middle East and AfricaChina240180Asia Pacificexcluding ChinaNote:Bubble sizes indicative;emissions exclude fugitive methane emissions.Sources:Oliver Wyman analys
134、is27Abatement pathways and challengesAs mentioned,minings existing emissions profile and corresponding decarbonisation pathways are unique for every individual mining operation because of factors like location,energy supply,and the materials being extracted.HaulageHaulage refers to the movement of e
135、xtracted materials across mining sites.The exact haulage infrastructure and approach differs across mining operations:Haulage,almost exclusively,employs diesel-powered combustion engines,giving rise to significant Scope 1 emissions.As mentioned,there are a few examples of low-carbon solutions,such a
136、s renewable diesel,hydrogen,or fuel cells,but most are currently limited to pilot-scale feasibility studies.Biofuels are widely seen as the chief intermediary pathway to decarbonisation,given its technological maturity and relative ease of integration into existing operations.For instance,many curre
137、nt vehicle engines can already operate on biofuel blends with little modification.Biofuels are in high demand across multiple industries and,today,are more expensive than traditionally used fossil fuels.The second option is to electrify haulage vehicles and power them with renewable energy.Inhaulage
138、 today,there are few examples of commercially scalable,battery-powered EVs,with most such solutions remaining at the pilot scale.The key technological barriers are battery size,weight,and charging times as well as the significant investments required to install the necessary electric infrastructure.
139、Hydrogen fuel cell-powered vehicles represent another haulage decarbonisation option,but one which is far less advanced than either biofuels or battery-powered EVs.Such solutions are being explored at the pilot level across the industry,with the major constraint being the lack of hydrogen infrastruc
140、ture and generation.Hydrogen may prove to be a key transition pathway in years to come,but for now its application to haulage solutions remains limited.In general,except for the biofuels option,switching existing vehicle fleets to lower-carbon alternatives translates to high investment requirements
141、and operational risks.ProcessingProcessing,the next step after the extraction and movement of mined materials,is another emission-heavy step in the mining value chain.The processing profile varies significantly between commodities and operations,with crushing and grinding the most energy intensive a
142、ctivities.For example,in underground nickel mining,the major driver of carbon dioxide emissions is processing,while the emissions contribution of processing in open-pit hematite mining is insignificant.28Most processing can be electrified,and full decarbonisation would involve a transition to renewa
143、ble electricity sources.For grid-powered operations,the first abatement option is increasing the use of virtual or green power purchase agreements(PPAs)with the national gridto secure renewable energy supplies for processing.Alternatively,for such operations where sourcing large supplies of green en
144、ergy through the grid is not viable because of a lack of grid infrastructure in remote mining operations or a lack of green PPA availability,for example an option for mining operations is the development of their own renewable power generation capabilities.The central technologies,wind and solar,are
145、 mature,but the intermittent nature of their supply can put the solutions in conflict with the 24/7 energy requirements of modern mining operations.Energy and power storage solutions to alleviate the issue and ensure a constant,reliable power supply have so far mainly focused on batteries,but their
146、high cost and low scalability pose challenges for this abatement option.For the processes where electrification is not possible,transitioning towards low-carbon fuel alternatives is key.As detailed above,one main challenge with biofuels is their limited abatement potential.Hydrogen-powered solutions
147、 are also a possibility,but hydrogen infrastructure and supply limitations render its feasibility low for now.Integrating renewables into the mix Rio Tinto operates five power generation facilities in the Pilbara area alone,with total capacity of 480 megawatts(MW)to develop further solar farms of up
148、 to 300 MW capacity in the coming years,in an ongoing effort to decarbonise operations.TransportTransport-related emissions are another lever along the mining value chain to decarbonise.However,if the mining companies do not run shipping and transport activities themselves,related emissions are cons
149、idered Scope 3 emissions.Consequently,abatement efforts addressing these Scope 3 emissions are necessary,but those would not directly address theScope 1 and 2 carbon dioxide emissions of mining companies discussed in this guide.Often the transport of mined material from pit to port is undertaken on
150、private freight railways,with the majority still reliant on diesel combustion engines.Potential decarbonisation options include battery electric,hydrogen,and ammonia-powered solutions with studies and pilot projects ongoing across the industry.29 Maritime shipping remains an emissions-intensive sect
151、or given its reliance on carbon-intensive bunker fuels.Regulatory pressure to decarbonise the marine segment is increasing,with short-term efforts focused on increased fuel efficiency.Mid-and long-term efforts are focused on alternative fuels,with various competing options present in pilots and feas
152、ibility studies,such as liquefied natural gas(LNG),biofuels,or methanol.The most pressing challenges with alternative fuels are the lack of adequate production capacity to meet the demand from multiple industries,the lack of required infrastructure,and the associated cost and investments of transiti
153、oning shipping fleets.Two developments can currently be observed:First,shipping companies are using LNG-powered vessels as a transitional fuel,with the technology at high maturity.For example,Anglo Americans new LNG-powered vessels offerapproximately 35%carbon reductions relative to conventional bun
154、ker fuel.29 Second,among the competing low-carbon shipping fuels for the longer-term transition,thefour frontrunners are advanced liquid biofuels,renewable methanol,green hydrogen,and green ammonia.All four remain relatively far from scale,with significant investment needed in production and distrib
155、ution infrastructure.Key Takeaways1.Even as demand for coal is forecast to decrease mid-or long-term,demand for most other mined materials,especially those necessary for the energy transition such as nickel,lithium,cobalt,and graphite,will increase over the coming decades.2.The replacement of fossil
156、 fuels,such as diesel,bunker fuels,or natural gas,for haulage,processing,and long-haul transport pose the largest opportunity for the mining sector to abate emissions.3.Availability of cost-effective low-carbon fuels and provision of reliable renewable power are prerequisites for change to the indus
157、try.4.Governments must continue working closely together with mining companies to define the right and most effective incentive schemes,policies,and actions to drive the sectors transformation.29304.Prioritising action31The Decarbonising Industry Working Group aimed to explore decarbonisation pilots
158、 for real-world application meeting three criteria:Address crucial emission challenges,leverage members expertise,and be scalable across the industry.A bottom-up assessment was conducted to establish a knowledge base which aimed to align participating companies understanding of their emission challe
159、nges.The working group then engaged a wider range of companies from various Sustainable Markets Initiative workstreams,such as hydrogen,finance,and CCUS,to leverage their expertise and discuss challenges,opportunities,and solutions.Concurrent interviews were held with subject matter experts and seni
160、or leaders overseeing sustainability initiatives to identify existing capabilities and potential gaps that could be filled through others expertise.After combining insights from both assessments,collaborative workshops were held to discuss priorities,and this collective effort resulted in the priori
161、tisation of five emissions reduction areas that align with the selection criteria.In the following part of this guide,the actionable emissions abatement topics identified by the working group are captured.Key criteria for pilot topic selection123Focus on the critical emissions abatement challenges i
162、n steel,aluminium,and miningRequire the capabilities and expertise of the participating companiesBe scalable and beneficial to the wider industrial community32STEELExpanding direct reduced iron ore grade feedstockRationaleThe quantity of suitable direct reduced iron ore grade today is insufficient t
163、o meet future demands.DRI processes are projected to be a pivotal piece of steelmakings zero-carbon future,andthe working group has identified this asakey topic of concern.The current standard for DRI-EAF production requires high-quality iron ore(typically over 67%Fe content),but today,only 13%of se
164、aborne iron ore is suitable for use in a DRI shaft.30 Select working group members have collaborated on how to address this issue and transform processes in their existing plants to accept lower iron content ore.Workshops were held to brainstorm on challenges and potential solutions such as the addi
165、tional infrastructure and technology required for hydrogen generation,transport,and storage.In-depth knowledge on how different low-grade iron ore affects the DRI product quality is limited among steel companies.The objective of this collaborative initiative is to assess the impact of various lower-
166、grade iron ores(for example,Indian iron ore,Australian iron ore)on the hot briquetted iron quality based on the tuning of the hydrogen injection in the DRI shaft furnace.Conducting this research is necessary to understand the various constraints around DRI feedstock.The relevance to the global steel
167、 industry could be further enhanced by including additional low-grade iron ores to the testing scope.Only 13%of seaborne iron ore today is DR grade.31ImplicationsThis topic has the potential to expand DRI technology across the industry and reduce per tonne carbon dioxide emissions from steel product
168、ion by over 65%for every new tonne of hydrogen-powered DRI that replaces existingBF production.Understanding the iron ore requirements for DRI production allows steel producers around the world to accelerate DRI investments given reduced implementation risk and feedstock constraints.The potential to
169、 use less expensive,more abundant iron ore as feedstock can positively impact the overall cost of green steel and reduce the demand forhigh-quality iron ore.Exhibit 13:Schematic overview of DRI production pathwayDirect ReductionPlantElectric smeltingfurnace66%Fe iron oreHydrogen supplyRenewable supp
170、lyEAF or BasicoxygenfurnaceIron Ore Supply33STEELStrengthening the carbon capture and storage business caseRationaleIn the short-to medium-term,reducing carbon dioxide emissions from crude steel production will require carbon capture.However,the industry is challenged by both the technical and finan
171、cial feasibility with the best available carbon capture technology today costing 40 to 100 USD per tonne of captured carbon.32To make carbon capture a viable solution,the optimum sequestration pathways need to be identified on a plant-by-plant basis to improve the investment outlook.Further research
172、 across the industry is needed to identify the optimum pathways by analysing the key levers and market outlook that impactthese pathways.Also,identifying indirect benefits in carbon value chain pathways such as end-product usage in other industries can improve both the investment and sustainability
173、outlook ofpotential projects.Finally,the potential to impact climate changeas well as policy and regulatory enablers need to be assessed to determine the likelihood of recognition in various compliance and regulatory standards.The topic was selected by the working group due to the criticality for th
174、e global steel industry and the outsized impact a solution like carbon capture and storage can have.ImplicationsIf successful,this study can provide the steel industry with key carbon capture knowledge,processes,and a proof of concept that can be widely adapted to reduce emissions from integrated st
175、eelmaking as well as strengthening the investment case for carboncapture projects.The lessons learned from this potential study can also be expanded and applied to DRI-EAF/ESF processes to produce and recycle methanol back into the steelmaking process to build a fully circular business model.In addi
176、tion,this study can also serve as a critical proof of concept for other hard-to-abate industries with the utilised carbon having potential application in the aviationand marine sector.Exhibit 14:Schematic overview of carbon capture pathways for steelmaking usageBasic oxygen furnace carbon captureCar
177、bon dioxide processingBlast Furnace carbon captureStorageValue added productsCarbon captureProcessingDestination34MININGE-methanol to fuel the future of shippingRationaleLess than one per cent of bunker fuels today are low carbon with the other 99%coming from fuel oil and marine gas oil.Given the in
178、ter-connectedness of mining operations and vast quantities of material that must be shipped globally,mining companies are highly exposed to carbon emissions in this sector.Accelerating innovation and the scaling up of low-carbon alternatives economically can significantly reduce emissions for the mi
179、ning sector as well as all sectors that relyonseaborne trade.Members of the Decarbonising Industry Working Group identified this area as a key focus point for their operations.Identifying the most cost-effective production pathway for e-methanol at select locations would be valuable for the industry
180、.Areas of a potential analysis should include a techno-economic evaluation of potential production pathways that depends on location,feedstock supply,product specifications,product demand(offtake),andavailable energy sources.The produced e-methanol could then be supplied to shipping operations in th
181、e mining sector,supporting the abatement efforts to decarbonise parts of the mining value chain.Improving the understanding of cost drivers and technological challenges when producinge-methanol will benefit multiple industries to reduce production cost and ramp up capacities.ImplicationsE-methanol h
182、as the potential to significantly reduce carbon dioxide emissions of shipping operations by more than 90%as well as reducing pollutants such as sulphur oxides(SOx)and nitrogen oxides(NOx)in comparisonto traditional shipping fuels.33Demonstrating economic feasibility at a defined locations can increa
183、se support andinvestments in e-methanol production forlow-carbon bunker fuel.Exhibit 15:Schematic overview of E-methanol production processRenewable energy generationHydrogen electrolyserMethanol reactorCarbon captureUsage as shipping fuelDistribution andlogisticsE-methanol productionE-methanol usag
184、e35ALUMINIUMReplacing fossil fuels with electric calcinationRationaleEliminating emissions from the alumina refining process requires a transformation in the way traditional calcination is done.Over 60%of alumina refining emissions could be reduced through the application of electric calcination on
185、a global scale,total emissionsabatement can be significant.Given the potential impact,the working group prioritised and collaborated on the design and development of an electric calciner.This process is intended to replace existing calciners and could be expanded globally ifthe pilot proves successf
186、ul.In addition to the development of the core technology,working group members are potentially looking to integrate Mechanical Vapour Recompression to capture the uncontaminated steam from the electric calciner to feed back into the Bayer process,further reducing alumina refining emissions.Implicati
187、onsEliminating emissions from calcination can potentially reduce Scope 1 and 2 emissions from aluminium production by over 10%if powered by renewable energy.This technology has high scalability potential,and,once a proof of concept is successfully achieved and the technological maturity level increa
188、ses,the entire alumina refining industry can benefit from this development.In addition to the core technology,this study could expand to include Mechanical Vapour Recompression in conjunction with electric calcination to reduce emissions further.Electric calcination can reduce primary aluminium emis
189、sions by 10%.Exhibit 16:Schematic overview of electric calcination versus traditional pathwayTraditionalpathwaySteam produced bygas turbineNatural gasorfuelcombustionCarbon dioxide emissionsContaminated steamAluminaHydrateTraditional CalcinerAluminaAluminaElectric CalcinerRenewablepowerUncontaminate
190、d steamMechanical VaporRecompressionBauxitePilot pathwayBayerProcess36ALUMINIUMProducing zero-carbon steamRationaleThis study suggests examining the feasibility and suitability of retrofitting zero-carbon steam processes in the Bayer process duringalumina refining.Zero-carbon steam is generated usin
191、g a combination of renewable energy generation and thermal energy storage to produce steamat suitable pressures and temperatures to be used in industrial processes.In this context,an existing refining plant could be leveraged to integrate and test potential zero-carbon steam processes.The production
192、 of steam mostly fossil fuel-powered required for the Bayer process in alumina refining is a significant contributor to aluminiums greenhouse gas footprint due to the pressure and temperature requirements.The technology in scope could be adapted tovarious locations if reliable renewable power can be
193、 supplied.ImplicationsEmissions from aluminium production coulddecrease by more than five per cent dueto this technology.Decarbonising steam production is a key element of aluminiums decarbonisation pathway.A study could provide a valuable proof of concept for the entirealuminium industry.The techno
194、logy and concept being developedcould potentially be utilised in other industries such as the chemicals industryor mining for zero-carbon steam generation.Primary aluminium emissions could be reduced by 5%due to this technology.Exhibit 17:Schematic overview of zero-carbon steam processRenewable ener
195、gy generation(for example PV)Thermal energy storage(for examplemolten salt)Alumina HydrateBayerProcessTraditional steam production pathwayBauxitePilot pathwaySteam produced bygas turbine375.A call for action38Over the course of this initiative,it became clear that considerable progress on emissions
196、abatement can be achieved in hard-to-abate industries when the right organisations and stakeholders collaborate in a mission-driven manner.The three hard-to-abate industries profiled are responsible for approximately 12%of direct global carbon dioxide emissions and must therefore become a focus of g
197、lobal decarbonisation efforts.34,35 However,it is critical for organisations to have confidence that positive actions taken today on behalf of the environment will not disadvantage them or harm their competitiveness disproportionately.Throughout the work,a recurring challenge for the group was wrest
198、ling with the commercial uncertainty surrounding the rate of adoption of abatement technologies.Much of this uncertainty stems from the lack of a level playing field around regulatory practices and an absence of established“green premiums”that guarantee products with lower embedded greenhouse gas em
199、issions will be rewarded with sustainable higher prices.Without assurancesthat competitors will face the same regulatory imperatives or a guarantee of higherprices for adopting greener processes,businesses struggle to evaluate the economicfeasibility ofemissions abatement initiatives.Consequently,al
200、though transitioning to green production processes might offer competitiveadvantages over the long run,the current absence of well-established demandandprice-points for green products within the three industries often hinders theviability ofdecarbonisation pathways.Calls for actionSteel,aluminium,an
201、d mining face a broad range of commercial and technical challenges,withmultiple overlapping barriers faced by all three.If decarbonisation efforts are to proceedon alarger scale,the following prerequisites must be met:1.Global frameworks for regulation and policy on emissions abatement must be devel
202、oped to ensure a level playing field across regions and industries.The industries need to advocate for the development of international agreements and frameworks that promote and support the adoption of low-carbon solutions.Industry players cannot move ahead at pace without the assurances that their
203、 global rivals will face the same or similar set of standards,regulations,and guidelines.Additionally,more alignment on carbon accounting practices across industries and countries is needed to provide companies guidance,but alsoto ensure differing practices will not hinder the rollout of effective a
204、batement studiesand pilots where organisations do not understand whether efforts wouldsupporttheir net-zero ambitions.392.Demand for green products is picking up but needs to be supported with policies andincentives.Policymakers need to implement incentives and regulations that encourage sustainable
205、 procurement practices across industries(and countries).This can be achieved either through the introduction of new requirements to produce or use low-carbon products,or by introducing support schemes for bridging the cost gaps between low-carbon products and traditional products.Such schemes could
206、give market demand and price clarity a much-needed push in the right direction.Increased demand for low-carbon products enhances the security and transparency for producers and reduces the risks associated with larger decarbonisation investments.3.Energy infrastructure and capacities need to be scal
207、ed up rapidly.The accelerated scaling of renewable power generation,green hydrogen production,and grid capacities is mandatory to decarbonise the steel,aluminium,and mining industries.Policymakers need to ensure subsidies,incentives,and regulatory frameworks in place are supportive of such an ambiti
208、on.“Fit-for-purpose”permitting processes for new capacities need to be ensured by policymakers,enabling organisations and investors to expand capacities rapidly.Additionally,policymakers should foster collaboration with relevant organisations and the financial community to resolve issues and to enco
209、urage capacity expansions.Accelerating“olive”financing The energy transition will require not only investment into green technologies,but also into the decarbonisation of existing hydrocarbon assets(referred to as“Olive”projects).However,there are fundamental limitations on funding Olive projects,bo
210、th on regulated capital due to current risk and ESG frameworks as well as on private investors appetite.A workstream within the Sustainable Markets Initiative is evaluating strategies to accelerate financial support,as well as ways to increase the allocation to countries,organisations,and projects t
211、hat might otherwise face challenges getting sufficient and attractive funding for decarbonisation.404.Transformational investments are needed to move towards low-carbon practices at scale.Tremendous investments will be needed to decarbonise steel,aluminium,and mining,starting with the necessary expa
212、nsion of renewable energy.Policymakers must be prompted to establish funding programs,grants,subsidies,and low-interest loans specifically targeted at supporting the adoption of low-carbon solutions across sectors.Additionally,policymakers should consider providing tax incentives and fiscal benefits
213、 to companies in hard-to-abate industries that invest in low-carbon technologies,like those created in the 2022 Inflation Reduction Act in the United States and the European Unions Green Deal.Given the substantial amounts of financing required,companies could also consider adopting the issuance of g
214、reen bonds to drive green investments.5.More funding of research and development is needed.Governments can support the adoption and advancement of low-carbon technologies by further increasing the funding and incentives for green technology-related research,patents,and piloting.Additionally,internat
215、ional platforms and forums need to be expanded and supported to bolster progress and joint problem solving.Research-focused collaborative partnerships,whether among companies within the same industry or across different sectors,also play a pivotal role.These partnerships can enable organisations to
216、harness their collective research and development capabilities,contributing to the advancement of technologies,accelerating learning,and successfully executing emissions abatement pilot projects.This collaboration can also help to build markets for the new low-carbon products.The outcomes of the col
217、laborations as part of this Sustainable Markets Initiative working group illustrate the collective commitment from hard-to-abate sectors to establish strategies for reducing emissions.However,the outcomes formed during this process are a double-edged sword:On one hand,they highlight the potential fo
218、r significant progress,but on the other hand,they underscore the challenges of achieving widespread decarbonisation across industries.The calls to action are an effort to emphasise some of the changes needed to expedite an effective transition across the three industries.Steelmakers,aluminium produc
219、ers,and miners cannot change their industries alone.While industry players know what key challenges need to be addressed and how this could potentially be done,we now must create the right incentive mechanisms,financial support,andtechnological development to accelerate decarbonisation.41Acronym tab
220、leAPACAsia-Pacific regionBF-BOFBlast Furnace-Basic Oxygen FurnaceCCUCarbon Capture and UtilisationCCUSCarbon Capture,Utilisation and StorageCO2Carbon DioxideDRIDirection Reduction Iron-OreEAFElectric Arc FurnaceEUEuropean UnionEUROFEREuropean Steel AssociationEVElectric VehicleGHGGreenhouse GasesGWh
221、Gigawatt hourHBIHot Briquetted IronIAIInternational Aluminium InstituteIEAInternational Energy AgencyJSAJoint Study AgreementskWhKilowatt hourLNGLiquefied Natural GasMEAMiddle East and AfricaMWMegawattp.a.Per annumPFCPerfluorocarbonPPAPower Purchase AgreementPSAPressure Swing AdsorberPVPhotovoltaicR
222、OIReturn on InvestmentSMRSteam Methane ReformertCO2e/tTonnes of carbon dioxide equivalent per tonnetCO2-Eq/tAlTonnes of carbon dioxide equivalent per tonne of aluminium42Table of figuresExhibit 1:Direct global carbon dioxide emissions in 2022 6Exhibit 2:Global steel demand growth by region 8Exhibit
223、3:Principal steel production pathways 10Exhibit 4:Regional overview of steel production mix 2023 11Exhibit 5:Primary emissions from steelmaking by region in 2022 12Exhibit 6:Carbon dioxide emissions from current and future low-carbon steel production 15Exhibit 7:Global aluminium consumption 16Exhibi
224、t 8:Direct and electricity-related greenhouse gas emissions of primary aluminium production 17Exhibit 9:Smelting power mix by power source 18Exhibit 10:Primary aluminium production carbon dioxide emissions by region in 2022 20Exhibit 11:Global demand for lithium,nickel,and cobalt 24Exhibit 12:Primar
225、y carbon dioxide emissions from mining acivities by region in 2022 26Exhibit 13:Schematic overview of DRI production pathway 32Exhibit 14:Schematic overview of carbon capture pathways for steelmaking usuage 33Exhibit 15:Schematic overview of E-methanol production process 34Exhibit 16:Schematic overv
226、iew of electric calcination versus traditional pathway 35Exhibit 17:Schematic overview of zero-carbon steam process 3643Endnotes1 International Energy Agency(2022),Iron and Steel Technology RoadmapEdition,License:CC BY 4.02 International Energy Agency(2023),Tracking Clean Energy Progress 2023,IEA,Pa
227、ris,License:CC BY 4.03 See endnote 1 and 2.4 See endnote 1.5 See endnote 2.6 See endnote 1.7 World Economic Forum(2022),Net-Zero Industry Tracker 2022Edition.8 Global Energy Monitor,Global Steel Plant Tracker.9 See endnote 1.10 See endnote 8.11 Worldsteel.org(2022),Hydrogen(H2)-based ironmaking.12 M
228、ission Possible Partnership(Sep 2022),Making Net Zero Steel Possible,2022 Edition.13 See endnote 2.14 See endnote 2.15 World Economic Forum(2020),Aluminium for Climate:Exploring pathways to decarbonize the aluminium industry.16 International Aluminium(2021),Greenhouse Gas Emissions Intensity Primary
229、 Aluminium,Oliver Wyman analysis.17 International Aluminium(2022),Primary Aluminium Smelting Energy Intensity,Oliver Wyman analysis18 See endnote 17.19 See endnote 16.20 Mission Possible Partnership(Apr 2023),Making Net Zero Aluminium Possible,2023 Edition.21 Our World in Data(2022),Carbon intensity
230、 of electricity,2022 Edition.22 See endnote 15.23 Kirk,Thomas and Jessie Lund.Decarbonization Pathways for Mines:A Headlamp in the Darkness,Rocky Mountain Institute,2018.24 International Energy Agency(2023),Critical Minerals Market Review 2023,IEA,Paris,License:CC BY 4.0.25 See endnote 24.26 See end
231、note 24.27 ARENA(2017),Renewable energy in the mining sector.28 International Energy Agency(2023),Global Methane Tracker(2023),IEA,Paris,License:CC BY 4.0.29 Anglo American.(2023,January 26).Anglo American loads first LNG dual-fuelled vessel in chartered fleet,cutting emissions by up to 35%Press rel
232、ease.30 See endnote 12.31 See endnote 12.32 International Energy Agency(2021),Is carbon capture too expensive?,IEA,Paris,License:CC BY 4.0.33 Methanol Institute(May 2023),Marine Methanol:Future-Proof Shipping Fuel34 See endnote 1.35 See endnote 2.The decarbonisation of the mining sector and the valu
233、e chains that our products feed into is a complex challenge.However,given the central role many metals and minerals play in providing the foundations and technologies for a low-carbon future,it is a vital task.It involves the efforts of individual companies to set and take ownership of their own dec
234、arbonisation ambitions,but crucially it also involves consistent as well as creative partnerships along and across value chains,including the steel value chain.Some of these partnerships build on existing relationships,but the Sustainable Markets Initiative provides a breadth and diversity of member
235、ship,which is unique.Working in multi-company partnerships is novel and complicated,but such creativity will surely play a vital role in delivering a low-carbon world.Decarbonisation of hard-to-abate sectors requires collaboration at an unprecedented scale to innovate,accelerate,and help deliver a m
236、ore sustainable future.Through its work,the Decarbonising Industry Working Group within the Sustainable Markets Initiatives Energy Transition Task Force has sought to stimulate that collaboration bringing together companies across the energy,technology,and industry sectors to try to solve some of th
237、e toughest decarbonisation challenges in steel,aluminium,and mining.bp is grateful for the openness and commitment of the members of this workstream.Energy transition challenges were shared transparently,and all involved made the effort to look for innovative and pragmatic solutions.We look forward
238、to watching the progress of the collaboration topics that have been identified and playing our part to help advance the energy transition of hard-to-abate sectors.Abdulnasser Bin Kalban,Chief Executive Officer of Emirates Global Aluminium,said:“Aluminium is an essential material for decarbonising ot
239、her industries,from electricity generation to transport.Decarbonising aluminium production requires cooperation across industries.This is why EGA is participating in the Sustainable Markets Initiatives Energy Transition Task Force and the Decarbonising Industry Working Group.Our first goal with this
240、 cooperation is to find ways to decarbonise our alumina refining.Full electrification of calcination at the scale of EGAs operations has never been achieved before.We have already made progress.I am confident that by working with members of the group and others,we will solve this challenge in the co
241、ming years.”We need to build markets that work for our planet and its people.The Sustainable Markets Initiative brings businesses together and provides an opportunity for the private sector to deliver the necessary change.Industry needs to decarbonise quickly in line with net zero and this workstrea
242、m is making progress towards meaningful change in this area.We support the work of the Decarbonising Industry Working Group and are committed to unleashing clean power for industrial uses.As one of the worlds leading renewable energy companies,rsted is committed to creating a world that runs entirel
243、y on green energy.Currently,around one-third of global carbon emissions come from industry and heavy transport,so the decarbonisation of these hard-to-abate sectors will be essential to delivering net-zero targets and meeting global climate goals.While we have the technology to produce green hydroge
244、n and green fuels to decarbonise these sectors,there remains some key challenges including combining and scaling these solutions and making them cost-competitive.This guide provides insight into how we might meet these challenges and provides concrete solutions to successfully decarbonise our econom
245、y and enable a successful transition to net-zero emissions by 2050.Energy is the foundation for social development,economic growth,and prosperity.Tackling the energy transition means tackling multiple sectors causing global greenhouse gas emissions in parallel to achieve the implementation of the Pa
246、ris Climate Agreement in 2015 and its long-term goal.The Sustainable Markets Initiative is an outstanding initiative for all affected industries not only for discussion,but rather to partner and act together as a community of leading companies across the value chain with a strong will to make a chan
247、ge:In concrete projects with defined actions,joint implementation and thus creating blueprints for energy-intensive industries considering the perspectives of the energy consumer,the energy provider,and the technology provider.It is time to act.Only concrete and actionable measures will drive the de
248、sired change.In the words of Antonio Guterres,secretary-general of the United Nations,“leaders must lead,no more waiting for others to move first.”As Siemens Energy we are delivering our share to shape and drive the energy transition as an integrated energy technology company.Tata Steel has been a p
249、art of the Energy Transition Task Force of the Sustainable Markets Initiative and primarily got engaged in the activities related to decarbonising the steel industry in this working group.Engaging consultant Oliver Wyman with contribution from Masdar and other members has been helpful to bring all p
250、artners in the discussion forums to exchange ideas regularly and easily.The How-To Guide for this Decarbonising Industry workstream is a well-made report which we believe will be very useful for industries engaged in the journey of reducing carbon emission.The Sustainable Markets Initiative has prov
251、ided a platform for Tata Steel to discuss novel decarbonisation initiatives for low-carbon steel production.We have plans to invest substantially in such technologies during this decade so that low-carbon steel can integrate into our commercial production beyond 2030.We have had ample opportunities
252、to engage with diverse partners and understand their perspectives on green hydrogen,green energy,and carbon capture,utilisation and storage(CCUS).The Sustainable Markets Initiatives efforts to bring together energy and manufacturing companies with a focus on decarbonising industry will facilitate lo
253、ng-term collaboration and drive sustainable industrial growth in the future.Decarbonisation of the hard-to-abate sectors is perhaps the most difficult challenge facing the industrial net-zero plan.The lack of first movers for such decarbonisation initiatives is a big bottleneck.The Sustainable Marke
254、ts Initiative,therefore,is playing a very important role by getting together companies to set up pilot programmes,that will eventually help create the right signals for both the demand and supply of low-carbon/near-zero solutions.ReNew benefits by being part of this initiative both as an infrastruct
255、ure-intensive company that is a user of these carbon-intensive products such as steel and cement.As well as a decarbonisation solutions provider that helps other companies achieve their net-zero agenda.It is encouraging to see the participation of the working group,which includes other leading globa
256、l organisations.We look to engage meaningfully with the group and deliver outcomes and solutions that could be scalable in the future.The mining industry produces materials essential to the energy transition:Copper,aluminium,critical minerals,and even steel all have a role to play.At Rio Tinto,we ha
257、ve put climate change and the low carbon transition at the heart of our strategy.We are working hard to decarbonise our operations,to reduce Scope 1 and 2 emissions by 50%by 2030,and achieve net zero by 2050.Meeting this challenge is not easy,and we cannot do this alone.We must work with our custome
258、rs,communities,host governments and other external stakeholders to achieve our shared goals.The Sustainable Markets Initiative creates an opportunity to bring together others in hard-to-abate industries,to leverage their knowledge,to find innovative solutions for meaningful,positive,sustainable change at pace.