Heavy Industry’s Daunting Net-Zero Challenge

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More companies are pledging to achieve net-zero carbon emissions as they work to convince investors and consumers they can reduce their environmental footprint. High-emitting industrial companies face an especially tough challenge to get there.

More than 1,500 companies have vowed to get to net zero, according to nonprofit groups Data-Driven Envirolab and the NewClimate Institute. That involves reducing their emissions as low as possible, then removing any remaining carbon dioxide—for instance with carbon-capture technology—to cancel out the remaining emissions.

“Net zero” means different things to different companies. Some focus on carbon dioxide emissions from their own operations. Some include emissions generated by suppliers and by consumers when the company’s products are used, and some aim to cut other greenhouse gases, such as methane. Some companies shoot for net-zero by 2050, some much earlier. Tactics for reducing emissions range from using renewable electricity to asking customers to adopt environmentally conscious habits.

The challenge is especially daunting for sectors where emission cuts entail radical, expensive—and often unproven—changes to industrial processes.

“Heavy industry and heavy transport are the sectors with the highest emission-mitigation costs,” said Max Ahman, associate professor in environmental and energy system studies at Lund University in Sweden.

According to the Transition Pathway Initiative, a research group, 15% of high-emitting companies have promised cuts on the scale required to keep the global temperature-rise below 2 degrees Celsius (3.6 degrees Fahrenheit). Some experts have reservations about their prospects for getting there.

“No one is going to be able to confirm if these targets are realistic or feasible,” said

Ben Gallagher,

senior research analyst at consulting group Wood Mackenzie. Still, even unrealistic targets might indicate that companies want to address their contribution to climate change, he said.

Green Steel

Steelmaking contributes about 7% of the total carbon dioxide emissions from the energy sector, according to the International Energy Agency. Most steel is produced by burning coal to melt iron ore in blast furnaces, emitting about 1.9 metric tons of carbon dioxide for every metric ton of steel, according to the World Steel Association. The technology needed to melt iron ore using renewable fuel doesn’t yet exist on the necessary scale.

“You need large volumes of low-carbon heat and, at present, there are very few avenues to easily decarbonize those required volumes,” said Mr. Gallagher at Wood Mackenzie.

Electric arc furnaces, which produce steel from scrap metal, have lower emissions, but there isn’t enough recycled steel to cover demand.

Luxembourg-based steel producer

ArcelorMittal SA,

which in September pledged to become carbon-neutral by midcentury, sees two main routes to low-emissions steelmaking. One would replace coal with nonemitting fuels, such as hydrogen and biomass, and deploy carbon capture. Another would use hydrogen to remove impurities from iron without using a blast furnace.

The company has invested around €300 million, roughly $366 million, in a program aimed at making low-carbon steel. It says it will start deploying pilot technologies at facilities in Europe, where it aims to reduce emissions by 30% over the next 10 years.

These technologies would squeeze profit margins. ArcelorMittal estimates carbon-neutral steel made with biomass in its furnaces and carbon capture would cost it at least 30% more to produce, 60% if it adds hydrogen to the mix. The company reported an operating profit of $2.11 billion on sales of $53.3 billion in 2020.

Low-Carbon Concrete

Some 8% of global carbon dioxide emissions come from cement manufacturing, according to a 2018 report by Chatham House, a think tank.

Cement’s main ingredient, clinker, is produced by burning fossil fuels to heat a kiln containing powdered limestone, which releases carbon dioxide when heated. Emissions-reduction proposals involve making processes more energy-efficient, switching to alternative fuels and using less clinker.

Swiss building materials company

LafargeHolcim Ltd.

is using alternative fuels such as biomass to heat its kilns and recycled materials to produce less-polluting cement.

It aims to reduce emissions from 555 kilograms of carbon dioxide per metric ton of cement and cement-based material produced in 2020 to 475 kilograms by 2030, and plans to reach net zero by 2050.

Experts say cuts on that scale would require the use of carbon-capture technology, which is currently costly and energy-intensive. As in the steel sector, the cost of developing the technology could make early adopters less competitive.

“To reach net zero, cement makers need carbon capture, but, if no one else is doing it, it’s hard to be the first one,” said Mr. Ahman, the Lund University professor.

LafargeHolcim says it is piloting 20 carbon-capture utilization and storage projects. Germany’s

HeidelbergCement AG

in December received the green light to build an industrial-scale project.

Refueling

For makers of planes and trucks, the net-zero challenge centers on finding a low-carbon, energy-dense power source that can rival fossil fuels for efficiency.

Truck makers see hydrogen fuel cells as the best bet, mainly because current lithium-ion batteries can’t move heavy trucks very far on a single recharge.

Daimler AG

and

Volvo

AB, the two largest makers of heavy trucks by revenue, have both pledged net-zero emissions by 2050—including the emissions produced when the vehicles are driven. In April, they formed a new company that aims to start building fuel-cell systems in Europe in 2025.

More From WSJ Pro Sustainable Business

Write to Maitane Sardon at maitane.sardon@wsj.com

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