Net Zero Industry Tracker 2024 Cross Sector Findings

carbon offsets is essential. CCUS, in particular, is expected to account for 18% of global emissions reduction in the heavy industry sectors, and 1% in the heavy transport sectors in scope by 2050. Moreover, CCUS facilitates the production of blue hydrogen, which can significantly reduce emissions by providing a low-carbon fuel alternative for heavy industry and transport. In 2024, global operational CCUS capacity reached over 50 MT of CO2 per year, with over 110 commercial-scale projects potentially reaching final investment decision (FID).54 If these projects proceed as planned, CCUS investment could rise almost tenfold to $26 billion by 2025, boosting global CO2 capture capacity to 430 MT per year and storage to 620 MT per year by 2030.55 However, despite progress, current CCUS deployment lags behind net-zero needs, with only 20% of the announced capture capacity and 15% of the storage capacity for 2030 in place or reaching FID.56 Industrial sectors are even further behind, representing less than 10% of the announced global capacity, far below the 25% of CO2 they need to capture by 2030 under the IEA Net Zero Scenario.57 High costs, technological challenges, insufficient CO2 transport and storage infrastructure, and regulatory uncertainties remain major barriers to scaling CCUS in time to meet emission reduction targets. Government investments, such as the $12 billion from the US Infrastructure Investment and Jobs Act and various European initiatives, have significantly supported the expansion of CO2 pipelines and storage infrastructure, which must be available promptly to meet growing CCUS demand. ENI has successfully secured UK government funding to support its Hynet Project on creation of a CCUS infrastructure network by 2030.58 Equinor, Shell and Total have invested in the Northern Lights project, the world’s first cross-border CO2 transport and storage facility, which is now ready for use.59 Challenges: –Clean power: Policy uncertainties and delayed policy responses to the new macroeconomic environment, insufficient investment in grid infrastructure preventing faster expansion of renewables, cumbersome administrative barriers and permitting procedures and social acceptance issues, and insufficient financing in emerging and developing economies –Clean fuels: Limited international collaboration in terms of supportive policies to increase production of hydrogen-based fuels and biofuels, and needed infrastructure, combined with a lack of clear demand signals in terms of demand projections across sectors and pricing that is competitive with fossil fuels. Carbon standards and accounting are also insufficient to accurately measure and assess fuel options, and enable comparability and cross-border trade. –CCUS: High costs related to technology and infrastructure, insufficient regulatory frameworks and incentives to support large-scale adoption, and the need for enhanced public and industry trust in its effectiveness and safety Way forward: While clean power is increasingly available and crucial for decarbonizing hard-to-abate sectors, much greater investment is needed to achieve net-zero targets. Approximately 50% of the total investment will come from the broader ecosystem, with a notable portion allocated to energy infrastructure. By 2050, clean power is projected to account for 26%,60 100%61 and 60%62 of the steel, aluminium and trucking energy mix by 2050, respectively. On the other hand, the relative role of renewables and electrification in the cement and chemicals sectors is more limited, with clean power expected to be only 8%63 of the 2050 power mix for cement, and approximately 0% for chemicals.64 To reach net-zero targets, a wider array of solutions, including clean fuels, will be essential. The IEA and IRENA indicate that about half of final energy demand in net-zero scenarios will come from non-electron sources. These include renewable molecules such as liquid, gaseous and solid clean fuels, which are especially important for sectors with non-energy uses, such as feedstocks. CCUS will also be a key component, with new players like gas infrastructure developers, chemical companies and capture-as-a-service providers entering the market. This increased competition helps reduce costs, particularly through the creation of CCUS hubs, where infrastructure is shared by multiple emitters. Despite the growth in CCUS, sectors like aviation will still require carbon offsets for remaining emissions, necessitating collaboration among governments, businesses and stakeholders to address challenges like verification and transparency. Industries and co-located companies from different industries can benefit from collaborating with each other through shared infrastructure models (such as infrastructure hubs and industrial clusters) to improve access to the required clean energy, by capitalizing on economies of scale. CCUS is expected to account for 18% of global emissions reduction in the heavy industry sectors, and 1% in the heavy transport sectors in scope by 2050. Net-Zero Industry Tracker: 2024 Edition 17