Scaling Up Europe

Bringing Low-CO2 Materials from Demonstration to Industrial Scale

Energy-intensive industries are a key piece of the puzzle as Europe seeks to transition to an economy with net zero greenhouse gases. Decarbonising industry is critical to EU climate targets and EU competitiveness. With Europe using more than 700 million tonnes of often-imported raw materials and energy inputs each year, industry is also central to an increasingly urgent debate about strategic autonomy.

Preface

Energy-intensive industries are a key piece of the puzzle as Europe seeks to transition to an economy with net zero greenhouse gases. Decarbonising industry is critical to EU climate targets and EU competitiveness. With Europe using more than 700 million tonnes of often-imported raw materials and energy inputs each year, industry is also central to an increasingly urgent debate about strategic autonomy.

Several “roadmaps” have already outlined what a net-zero industry could look like in 2050, showing the need for profound changes in the decades to come. This report shows that the future is already here. European companies are already moving from roadmap to action, with some 70 projects underway to commercialise and scale up new, breakthrough industrial production of steel, chemicals and cement/concrete. Key investment decisions will be made already in the next few years.

This report takes the pulse of that exciting development. We consulted with more than 30 companies and other organisations and found a real sense of opportunity – but also reasons for concern. There is a widening gap between industrial innovators’ cleantech ambitions, and the policy and market conditions required to realise them at scale. If Europe is to harness this extraordinary potential, it needs not just targets and a vision towards 2050, but a concrete plan for the 2020s.

The analysis presented here can help deﬁne that plan. We describe the breakthrough projects being advanced by industrial cleantech pioneers, as well as the barriers they face in scaling up. Without proposing speciﬁc policies approaches, we then identify ﬁve core policy areas can be woven together for European companies to succeed in their ambitions to scale up. Our hope is to provide useful data and perspective to inform the ongoing revisions of EU and national policies.

This study was conducted by Material Economics, with support from Breakthrough Energy and in collaboration with the Mission Possible Partnership, the European University Institute Florence, Cleantech for Europe, and the International Energy Agency. We thank our partners and the more than 30 companies and organisations that shared their valuable insights. The ﬁndings of this report are those of the authors and do not necessarily reﬂect those of our partners or of the stakeholders consulted. Any remaining omissions or mistakes are of course the authors’ own.

Executive summary

Low-CO₂ materials – steel, cement, chemicals and more – are indispensable for EU climate targets. They also are a massive economic opportunity for European industries, which can tap into an emerging global market that could reach 100 USD billion by 2030. European companies now lead in this space, with more than 70 industrial projects with breakthrough clean technologies planned across the continent. Yet for all the promising entrepreneurial activity, policies and market conditions are not yet ready to seize this opportunity. The crucial step to industrial scale has yet to come, and final investment decisions are still pending. The EU and European countries urgently need to adopt a policy package and innovative financing mechanisms to put heavy industries on a path towards net zero – and, in the process, secure European industrial competitiveness for decades to come.

European energy-intensive industries are making bold moves

Something big is afoot in European energy-intensive industries. The normally slow-moving sectors of steel, chemicals and cement are now abuzz with innovation. More than 70 projects have been announced just in the last two or three years to bring new, clean technologies and business models online. They aim to produce steel with hydrogen instead of coal; use recycled plastics as feedstock to make chemicals; pioneer new types of concrete with less than half the climate impact of today’s products; and capture carbon from industrial processes to be stored permanently underground or reused to make high-value products. Together, these breakthrough technologies could transform industrial production in the EU.

The impetus for all this innovation is the EU’s commitment to a low-CO₂ future. Companies know their current trajectory collides with EU climate targets: CO₂ emissions from energy-intensive industries have been stuck at around 650 Mt CO₂ for many years. To achieve deep emission reductions, they need to change the fundamentals of production: make steel, chemicals and cement with different feedstock, invest in new core capital assets and novel business models, and mobilise massive amounts of clean energy. After years of development, the key technologies are largely known and increasingly ready to deploy. The challenge is to bring them to industrial scale in the real world.

European industry is rising to the challenge. The steel sector has its first major new entrants in several decades; more than a dozen start-ups are turning waste plastics into chemicals feedstock; companies want to launch entirely new concrete products; and technology companies are providing a wide range of novel solutions. Innovation is happening in all major EU regions, often through value chain collaborations between industrial companies and end-users. This could be a step-change for industry.

An economic opportunity for Europe

Europe has every reason to support this effort to remake heavy industries. The steel, chemicals and cement sectors underpin value chains that together contribute as much as 14% of EU GDP and 7.4 million jobs. The current energy and geopolitical crisis only underlines the need to find ways to increase Europe's strategic autonomy in basic materials. The same technologies that cut CO₂ also enable increased use of indigenous resources: renewable electricity, green hydrogen, and circular use of steel and plastics in place of imported ores, coal, oil and gas.

European industry can also benefit from a fast-growing new market for low-CO₂ materials. Already, thousands of companies, cities and other actors globally have committed to sharply reduce their CO₂ footprint under initiatives such as the Science-Based Targets and the First Movers Coalition. As these companies decarbonise their supply chains, we estimate that by 2030, the market for low-CO₂ steel, chemicals (including plastics) and cement will reach 100 billion USD. These buyers will reward innovators and trail-blazers. Europe is now ahead in this market and can seize this opportunity to secure its lead and set the standards.

Europe should thus work to rapidly scale up breakthrough technologies: get the first-generation, industrial-scale plants online by 2025, and fully redirect capital flows towards new low-CO₂ technologies by 2030. By mobilising 45 EUR billion of investment, Europe could ramp up production to 25 Mt of steel, 5 Mt of high-value chemicals made from recycled plastic feedstock, and 70 Mt of concrete (equivalent to 10 Mt of cement) per year by 2030. To give a sense of the scale, in a single year, this would provide enough steel for 13 million cars, recycled plastic for one in six pieces of plastic packaging, and enough concrete for some 700,000 houses. The benefits would be massive, cutting 2030 emissions by 30 Mt CO₂ per year, creating 20 billion EUR worth of low-CO₂ materials, and positioning EU industry for global leadership.

Europe needs to act fast to capture this industrial opportunity

Europe is not yet positioned to realise that potential, however. Stakeholders consulted for this study pointed to two concerns. First of all, the projects currently in the pipeline are not enough to reach the needed scale. Only in steel are there proposals for large-scale projects across the sector. Second, final investment decisions on many of the proposed projects are still pending. Stakeholders are awaiting confirmation that the business case can work and that the necessary finance, energy supply and infrastructure can be put in place. Time is short: key investment decisions are due within two or three years.

Without prompt action, Europe risks falling into old traps: leading in the early stages of technology development, but failing to follow through to scale. Stakeholders identified several challenges that need to be addressed. The current CO₂ prices are not effective in generating revenues for clean production, so companies risk being left without an answer when investors ask how they will pay for new low-CO₂ investments. Early movers need to manage the risk of untested new technologies, and overcome a powerful incentive to wait for others to take the first step. Producers and buyers alike need clear standards as well as lead markets pull to create the lead market on which new businesses can be built. Companies will need to obtain operating permits for new facilities faster than current systems can achieve, and secure access to the new energy supplies and infrastructure they need. Regulations need to be updated to ensure they do not keep innovations and new entrants out of the market.

In short, Europe must learn and act fast, or else it could lose this opportunity.

Making the 2020s the decade of action

The EU has a chance to solve these problems as part of the ongoing revamp of policy and regulations under the Green Deal and in response to new geopolitical and energy realities. If Europe wants to seize this opportunity, it needs to adopt a clear vision for transforming heavy industry, at scale, and then develop a comprehensive, coherent policy agenda to achieve it. Our analysis identifies five pillars of a successful industrial transformation:

1. Overcome the green cost premium and create lead markets. Especially for the first-of-a-kind projects, companies face a green cost premium of 100–150 EUR per tonne CO₂. While many see a clear route to competitiveness, the current lack of effective CO₂ prices for industry leaves a hole in the business case for clean industrial production. Proposed reforms to the EU Emissions Trading System, combined with carbon border adjustments, could address this in the long term, but likely not before the 2030s. An answer for the 2020s is therefore needed. Proposals under discussion include the free allocation of EU ETS allowances to non-emitters, subsidies such as carbon contracts for difference, and quotas for the use of recycled content in plastics. All told, we estimate a revenue gap in the range of 4–6 billion EUR per year by 2030. For comparison, annual support to biomass, wind and solar energy is 16–27 billion EUR each, while free allocation in the EU ETS is worth closer to 60 billion EUR per year.

2. Enable investment for innovation. European companies must invest 40–50 billion EUR in industrial production to 2030 to scale up breakthrough technologies. First movers create tremendous value through reference plants and experience on which further scaling and innovation can be built. Yet they are rarely rewarded for this, and instead face large, often undiversifiable risks in bringing new technology and business models to market. This creates a powerful incentive to wait until costs fall and risks are smaller. Public support can go a long way to bridge the financing gap, and both the EU and European countries are exploring mechanisms such as capex grants, loan guarantees to mobilise private finance, and blended finance derisking approaches to enable a more favourable capital structure.

3. Mobilise demand for green materials and chemicals. As noted, there is powerful latent demand for low-CO₂ products and value chains. Companies in automotive, packaging, construction and other sectors know that the additional cost even of fully decarbonised products can be minimal, often just 1–2% on the 2030 sales price, as the share of materials in the total production cost of a complex product is often small. Policy can support this nascent market. Stakeholders pointed to a range of potential options: 2030 production targets for green materials that help coordinate supply and demand; ambitious standards that define and differentiate green, breakthrough materials and can underpin a market premium; and public and private initiatives that drive demand for low-CO₂ materials, such as the limits for CO₂ content of construction materials now being introduced by some European countries.

4. Provide the energy and infrastructure needed. Now more than ever, Europe clearly sees the value in mobilising its own energy and raw material resources. Industrial production is no exception. We estimate that scaling up industrial cleantech would require 90 TWh of additional low-CO₂ electricity, 20 TWh of low-CO₂ hydrogen, 10–15 Mt of storage capacity for industrial CO₂, and the effective recycling of another 10 Mt of plastic waste for use as feedstock in place of oil and gas. EU and national energy and infrastructure plans do not yet anticipate such large requirements. Europe needs climate and energy plans to serve the industrial clusters of the future, including prioritised access to clean hydrogen to reduce future reliance on imported gas by European steel and chemicals industries. It also needs a circular and bio-based raw materials strategy, to enable effective replacement of imported fossil energy and feedstock, as well as a CO₂ storage strategy that accounts for industrial needs.

5. Adapt regulations for innovation at scale. Post-war Europe saw the build-out of the current industrial base and infrastructure, creating many of today’s industrial champions. But since the 1980s, Europe has lost its appetite and capacity for ambitious new industrial capacity and infrastructure, with national regulations tuned for slow change but unsuited to rapid transformation. To succeed, stakeholders say a new regime and social contract is needed: permitting processes that are streamlined and more predictable, new products permitted to enter the market rather than held back by legacy product standards, and new regulatory frameworks created to build the new infrastructure required – from CO₂ storage to hydrogen pipelines.

Fast-forward to the future European industry

The emergence of more than 70 breakthrough industrial projects in just a few years is truly inspiring. It provides line of sight to a competitive, low-CO₂, and much more autonomous future industry. There is every reason for optimism that a low-CO₂ transition will play to many European industrial strengths. European steel and chemicals companies have already gravitated towards high value-add niches over time, with innovation as the key antidote to other structural disadvantages, such as higher energy or feedstock prices. The same skillset will be key to the low-CO₂ transition. Where Europe has succeeded in the past – such as in mobile telephony, pharmaceuticals and automotive – it has combined tightly integrated innovation systems, leadership in setting standards, and clusters of initial domestic demand that can form the base for scaling to global markets.

If Europe can apply the same formula to its basic materials industries, it can unlock a major economic opportunity for the next few decades.

Chapter 1

The imperative and opportunity of low-carbon materials

Something big is afoot in Europe's energy-intensive industries. Six years ago, SSAB, a Swedish steelmaker, announced a bold move: rather than reinvest in its existing coal-based production, it would launch an initiative jointly with mining company LKAB and electric utility Vattenfall to develop entirely new steelmaking technology based on hydrogen. This proved to be a sign of things to come.

Intro

SOMETHING BIG IS AFOOT IN EUROPE's ENERGY-INTENSIVE INDUSTRIES.

Six years ago, SSAB, a Swedish steelmaker, announced a bold move: rather than reinvest in its existing coal-based production, it would launch an initiative jointly with mining company LKAB and electric utility Vattenfall to develop entirely new steelmaking technology based on hydrogen.² This proved to be a sign of things to come. Optimistic about the underlying technology and the future of green hydrogen, virtually all major EU steelmakers (ArcelorMittal, Liberty Steel, Salzgitter, Tata Steel, ThyssenKrupp, and Voestalpine) have launched similar initiatives, with 20 projects now underway across Europe that could transform the industry. The sector is also seeing its first new entrants in decades, including the start-up H2 Green Steel and LKAB. It is seeing new value chain collaborations – with utilities joining in the supply of hydrogen, and automotive companies investing in steel production or agreeing to long-term offtake of "green" steel. The Italian metals and mining technology company Tenova is starting to develop similar projects in China and beyond, while others already are looking to the next generation of hydrogen-based and electrified technology. Together, EU companies are leading the world in commercialising a crucial clean technology for a sector now responsible for 7% of global CO₂ emissions.³

- “It is my belief that the next 1,000 unicorns – companies that have a market valuation over a billion dollars – won't be a search engine, won't be a media company, they'll be businesses developing green hydrogen,
green agriculture, green steel and green cement”

LARRY FINK
CEO, BLACKROCK¹

Profound shifts have also begun in the EU petrochemi-cals sector. More than 10 start-ups have launched 25 projects to develop and commercialise technology and supply chains that turns plastic waste into valuable feedstock for new chemicals production. Like the steelmakers, they want to create value through lower CO₂ emissions, a more circu-lar economy, and reduced dependency on largely imported fossil fuels and feedstock. Large chemicals companies are joining forces with these start-ups, while also exploring other ways to reduce emissions. At its Terneuzen plant in the Netherlands, Dow plans to capture carbon and produce hydrogen fuel by 2026.⁴ Dow and many other companies (BASF, Borealis, BP, Linde, Repsol, SABIC, Shell, Total Energies, and Versalis) are also mobilising to bring new electriﬁed technology to market.

The cement sector is pursuing decarbonisation as well. The world’s first industrial-scale carbon capture and storage (CCS) project at a cement production plant is set to open at Norcem’s site in Brevik, Norway, in 2024.⁵ Some 15 additional projects with similar ambitions have been proposed. Again, new, breakthrough technology is at the core. For example, new entrant technology company Calix has developed a novel kiln process that facilitates CO₂ capture.⁶ Several others are finding new ways to produce valuable products from captured carbon. In addition, start-ups are working to develop new raw materials that can replace CO₂-intensive cement, such as a new concrete formulation by Ecocem that the Irish company says has one-sixteenth the carbon footprint of other cements.⁷

All in all, sectors that used to be seen as “hard to abate” are now racing ahead, with more than 70 projects underway. Timelines are fiercely ambitious, compressing what normally would be a 15- to 20-year innovation and investment cycle into just a decade. Together, they hold the keys to a reinvigorated future EU industrial base that is not only low-CO₂, but also more circular, less import-dependent and more competitive.

This study takes the pulse of this development and asks the critical question: what will it take to bring this promising initiative all the way to industrial scale – with all the benefits for climate, competitiveness, and strategic autonomy? In the chapters that follow, we examine what is at stake, what barriers stand in the way, and what EU policy-makers can do to support this breakthrough technology shift and secure Europe’s leadership in low-CO₂ steel, chemicals and cement production.

Chapter 2

The Emerging EU Leadership in industrial breakthrough technology

A deep dive into proposed breakthrough projects shows highly promising momentum and opportunity. However, success is far from assured.

Intro

A deep dive into proposed breakthrough projects shows highly promising momentum and opportunity. However, success is far from assured. The scale of the initiatives in the pipeline is still too small, and without additional support, some proposals could fail to come to fruition. The first part of this section lays out the opportunity and quantifies the investments needed to scale up breakthrough industrial production by 2030. The second part lays out the key challenges, which are then addressed systematically in Section 3. The key take-away is that the EU must act fast to enable the transformation of its heavy industries.

- European companies have launched more than 70 breakthrough projects for production of low-CO₂ steel, chemicals and cement.

Chapter 3

Going from demonstration to scale

Across the five case study areas, interviews and analysis for this study indicate a common set of prerequisites that must be put in place (Exhibit 9). In short, they involve managing the first mover and technology risks of first-of-a-kind plants; building the business case for costlier production; orchestrating the energy and input supply chains and infrastructure required by new industrial production systems, and adapting regulations and market arrangements to fit a new industrial logic.

Intro

Across the five case study areas, interviews and analysis for this study indicate a common set of prerequisites that must be put in place (Exhibit 9). In short, they involve managing the first mover and technology risks of first-of-a-kind plants; building the business case for costlier production; orchestrating the energy and input supply chains and infrastructure required by new industrial production systems, and adapting regulations and market arrangements to fit a new industrial logic.

Chapter 4

A blueprint for transforming EU industry

The EU has a crucial decade ahead to capitalise on its emerging front-runner position in industrial cleantech. This section lays out an agenda for action, starting right away, to systematically put in place the prerequisites for large-scale industrial transformation.

Intro

The EU has a crucial decade ahead to capitalise on its emerging front-runner position in industrial cleantech. This section lays out an agenda for action, starting right away, to systematically put in place the prerequisites for large-scale industrial transformation. We offer no individual policy recommendations, but identify the issues to solve and the approaches now under discussion as the EU and European countries consider policy revisions under “Fit for 55” and other initiatives.

- Europe needs to adopt a clear vision for transforming industry, at scale, and then develop a comprehensive, coherent policy agenda to achieve it.

Such a breakthrough industry policy package is ambitious and broad ranging, yet would be surprisingly affordable: For the scale-up ambition sketched in the previous section, the direct investment support needed would total less than 10 billion EUR to 2030. Ongoing support to offset additional production costs would be 4–6 billion EUR per year by 2030. For comparison, free allocation in the EU ETS will be worth some 400 billion EUR in 2022–2030,⁶⁴ and the EU budget will spend more than 500 billion EUR on the European Green Deal.⁶⁵ For end-users, meanwhile, the price impact would be tiny – less than 1–2% for cars, buildings, packaged consumer goods or pharmaceuticals, even if end-users were to pay for 100% low-CO₂ materials.⁶⁶ In investment terms, the amounts required are on the order of 1% of the total amount expected to be invested in the energy system in the next decade.

Exhibit 17 shows five areas of action for the EU and European countries to consider as they seek to catalyse a transformation of their heavy industries, each addressing a challenge identified in Section 3. The first priority is to make the business case work. The second is to enable investment through direct financial support and climate policy. Third, the EU needs to mobilise demand for green materials and chemicals. Fourth, Europe must put in place the infrastructure, energy supply, and raw materials value chains on which the new industry will depend. Fifth, and crucially, EU and Member State permitting processes and regulations need to be revamped to enable the rapid deployment and scaling up of breakthrough technologies.

Chapter 5

Conclusion: Aiming for EU leadership in green materials

The emergence of more than 70 breakthrough industrial projects in just a few years is truly inspiring. It provides line of sight to a competitive, low-CO2, and much more autonomous future industry.

Conclusion

The emergence of more than 70 breakthrough industrial projects in just a few years is truly inspiring. It provides line of sight to a competitive, low-CO2, and much more autonomous future industry. There is every reason for optimism that a low-CO₂ transition will play to many European industrial strengths. European steel and chemicals companies have already gravitated towards high value-add niches over time, with innovation as the key antidote to other structural disadvantages, such as higher energy or feedstock prices. The same skillset will be key to the low-CO₂ transition. Where Europe has succeeded in the past – such as in mobile telephony, pharmaceuticals and automotive – it has combined tightly integrated innovation systems, leadership in setting standards, and clusters of initial domestic demand that can form the base for scaling to global markets.

If Europe can apply the same formula to its basic materials industries, it can unlock a major economic opportunity for the next few decades. There is much work to be done to design an integrated approach – and no time to lose.

ENDNOTES

Endnotes

¹ Clifford, C. 2021. “Blackrock CEO Larry Fink: The next 1,000 Billion-Dollar Start-Ups Will Be in Climate Tech.” CNBC. October 25, 2021. https://www.cnbc.com/2021/10/25/blackrock-ceo-larry-fink-next-1000-unicorns-will-be-in-climate-tech.html.

² SSAB’s website package on “fossil-free steel”: https://www.ssab.com/fossil-free-steel and announcements of the launch of the low-CO₂ steel initiative in April 2016: https://www.ssab.com/News/2016/04/SSAB-LKAB-and-Vattenfall-launch-initiative-for-a-carbondioxidefree-steel-industry and a joint venture in June 2017: https://www.ssab.com/News/2017/06/SSAB-LKAB-and-Vattenfall-form-joint-venture-company-for-fossilfree-steel.

³ IEA. 2020. “Iron and Steel Technology Roadmap.” Technology report for Energy Technology Perspectives. Paris: International Energy Agency. https://www.iea.org/reports/iron-and-steel-technology-roadmap.

⁴ The Terneuzen plan is “multi-generational”; by 2030, the plan is to scale up carbon capture and replace gas turbines with electric drivers; by 2050, the implementation of “e-cracking” technology would allow the plant to reduce its emissions by 95% relative to conventional processes. See the Terneuzen case study on Dow’s website: https://corporate.dow.com/en-us/seek-together/carbon-neutrality-case-study.html.

⁵ The plant is expected to capture and permanently store 400,000 tonnes of CO₂ per year. See press release from Norcem’s parent company, HeidelbergCement: https://www.heidelbergcement.com/en/pr-15-12-2020 and updated project information: https://blog.heidelbergcement.com/en/brevik-css-start-milestone-project.

⁶ Calix, founded in 2005 in Australia, is applying its technology in several sectors. Its LEILAC (Low Emissions Intensity Lime And Cement) project, supported by EU Horizon 2020 research and innovation funds, is piloting and demonstrating the technology at HeidelbergCement plants in Lixhe, Belgium, and Hannover, Germany. See https://www.calix.global/industries/cement/ and https://www.project-leilac.eu.

⁷ See https://www.ecocem.ie/benefits/enviromental/.

⁸ Major global initiatives to raise climate ambition include, among others: the Science Based Targets: https://sciencebasedtargets.org/companies-taking-action; the Climate Ambition Alliance: Net Zero 2050: https://climateinitiativesplatform.org/index.php/Climate_Ambition_Alliance:_Net_Zero_2050; the Climate Action 100+: https://www.climateaction100.org; the Race to Zero Campaign: https://unfccc.int/climate-action/race-to-zero-campaign and the First Movers Coalition: https://www.weforum.org/first-movers-coalition.

⁹ Ambitions and targets vary among companies, but public announcements support the overall consensus that the major players of the automotive industry have set net-zero goals. The percentage is based on vehicle sales data as well as average steel content per vehicle and global steel production from the World Steel Association (2021). Cavini, N. 2021. “Global Auto Market 2020. Volkswagen Group Leads the Market While Hyundai-Kia Holds Successfully.” Focus2Move (blog). February 25, 2021. https://www.focus2move.com/worl-group-car-ranking/. World Steel Association. 2021. “Global Crude Steel Output Decreases by 0.9% in 2020.” Press Releases. January 26, 2021. http://www.worldsteel.org/media-centre/press-releases/2021/Global-crude-steel-output-decreases-by-0.9--in-2020.html. See also the World Steel Association’s “Steel in Automotive” web page: World Steel Association. 2021. “Steel in Automotive.” 2021. https://www.worldsteel.org/steel-by-topic/steel-markets/automotive.html.

¹⁰ Authors’ calculations based on: World Steel Association. 2021. “World Steel in Figures 2021.” Brussels. https://worldsteel.org/publications/bookshop/world-steel-in-figures-2021/. Germany Trade & Invest. 2018. “The Plastics Industry in Germany.” https://www.gtai.de/resource/blob/64132/90bb4f93ab4a2780476d37d1c0a678c1/industry-overview-plastics-industry-in-germany-en-data.pdf. Perilli, D. 2020. “Update on Germany.” Global Cement, August 12, 2020. https://www.globalcement.com/news/item/11214-update-on-germany.

¹¹ This analysis was performed to gauge the current momentum of demand for low-CO₂ materials in 2030. It is based on company commitments (as of 2 November 2021) to the Science Based Targets, a leading and particularly stringent framework for greenhouse gas emission reductions. When companies commit to the SBTs, they commit to a two-year deadline to set targets and meet the associated requirements in line with their desired ambition level. While ambition levels vary, the existing target portfolio is successively shifting towards higher ambitions as more and more of the already committed companies are setting new targets aligned with the recently introduced Net-Zero Standard. The portfolio is also growing as the number of new commitments has approximately doubled every year. In response to these developments, our snapshot momentum analysis is based on a simplified middle ground, assuming no additional commitments but that all current commitments and targets will result in net-zero targets and that these will be met to a 20–30% degree on average by 2030. It is further assumed that, in meeting those targets, companies will demand a similar share of their input materials as low-CO₂ materials. Input materials are in turn estimated on a sector-by-sector basis using benchmarks and extrapolation by company revenue, while double counting was avoided as well as possible by focusing on end uses. See the SBT web pages for companies taking action: https://sciencebasedtargets.org/companies-taking-action and the Net-Zero Standard: https://sciencebasedtargets.org/net-zero.

¹² See the European Environment Agency’s database of national greenhouse gas inventories: https://www.eea.europa.eu/ds_resolveuid/45b73e8a0ced4df4b40e364c497717ee.

¹³ Below are some well-known reports, although the list could be made much longer. Material Economics. 2019. “Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry.” Stockholm. https://materialeconomics.com/publications/industrial-transformation-2050. Witecka, W.K. et al. 2021. “Breakthrough Strategies for Climate-Neutral Industry in Europe : Policy and Technology Pathways for Raising EU Climate Ambition ; Study.” Berlin: Agora Energiewende. http://nbn-resolving.de/urn:nbn:de:bsz:wup4-opus-77513. Mission Possible Partnership. 2021. “Net-Zero Steel: Sector Transition Strategy.” https://missionpossiblepartnership.org/wp-content/uploads/2021/10/MPP-Steel-Transition-Strategy-Oct-2021.pdf. IEA. 2021. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050. McKinsey & Company. 2020. “Net-Zero Europe - Decarbonization Pathways and Socioeconomic Implications.” December 3, 2020. https://www.mckinsey.com/business-functions/sustainability/our-insights/how-the-european-union-could-achieve-net-zero-emissions-at-net-zero-cost.

¹⁴ Material Economics scenario analysis based on multiple sources and previous work. See: Material Economics. 2019. “Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry.” Stockholm. https://materialeconomics.com/publications/industrial-transformation-2050.

¹⁵ Material Economics analysis based on multiple sources: Oxford Economics. 2019. “The Impact of the European Steel Industry on the EU Economy.” Oxford, UK. https://www.oxfordeconomics.com/publication/download/316776. EUROFER. 2020. “European Steel in Figures 2020.” Brussels: European Steel Association. https://www.eurofer.eu/publications/archive/european-steel-in-figures-2020/. European Commission, and I. Directorate-General for Internal Market Entrepreneurship and SMEs. 2018. “Competitiveness of the European Cement and Lime Sectors : Final Report.” Publications Office. doi:10.2873/300170. Cefic. 2021. “2022 Facts and Figures of the European Chemical Industry.” Cefic.Org. June 12, 2021. https://cefic.org/a-pillar-of-the-european-economy/facts-and-figures-of-the-european-chemical-industry/. See also Eurostat data: National Accounts Aggregates by Industry (up to NACE A*64): https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_a64&lang=en. Symmetric Input-Output Table at Basic Prices (Product by Product): http://appsso.eurostat.ec.europa.eu/nui/show.do?wai=true&dataset=naio_10_cp1700. Annual Detailed Enterprise Statistics for Industry (NACE Rev. 2, B-E): https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=sbs_na_ind_r2&lang=en. Annual Detailed Enterprise Statistics for Construction (NACE Rev. 2, F): https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=sbs_na_con_r2&lang=en. Share of Housing Costs in Disposable Household Income, by Type of Household and Income Group - EU-SILC Survey: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_mded01&lang=en.

¹⁶ World Steel Association. 2010. “Steel Statistical Yearbook 2010.” Steel industry statistics. http://www.worldsteel.org/steel-by-topic/statistics/steel-statistical-yearbook-.html. World Steel Association. 2011. “Steel Statistical Yearbook 2011.” Steel industry statistics. Brussels, Belgium. https://www.worldsteel.org/en/dam/jcr:c12843e8-49c3-40f1-92f1-9665dc3f7a35/Steel%2520statistical%2520yearbook%25202011.pdf. World Steel Association. 2020. “Steel Statistical Yearbook 2020.” Steel industry statistics. Brussels, Belgium. https://www.worldsteel.org/steel-by-topic/statistics/steel-statistical-yearbook.html. EUROFER. 2020. “European Steel in Figures 2020.” Brussels: European Steel Association. https://www.eurofer.eu/publications/archive/european-steel-in-figures-2020/. Also see Eurostat data for EU Trade since 1988 by HS2-4-6 and CN8 (DS-045409): http://epp.eurostat.ec.europa.eu/newxtweb/setupdimselection.do.

¹⁷ Material Economics analysis based on multiple sources: EUROFER. 2020. “European Steel in Figures 2020.” Brussels: European Steel Association. https://www.eurofer.eu/publications/archive/european-steel-in-figures-2020/. Cefic. 2021. “2022 Facts and Figures of the European Chemical Industry.” Cefic.Org. June 12, 2021. https://cefic.org/a-pillar-of-the-european-economy/facts-and-figures-of-the-european-chemical-industry/. Oxford Economics. 2019. “The Impact of the European Steel Industry on the EU Economy.” Oxford, UK. https://www.oxfordeconomics.com/publication/download/316776. European Commission, and I. Directorate-General for Internal Market Entrepreneurship and SMEs. 2018. “Competitiveness of the European Cement and Lime Sectors : Final Report.” Publications Office. doi:10.2873/300170. Also see graphic from the European Cement Association (CEMBUREAU): https://cembureau.eu/media/jrlhowdo/figures_05.png.

¹⁸ Eurostat. 2020. “Output of Economic Activities in the EU Member States.” October 28, 2020. https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20201028-1.

¹⁹ Material Economics analysis based on multiple sources: EUROFER. 2020. “European Steel in Figures 2020.” Brussels: European Steel Association. https://www.eurofer.eu/publications/archive/european-steel-in-figures-2020/. Cefic. 2021. “2022 Facts and Figures of the European Chemical Industry.” Cefic.Org. June 12, 2021. https://cefic.org/a-pillar-of-the-european-economy/facts-and-figures-of-the-european-chemical-industry/. Also see the European Commission’s web page on the chemicals sector: https://ec.europa.eu/growth/sectors/chemicals_en.

²⁰ See the European Commission’s web page on the chemicals sector: https://ec.europa.eu/growth/sectors/chemicals_en.

²¹ European Commission, Executive Agency for Small and Medium sized Enterprises., I. Merkelbach, and H. Hollanders. 2020. European Panorama of Clusters and Industrial Change: Performance of Strong Clusters across 51 Sectors and the Role of Firm Size in Driving Specialisation : 2020 Edition. LU: Publications Office. https://data.europa.eu/doi/10.2826/451726.

²² See Eurostat data on EU Trade since 1988 by HS2-4-6 and CN8 (DS-045409): http://epp.eurostat.ec.europa.eu/newxtweb/setupdimselection.do. Products included:
• Products of the chemical or allied industries, excluding pharmaceuticals – CODES 28, 29, 31–38
• Cement, incl. cement clinkers, whether or not coloured – CODE 2523
• Iron and steel, excluding primary materials; iron and non-alloy steel in ingots or other primary forms; semi-finished products of iron or non-alloy steel – CODES 7208–7229

²³See European Aluminium’s web page on EU import dependency: https://www.european-aluminium.eu/data/economic-data/eu-aluminium-imports-dependency/.

²⁴ Material Economics analysis based on multiple sources: Oxford Economics. 2019. “The Impact of the European Steel Industry on the EU Economy.” Oxford, UK. https://www.oxfordeconomics.com/publication/download/316776. EUROFER. 2020. “European Steel in Figures 2020.” Brussels: European Steel Association. https://www.eurofer.eu/publications/archive/european-steel-in-figures-2020/. European Commission, and I. Directorate-General for Internal Market Entrepreneurship and SMEs. 2018. “Competitiveness of the European Cement and Lime Sectors : Final Report.” Publications Office. doi:10.2873/300170. Cefic. 2021. “2022 Facts and Figures of the European Chemical Industry.” Cefic.Org. June 12, 2021. https://cefic.org/a-pillar-of-the-european-economy/facts-and-figures-of-the-european-chemical-industry/. See also Eurostat data on: National Accounts Aggregates by Industry (up to NACE A*64): https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_a64&lang=en. Symmetric Input-Output Table at Basic Prices (Product by Product): http://appsso.eurostat.ec.europa.eu/nui/show.do?wai=true&dataset=naio_10_cp1700. Annual Detailed Enterprise Statistics for Industry (NACE Rev. 2, B-E): https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=sbs_na_ind_r2&lang=en. Annual Detailed Enterprise Statistics for Construction (NACE Rev. 2, F): https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=sbs_na_con_r2&lang=en. Share of Housing Costs in Disposable Household Income, by Type of Household and Income Group - EU-SILC Survey: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_mded01&lang=en.

²⁵ IEA. 2021. “Global Hydrogen Review 2021.” Paris: International Energy Agency. https://www.iea.org/reports/global-hydrogen-review-2021.

²⁶ Finland’s greenhouse gas emissions in 2019, including international aviation, amounted to 40.97 Mt CO₂e, per official EU data. See https://www.eea.europa.eu/data-and-maps/data/data-viewers/greenhouse-gases-viewer.

²⁷ Material Economics analysis based on multiple sources. The number of dwellings is based on the EU average floor area per dwelling times the typical cement consumption per floor area, divided by the announced volume of low-CO₂ cement. The abatement figure for cement is based only on CCUS and does not include the abatement from low-clinker cements. The displayed number of cars is conservatively calculated from the steel production that is certain to be H-DRI based from the start (may be larger if/once the remaining DRI plants run on renewable hydrogen), divided by the average steel content per car. The abatement from steel does not include savings from scrap use as it is currently used in other regions through exports. It could be higher if the 37 Mt are shifted to hydrogen. The plastic emissions reduction includes end-of-life emissions. See the European Commission’s EU Buildings Database: https://ec.europa.eu/energy/eu-buildings-database_en, as well as: Agora Energiewende. 2021. “Breakthrough Strategies for Climate-Neutral Industry in Europe : Policy and Technology Pathways for Raising EU Climate Ambition ; Study.” Berlin: Agora Energiewende. http://nbn-resolving.de/urn:nbn:de:bsz:wup4-opus-77513. Material Economics. 2019. “Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry.” Stockholm. https://materialeconomics.com/publications/industrial-transformation-2050.

²⁸ Material Economics analysis assuming constant steel production 2050 around ~160 Mt (saturating steel stock), with constant share of purely scrap based production around 65 Mt, which yields 95 Mt to be transitioned from BF-BOF to breakthrough technologies to be decarbonised. 52 Mt is thus more than half of these 95 Mt. Analysis based on: EUROFER. 2020. “European Steel in Figures 2020.” Brussels: European Steel Association. https://www.eurofer.eu/publications/archive/european-steel-in-figures-2020/.

²⁹ ~15 Mt H-DRI based steel includes 1 Mt by ArcelorMittal in Hamburg, 5 Mt by SSAB/HYBRIT/LKAB, 5 Mt by H2GS in Boden and 2.5-5 Mt by H2GS in the Iberian Peninsula.

³⁰ Based on a benchmark of 1.9 tonne CO₂ per tonne steel for the BF-BOF route and a range of 0.9–1.5 tonnes CO₂ per tonne steel for the DRI route. The DRI range depends on the fuel used for pelletisation, the local carbon footprint of electricity used in EAFs as well as variations in the impact of downstream processing. For more information, see the Annex to this report. Rechberger, K. et al. 2020. “Green Hydrogen‐Based Direct Reduction for Low‐Carbon Steelmaking.” Steel Research International 91 (May). doi:10.1002/srin.202000110.

³¹ World Steel Association. 2021. “World Steel in Figures 2021.” Brussels. https://worldsteel.org/publications/bookshop/world-steel-in-figures-2021/.

³² Material Economics analysis based on information available on company websites and public announcements. The estimated 52 Mt are based on the following assumed EAF capacities by 2030: H2 Green Steel, 5 Mt, Boden; SSAB, 2.2 Mt, Luleå (assumed split of announced 3.5 Mt based on current production capacitites in Luleå and Raahe); SSAB, 1.3 Mt, Raahe; SSAB, 1.5 Mt, Oxelösund; ArcelorMittal, 1 Mt, Hamburg; ArcelorMittal, 0.5 Mt, Bremen (assumed split of the announced combined capacity of 3.5 Mt at the industrial-scale plant in Eisenhüttenstadt and pilot-scale plant in Bremen); ArcelorMittal, 3 Mt, Eisenhüttenstadt; ArcelorMittal, 3.2 Mt, Gent (assuming the total capacity to remain constant at 5.5 Mt and blast furnace B to operate in parallel with the new EAFs); Tata Steel, 7.5 Mt, Ijmuiden (assuming the total capacity to remain constant at 7.5 Mt); Liberty Steel / SHS Group, 4 Mt, Ascoval / Ostrava (based on (H)-DRI capacity in Dunkerque); Salzgitter, 5.2 Mt, Salzgitter (assuming the total capacity to remain constant at 5.2 Mt); Voestalpine, 4 Mt, Linz (based on a BOF capacity of 6 Mt and an announcement that two-thirds of BF-BOF will be converted by 2030); Voestalpine, 0.8 Mt, Donawitz (based on a BOF capacity of 6 Mt and an announcement that half of BF-BOF will be converted by 2030); Liberty Steel, 4 Mt, Galati; ArcelorMittal, 1.1 Mt, Gijón; ArcelorMittal, 1.6 Mt, Sestao (existing EAF capacity); ArcelorMittal, 2.5 Mt, Taranto; H2 Green Steel, 3.75 Mt, Iberian Peninsula.

³³ Material Economics. 2022 (forthcoming). “Europe’s Missing Plastics: Taking Stock of EU Plastics Circularity.” Stockholm. https://materialeconomics.com/publications.

³⁴ Material Economics. 2019. “Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry.” Stockholm. https://materialeconomics.com/publications/industrial-transformation-2050.

³⁵ There are a range of different pyrolysis and similar advanced chemical recycling processes being developed, with different types of reactors, with and without the use of catalysts, with different tolerance for moisture etc., resulting in different yields and output compositions. The cost and other estimates in this study focuses on pyrolysis.

³⁶ The currently proposed plants have an aggregated capacity to convert 1.2 Mt of plastic waste, corresponding to almost 0.6 Mt chemically recycled high-value chemicals (HVC) assuming an average plastics-to-HVC conversion rate of 46%. This is approximately 1% of the 45.5 Mt HVC production in the EU + UK. (Agora, 2021). Agora Energiewende. 2021. “Breakthrough Strategies for Climate-Neutral Industry in Europe : Policy and Technology Pathways for Raising EU Climate Ambition ; Study.” Berlin: Agora Energiewende. http://nbn-resolving.de/urn:nbn:de:bsz:wup4-opus-77513.

³⁷ For example, OMVs ReOil technology. OMV. 2019. “Circular Economy.” In OMV Sustainability Report 2019. Vienna. https://omv.online-report.eu/en/sustainability-report/2019/focus-areas/innovation/circular-economy.html. OMV. 2020. “ReOil: 200,000 Kg of Plastic Waste Recycled with OMV’s Circular Economy Pilot Project.” June 5, 2020. https://www.omv.com/en/news/reoil-200-000-kg-of-plastic-waste-recycled-with-omv-s-circular-economy-pilot-project-.

³⁸ Steilemann, M. 2021. “European Plastics Manufacturers Plan 7.2 Billion Euros of Investment in Chemical Recycling.” Plastics Europe, May 26, 2021. https://plasticseurope.org/european-plastics-manufacturers-plan-7-2-billion-euros-of-investment-in-chemical-recycling-2/.

³⁹ Material Economics. 2022 (forthcoming). “Europe’s Missing Plastics: Taking Stock of EU Plastics Circularity.” Stockholm. https://materialeconomics.com/publications.

⁴⁰ Material Economics summary based on information available on company websites and public announcements. Capacities shown are plastic recycling capacities (input) unless otherwise specified. Capacities announced as pyrolysis oil or similar (output) have been converted assuming a 70% yield as an average of multiple sources including Larrain et al. (2020), Riedewald et al. (2021), Thunman et al. (2019) and Neelis et al. (2005). The total 1.2 Mt plastic waste capacity by 2030 is based on the following plants: Quantafuel, 10 kt, Kristiansund; Quantafuel, 20 kt, Skive; Quantafuel, 100 kt, Sunderland; Quantafuel, TBA; Teeside; Pryme, 60 kt, Rotterdam; Recenso, 1 kt, Ennigerloh; Bluealp, 30 kt, Moerdijk; Ravago, 55 kt, Vlissingen; Fuenix Ecogy Group, 20 kt, Weert; Renasci, 20 kt (converted), Oostende; Plastic Energy, 20 kt, Geleen; Plastic Energy, 25 kt, Le Havre; Plastic Energy, 15 kt, Grandpuits; Pyrum, 20, Dilingen; OMV, 200 kt, Schwechat; Servizi di Ricerche e Sviluppo, 6 kt, Mantova; LyondellBasell, <1 kt, Ferrara; Petronor, 10 kt, Bilbao; Plastic Energy, 5 kt, Seville; Plastic Energy, 5 kt, Almeria; Pryme, 350 kt (converted), location TBA; Quantafuel, capacity TBA, location TBA; Plastic Energy, capacity TBA, location TBA; Plastic Energy, capacity TBA, location likely in the UK; New Energy, 8 kt, location TBA; Remondis, capacity TBA, location TBA. Larrain, M. et al. 2020. “Economic Performance of Pyrolysis of Mixed Plastic Waste: Open-Loop versus Closed-Loop Recycling.” Journal of Cleaner Production 270 (October): 122442. doi:10.1016/j.jclepro.2020.122442. Riedewald, F. et al. 2021. “Economic Assessment of a 40,000 t/y Mixed Plastic Waste Pyrolysis Plant Using Direct Heat Treatment with Molten Metal: A Case Study of a Plant Located in Belgium.” Waste Management 120 (February): 698–707. doi:10.1016/j.wasman.2020.10.039. Thunman, H. et al. 2019. “Circular Use of Plastics-Transformation of Existing Petrochemical Clusters into Thermochemical Recycling Plants with 100% Plastics Recovery.” Sustainable Materials and Technologies 22 (December): e00124. doi:10.1016/j.susmat.2019.e00124. Neelis, M. L. et al. 2005. “Modelling CO₂ Emissions from Non-Energy Use with the Non-Energy Use Emission Accounting Tables (NEAT) Model.” Resources, Conservation and Recycling 2005 (45): 226–50.

⁴¹ Roadmaps for the chemicals sector have identified several other options (Material Economics, 2019). Byproducts can be upgraded and turned into products instead. Likewise, fossil feedstock can be replaced to some degree by bio-based feedstock that releases no fossil CO₂. In the long run, the cracker process itself can be bypassed to some degree, by using other routes to make the basic chemicals needed. To date, however, these solutions are not part of active development by the EU chemicals industry. The main exception are several projects to produce methanol, a major chemical, from biomass and from captured CO₂. Material Economics. 2019. “Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry.” Stockholm. https://materialeconomics.com/publications/industrial-transformation-2050.

⁴² Material Economics analysis based on clinker production emissions from EU ETS data and emissions split from WBCSD Cement Sustainability Initiative. WBCSD Cement Sustainability Initiative. 2016. “Getting the Numbers Right (GNR) Project, Emission Report 2016.” http://www.wbcsdcement.org/GNR-2016/index.html.

⁴³ Based on the EU cement sector emissions and the aggregated cement CCS capacity to be realised by 2030 according to public announcements and company websites.

⁴⁴ Material Economics summary based on information available on company websites and public announcements. Capacities shown are in tonnes CO₂ per year by 2030 or earlier. Some capacities have been calculated based on cement production data assuming 0.8 tonne CO₂ per tonne cement. The total ~10 Mt carbon capture capacity is based on the following projects: Norcem, 0.4 Mt (50% of the plant’s emissions), Brevik; Cementa, 1.8 Mt , Slite; Aalborg Portland, 0.45 Mt, Ålborg; Holcim, 1 Mt (assuming that the full carbon capture potential is utilized), Lägerdorf; Hanson, 0.8 Mt, Padeswood; Leilac, 0.1 Mt, Hannover; Westküste100 and Holcim, 1.3 Mt, Höver; Górażdże, capacity TBA, Górażdże; Catch4Climate, 0.8 Mt (calculated), Heidenheim; Coolplanet with Holcim and Hereon, 0.7 Mt, Mannersdorf; Vicat, 0.7 Mt (calculated), Montalieu-Vercieu; ECRA and Holcim, 0.4 Mt (calculated), Retznei; Buzzi Unicem, 0.9 Mt (calculated assuming carbon capture applies to all plant emissions with the targeted capture efficiency of 90%), Vernasca; Carbon Clean and Holcim, 0.14 Mt (calculated), Colleferro; ECRA and Holcim, 0.07 Mt (may be later scaled up to 0.7 Mt), Carboneras.

⁴⁵ Costs for electrified Leilac carbon capture is similar to the costs for oxy-fuel CCS, but Leilac carbon capture with alternative fuel could be some 20% cheaper than oxy-fuel CCS, given that the alternative fuel is very cheap.

⁴⁶ The approach includes a combination of further compacting, adding fillers and plasticisers, reducing water content, and replacing standard clinker with other binder materials. Clinker accounts for 95% of the emissions from ordinary cement production. See: WBCSD Cement Sustainability Initiative. 2016. “Getting the Numbers Right (GNR) Project, Emission Report 2016.” http://www.wbcsdcement.org/GNR-2016/index.html.

⁴⁷ Gilliam, R., and K. Krugh. 2021. “Fortera: Low-CO₂ Cement Inspired by Nature,” September 27, 2021. https://www.globalcement.com/magazine/articles/1230-fortera-low-co2-cement-inspired-by-nature.

⁴⁸ McDowell, A. 2019. “Big Ambitions and Investments for Net-Zero Emissions.” European Investment Bank, April 4, 2019. https://www.eib.org/en/stories/energy-transformation.

⁴⁹ Some 30% of current EU cement production takes place at plants that emit less than 500,000 tonnes of CO₂ emissions per year, so the cost per tonne is higher. A third of production occurs more than 300 km from any major port that could take CO₂ for offshore storage, making transport and storage much more expensive. See Annex to this report for more information.

⁵⁰ Material Economics analysis based on multiple sources including the key ones listed below. For more information, see the Annex to this report. Bhaskar, A. et al. 2021. “Decarbonizing Primary Steel Production : Techno- Economic Assessment of a Hydrogen Based Green Steel Production Plant in Norway,” September. doi:10.5281/zenodo.5526695. Pei, M. et al. 2020. “Toward a Fossil Free Future with HYBRIT: Development of Iron and Steelmaking Technology in Sweden and Finland.” Metals 10 (7): 972. doi:10.3390/met10070972. Agora Energiewende. 2021. “Breakthrough Strategies for Climate-Neutral Industry in Europe : Policy and Technology Pathways for Raising EU Climate Ambition ; Study.” Berlin: Agora Energiewende. http://nbn-resolving.de/urn:nbn:de:bsz:wup4-opus-77513.

⁵¹ See Salzgitter’s “green steel” website; SSAB’s “fossil-free steel” website: https://www.ssab.com/fossil-free-steel; and H2 Green Steel announcement: https://www.affarsvarlden.se/intervju/afv-avslojar-h2-green-steel-har-salt-for-over-20-miljarder.

⁵² See the Eastman website: https://www.eastman.com/Company/Circular-Economy/Solutions/Pages/Our-investment-in-France.aspx.

⁵³ Energy Transitions Commission, and Material Economics. 2021. “Steeling Demand: Mobilising Buyers to Bring Net-Zero Steel to Market before 2030.” Prepared for the Net-Zero Steel Initiative, part of the Mission Possible Partnership. https://materialeconomics.com/publications/steeling-demand.

⁵⁴Material Economics analysis based on annual production of steel, plastics and cement as well as inputs needed per production of each tonne of these materials. Based on annual EU production (2019 or latest available number) of 157 Mt steel using 234 Mt iron ore (both lump ore and sinter/pellets) and 133 Mt coking coal (both coal to make coke and coal as reducing agent), 40 Mt HVC plastics using 62 Mt Naphtha and 182 Mt cement using 252 Mt limestone. Multiple sources, including: EUROFER. 2020. “European Steel in Figures 2020.” Brussels: European Steel Association. https://www.eurofer.eu/publications/archive/european-steel-in-figures-2020/. Agora Energiewende. 2021. “Breakthrough Strategies for Climate-Neutral Industry in Europe : Policy and Technology Pathways for Raising EU Climate Ambition ; Study.” Berlin: Agora Energiewende. http://nbn-resolving.de/urn:nbn:de:bsz:wup4-opus-77513. See also “Key Facts & Figures” web page from CEMBUREAU: https://cembureau.eu/cement-101/key-facts-figures/.

⁵⁵ Gross electricity generation data from BP (2021). bp. 2021. “Statistical Review of World Energy 2021.” https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2021-full-report.pdf.

⁵⁶ Material Economics has identified 35–54 Mt CO₂ of planned carbon-capture storage capacity by 2030 based on information from the Global CCS Institute (2021) and by summarising announcements from Polaris, Northern Lights, Acorn, Greensands, Northern Endurance Partnership, Humber Zero, Porthos, HyNet, North West and Ravenna Hub. Global CCS Institute. 2021. “Global Status of CCS 2021: CCS Accelerating to Net Zero.” Melbourne, Australia: Global Carbon Capture and Storage Institute. https://www.globalccsinstitute.com/resources/global-status-report/.

⁵⁷ Material Economics analysis based on the European context with data from Wind Europe (2021). The number of turbines required depends heavily on size and location. Offshore turbines tend to be larger than onshore turbines, which allows them to generate more power as well as capture energy at lower wind speeds. In addition, they typically operate under better and more consistent wind conditions and can therefore generate power closer to their rated capacity throughout the year. If 5.5 TWh of electricity per year were to be generated from new offshore wind power ordered today, around 110 to 170 turbines would be needed, depending on the achieved capacity factor (the European range is approximately 35-55%) and assuming an average capacity of 10.4 MW per offshore turbine (according to the latest order data). Similarly, if 5.5 TWh of electricity were to be generated from onshore wind turbines, around 430 to 500 turbines would be needed, based on capacity factors in the range 30-35% and assuming an average capacity of 4.2 MW per onshore turbine (according to the latest order data). See: Wind Europe. 2021. “Wind Energy in Europe: 2020 Statistics and the Outlook for 2021-2025.” Brussels. https://windeurope.org/intelligence-platform/product/wind-energy-in-europe-2020-statistics-and-the-outlook-for-2021-2025/.

⁵⁸ Assuming 1 Mt of total HVC capacity, and 46% plastics-waste-to-HVC conversion rate. According to Deloitte (2021), there are 8 main petrochemical clusters in the EU. Deloitte et al. 2021. “IC2050 Project Report: Shining a Light on the EU27 Chemical Sector’s Journey toward Climate Neutrality.” https://news.cefic.org/storage/5200/iC2050-Project-report-'Shining-a-light-on-the-EU27-chemical-sector%E2%80%99s-journey'-October-2021.pdf.

⁵⁹ Plastic waste per household is calculated as the total volume of EU27 end-of-life plastics, based on our Circular Economy Model (2018), divided by the number of households in the EU27 region. See: Material Economics. 2018. “The Circular Economy - A Powerful Force for Climate Mitigation.” Stockholm. https://materialeconomics.com/publications/the-circular-economy. Also see Eurostat household data: https://ec.europa.eu/eurostat/databrowser/view/lfst_hhnhwhtc/default/table?lang=en.

⁶⁰ Material Economics. 2018. “The Circular Economy - A Powerful Force for Climate Mitigation.” Stockholm. https://materialeconomics.com/publications/the-circular-economy.

⁶¹ Verordnung der Bundesregierung. 2021. “Verordnung Über Die Kosten Und Entgelte Für Den Zugang Zu Wasserstoffnetzen Und Zur Änderung Der Anreizregulierungsverordnung.” https://www.bmwi.de/Redaktion/DE/Downloads/V/verordnung-ueber-kosten-und-entgelte-fuer-zugang-zu-wasserstoffnetzen-und-aenderung-anreizregulierungsverordnung.pdf?__blob=publicationFile&v=6.

⁶² Material Economics analysis, assuming 4,000 hours per year, 70% power-to-hydrogen energy efficiency.

⁶³ Our assumption is based on the findings of the Energy Sector Management Assistance Program (ESMAP, 2020). ESMAP estimated that the electrolyser manufacturing capacity in 2020 was 300 MW and 2,100 MW for PEM and alkaline electrolysers, respectively, and that they would pass 1,500 MW and 3,000 MW in 2025. However, this would not only need to cover the needs of the steel industry. For comparison, the IEA (2021) claims that the global installed electrolyser capacity would need to reach 180 GW by 2030 to meet the current pledges of governments around the world, or as much as 850 GW in their net-zero scenario. See IEA. 2021. “Global Hydrogen Review 2021.” Paris: International Energy Agency. https://www.iea.org/reports/global-hydrogen-review-2021. Energy Sector Management Assistance Program. 2020. Green Hydrogen in Developing Countries. World Bank, Washington, DC. doi:10.1596/34398.

⁶⁴ Approximately 4.5 billion allowances will be allocated during the years 2022–2030. The value depends on the average allowance price – the 400 billion value applies even if there is no further increase from today’s (record) levels of around 90 EUR/tCO₂.

⁶⁵ Leyen, U. von der. 2021. “Statement by the President on Delivering the European Green.” European Commission – Press Room. July 14, 2021. https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_21_3701.

⁶⁶ Material Economics. 2019. “Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry.” Stockholm. https://materialeconomics.com/publications/industrial-transformation-2050.

⁶⁷ EU carbon prices fluctuate, but they exceeded 80 EUR for much of December 2021–February 2022.

⁶⁸ European Commission et al. 2021. “Study on Energy Subsidies and Other Government Interventions in the European Union: Final Report.” Luxembourg: Publications Office of the European Union. doi:10.2833/513628; Elkerbout, M. 2022. “Can ETS Free Allocation Be Used as Innovation Aid to Transform Industry?” Policy Brief. Brussels: Centre for European Policy Studies. https://www.ceps.eu/ceps-publications/can-ets-free-allocation-be-used-as-innovation-aid-to-transform-industry/.

⁶⁹ Elkerbout, M. 2022. “Can ETS Free Allocation Be Used as Innovation Aid to Transform Industry?” Policy Brief. Brussels: Centre for European Policy Studies. https://www.ceps.eu/ceps-publications/can-ets-free-allocation-be-used-as-innovation-aid-to-transform-industry/.

⁷⁰ Moreover, if low-CO₂ installations are included among the top 10% of sites on which benchmarks are based, allocations to existing plants could be reduced drastically – further undermining carbon leakage protection.

⁷¹ European Commission. 2021. “Proposal for a Directive of the European Parliament and of the Council Amending Directive 2003/87/EC Establishing a System for Greenhouse Gas Emission Allowance Trading within the Union, Decision (EU) 2015/1814 Concerning the Establishment and Operation of a Market Stability Reserve for the Union Greenhouse Gas Emission Trading Scheme and Regulation (EU) 2015/757.” COM(2021) 551 final. Brussels. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021PC0551.

⁷² Of the 311 proposals, 204 involved energy-intensive industries. See DG CLIMA. 2020. “First Innovation Fund Call for Large-Scale Projects: 311 Applications for the EUR 1 Billion EU Funding for Clean Tech Projects.” Directorate-General for Climate Action News. November 5, 2020. https://ec.europa.eu/clima/news-your-voice/news/first-innovation-fund-call-large-scale-projects-311-applications-eur-1-billion-eu-funding-clean-tech-2020-11-05_en.

⁷³ See https://plasticseurope.org/knowledge-hub/plastics-europes-position-on-recycled-content-for-plastics-packaging-under-the-review-of-the-directive-94-62-ec-on-packaging-and-packaging-waste-ppwd/.

⁷⁴ European Commission. 2021. “Sustainable Carbon Cycles: Communication from the Commission to the European Parliament and the Council.” COM(2021)800. Brussels. https://ec.europa.eu/transparency/documents-register/detail?ref=COM(2021)800&lang=en.

⁷⁵ An alternative would be to provide sufficient ongoing revenue, so investors are persuaded to cover the additional upfront cost. However, this risks being inefficient. The financing equation of untried technologies is already stretched, and additional marginal (typically, equity) capital can get expensive. Ongoing payments are therefore often less effective at overcoming barriers specific to early entry.

⁷⁶ The range is based on a comparison of two different debt/equity ratios and a small range for the cost of debt: case 1– debt 70%, equity 30%, cost of debt 4–5% and cost of equity 20%; case 2 – debt 40%, equity 60%, cost of debt 4% and cost of equity 15%.

⁷⁷ See https://www.riksgalden.se/fi/our-operations/guarantee-and-lending/credit-guarantees-for-green-investments/.

⁷⁸ European Commission. 2021. “Questions and Answers: EU-Catalyst Partnership.” Press Corner. November 2, 2021. https://ec.europa.eu/commission/presscorner/detail/en/QANDA_21_5647.

⁷⁹ Cleantech Group. 2021. “Cleantech for Europe: Seizing the EU’s Man on the Moon Moment.” https://www.cleantechforeurope.com/report-download.

⁸⁰ A concrete initiative for this was announced in February 2022, via the European Scale-Up Initiative. The European Investment Fund/European Investment Bank will manage a multi-investor “fund of funds” aiming specifically to support promising new companies in the scale-up phase EIF. 2022. “EIB Group Supports the Pan-European Scale-up Initiative to Promote Tech Champions.” European Investment Fund News. February 9, 2022. https://www.eif.org/what_we_do/equity/news/2022/eib-supports-the-pan-european-scale-up-initiative-to-promote-tech-champions.htm.

⁸¹ European Commission. 2020. “A Hydrogen Strategy for a Climate-Neutral Europe: Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.” COM(2021)301 final. Brussels. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020DC0301.

⁸² European Commission. 2016. “Become Competitive in the Global Battery Sector to Drive E‐mobility Forward.” SET Plan Action No. 7 Declaration of Intent. SET Plan Secretariat. https://setis.ec.europa.eu/system/files/2021-05/action7_declaration_of_intent_0.pdf.

⁸³ See https://www.weforum.org/first-movers-coalition.

⁸⁴ See the FMC factsheet on steel: https://www3.weforum.org/docs/WEF_Steel_2021.pdf.

⁸⁵ See the European Commission’s Green Public Procurement website: https://ec.europa.eu/environment/gpp/what_en.htm.

⁸⁶ The Directive was last updated in January 2022. See European Parliament, and Council of the European Union. 2022. Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on Public Procurement and Repealing Directive 2004/18/EC (Text with EEA Relevance)Text with EEA Relevance. http://data.europa.eu/eli/dir/2014/24/2022-01-01/eng.

⁸⁷ European Commission. 2008. “Public Procurement for a Better Environment: Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.” COM(2008) 400 final. Brussels. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52008DC0400.

⁸⁸ OECD. 2016. “Country Case: Green Public Procurement in the Netherlands.” Public Procurement Toolbox. Paris: Organisation for Economic Co-operation and Development. https://www.oecd.org/governance/procurement/toolbox/search/green-public-procurement-netherlands.pdf.

⁸⁹ For example, the city of Zurich requires the use of recycled aggregates in publicly funded construction. See Land, P. 2019. “The Swiss Example: Using Recycled Concrete.” July 1, 2019. https://global-recycling.info/archives/2956.

⁹⁰ For example, the Swedish Transport Administration is gradually raising standards for suppliers in investment and maintenance projects, with the goal of making infrastructure climate-neutral by 2045. See https://www.trafikverket.se/for-dig-i-branschen/miljo---for-dig-i-branschen/energi-och-klimat/klimatkrav/ (in Swedish). See also this peer-reviewed study: Karlsson, I., J. Rootzén, and F. Johnsson. 2020. “Reaching Net-Zero Carbon Emissions in Construction Supply Chains – Analysis of a Swedish Road Construction Project.” Renewable and Sustainable Energy Reviews 120 (March): 109651. doi:10.1016/j.rser.2019.109651.

⁹¹ See https://energy.ec.europa.eu/topics/energy-efficiency/energy-efficient-buildings/energy-performance-buildings-directive_en and https://ec.europa.eu/growth/sectors/construction/construction-products-regulation-cpr_en.

⁹² See https://ec.europa.eu/growth/industry/strategy/hydrogen/ipceis-hydrogen_en.

⁹³ European Commission. 2008. “The Raw Materials Initiative: Meeting Our Critical Needs for Growth and Jobs in Europe: Communication from the Commission to the European Parliament and the Council.” COM(2008) 699 final. Brussels. https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A52008DC0699.

⁹⁴ See https://ec.europa.eu/growth/sectors/raw-materials/eip_en.

⁹⁵ Material Economics. 2021. “EU Biomass Use in a Net-Zero Economy – A Course Correction for EU Biomass.” Stockholm. https://materialeconomics.com/latest-updates/eu-biomass-use.

⁹⁶ European Commission. 2021. “Proposal for a Directive of the European Parliament and of the Council Amending Directive 2003/87/EC Establishing a System for Greenhouse Gas Emission Allowance Trading within the Union, Decision (EU) 2015/1814 Concerning the Establishment and Operation of a Market Stability Reserve for the Union Greenhouse Gas Emission Trading Scheme and Regulation (EU) 2015/757.” COM(2021) 551 final. Brussels. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021PC0551.

⁹⁷ See Q&A on the Norwegian government website: https://www.regjeringen.no/en/topics/energy/landingssider/ny-side/sporsmal-og-svar-om-langskip-prosjektet/id2863902/.

⁹⁸ Porthos. 2021. “Dutch Government Supports Porthos Customers with SDE++ Subsidy Reservation.” Press Release (blog). June 9, 2021. https://www.porthosco2.nl/en/dutch-government-supports-porthos-customers-with-sde-subsidy-reservation/.

⁹⁹ Council of the European Union. 2021. “Outcome of Proceedings: Proposal for a Regulation of the European Parliament and of the Council on Guidelines for Trans-European Energy Infrastructure and Repealing Regulation (EU) No 347/2013.” 9732/21. Brussels. https://www.consilium.europa.eu/media/50423/st09732-en21.pdf.