Experts warn that without technological solutions, resources and investments, decarbonizing the industry “will not be viable”

Without technological solutions, resources and public and private investments, reaching 2050 with a decarbonized industry “will not be viable.” This is according to the experts that the Naturgy Foundation has brought together in a colloquium, in which the study “Perspectives for digital transformation for a green economy” was presented this Wednesday, a report prepared by the Technological Research Institute of the Pontifical University Comillas (ICAI-IIT) and presented by Pedro Linares, professor at Comillas ICAI-IIT, and Timo Gerres, professor and guest researcher at this same center. It points out that the energy transition of the industry requires “time and a European industrial policy” that accompanies and encourages the formation of an emissions-neutral Single Market, capable of promoting technological competitiveness.

The industry stands as a basic pillar in most developed economiescontributing with 12.3% to the added value in the countrybut at the same time it is also one of the largest emitters of greenhouse gases. In Spain, 24.1% of the national total is attributed to it. Furthermore, industry consumes proportionally more energy than other economic activities.

The industrial sector in our country is responsible for 20.5% of final energy consumptionwhich implies a carbon footprint corresponding to the aforementioned 24.1% of all direct ones in the country. Specific, more than half of the energy consumption and almost 80% of the industry's emissions are linked to the raw materials production such as steel, cement, petrochemical products, paper and other products obtained from non-metallic minerals, such as glass and ceramics, whose gross added value is much lower than that of other industrial activities. Furthermore, to obtain steel, cement and petrochemical products, materials that contain carbon (coal, lime or oil, respectively) are processed and therefore their production involves both emissions associated with energy consumption (“energy emissions”) and others resulting from chemical reactions. from these materials (“process emissions”).

The truth is that the structure of the sector has undergone major changes over the last four decades since its integration into the European and global markets, marked by economic growth and the structural crisis. The fact of reaching the net 0 emissions target by 2050 represents an immense challenge for the industry. And, although it has managed to reduce its energy intensity by 25% since 2000, it faces challenges to decarbonize that are not comparable with other sectors of the economy. Pedro Linares assures that “the three most difficult things to solve are, first, the provision of thermal energy at very high temperatures; second challenge, process emissions, greenhouse gas emissions that have nothing to do with the energy you use; and third challenge, the great diversity that exists as soon as you leave the large intensive sectors.

Types of solutions for reducing emissions

There are several types of solutions to reduce emissions that, in a generalized way, could be applied to all industries. These measures refer to the change of fossil energy sources for less intensive or carbon-neutral alternatives, the capture of emissions during production processes, the change of material inputs, that is, the use of new resources in production, whether improvement in the energy efficiency of processes. According to Linares: “The Improvement in process efficiency can be applied to all industrial processes. The only drawback is that it doesn't give you enough decarbonize 100%”.

As Timo Gerres explains, “the Process emissions are the most difficult to reduce because they imply that we change the processes themselves, we change the way we produce materials. If we talk about the cement sector, almost the only solution there is CO2 capture. In the petrochemical sector, recycling can play a very important role, while companies are also exploring alternative ways to obtain, for example, plastics based on other materials.”

On the other hand, the Substitution of renewable sources is an essential requirement for the suppression of emissions associated with energy in thermal processes. However, we must take into account the limitations of each energy source to reach and maintain high temperatures and the technologies available to operate with these alternatives that limit the options of industries. Thus, Gerres explains that “if we talk about industrial processes with temperatures in the range of up to 200ºC, there are many options. We are talking, for example, about electric boilers, heat pumps, solar thermal energy… In the case of thermal processes of more than 500ºC, renewable gases are the most viable solution to avoid energy emissions from the industry. There we talk about hydrogen, more towards the future, but also, more currently, about methane, which can replace natural gas without major modifications.”

European policies and the case of Spain

The European policies of recent years, among which the European Climate Law, would highlight the political priority in the European Union regarding the transformation of the industry. The decarbonization objectives are very ambitious and require very high levels of change and investment from industries, in a very short period of time, too. As Linares explains, “this transformation process is not only going to affect the industry, it is going to affect everything. There will be job creation and greater activity in these sectors adapted to the future and there will be job loss, loss of income, in sectors that are not capable of transforming.” That was the response given from Brussels to the US Inflation Reduction Act (IRA) signed into law by President Joe Biden. “They have designed a program that has injected competitiveness into their industry,” Linares highlighted.

“Faced with the American IRA, Europe had two options. It could regulate a european sovereign fund, but that was not the decision that the twenty-seven made in a way that really represented an alternative to the American mechanism,” they say. In the field of R&D&I, they have said that “the United States invents, China copies and Europe regulates. Europe subsidizes, the States are the ones who provide those funds. Those of us who have less fiscal space have less room for our industries to be competitive. For this reason, Next Generation funds acquire relevance, not only in terms of structure, but also in industrial matters.”

Regarding Spain, Jordi Llinares San Juan, General Director of Industrial Programs (Ministry of Industry and Tourism) has defended the line followed by the PERTE, a program that, according to what he said, is very similar to that of the naval sector funds. Thus, a fund is sought in which it is also managed privately, feeding it with public aid for issuance costs. In this sense, the experts who participated in the meeting highlighted that the PERTE are a “very skilful lace-up within a very constricted market. It is a corset that several countries are ignoring by doing something and Spain has to make that bet.”

Carlos Reinoso, spokesperson for the Alliance for the Competitiveness of Spanish Industry, wanted to highlight three key aspects of the report presented: the technological factor, the temporal factor and investments. He technological factor is going to be the key, he said, “it has to give us the solution to having a radically different industry in the future. The great variety of industrial sectors requires a great variety in technology to decarbonize them.” And he added, ““We need more technological neutrality and less technological dogmatism/idealism.”

Regarding the temporal factor, he defends that we need time, because Some technologies are here, but others need a longer period. “It is important to have sufficient deadlines for this.” And in relation to the investmentsReinosa has warned that these They could be multiplied by two or even three if we want to achieve that decarbonization. “It is true that there are countries with a greater fiscal balance, but in the end it is a matter of options. Many are prioritizing the industry to have a more resilient economy, more work, more R&D, more trade balance. In the end, prioritizing Industrial policy is an option and it is what is expected of Spain and what I would like the Government to do.

The role of SMEs

On the other hand, during the expert colloquium it was emphasized that the Dependence on the cost of energy is often attributed to large companies, but the truth is that there are many SMEs that exist in our country. “Spain is a country of SMEs, they have remembered. Regarding this, José Miguel Guerrero, vice president of Cepyme, has stated that despite the large presence of small and medium-sized companies in Spain, the data indicates that the 80% of gas emissions correspond to large companies and 20% to SMEs.

“He 99% of the economy in Spain is based on SMEs. And what worries SMEs the most is the day-to-day, they cannot dedicate resources to these types of problems.” Therefore, simplifying procedures is one of the keys. As they have said, the deadlines have to be adjusted to the reality of the companies. Clear and stable legislation is also required in the autonomous communities. Regarding the challenges facing the industry, Guerrero has stated that “the great transformations have always been carried out with balance. But the solution is not to subordinate the industry to the climate change.

For his part, Llinares has assured that “administrations, public sector and private sector have to go hand in hand.” As he explained, The challenge is being huge, but the focus is on making industrial policy. As for small and medium-sized companies, he has insisted that they have to make that effort, “we are trying to be didactic,” he added, highlighting other departments such as CDTI, focused on R&D&I. “We have to be in dialogue to see how these funds can be channeled, because it is the only way that Brussels offers us and because we have to be competitive in this global community.”

Circular economy

One of the ways mentioned in the study to overcoming the challenges of the transition is to create markets for green products in a circular economy with incentives for the efficient and intelligent use of raw materials. Taken together, existing regulatory measures and new policies aimed at sustainable and circular consumption are key to encouraging recycling and product design that facilitates the reuse of their materials.

The optimal use of raw materials in a circular economy, as indicated in the study, implies a reduction in the use of raw materials through high recovery rates and recycling of waste. To maximize circularity, intermediate and final products must be designed so that raw materials are easily recoverable and final products easily repairable. Thus, the study shows that the Government financed projects related to the circular economy, allocating 492 million eurosand renewable energies, renewable hydrogen and storage (6.9 billion).