Consumer-facing companies contributing to decarbonize the heavy-industry

Abstract

Most countries have shown their concern towards global warming and made commitments to decrease carbon emissions. Energy usage will have to become more efficient and generated by an increasing amount of sustainable resources. Hard-to-abate industries will require incentives to decarbonize their processes. Research shows that consumer-facing companies (CFCs) are willing to and can incentivize upstream production to decarbonize processes. Literature research concludes that steel, ammonia, methanol and refineries are highly dependent on hydrogen to be decarbonized. Demand sectors of these heavy industries are analyzed to identify potential demand for hydrogen-based products, and whether their value proposition towards consumers increases using hydrogen-based products. Some case studies on CFCs using heavy industry’s products do confirm this. A table with scores per industry is provided to show the relative degree of downstream capability and willingness to decarbonize upstream production. The research shows that the steel sector will be the most applicable industry to be incentivized from a CFC’s perspective, followed by ammonia and to less extent methanol and refineries. CFC initiated decarbonization mechanisms are qualitatively sorted and discussed for applicability on hydrogen-based transition. The mechanisms holding the highest potential to initiate upstream decarbonization are discussed regarding applicability for the steel industry. Business model innovation, industry & sector level collaboration, performance standards and industry & market standards are considered to have the highest potential among CFC mechanisms to reduce risks in transitioning upstream industries.