How a ‘materials transition’ can support the net-zero agenda

As the energy transition continues, advances toward low-emissions materials and the circular economy can also speed progress to net zero. Research on Europe shows the value in such a materials transition.

Many countries and businesses have so far centered their plans for achieving net-zero emissions on an energy transition, which calls for boosting energy efficiency and accelerating the transition to renewable energy. And rightly so, given that the use of fossil fuels accounts for a clear majority of global CO2 emissions and presents obvious emissions reduction opportunities. However, the production, use, and eventual disposal of industrial materials such as steel, plastics, aluminum, and cement also account for almost a quarter of all global CO2 emissions. To stand a chance of reaching net zero, countries and businesses should also consider what might be called a materials transition, which would involve both the implementation of lower-impact ways to produce materials and—crucially—the application of circular-economy principles to optimize the use and reuse of these materials.

The implications of such a materials transition could be as deep and disruptive as those of the energy transition. In this article, we draw on research by Material Economics 1 to show how a widespread transition to green-materials production and circular-economy practices in the European Union could set the region’s emissions on a path to net zero by 2050. The findings, we believe, also offer lessons to the rest of the world on what it will take to realize global net-zero goals.

A materials transition that applies circular-economy principles and involves lower-impact ways to produce materials can help to realize global net-zero goals.

Implementing circular-economy practices is a powerful way to reduce greenhouse-gas emissions from industry in Europe. That was the main conclusion from research conducted in 2018 on how low-carbon goals and circular-economy principles relate to one another. In the European Union, the production of four major material types—steel, plastics, aluminum, and cement—created 75 percent of all CO2 emissions from industry. In a business-as-usual scenario, which includes a broad transition toward renewable energy and continued improvements in energy efficiency, our analysis suggests that industrial emissions in 2050 would be 530 million metric tons of CO2 (MtCO2), which is roughly what they are at present, and which is far from Europe’s net-zero targets. This is one of the main reasons these sectors are considered “hard to abate.”

However, the outlook becomes different when it incorporates the effects of building a more circular economy in Europe. Recirculating materials, using them more efficiently in products, and increasing the utilization and lifetime of vehicles and buildings (which take up most of the aluminum, steel, and cement produced in the European Union) could significantly lessen demand for primary industrial materials—and thereby reduce environmental impacts. In all, these circularity measures could cut emissions by 56 percent, compared with the baseline scenario noted above. They therefore represent an important set of actions for Europe and its companies to consider as they pursue their net-zero targets.

For more, see The circular economy: A powerful force for climate mitigation.

Circular opportunities in Europe can cut 2050 emissions from steel, plastics, aluminum, and cement by 56 percent.

Looking ahead to the European Union’s goal of reaching net zero by 2050, it is clear that the production of industrial materials must also achieve net-zero emissions over the same time frame. Until recently, the emissions associated with making cement, chemicals, and steel were considered hard to abate, either because they come from necessary chemical reactions (such as the calcination of limestone during cement making) or because zero-emissions versions of standard industrial equipment (such as high-temperature furnaces) are ineffective or costly.

During the past few years, however, new production methods, alternative energy sources and feedstocks, emissions-abatement technologies, and circular practices have emerged. Together, these new approaches and innovations combine to make a net-zero transition more feasible than it seemed until recently. Our research explores a set of coherent net-zero pathways for Europe’s materials industries, quantifies their consequences, and discusses “no regrets” and trade-offs across the pathways. It also shows the prerequisites of new supply chains, energy inputs, and infrastructure.

For more, see Industrial transformation 2050: Pathways to net-zero emissions from EU heavy industry.

Three emissions reduction pathways could bring Europe’s materials industries close to net zero in 2050.

Europe’s current way of using materials is far from circular: large volumes of materials do not get recycled, and those that do often go down in price because their quality suffers as a result of mixing, pollution, and toxicity. Volume and price both affect the value of materials, but most research looks only at volume. Our recent study examined both volume and price to determine how much of the original value of raw materials remains after a typical use cycle through Europe’s economy.

The research uncovered several meaningful insights. First, we found that 57 percent of the materials’ total value was lost, even though these materials can technically be recycled many times. Second, we also found significant quality downgrading effects in the metals, which are commonly thought of as fully circular already. Third, we found that quality downgrading often prevents high recycling rates, simply because the downgraded material isn’t worth much.

These findings suggest that increasing retention of materials at high value could be a major business opportunity. We estimate that if all the lost materials were recycled, they could supply as much as 64 percent of EU production for the same materials today, rising to more than 80 percent by 2050.

For more, see Preserving value in EU industrial materials: A value perspective on the use of steel, plastics, and aluminium.

Each year in Europe, €78 billion of materials value is lost in the use of steel, plastics, and aluminum.

Here we turn to biomass—not an industrial material, but an input that needs to be used for the right applications if the European Union is to complete its net-zero transition, and an input that needs to be sourced sustainably to prevent major harm to nature.

There is only limited additional sustainable biomass to be had from wastes and residues, including forests. Any large expansion is unlikely, as it would need to come from energy crops that are not in use today. On the other hand, the low-carbon transition looks likely to require 40 to 100 percent more biomass. Many industries want to use it as a convenient substitute for fossil fuels, and many others want to use it as a feedstock for material production.

This supply–demand imbalance creates an urgent need to prioritize where biomass is best used. Our research report provides a fact base and framework for such an exercise. The analysis highlights three findings: using biomass in bio-based materials production has the most value in a net-zero context; many traditional bioenergy applications could become less attractive than other energy sources; and high-value uses of bioenergy can be found instead in niches such as industrial heat, power systems, aviation, and carbon management.

For more, see EU biomass use in a net-zero economy: A course correction for EU biomass.

For many potential applications in Europe, biomass is only cost-effective at prices below the expected costs of growing and processing it on a large scale.

Just a few short years ago, the materials transition looked like a remote prospect. Now, major change is under way. Based on commitments made by more than 2,000 companies under the Science-Based Targets initiative, we estimate that the global market for low-CO2 steel, chemicals (including plastics), and cement will reach $80 billion to $105 billion by 2030. What’s more, in a recent study on industrial cleantech in Europe, we found that companies in the cement, chemicals, and steel sectors have launched more than 70 projects aimed at achieving breakthroughs in low-CO2 production. These projects could supply Europe with 15 Mt to 52 Mt of low-CO2 steel, 3 Mt of low-CO2 chemicals, and 15 Mt of low-CO2 cement (equivalent to 100 Mt of concrete) by 2030.

These findings suggest that Europe is in the lead in producing green materials and stands at a tipping point in bringing new technologies to industrial scale. Crucially, a step-up in finance, infrastructure, inputs, and regulation will be needed to meet the long-term opportunity. For example, we find that by mobilizing between €31 billion and €37 billion of investment, Europe could ramp up production to 25 Mt of low-CO2 steel, 2.5 Mt of high-value chemicals made from recycled plastic, 5 Mt of high-value chemicals produced using carbon capture, use, and storage (CCUS), and 130 Mt of low-CO2 concrete (equivalent to 20 Mt of low-CO2 cement) per year. We also estimate that scaling up industrial cleantech would require 90 terawatt hours (TWh) of additional low-CO2 electricity, 20 TWh of low-CO2 hydrogen, 10 to 15 Mt of storage capacity for industrial CO2, and the effective recycling of 10 Mt of plastic waste.

For more, see Scaling up Europe: Bringing low-CO2 materials from demonstration to industrial scale.

EU companies and innovators plan for more than 70 breakthrough projects in industrial cleantech.

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