Pathways to deep decarbonisation of carbon-intensive industry in the European Union - Techno-economic assessments of key technologies and measures

Doctoral thesis, 2015

By Year 2050, the EU has committed itself to reducing greenhouse gas emissions by 80%–95% relative to the levels in 1990, so as to contribute to global efforts to limit the long-term global average temperature increase to <2°C. This thesis investigates the prospects for and the practical implications of contributing towards this goal for three of the most CO2-emission-intensive industrial activities in the EU, petroleum refining, iron and steel production, and cement manufacturing, collectively referred to as ‘the carbon-intensive industry’. The thesis consists of six papers, Papers I–III explore the potentials and limitations for CO2 emission reductions in carbon-intensive industry in the EU as a whole. Papers IV–VI take as the point of departure carbon-intensive industry in the four largest Nordic countries of Denmark, Finland, Norway, and Sweden. All of the studies are based on a bottom-up approach with representation of the current technology stock and of emerging technologies and processes. In Papers I and II, the potentials for reductions in emissions of key mitigation technologies and measures are provided as fixed estimates without any explicit consideration of the timing of their implementation. In Papers III and IV, different future trajectories of technological developments are explored through scenario analyses, explicitly considering the rate of capital stock turnover. Based on the work reported in Papers I–IV, it is concluded that: 1) the combined effects of extensive deployment of available abatement measures and proven best-available process technologies are not sufficient to comply with more stringent emission reduction targets in the medium term (to Year 2030) and long term (to Year 2050); and 2) unless production levels are significantly reduced, only ambitious deployment of CO2 Capture and Storage in the carbon-intensive industry result in emissions reductions that are in line with the targets. To date, progress with respect to overcoming the technical, infrastructural and financial barriers to the uptake of alternative low-CO2 technologies has been slow. With the price of emission allowances under the EU Emission Trading System currently far below the levels required to unlock investments in low-CO2 production processes in the carbonintensive industry Papers V and VI investigate the impacts of intermediate and final consumers of steel- or cement-containing products bearing the full costs of CO2 trading and investments in CO2 abatement in the steel- and cement-industries. The results from these two papers, using the supply of cement and concrete to a residential building (Paper V) and the supply of steel to a passenger car (Paper VI) as case studies, suggest that while covering the costs of investing in new low-CO2 steel- and cement-making processes would require substantial increases in the selling prices of steel and cement such price increases would neither significantly alter the cost structure nor dramatically increase the price to be paid by a car buyer or a procurer of a building or an infrastructure project.