The European Commission must move beyond just renewables and electrification to a more holistic approach to decarbonisation, Zero Emissions Platform (ZEP) secretary-general Eadbhard Pernot told Argus ahead of the commission's expected Clean Industrial Deal proposal on 26 February.
How important is this Clean Industrial Deal?
The industrial sector is directly responsible for some 20-25pc of greenhouse gas (GHG) emissions globally. If you factor in all energy emissions linked to the industrial sector — whether in power or other sectors — then you're looking at 40-45pc of GHG emissions. Under existing tools like the carbon border adjustment mechanism (CBAM), globally traded industrial products such as steel or aluminium will still be imported at lower cost from other regions, such as China, with massive oversupply. In many cases, exporters will shift existing clean production to Europe and send other carbon-intensive products elsewhere. Or they will simply import finished products like cars here without accounting for those emissions. It's a lose-lose.
What other specific concrete adjustments can the EU or Clean Industrial Deal bring?
Creating a market for decarbonised cement, fertilisers, steel and aluminium, for example, should be on the list of things in the Clean Industrial Deal. In many cases, governments themselves are the ones procuring products — think of bridges and other major infrastructure. That entails reform of EU procurement rules and having long-term offtake agreements.
We've got a lot of industrial sites that are going to start producing decarbonised products within the next year or so. If we look at Norway's Longship Project — with multiple emitters, including the Norcem cement plant in Brevik, fertiliser producer Yara, and Haflsund's waste to energy facility — multiple industrial producers are going to be producing decarbonised products and services in the next years, built around common infrastructure projects. We have to ensure a market exists for them.
How do you see the wider industrial carbon management strategy unfolding?
With the EU elections in June and the start of a new commission, 2024 wasn't an ordinary year. But things are moving in the background. So far, there's been a particular focus on where the best areas are in Europe to develop commercial carbon capture and storage (CCS) sites, like the North Sea, but now it's clear that CCS is essential for the whole of Europe. Central, eastern and southern European countries are taking action.
What other legislative solutions do you want to see?
Currently, there are no clear EU-wide rules on how the CCS market functions — unlike for gas, power and hydrogen. So we need to secure a regulatory framework for CO2 transport, tackling competitive issues, pricing, ownership of infrastructure and third-party access. We need rules of the game for emitters, storage sites, pipelines and shippers.
We hope to see that EU framework within the next 18 months. This is really important for investors and lenders too. At the moment, we only have a patchwork with the 2009 CCS Directive. And the only country with a detailed comprehensive framework is outside the EU — the UK.
Do you think the EU really has the political will to push for CCS?
Given the role that CCS and carbon capture and use (CCU) will have to play in emissions reductions as well as removals, industrial carbon management is essential to meet the EU's net 90pc GHG CO2 reduction target for 2040. It's non-negotiable, and politicians recognise this now across the political spectrum.
Can hydrogen help decarbonise industry?
Clean hydrogen certainly has the potential to decarbonise some hard-to-abate industrial processes in the long term. The hydrogen industry is also currently responsible for a significant chunk of European emissions, and that isn't discussed enough. When making grey hydrogen, we need to stop venting CO2 into the atmosphere that could otherwise just be permanently geologically stored. Our focus in the recent EU delegated act on low-carbon hydrogen was to ensure the criteria for carbon stored outside Europe meet the same standard as ours in the EU.
