UPDATED 1 Sept: The EI library in London is temporarily closed to the public, as a precautionary measure in light of the ongoing COVID-19 situation. The Knowledge Service will still be answering email queries via email , or via live chats during working hours (09:15-17:00 GMT). Our e-library is always open for members here: eLibrary , for full-text access to over 200 e-books and millions of articles. Thank you for your patience.

Energy-intensive industries

Energy-intensive industries (EIIs) are those with high energy demands and usage, typically in the processing of raw materials or manufacturing sector[1]. They include, among others:

It is common for industries to be located in coastal regions or near lakes or rivers, where they tend to create local, clustered hotspots of economic activity, for example, in the UK in South Wales, Southampton, Humberside, Teesside, Grangemouth and Merseyside. Such locations provide access to water for use in processing, washing, cooling, and importing feedstocks or exporting products. Industrial clusters also provide opportunities for decarbonisation in terms of shared infrastructure for carbon capture, utilisation, and storage (CCUS) and hydrogen.

However, the pathways to reducing or eliminating their greenhouse gas (GHG) emissions are often technologically difficult and/or expensive. And, given that energy makes up a high proportion of their costs, these sectors are extremely exposed to energy price changes, such as the energy prices rises in 2022. These factors make being market competitive a challenging prospect due to the capital-heavy nature of investments to reduce emissions.

Nevertheless, they do have the potential for a net zero by 2050, with any residual emissions offset by greenhouse gas removal measures and the benefits they bring. Getting there from where we are today is poised to be challenging – for the companies, workforce, supply chains, local communities, and governments.

Across the UK, industrial sectors (energy-intensive and less energy-intensive industries) contribute around £170 billion to the economy, accounting for 9% of the GDP and 2.6 million direct jobs [2]. The outputs of these industries are the building blocks of many consumer products, from buildings and infrastructure to plastic goods. Due to their role in the supply chain, they are central to reaching net zero emissions: from concrete and cement for construction to steel and aluminium for car manufacturers and wind farms.


Making a wind turbine


Decarbonisation drivers

In 2020, EIIs accounted for 26% of global CO2 emissions[3] with emissions being reduced during the Covid pandemic but surging back during 2022. Emissions from industrial processes also include methane (CH4) and nitrous oxides (NOx), both potent greenhouse gases:


Industrial processes and products CO2 emissions (MtCO2e) in 2019 - examples


And there are a growing number of reasons for industries to cut their emissions:

Routes to net zero

Getting to net zero in these industries will take time and requires further development and cost reductions in future technologies and innovations. The main routes to reducing GHG emissions are the same for industrial processes as for other energy uses, with actions required across each area: demand reduction and efficiency improvement measures; where possible, switching to low carbon energy sources such as renewables; and, where the energy source cannot be made low carbon, carbon abatement measures such as CCUS will be required. Due to the specific processes, infrastructure, and resources involved, the best pathway varies from sector to sector and by location.


Efficiency improvements: Reducing demand and making efficiency improvements at industrial sites could be achieved through increasing product longevity, improving processes, and installing more efficient equipment, as well as material efficiency and circular economy measures such as expanded material reuse and recycling networks. Specifically, a more circular economy could reduce CO2 emissions from four major industry sectors (plastics, steel, aluminium, and cement) by 40% globally and by 55% in developed economies like Europe by 2050[9]. A specific risk, however, is that investing in efficiency improvements could create stranded assets by causing delayed investment in other decarbonisation activities. It is, therefore, important for businesses to maintain a long-term strategic focus and be aware of the future implications of immediate actions.

Diversification of energy sources: Focus on the source of energy is also required to reach net zero. Electrification has become more economically attractive for some producers as it has become more feasible to electrify processes which require lower heat (of less than 1,000ᵒC), with increasing supply of low-carbon electricity. For other processes, which may require higher temperatures or round-the-clock heating, other options will be more appealing. These include low-carbon hydrogen, biomass, and thermal storage.

Abating fossil fuels: Another element is the use of measures to address emissions that cannot currently be reduced entirely by other means – particularly where emissions can’t be abated as they are produced during the process, such as in steel and cement production. These measures include CCUS, and CO2 removal approaches such as direct air capture (DAC),  bioenergy with carbon capture and storage (BECCS), carbon offsetting and nature-based solutions:

Future technologies

Whilst the hierarchy of measures indicates the overall approach to achieving net zero greenhouse gas emissions, there are technologies and pathways where sectors differ. For example:

For more information on each of the sectors and their potential pathways to reaching net zero emissions, please see the International Energy Agency’s (IEA) Achieving Net Zero Heavy Industry Sectors in G7 Members report[11].

Notably, many low-carbon technologies have reached large prototype and demonstration phases. For example, steel production using green hydrogen or electric arc furnaces could be scaled commercially by 2025.

However, at their current pace of development, most of these technologies won’t be commercially ready for industry adoption before the second half of the 2020s. This is particularly important, as energy-intensive industries operate in highly competitive, global markets and face low profit margins, high capital costs for equipment, and long asset life (of over 15 to 25 years). This means that 2050 is just one investment cycle away and therefore urgent decisions will be needed on which technologies to install or pursue.

It is also unlikely that one of these technological methods will emerge as a “winner”. The IEA calls for at least two or three different near-zero emission methods for each sector. Integrating the whole system, infrastructure and technology maturation timelines will be key to an effective and smooth transition.

As part of its industrial decarbonisation strategy, and due to the natural distribution of these industries, the UK government is focussing its industrial decarbonisation efforts on regional clusters as a way to build these integrated systems.

However, it remains uncertain how the UK government will support the decarbonisation of dispersed sites. Also, high costs will be incurred to abate their large quantities of emissions, as a result of connecting them to existing networks or shared infrastructure considering the distance from clusters.