This Hub is a cross-campus effort of the Precourt Institute for Energy. Take the Understand Energy course for credit.

Industry Decarbonization

Photo by Morteza Mohammadi on Unsplash

Fast Facts About
Industry Decarbonization

Printable PDF, 237KB

Industry, which includes large-scale manufacturing and production processes to make products such as steel, cement, and chemicals, is a significant source of greenhouse gas emissions. Reducing emissions from heavy industry is challenging. Unlike the electricity sector, which already has economically viable solutions like wind and solar to replace fossil fuels, the industry sector is still developing the technologies needed for cost-effective and scalable decarbonization.

Industry mainly uses fossil fuels for two purposes:

  • Energy: generating heat for industrial processes through combustion, which emits CO2 and air pollution
  • Feedstocks: the raw materials that are chemically transformed into products like steel, fertilizer, chemicals, and plastics

To decarbonize industry, it is essential to eliminate the use of fossil fuels for energy production. However, fossil fuel combustion can be difficult to replace, as it is a mature technology that achieves the high temperatures often required by industrial processes. Nevertheless, certain electrical technologies can generate the same high temperatures and be powered by carbon-free electricity sources. The main challenges are:

  • Higher operating costs: Electricity is more expensive than natural gas or coal.
  • Capital investment requirements: Up-front costs to retool factories, such as increasing electrical capacity or installing electrified industrial machinery, can be high.
  • Technological readiness: Electrified technologies that generate high-temperature heat (>500°C) are still at the laboratory and pilot stage.

That said, electricity is used more efficiently than fossil fuels and can be cost-effective with the right policy support or with technological approaches that reduce electricity costs, such as using industrial heat pumps (extremely efficient) and thermal energy storage (enables industrial facilities to buy electricity only in the hours of the day when it is cheapest).

Government policies and market incentives can help facilitate the transition to decarbonized industry, but more are needed.

Significance

Greenhouse Gas (GHG) Emissions

World 30% 🌎
U.S. 30% 🇺🇸
of GHG emissions come from industry

When purchased electricity is excluded, these percentages drop by about one-quarter. Purchased electricity is relatively easy to decarbonize, but the remaining portion is more difficult.

Total Energy Consumption*

World 30% 🌎
of total final energy is used in industry
U.S. 33% 🇺🇸
of primary energy is used in industry

Share of Final Energy Used in Industry From Renewable Resources

World 17% 🌎
U.S. 7% 🇺🇸
of energy used in industry comes from renewable resources

*Note that the data for the world is total final energy consumption by sector, and data for the U.S. is primary energy consumption by sector. Total final energy consumption is only the energy consumed by end-users. Primary energy consumption is the total energy supply to each sector, including losses in the energy system after the point of extraction, as well as energy consumed by end-users. Unfortunately, primary energy consumption by sector isn't tracked at the global scale.

Chemical and petrochemical, iron and steel, and non-metallic minerals (mostly cement) account for almost half.

Chemical and petrochemical includes fertilizers, plastic resins, synthetic fibers, and other basic chemical products. Non-metallic minerals also include ceramics (brick, tile), lime, glass, and related products.

Chemical and petrochemical, iron and steel, and non-metallic minerals (mostly cement) account for 70%.

*“Primary Energy Consumption” here refers to the first use of energy for heat, power, and as feedstock or raw material inputs. It excludes quantities of energy produced from other inputs to avoid double-counting (for example, coke made from coal onsite).

Both charts include industrial electricity use. The global data count the electricity purchased by industry, while the U.S. data count the fuel used to generate the electricity industry purchases.

World

Highest Annual GHG Emissions from Industry

China* 43% 🇨🇳
India 11% 🇮🇳
U.S. 7% 🇺🇸
of global annual GHG emissions from industrial final energy consumption

Highest Annual Energy Use for Industry

China 38% 🇨🇳
U.S. 9% 🇺🇸
India 9% 🇮🇳
of global annual industrial final energy consumption

*Though China has the highest annual industrial emissions, much of the production from the emissions is exported. For example, in 2021 China was the largest exporter of metal, iron, and steel with almost 3x more exports than the next exporter (Italy) and over 7x more than the U.S.

*1,650 steel plants worldwide will need to be decarbonized to meet stricter emissions targets, according to McKinsey & Co.

Concrete is the Second-Most Used Material on Earth and a Major Climate Challenge

After water, concrete is the most used material on Earth, with approximately 3 tonnes used per person per year globally. Concrete is made from cement (the binding agent), sand, gravel, and crushed stone. The production of cement (concrete's most emissions-intensive ingredient) contributes approximately 8% of global GHG emissions through two main pathways: process emissions from the chemical reaction of heating limestone, which releases CO₂ regardless of the energy source, and energy emissions from burning fossil fuels to reach the extremely high temperatures (1400-1650°C) required in cement kilns.

Decarbonization approaches include electrified industrial heating technologies (electric arcs, resistance heating, induction), alternative cement formulations with lower carbon intensity, carbon capture at cement plants, and improved concrete mix designs that use less cement per tonne (such as blending in supplementary materials like fly ash or slag). Given concrete's ubiquity in construction worldwide, even modest efficiency improvements can yield substantial emissions reductions at the global scale.

Decarbonization of Industrial Heat*

TechnologyDescriptionEfficiencyTemperature Range
Heat pump

Transfers heat from one location to another using a refrigeration cycle and minimal external energy inputs

Example uses: drying processes, steam supply

Very high, can be over 300%Low temperature (up to 165℃, and sometimes 200℃)
Electrical resistance heating

Electrical current runs through a resistor converting energy to heat

Example uses: plastic welding, drying and cutting, rubber processes, semiconductor manufacturing

Near 100%Medium temperature (165℃ - 1000℃)
Induction

Heats a conductive material by subjecting it to a magnetic field that induces currents within the material, generating heat.

Example uses: welding, melting, tempering metals (only heats electrically conductive materials)

90%High temperature (> 1000℃)
Electric arcs

Electricity is run from an electrode through conductive material to another electrode 

Example uses: steelmaking, welding, plasma cutting

40- 75%High temperature (> 1000℃)
Thermal batteries

Type of heat storage that can be activated anytime; stores heat in a heat-absorbing material in an insulated case. Can be connected to the grid or independent

Example uses:  metal processing, glass, chemical processing, oil refining

95% round trip efficiencyMedium - high temperature (up to 1,500℃)
Decarbonized hydrogen combustion

Green hydrogen (using electrolysis) or blue hydrogen (using carbon capture) can be burned to generate low-carbon heat

Example uses: steel production, chemical manufacturing, refining

16% for green hydrogen (without waste heat recovery, at 1340℃)High temperature (> 1,000℃)
Dielectric heating

Rapidly oscillating electric field that makes polar molecules vibrate, creating thermal energy

Example uses: food processing, textile drying (things that need to be heated fast)

70%Medium temperature (165℃ - 1000℃)
Infrared heating

Contains an emitter that is heated and projects infrared radiation

Example uses: drying paint/coatings, warming heat sensitive materials

85-95%Low - medium temperature (up to 500℃)
Lasers

Concentrated light energy to rapidly and precisely heat materials

Example uses: cutting materials, welding, drilling

Up to 50% depending on typeHigh temperature (> 1,000℃)
Electron beams

Streams of high-energy electrons used to heat materials. Generated by accelerating electrons and focusing them onto a target material.

Example uses: welding, additive manufacturing

> 95%High temperature (> 1,000℃)

*This table focuses on electrified and non-combustion technologies for industrial heat, which directly replace fossil fuel burners. It excludes bioenergy and carbon capture and storage (CCS) because they are not heat-generation technologies themselves, and they come with additional challenges.

Policy and Economics

Policy mechanisms are essential to initiating industry decarbonization because they provide a regulatory framework and incentives that drive companies to adopt cleaner technologies and practices. Without such policies, market forces alone may be insufficient to overcome the high initial costs and risks associated with transitioning to low-carbon operations in industry.

Examples of Policy Mechanisms and U.S. Policies That Support Industry Decarbonization

Policy MechanismU.S. Example(s)
Emissions standards on industrial boilers and other industrial equipment

National Emission Standards for Hazardous Air Pollutants from the Environmental Protection Agency (EPA) related to institutional boilers and process heaters.

Colorado Greenhouse Gas Emissions and Energy Management for Manufacturing regulations.

Efficiency standards for industrial equipmentAppliance and Equipment Standards Program from the Department of Energy (DOE) sets minimum energy efficiency standards.
Green government procurement

Environmentally Preferable Purchasing Program from the EPA encourages the U.S. government to purchase products that meet certain standards and ecolabels. In 2022, the U.S. government purchased more than 8 million registered products.

State-level Buy Clean programs (e.g., California Buy Clean Act 2017, Colorado Buy Clean Act 2021) that require public agencies to purchase construction materials with lower embodied greenhouse gas emissions. These policies use the government’s own purchasing power to create demand for cleaner industrial production, especially for materials like steel, cement, concrete, and insulation.

Incentives and financing support such as rebates for electrified industrial equipment, subsidies for clean production, and green banksThe DOE Loan Programs Office aims to support and grow new technologies that haven’t found a commercial market.
R&D support policiesThe DOE Industrial Efficiency and Decarbonization Office supports the development of industrial decarbonization technologies through direct funding for research, support of national labs, conferences, etc.
Carbon pricingThe U.S. does not have a federal carbon tax, but there are programs such as California’s cap-and-trade system that apply to industry. Several East Coast states formed the Regional Greenhouse Gas Initiative (RGGI) to price carbon, although currently only the electricity sector, not the industry sector, is included in RGGI
Workforce training and developmentThe DOE teaches sustainable manufacturing concepts to science, technology, engineering, and mathematics students via their university-based Industrial Training and Assessment Centers.

Visit our Energy Policy page for more information.

Drivers

  • Need for GHG mitigation to address climate change
  • Many decarbonization technologies have been developed, and some are on the market
  • Government regulatory pressures such as air pollution standards
  • Government financial incentives
  • Increasing demand for green products by businesses and consumers

Barriers

  • No legal requirement to decarbonize or penalty for emitting CO2 in most places
  • Electricity is more expensive per unit energy than natural gas, even after adjusting for the fact that electricity is used more efficiently (with the exception of select technologies such as industrial heat pumps and thermal batteries)
  • Upfront capital costs to retrofit or replace equipment
  • Technology is still being developed for some high-temperature processes
  • Insufficient workforce with the knowledge and skills to operate low-carbon technologies

Climate Impact: High

High gradient
  • High emissions of CO2 and other GHGs from industrial processes

Environmental Impact: High

High gradient
  • Air pollution: NOx, SOx, PM2.5, VOCs
  • Water pollution, land degradation
Sources
 

Updated December 2025

Our 10-Minute Take On
Energy for Industry

If you're short on time, start by watching this video of key highlights from our lecture on Industry Decarbonization.

Diana Gragg

Presented by: Diana Gragg, PhD; Core Lecturer, Civil and Environmental Engineering, Stanford University; Explore Energy Managing Director, Precourt Institute for Energy
 

Recorded: September 19, 2025  
Duration: 12 minutes

If you liked this video, watch the other 10-Minute Takes here!

Featured Lecture on
Decarbonizing the Industrial Sector

This is our Stanford Energy Seminar lecture on decarbonizing industry. We strongly encourage you to watch the full lecture to understand the importance of decarbonizing the industrial sector and opportunities that exist for reducing greenhouse gas emissions from major subsectors like iron and steel, chemicals, and cement. We also encourage you to review the readings and videos listed in the next section to help contextualize the lecture content.

Presented by: Jeffrey Rissman, Senior Director, Industry at Energy Innovation; Author of Zero-Carbon Industry: Transformative Technologies and Policies to Achieve Sustainable Prosperity
Recorded: February 26, 2024  Duration: 55 minutes

Readings and Videos on
Industry Decarbonization

For a complete learning experience, we strongly encourage you to review the readings and videos below in addition to watching the Decarbonizing the Industrial Sector lecture.  

General

Steel

Chemicals

  • Living With Chemistry. Voyager. March 29, 2024. (4 pages)
    Explores the challenges to decarbonizing chemicals production and promising approaches that are emerging. 

Cement

Additional Resources About
Industry Decarbonization

Stanford University

 

Other Resources and Resources for Specific Topic Areas

Next Topic: Energy Policy Other Energy Topics to Explore

Fast Facts Sources

* Rest of information is from the lecture video

More details available on request.
Back to Fast Facts