Scenario analysis of a low-carbon transition of the EU industry by 2050: Extending the scope of mitigation options

Industry accounts for about 25% of EU final energy demand and uses gas, electricity, coal, and oil as the dominant energy carriers. This makes the sector critical for the achievement of European climate goals. The EU Roadmap for moving to a competitive low carbon economy in 2050 states a potential of -83 to -87% emission reductions in industry by 2050. Several analyses show that industry is unlikely to meet this target without a major change in the policy frame. Our contribution presents two alternative transition scenarios for the EU28 that achieve a reduction in GHG emissions of more than 85% by 2050 compared to 1990 for the industrial sector. The scenarios are based on the bottom-up simulation model FORECAST, which allows simulating technological change with a high level of technological detail also considering policy instruments. The transition scenario contains mitigation options including energy efficiency, fuel switch to RES, CCS, power-to-heat, secondary energy carriers based on RES, innovative production technologies and new products, material efficiency, substitution and circular economy elements. Thus, the scope of mitigation options is very broad, particularly compared to the scenario calculations that were conducted to support the EU Low Carbon Roadmap, which is mainly based on CCS for the industrial sector. Results show that RES and energy efficiency have huge potentials towards decarbonisation. But also changes in production structure giving way to new innovative technologies like renewable hydrogen based direct reduction in the steel industry or low carbon cement types are needed. This scenario reflects a radical change to be achieved in less than 35 years. Even if many mitigation options will be rolled out in large quantities only after 2030, policies need to be in place soon to drive this transition. A potential policy mix towards implementation of the modelled transition scenario is discussed at the end and compared to current policies in place in the EU.