Key insights
The energy transition is advancing rapidly where technologies, supportive policies and viable business cases align, but achieving a net-zero future requires accelerated progress across all sectors, especially in hard-to-abate sectors like steel, aluminium, cement, primary chemicals, oil and gas, aviation, shipping, and trucking. These economically vital sectors face unique physical, macroeconomic and business challenges in significantly reducing emissions. Together, they account for 40% of global GHG emissions, with demand for heavy industry and transport projected to rise by over 60% by 2050.
The World Economic Forum’s Net-Zero Industry Tracker 2024 offers a data-driven assessment of energy transition progress in these eight challenging sectors, which collectively account for around 40% of global GHG emissions. These sectors are vital to the global economy as demand for heavy industry and heavy transport sectors is projected to rise by more than 60% on average by 2050.
The Net-Zero Industry Tracker 2024 key findings are as follows:
This is the first time since the launch of the Net-Zero Industry Tracker report that there has been a reduction in absolute emissions of hard-to-abate sectors in scope. Sectors have reduced absolute emissions by 0.9% between 2022 and 2023, compared to total global energy-related emissions increasing by 1.3%.3 Emissions intensity decreased by 4.1% between 2019 and 2023, with an accelerated 1.2% drop in the last year. Five out of eight sectors in scope reduced emissions intensity in the last year, i.e. aluminium, cement, chemicals, aviation and trucking. Additionally, energy intensity decreased by 3.2% in 2022 in these sectors, 1.6 times more than the global level.
To gain the required trajectory for net zero, an estimated $30 trillion in additional capital is required by 2050 for the sectors in scope. This figure represents around 45%5 of the total incremental net-zero investment required by 2050. This need for investment is particularly challenging given the competitive profit margins of most of these sectors, which limits companies’ capacity to absorb the substantial costs while maintaining adequate profitability.
Data and artificial intelligence (AI) have emerged as powerful tools to support the transition to net zero. Accenture estimates that the use of generative AI could improve capital efficiency by 5-7%, reducing capital requirements of hard-to-abate sectors by $1.5-2 trillion for the net-zero transition. Additional value levers include asset management and energy efficiency, R&D acceleration, and enhanced transparency through product-level reporting. However, the increased use of AI is expected to raise electricity demand, potentially competing with hard-to-abate sectors for access to low-carbon power.
The Net-Zero Industry Tracker 2024 highlights the key steps that the industries must take to further progress towards their respective emission reduction goals by providing analysis and scores across five key dimensions of the readiness framework – technology, infrastructure, demand, capital and policy:
Technology readiness scores have improved this year due to improved economics and adoption; however, nearly half of the required emissions reductions need to be achieved through technologies that are not commercially viable. The adoption of methane abatement, electric transport and industrial processes, and energy efficiency technologies has increased. However, deep emission reduction in hard-to-abate sectors relies heavily on disruptive technologies that are not economically viable today.
- Investments in R&D need to be ramped up in carbon capture, utilization and storage (CCUS), new production pathways for materials, and hydrogen and its derivatives.
Infrastructure development has been slow; the sectors covered in this report are forecast to represent nearly 70% and 55% of the total hydrogen and CCUS capacity required by 2050, respectively. While infrastructure development for low-carbon power has been encouraging, hydrogen and CCUS infrastructure currently address less than 1% of sector requirements.
- Clean power, hydrogen and CCUS infrastructure need to be developed faster in countries with large heavy industry and heavy transport sectors.
Demand readiness scores have shown limited progress due to the conditions not being met for scaling demand for low-emission products. Major barriers to scaling clean demand include high green premiums, lack of clarity on customer willingness to pay the premium, and limited industry-wide adoption of carbon threshold standards for green products. Current estimates suggest a 40-70% increase in the price of net-zero base material products
- Standardized carbon thresholds need industry-wide adoption, and businesses need to enhance product-level reporting.
Capital readiness scores have remained stagnant due to lack of material flow of capital to decarbonize the sectors in scope, driven by the challenge of generating returns on clean investments. This report estimates that the $30 trillion additional capital required by 2030 across the sectors in scope is split 43% ($13 trillion) directly by these sectors and 57% ($17 trillion) for clean energy infrastructure. The sectors must generate returns to raise investments on energy transition initiatives, which represent an 80% increase in investment relative to today’s levels.
- Sectors should increase investments in retrofitting existing assets and building new climate-compatible assets, while energy suppliers need to build the enabling infrastructure.
Policy support has been fragmented and lacking cross-regional collaboration. As of 2024, there are 75 carbon-pricing instruments in operation worldwide, covering 24% of global emissions.6 However, increased protectionism through tariffs on green products add an incremental cost on green premiums. Moreover, there are insufficient incentive-based policies to drive focus on low-emission production.
- Policy-makers should create stronger incentives that align with the goals of hard-to-abate sectors, energy suppliers and consumers.
The sectors in this report face a gridlock as businesses, policy-makers, consumers, energy suppliers and financiers hesitate, each waiting for others to commit to investments and measures that can significantly reduce emissions. Hence, there is a need to shift from a point-solutions approach to a system-wide, partnership-based approach, to simultaneously solve several problems, align supply and demand, and overcome cost and risk hurdles.
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