Keynote presentation by Lord Adair Turner, Chairman of the Energy Transitions Commission; Senior Fellow, INET

1. CONFIDENTIAL DRAFT - NOT FOR DISTRIBUTION
Getting to net zero by 2050:
the heavy industry challenge
OECD 2019 GGSD Forum: Greening Heavy and Extractive Industries
Paris, 26th November 2019
Adair Turner
Chairman, Energy Transitions Commission

2. Global emissions pathways in the IPCC 1.5˚C report
Gt CO2/year
Four illustrative
model pathways
P1
P2
P3
P4
40 50 60 70 80 90 21002010 20 30
-20
-10
0
10
20
30
40
50
To limit global warming to 1.5˚C global CO2 emissions must fall to net zero by around 2050
Source: IPCC (2018), Global Warming of 1.5˚C
2

3. It is technically and economically feasible for the
global economy to reach by 2050 net-zero
carbon emissions from the energy and industrial
systems without relying on offsets from land use

4. 4
China could achieve net zero emissions
by 2050 while becoming a fully
developed rich economy with GDP per
capita similar to current western
European level

5. Estimates of the ‘levelised cost’ of solar power have collapsed ; but bid
prices at auctions in most favourable locations are far lower still
Levelised cost of solar PV: Global average benchmark
US$ per MWh, nominal
Source: Bloomberg New Energy Finance (2017)
314
150
60
20142009 2018
-81%
5
Lowest bid prices
$18 per MWH solar (Saudi Arabia)
$22 per MWh wind (Mexico)

6. Emissions from harder-to-abate sectors are 30% of the total and
will grow significantly if forceful action is not put in place soon
1.0
0.3
1.1
2.5
2.3
2.2
0.9
2014
1.6
0.4
3.3
2.3
1.7
1.8
2050
Business as usual
3.3
1.7
1.8
2.310.3
15.7
1.6
~30% of global
emissions
~40% of global
emissions
Source: IEA (2017), Energy Technology Perspectives
Direct and process emissions from the harder-to-abate sectors
Gt CO2,
Aluminum
Chemicals and
petrochemicals
Shipping
Cement
Iron and steel
Aviation
Heavy road
6
4.6

7. Three routes to net-zero carbon emissions
7

8. 9.3
2.0
1.9
0.8
0.9
Circular
scenario 2050
Current practice
scenario
Materials circulation Product circulation
1.7
2.0
5.6
-40%
Aluminum
Steel
Plastics
Cement
2.9
2.8
2.2
1.3
Global emissions reductions potential from a more circular economy
Gt CO2 per year
A more circular economy can cut emissions from the harder-to-abate
sectors in industry by 40% by 2050
Source: Material Economics analysis for the Energy Transitions Commission (2018)
8

9. • CCS/U
• Heat electrification
• Biomass heat production
• Innovative combinations
• Coking coal + CCS/U
• Hydrogen direct reduction
• Innovative combinations – HIsarna process
• Direct electrolysis
• CCS/U
• Heat electrification
• New electrochemical processes
In each industrial sector, technically feasible decarbonization options
are available
9

10. In each industry sector, the cost of electrification will determine the
least cost route between CCS/U and electricity based options
0
50
100
150
200
250
300
0 10 20 30 40 50 60 70 80
Electricity-based route
Carbon capture route
Electricity price
US$/MWh
Abatement cost
US$ per tonne of CO2
Breakeven point at which
electricity-based solutions
become lower-cost than CCS
INDICATIVE TRADE-OFF
10

11. In most harder-to-abate sectors, there will be some net cost of achieving
decarbonization
11
60
130
295
110
265
25
Supply-side abatement cost range
US$/tonne CO2
Source: Energy Transitions Commission Mission Possible (2018)
Ethylene
(input to plastics)
Steel
Cement

12. However, the impact on end consumer prices, and thus on living
standards and economic growth will be very small …
12
+$0.01
on a bottle of soda
<1%
Source: SYSTEMIQ analysis for the Energy Transitions Commission (2018)
+$180
on the price of a car +1%
+$15,000
on a $500,000 house
+3%
Impact on final product cost
US$ / % price increase
Cement
Steel
Ethylene
(input to plastics)

13. … although, in some cases, there could be a significant impact on
intermediate product costs / prices
13
+$500
per tonne of ethylene
+50%*
Source: SYSTEMIQ analysis for the Energy Transitions Commission (2018)
+$120
per tonne of steel
+20%
+$100 per tonne of cement
(+$30 per tonne of concrete)
+100%
(+30%)
Impact on intermediate product cost
US$ / % price increase
Ethylene
(input to plastics)
Steel
Cement

14. Achieving a zero-carbon economy will require about 4-5x more electricity
generation…
Source: SYSTEMIQ analysis for the Energy Transitions Commission analysis (2018)
Direct electricity use as %
of final energy demand
~22% >60%
2016 Mid-century
>60%
Direct electricity use
Electricity generation
TWh per annum
23
97
74
14
9
Supply-side
decarbonization
only
2016 With maximum
demand reduction
and energy efficiency
4
3
115
86
Fuel synthesis + Haber Bosch
ammonia production
Hydrogen electrolysis
Direct electricity use
14

15. … and a massive increase in the role of hydrogen
Possible hydrogen consumption in 2050
m tonnes
Industrial processes + heat
Road transport
Shipping + aviation
Building heating
Power systems balancing 100
330
80
30 120
20
650
120m tonnes used to
produce ammonia
50% from electrolysis?
40% from SMR + CCS?
10% from coal gasification
in China?2018 60 11 times increase
15