Industrial manufacturers face challenges in cutting emissions

21 October 2021

Government slow to pursue carbon capture, utilisation, and storage

As all parts of the New Zealand economy take steps to decarbonise and lower emissions, the construction sector faces significant obstacles to doing its part.  The largest construction sector emitters are iron, steel, cement, and aluminium. 

Their industrial processes contribute approximately 4.34% of overall New Zealand emissions plus, to a lesser extent, the emissions from process heat.

For this sector to decarbonise, they need new technologies to fundamentally change their manufacturing processes. 

While there are technologies being developed, they are a long way from being commercialised, and in some instances, these technologies may not be viable in New Zealand because existing production facilities may be unable to accommodate them.

Other than the emissions price, innovation and technological change are what matter most for long-term emissions reductions.  In its August 2018 report Low-emissions Economy, the Productivity Commission points out that:

"Innovation can and should play a central role in New Zealand’s transition to a low-emissions economy.  It is the closest thing to a 'silver bullet' to enable humanity to meet the challenge of avoiding damaging climate change."

However, the speed, extent and type of technological change that reduces emissions and the impact of those changes on the economy, is highly uncertain.

In the manufacture of construction materials, emissions are largely generated from industrial processes.  The Commission examined these industries and found that barring technological breakthroughs, opportunities to significantly reduce emissions from iron, steel, cement and aluminium production remain limited, though there is a higher potential for breakthrough technology in the production of cement than for other industrial processes.

Decarbonisation options

The limited decarbonisation options available to iron and steel manufacturers are a good example.  Most emissions from the production of iron and steel result from the production of iron.  Coal is used as a reducing agent in the manufacture of iron.  CO2 is created by heating and drying concentrated iron sand and coal; and converting the oxide in iron sand into iron.

Today there are only limited opportunities to directly reduce emissions from iron and steel production.  Technologies do exist that use hydrogen produced from renewable electricity as the reductant to convert magnetite sands into iron.  However, it will be 20-30 years before a commercially viable alternative product is manufactured.  Recycling steel is a possible means of reducing emissions but this is outside the manufacturing process.

The same applies to cement.  A core input to cement is lime.  To produce lime, limestone is baked at high temperatures (ie higher than 1000°C).  This process releases CO2.  There are carbon emissions reducing technologies being developed including a process to recombine CO2 released during lime calcination with calcium hydroxide to recreate limestone; and a magnesium based cement has been invented that requires less heating than lime based options.  None of these initiatives are immediately available.

Carbon capture, utilisation, and storage

Given the limited opportunities for reducing emissions from these industrial processes, other technologies such as carbon capture, utilisation, and storage (CCUS) will need to be used.  The International Energy Agency (IEA) says that these technologies will play an increasingly important role in reducing emissions, in heavy industries where the full elimination of emissions is difficult to achieve.  The IEA says that CCUS is particularly important for cement and will be central to efforts to limit the process emissions that occur during cement manufacturing.

CCUS covers two concepts - carbon capture and storage (CCS) which involves capturing, compressing, transporting and permanently storing carbon dioxide emitted from large point sources; and carbon capture and utilisation (CCU) which involves capturing carbon and converting it into viable commercial products, such as construction materials, chemicals, and fuels.

CCU has the benefit of making carbon capture more economical, by generating revenue from the sale of captured CO2.  However, converting it consumes a great deal of energy, most prominently hydrogen, leading to high costs and strong demand for zero-carbon electricity.

The Productivity Commission considered CCS a potentially viable option for several large single-point emitters in New Zealand (eg steel, aluminium and cement).  Some New Zealand emitters immediately cautioned against relying on it as a significant mitigation strategy, raising concerns around practicality, environmental risks and economic viability.

The Government has largely been slow to focus its efforts on CCS to date and has not taken up the Commission's recommendation to develop new legislation to regulate CCS in New Zealand.  In its Final Advice to the Government, the Climate Change Commission has suggested that investigating the potential of other options to remove emissions from hard to abate industries, such as CCS or bioenergy combined with CCS, could be worthwhile but has ruled out relying on CCUS because it is an expensive, emerging technology that has not progressed beyond the concept and research stage in Aotearoa.

All of which leaves our industrial manufacturers almost no where to move when it comes to making their contribution to achieving New Zealand’s net-zero emissions target by 2050.