From clusters to carbon busters

The challenge: Industrial and regional decarbonization

The world is in a race against time to decarbonize. The industrial sector is responsible for 30% of global CO2 emissions and roughly 37% of global energy consumption, and without rapid action, carbon emissions from this sector could greatly increase. The investment needed for these industrial sectors to reach decarbonization goals by 2050 is estimated to be $13.5 trillion.

Accelerating decarbonization requires collective action and cross-sector collaboration. The Industrial Transition Accelerator (ITA), launched during COP28, facilitates engagement and collaboration among stakeholders, including technology, infrastructure, and policy makers. Governments play a crucial role in setting the right policy and financing landscape, while also aligning priorities and regulatory requirements to achieve net zero goals. To make impactful change, governments and industrial leaders must partner in industrial cluster environments to realize decarbonization goals.

The role of government: Bring stakeholders together and offer an enabling policy framework

Governments are at the cornerstone of the transition. Beyond having overall accountability for meeting national targets - and determining how those targets cascade to business, industry and public sector - they are the only actors with the legitimacy to convene stakeholders, drive collective action and support them with the right enabling policies. Government-industry collaboration is crucial to develop effective policy frameworks that incentivize industries to engage in decarbonization programs.

Governments, together with key private sector stakeholders, must create a market and align newly developed policies with compelling value propositions to drive industry participation in the transition to a low-carbon economy. Value propositions for industry engagement in decarbonization programs can include tax incentives, streamlined permitting processes, and financing options such as grants for research and development. These measures can accelerate project approvals, demonstrate efficiency, and unlock funding for breakthrough solutions.

Our latest report, Powered for Change, highlights the need for clear and ambitious targets along with coordinated public-private efforts to achieve net zero. It identifies three strategic imperatives necessary to overcome the inertia hindering stakeholder action:

• Targeting green premiums to financially support the initial phase of industrial decarbonization
  
  
• Enabling the accelerated scaling of low-carbon power and hydrogen to ensure an affordable and secure supply
  
  
• Reducing the capital and operational costs of low-carbon infrastructure

These strategies justify further investments into industrial clusters, because of the potential to generate substantial returns and while also establishing participants as pillars of sustainable industrial development. Through such strategic and coordinated efforts, governments can significantly influence the speed and efficacy of the industry-wide transition towards sustainability.

The solution: Accelerating decarbonization with Industrial clusters

So, what are industrial clusters? Clusters refer to a set of co-located industrial companies within a defined geographic region which provide a unique opportunity to reduce emissions and scale solutions through collective action and cross-sectorial collaboration. The proximity of these industrial assets allows for shared infrastructure and resources, financial and operational risk mitigation, and value chain coordination which can significantly increase efficiencies and accelerate the journey to net zero.

The Transitioning Industrial Clusters (TIC) initiative, developed by the World Economic Forum, Accenture, and EPRI underscores the potential of these clusters. With 20 signatory clusters (and a goal of 100), this initiative provides the optimal platform for public-private ambitions to come to life. The technology-agnostic nature of the initiative welcomes innovation and decarbonization via a diverse “menu” of solutions such as carbon capture, hydrogen, direct electrification or system efficiency and circularity. Participants within these clusters have a unique chance to test innovative and disruptive solutions, leveraging extensive networks, shared knowledge, and innovative technologies.

The first phase of the collaboration focused on maturing clean technologies for refining, cement, iron and steel, foundry, and paper industries within the cluster, and furthermore, the team worked to effectively integrate and prioritize decarbonization solutions. A multi-year collaborative roadmap was created to promote decarbonization through different technologies such as clean hydrogen, CCUS, electrification, and circularity.

We believe that fostering collective action through clusters, and the management and tracking of decarbonization advancements will be key to defining and optimizing the path forward. Integrated digital platforms can do this. By leveraging such platforms, governments can not only collaborate with private stakeholders, but also track a range of critical indicators.

From emission reductions to the integration of green technologies, this will ensure that environmental and economic objectives are met efficiently and transparently. The dynamic and data-driven nature of these platforms can help define the right incentives to support the initial stages of decarbonization solutions. Platforms like these importantly allow the tracking the prices of low-carbon power and renewable feedstocks to optimize capital and operating costs of new infrastructure.

Digital twin solutions

Digital twin solutions in an industrial cluster environment can further support better decarbonization action planning. Given their potential to model infrastructure, renewable solution deployments and energy grids, as well as economic and social impacts of clean technologies, digital twins pose a great opportunity to plan, track, monitor, and stimulate the transition to clean technologies and the path to net zero.

These digital twins are an example of how Accenture is approaching data-driven decarbonization solutions for our clients – other solutions such as AI-driven clean technology decision making tools, and workforce transformations, or sophisticated demand-offtake models are currently being deployed across all geographies to benefit from the value of data-driven decision making and asset management.

Igniting the net zero industrial revolution

As the timeline for interim net zero goals rapidly approaches, the imperative for accelerated action is clear. Industrial clusters and digital platforms hold immense potential to define and achieve net zero emissions swiftly and effectively. The concept of cluster communities and concerted action marks a decisive step toward realizing ambitious environmental and economic objectives.