Multiple pathways can take EU industries to a clean and prosperous future

Achieving net-zero emissions by 2050 for European energy-intensive industries is within reach and multiple pathways can get them there. If supported by the right policy framework, these industries can contribute their share to the EU’s net-zero by 2050 vision, currently under discussion by member states, while remaining competitive and at the forefront of new economic opportunities at the global level.

These are some of the conclusions of a new report – Industrial Transformation 2050 – Pathways to Net-Zero Emissions from EU Heavy Industry – carried out by the consultancy Material Economics with the support of the Wuppertal Institute and the Institute for European Studies, and commissioned by the European Climate Foundation* . A second report, Towards an Industrial Strategy for a Climate Neutral Europe also published today by the Institute for European Studies at the Vrije Universiteit Brussel, spells out a vision of an integrated climate and industrial strategy to support this transition.

Heavy industry is one of the sectors of the EU economy with stagnating CO2 emissions abatement and significant fossil fuel use. Previously perceived as the “hard to abate” industrial sectors,  steel, chemicals, and cement account for about 14% of Europe’s annual emissions. While other sectors are accelerating their emissions reductions, the share of emissions from heavy industry will increase dramatically under business as usual. As such, industry has a key role to play in the decarbonisation of the European economy to fulfil the EU’s commitments under the Paris agreement.

Key findings

Climate neutrality for heavy industry: From Whether To How

According to the report, there are multiple possible pathways the EU could pursue to achieve the full decarbonisation of its heavy industries by 2050.  

  • A more circular economy is a large part of the answer. Increased materials efficiency throughout value chains could cut 58–171  Mt  CO2  per  year  by  2050. 800 kg of steel, cement and chemicals are used per person, per year in the EU. However, it is possible to achieve the same benefits and functionality with less material. Examples  include new manufacturing and construction techniques to reduce waste, coordination along value chains for circular product design and end-of-life practices, new circular business models based on sharing and service provision, substitution with high-strength and low-CO2 materials, and less over-use of materials in many large product categories.
  • Reusing materials that have already been produced can also result in large emission reductions. By 2050, 70% of steel and plastics could be produced using recycled feedstock. In the case of plastics, using end-of-life plastics as feedstock for new production could significantly reduce the need for fossil fuels to produce new plastics.
  • Innovations in new, clean production processes and significant increases in renewable energy production will help enable deeper emission reductions over time.  Between 143–241 Mt CO2 per year could be cut by 2050 by deploying new industrial processes. Innovations that would allow the use of electricity to produce high-temperature heat, switching for example from fossil fuels to green hydrogen, are emerging. However, these solutions need to be rapidly developed and deployed if they are to make a significant contribution by 2050.
  • Carbon capture and storage/use (CCS/CCU). All pathways developed in the study show that there are cases where not all the emissions can be abated through circular economy and electrification. CCS and CCU will be required to cut between 45 and 235 MtCO2 emissions per year by 2050. However, as the study highlights, these measures are not a ‘plug and play’ solution and would require access to suitable transport and storage infrastructure.

The benefits of decarbonisation

  • Reaching the full decarbonisation of its heavy industry will create an opportunity for Europe to become one of the key global hotspots for deep decarbonisation. Ten years ago Europe was an undisputed leader in a wide variety of renewable energy and low-carbon products and services. It now has the chance to boost the competitiveness of its industry by developing sustainable solutions that will be needed globally.
  • Switching from the import of large quantities of fossil fuels and feedstocks to home-grown resources would significantly reduce European industry’s dependence on energy imports and will foster Europe’s energy trade balance. Steel, cement, and chemicals production together use 8.4 Exajoules (EJ) of mostly imported oil, coal, and natural gas. A major benefit of a more circular economy would be to reduce this need by up to 3.1 EJ per year in 2050.

The costs of the transition

  • Thanks to a more circular economy and affordable electricity, consumer prices of cars, houses and packaged goods would increase by less than 1%. Overall, the additional costs of achieving zero emissions are around 0.2% of projected EU GDP by 2050.
  • However, the business-to-business impact can be challenging and must be managed carefully.  Therefore, strong policy support will be needed in the near term to ensure companies remain profitable in the transition.

Time is key

EU companies will need to make important investment decisions in the next few years. Changes in value chains and business models will take decades to establish and any delay will hugely complicate the transition. Therefore, national and European policymakers should urgently develop a comprehensive and integrated industrial climate policy strategy that ensures companies remain profitable in the transition to a net-zero and circular industrial future.

Towards an Industrial Strategy for a Climate Neutral Europe puts forward specific policy solutions to be taken into account by EU policymakers as part of their industrial strategy. The suggested policy options range from accelerating research and development, creating lead markets for and safeguarding the competitiveness of low-CO2 solutions, to incentivising and scaling up investments, enabling a fully circular economy as well as facilitating sector coupling and supporting infrastructure. It suggests that a dedicated governance mechanism for the industrial transition at the EU level must be put in place to guarantee a successful transition.

Download the reports


Adair Turner, Chair, the Energy Transitions Commission:

This report confirms the finding of the Energy Transitions Commission’s Mission Possible report – that  it is technically possible to achieve zero carbon emissions from heavy industry by 2050,   at a very low cost to consumers and no cost to jobs. Europe should now grasp the economic opportunity which  rapid  progress towards full decarbonization will create”

Eliot Whittington, Director of Policy, the University of Cambridge Institute for Sustainability Leadership:

 “This report clearly sets out that a zero carbon future is not only possible for key industries in Europe, it is also achievable and affordable. It presents more clear evidence that the European Commission’s “A clean planet for all” strategy is the right vision for the EU, and that member states should commit to it and start exploring the required actions to deliver on it. For example, to realise the potential futures set out in the report will require resolve and innovative action on all sides. Business and policy makers will need to work together to answer critical questions such as how new circular economy business models can be created, how the cost of innovations in industry will be shared and how much should the Europe invest in CCS development.” 

Mari Pantsar, Director of Carbon-neutral Circular Economy, Sitra:

“Transitioning to carbon-neutrality in heavy industry can only be achieved by co-operation between all stakeholders of society. Finland launched its globally first-of-a-kind road map to a circular economy already in 2016. We are now offering our lessons and experiences as an example to explore the needed transition pathways”

Laurence Tubiana, CEO, European Climate Foundation:

“In previously conservative sectors, we now see front-runners that are really envisioning different production models and technologies – including zero-carbon aluminum, steel, gas, and automobiles. The phase when abatement of emissions from industry was considered impossible is over. Industry leaders are looking at totally disruptive technologies and visions.”

Per Klevnäs, Partner, Material Economics:

“EU industrial companies have a major journey ahead. Net-zero emissions by 2050 is possible, as this report shows, but only with unstinting effort to put low-CO2 transformation at the heart of corporate strategy. Few EU companies now believe that status quo is a good place to be, and leading companies are already making significant progress to be the first with a low-CO2 offering to their customers. Policymakers now need to catch up, ensuring that investment and commitment to low-CO2 production and innovation becomes the profitable choice.”

Sira Saccani, Director, Sustainable Production Systems, EIT Climate-KIC:

“As the reports published today outline, there are multiple industrial pathways and strategies which the EU could pursue to achieve Net-Zero Emissions from EU Heavy Industry by 2050. Time is short and we think that a more circular economy with greater material efficiency, reducing the need for new material production, shall be accelerated through further innovation and financial investments. This will be a large part of the answer to reduce emissions from industry to net zero by 2050.”

Tomas Wyns, Doctoral Researcher, Institute for European Studies:

“An Industrial Strategy for Climate Neutrality will entail a consistent and coordinated set of actions and instruments from different policy areas and different levels of EU governance. It’s goal is to nurture new processes, products, value chains  and business models, some of which either don’t exist yet or are far from mature but will be essential to achieve net-zero emissions.”

*co-funded by Climate-KIC, Energy Transitions Commission, Cambridge Institute for Sustainability Leadership, Sitra, RE:source.



June 20, 2018. The European Climate Foundation launches today its new flagship project Industrial Transformation 2050. Together with industry and other stakeholders, the initiative aims to co-develop a credible and feasible industry roadmap that is in line with the Paris Agreement, as well as the policy frameworks needed to achieve a thriving, competitive and climate friendly European industry in 2050. The project is part of ECF’s Net-Zero 2050 Initiative.

The challenge for industry

The Paris Agreement commits countries globally to make the transition to a net-zero economy as imminently as possible – this applies to all sectors, also to heavy industry. Resource and energy intensive industries represent about 20% of the EU’s overall carbon emissions. Prior to 2010, industries in Europe have achieved considerable emission reductions, but more recently, industry emissions have been stagnant, and even increased in 2017 for the first time since 2010. Current projections[1] envisage these emissions will not decrease unless further action is taken. Furthermore, most European industry-led decarbonisation roadmaps are inconsistent with the Paris Agreement or based on assumptions which do not reflect demand side potentials from process or business model innovations. As a result, most existing 2050 roadmaps by governments and industry associations only anticipate emission cuts of about 50% by 2050, mainly through further efficiency gains, fuel switch, and electrification.

Recent analyses by the European Climate Foundation and its partners, amongst other thought-leaders, suggest that more ambitious emission reductions are in fact feasible, and could not just maintain but enhance industrial competitiveness. This is shown in a recent report commissioned by ECF and SITRA, the Finnish Innovation Fund, and undertaken by Material Economics. It highlights that there is an untapped potential for cutting emissions by for example more efficiently using and reusing resources in heavy industry, such as steel, chemicals and cement sectors. The report finds that “[d]emand-side measures can take us more than halfway to net-zero emissions from EU industry, and hold as much promise as those on the supply side. Moreover, they are often economically attractive” (Material Economics, 2018, full report accessible here). Combining these demand side measures such as enhanced circularity and resource efficiency along the whole value chain with supply side technologies that are not yet commercially demonstrated, could bring the industry down to net-zero emissions.

Enabling a thriving climate-friendly industry 

Industry transformation towards net-zero carbon pollution will require and stimulate innovation in products and processes, the development of new business models, and new forms of cooperation across industries. It will also be needed to unleash and redirect large amounts of investments to upgrade the existing asset base and increasingly build new, low-carbon plants and infrastructures.

While many of these investments have a business case already today and would help companies to increase competitiveness, they are blocked by a range of hurdles. Policy frameworks will need to be adjusted to make these investments viable for companies.

This is true in particular for the smarter use of resources enabled by an increasingly circular economy. Embracing circularity principles, resource and energy intensive industries have the opportunity to become global leaders in the transformation to a net-zero carbon economy in Europe and strengthen their role as backbone of strong industrial value chains in Europe. This will allow them to tap into new sources of value and jobs creation in an increasingly service based economy.

Early development and adoption of other technology solutions required for a net zero pathway, in particular breakthrough supply side technologies such as hydrogen or electricity based steel making or commercialization of new climate friendly materials, will also help secure European companies a competitive edge in the emerging low-carbon markets and value chains. The importance of this should not be underestimated in a context where customers downstream in the value chain are increasingly asking for sustainable and ultimately zero-carbon materials to reduce the climate footprint of their products.

To enable the transformation, a comprehensive and reliable policy framework will be necessary to unleash investment in research and innovation, as well as market deployment creating demand for new climate friendly products. Most of the emissions reductions under the EU-Emissions Trading System will come from energy generation. For emission-intensive industrial processes with relatively higher CO2-abetement cost, there is a need for a policy tool box that supplements the EU-ETS and that enables additional emissions reductions in a way that minimizes cost and ensures competitiveness of the European industry. The policy tool for industry must remove non-market barriers and should include sufficiently large research and innovation/market introduction programs; strengthened existing instruments such as financial disclosure, eco-design standards as well as full implementation of instruments such as green public procurement and contracts for difference or consumption charges. These instruments need to be combined as part of a ‘smart and clean industry policy package for Europe.’

The aims, role and activities of IT50

To foster these dynamics, ECF launches Industrial Transformation 2050 (IT50). In collaboration with basic materials and manufacturing industry and other stakeholders, it will co-develop pathways to net-zero industrial carbon emissions in Europe in line with the Paris Agreement objectives; as well as the policy frameworks that will help industry to embark on this transformation, making climate and intrinsic part of a comprehensive industrial strategy with the goal to have a thriving and competitive European net-zero emissions industry by 2050 the latest. These issues will be of key importance for the long-term climate vision and strategy to be published by the European Commission by COP24, as much as for the member state climate strategies expected in 2019.

The analytical side of the project builds on the work by the Energy Transition Commission (ETC), Material Economics, and recently published industry roadmaps like the IEA CSI Cement Roadmap, Cefic, the BDI, Dena and Acatech work in Germany and will liaise with other current initiatives. The IT50 scenarios will focus on metals in particular steel and aluminium; chemicals, in particular plastics; and cement and concrete sectors that together are responsible for approximately 60% of the EU’s industry carbon emissions.

The IT50 project draws some of its inspiration from the ECF´s experience with the “EU Power Roadmap 2050”. This first major ECF flagship project from 2009/10 helped bring about a credible vision for a low-carbon energy system in Europe, by providing a platform for fact-based debate between politics and the energy industry. The then EU Energy Commissioner Gunther Oettinger praised the roadmap as an “important contribution to the preparation of a practical guide to a low-carbon Europe”. Close engagement with and endorsement by a broad industry coalition were vital success factors for this impact at the time.

In a similar way, Industrial Transformation 2050 aims to engage leading companies in the steel, cement and chemicals sectors, joined by civil society, and public sector institutions, to jointly develop net-zero vision pathways for the resource and energy intensive industries in Europe, and to advocate for required policy frameworks at EU and country level. The initiative aims to publish its industry 2050 vision in spring 2019.

The Industrial Transformation 2050 consortium brings together Agora Energiewende, Carbon Market Watch, Climate Strategies, German Institute for Economic Research (DIW Berlin), Institute for European Studies at the Vrije Universiteit Brussels, Institute for Sustainable Development and International Relations, Material Economics, World Wild Fund for Nature (WWF) and Wuppertal Institute.

Contact info:

Simon Wolf, Senior Associate Industry,

Rannveig van Iterson, Associate Industry,


The circular economy – a powerful force for climate mitigation

Conducted by Material Economics and commissioned by Finnish Innovation Fund Sitra and the European Climate Foundation, this report investigates how a more circular economy can contribute to cutting CO2 emissions.

It explores a broad range of opportunities for the four largest materials in terms of emissions (steel, plastics, aluminium, and cement) and two large use segments for these materials (passenger cars and buildings).

The key conclusion is that a more circular economy can make deep cuts to emissions from heavy industry: in an ambitious scenario, as much as 58% (296 million tons CO2 per year in the EU by 2050, out of 530 Mt in total) – and some 3.6 billion tonnes per year globally.

Making better use of the materials that already exist in the economy thus can take EU industry halfway towards net-zero emissions. Moreover, doing so often is economically attractive. Initiatives for a more circular economy therefore deserve a central place in EU climate and industrial policy.

  • Download the executive summary here.
  • Download the full report here.
  • Download the press release here.