Beyond linear models – a new blueprint for industrial systems

Today, there is a shift from traditional linear and carbon-intensive business models to cleaner, decarbonized systems, and this change is accelerating around the world. We talked to Catherine McFarlane, Associate Director, Europe and Insights at Mission Possible Partnership, to find out how they, as a global voice across industry sectors, see the current transformation.

“Evolving our current industrial systems to other models is an essential part of achieving net zero goals,” McFarlane says. “Moving away from high-carbon linear models will help us achieve this. Not only that, removing carbon from the system also enables us to create more resilient and competitive systems for our industries, and to develop net zero materials, fuels and chemicals. The transformation is not just about the climate, it’s also about being more competitive and more resilient, especially with the current volatility in the fossil fuel supply chain.”

Very positive momentum – AROUND 1,000 clean projects announced

“At Mission Possible Partnership (MPP), we are tracking clean projects with our Global Project Tracker. We have seen more than 1,000 clean projects being announced globally, so there is a really positive momentum behind this change. Of these, 144 projects have already been financed or are already operating. Another 850 projects are still waiting for the final investment decision (FID), so there is a great investment opportunity out there,” McFarlane says.

There needs to be infrastructure in place that supports clean energy for both the upstream and downstream industries.

“The clean industrial projects that we have identified are projects that have a clear route to near-zero carbon lifecycle emissions, meaning more than 70-80 percent emissions reductions. At MPP, our view is that for these to progress, the issue is less about technology and more about political decisions. The number one obstacle to FID is getting guaranteed demand and offtake, and revenue certainty, for projects. While we see strong voluntary signals, to get the next wave of investments there need to be structural solutions that create a level playing field to enable offtake, and purchase of low-carbon products and decarbonization technology.

Access to clean energy is key to making the change

“As process industries begin to move away from traditional models, we can expect to see several types of change. And, while the technologies can be quite different, the pattern of change is similar – this is something that we have seen across different industries, like chemicals, cement, steel, aluminum, aviation and shipping. For transformation to happen in all of these sectors, access to clean energy is key. This means that there needs to be infrastructure in place that supports clean energy.

This has to be available for both the upstream and downstream industries because the transformation happens across value chains, not just in one single sector. Getting alignment across the value chain is especially important when industry needs to champion policy signals. Cross-value chain reinforcement is vital.”

A multi-step journey towards decarbonization

“There are different approaches to reducing carbon emissions in energy intensive industries. First of all, there are the critical decarbonization technologies and these are the ones that will deliver 70-80% of the decarbonization required to get us to net zero. These technology projects are what we track in our Global Project Tracker. There are also circular approaches like recycling and reuse. And then there are what we call First big step and Last-mile technologies, which can play also an important role in achieving immediate reductions. They are not enough to get to 80% by themselves but they are critical for the decarbonization timeline, and for reach and scale.”

“The cement industry is a very good example of this. In cement making, Supplementary Cementitious Materials (SCMs) can be the First big step, and they are a really important driver in cutting emissions before the critical decarbonization technology needed – Carbon Capture and Storage (CCS) – is widely deployed and available. The Aluminum industry is another example, where clean electricity does a lot of the work. However, to reach true net zero, Last-mile technology is needed, with an additional layer of decarbonization, for example, inert anodes. So even if you have some decarbonization technologies in place, a combined approach is needed, and it takes time to scale.

Clean industry needs a whole-system perspective

“In industry, the design of new technologies is becoming less wasteful and less dependent on fossil fuels, often with a circular approach built-in. So, there is a regenerative aspect to them. For example, in the steel industry, there is a large market for secondary steel, which is made using recycled steel, and that should be a priority for the secondary steel market. But there is also a need for higher standard, primary steel, made from virgin iron ore, which is where new technology developments should be focused. Again, when we think about clean industry, it’s important to take a full-system approach. You can find many opportunities, especially with emergence of new clean industry hubs and the ecosystems around them. There are mutual benefits across the value-chain.

The clean industry technology stack

“The technology stack for the next generation of net-zero industrial systems varies by sector, but underlying it is a backbone of clean power, renewable electricity, electrification, improved efficiency, cleaner feedstocks and circularity. Green hydrogen and its derivatives will be relevant in some sectors. CCS will be relevant to sectors like cement and steel. Low carbon fuels like clean green ammonia and methanol will be relevant for shipping, while lower emission feedstocks, including clean ammonia, and some new bio-feedstocks will go into sustainable aviation fuel (SAF). In addition, AI and digitalization may offer improvements to increase the productivity and efficiency of some of these technologies.”

When we think about clean industry, it’s important to take a full system approach.

“In our Global Project Tracker, we can see that clean technology is progressing faster in some sectors than in others. Green ammonia, methanol and SAF have more momentum because of the availability of technologies and also thanks to policy. For example, the SAF blending mandate in Europe, which requires SAF in the fuel mix, has been really important in getting projects through to FID. There’s a clear supply and demand effect. On the other hand, with cement, there is strong progress with SCM technology, but the deployment of CCS at scale is just not there yet. It’s similar with steel, although China is moving really fast in this and other areas.

Taking the first steps to cleaner industry 

“It’s worth noting that while demand is the biggest obstacle in the transformation, this only matters if all other enabling factors are already in place. An effective infrastructure is essential, along with everything preceding it, like permitting and financing.

“When companies begin shifting to cleaner industrial systems, one of the things we have learned is the value of partnerships across the value chain. For example, a steel company in the automotive chain must engage with both upstream and downstream companies to identify common barriers, and then they can jointly advocate for their removal. It’s important to recognize the value of early collaboration across the value chain.

Before, we used to see ambitions; now we are seeing execution and implementation.

“For process‑industry companies transitioning to cleaner models, some initial steps include identifying where the heavy emissions are and the dependencies in the wider system. Companies can often take early ‘no‑regret’ actions to cut emissions, and some structural shifts may also be needed – things to engage with and barriers to overcome.”

A pipeline full of exciting developments

“We are living in an interesting time for clean industry projects. There is a big pipeline of projects that have been announced. It’s exciting that there is such a strong pipeline with trillion-dollar investment opportunities waiting to be captured. We’re seeing great early progress with proven technology, including technology from companies like Valmet. There are clean technologies that are not just linear but also regenerative, and what we see with the high-level systems approach is really exciting. Before, we used to see ambitions; now we are seeing execution and implementation,” McFarlane concludes.

Text: Peter Cura