Transformative Pathways for U.S. Industry: Unlocking American Innovation

• The core near zero transformative pathway for the modeled chemicals* has the potential to reduce the emissions to approximately 15 MMT CO₂e by 2050, an 84% reduction compared with 2018.
• This subsector is especially challenging to decarbonize given the wide range of products, large thermal footprint, current reliance on energy- and emissions-intensive feedstocks and processes, and the dependence on co-manufacturing of certain chemicals.
• While interventions along the decarbonization pillars provide substantial decarbonization potential, innovative clean chemicals production technologies are needed to reach near zero emissions (represented as CCS-enabled clean production in the modeling). Without these innovations, achieving near zero or absolute net zero emissions seems unfeasible for most chemicals, with the exception of ethanol and chlor-alkali.
• Transformative pathways and pillar impacts will vary by chemical; for example, ethanol has a higher CCUS emissions reduction potential compared to some of the other chemicals modeled due to large proportions of high-purity CO₂ emissions.  
• Methanol, ethanol, ammonia, and CO₂ are critical feedstocks for future chemicals manufacturing that should be prioritized for further research.  
• The production costs of clean hydrogen underpin the economics of methanol and ammonia production emissions reduction.  
• Beyond the four decarbonization pillars, material recycling is another major lever for reducing chemicals subsector emissions, especially for those with existing recycling methods, such as ethylene, propylene, and BTX. 

*The transformative pathways modeling included deep dives on nine key basic chemicals which account for 40% of 2018 subsector emissions–ethylene, propylene, butadiene, benzene-toluene-xylene (BTX) aromatics, chlor-alkali (coproduction of chlorine and sodium hydroxide), soda ash, ethanol, methanol, and ammonia–and estimated the impact of crosscutting decarbonization measures for the remaining chemicals in the subsector. The near zero pathway was for eight chemicals– ethylene, propylene, butadiene, BTX, chlor-alkali, soda ash, methanol, and ammonia. 

• Multiple feasible near zero transformative pathways exist for this subsector, largely driven by decarbonizing hot water, hot air, and steam production.  
• These transformative pathways have the potential to reduce the subsector’s emissions to below 1 MMT CO₂e by 2050, a 99% reduction compared with 2018. 
• While each transformative pathway leans heavily into the impact of individual pillars, electrification, energy efficiency, and LCFFES will all be needed to reach near zero emissions. CCUS is not expected to make a significant impact in the subsector but might be considered for individual facilities with large point-source emissions. 
• The most likely eventual transformative pathway would include a mix of energy efficiency measures, increases in electrification, and utilization of LCFFES (as available and appropriate. Decisions around technology and pathway choice will depend on multiple factors, including the accessibility and availability of low-carbon fuels, clean electricity, and other energy sources and the processes within individual facilities.  
• No regrets strategies include investments in demonstration and deployment, especially since the subsector can greatly benefit from commercially available or mature technologies (e.g., heat pumps, dual-fuel process heating, or steam-generating equipment). 
• Changes in consumer demand, including preferences for certain products and food loss and waste reduction, as well as food-safety regulations can affect the choices industrial entities make in decarbonizing their operations. 
• Although the transformative pathways modeling focused on Scope 1 and 2 emissions for the manufacturing stage, it is important to consider the results in context with the entire food and beverage supply chain.

• Two distinct transformative pathways emerged for iron and steel. These pathways align in the steelmaking and finishing stages but differ in the ironmaking stage. The distinct approaches to clean production in the ironmaking stage that define these pathways are:  
  • Integrated mills with carbon capture and sequestration (IM-CCS)  
  • Hydrogen-ready DRI (H2-DRI) with evolution towards hydrogen as fuel and reductant.  
• The two near zero transformative pathways have the potential to reduce the subsector’s emissions to approximately 10 MMT CO₂e by 2050, a 90% reduction compared with 2018. 
• Electrolytically produced iron was limited in its representation in the Transformative Pathways modeling and severely constrained in its implementation. It is acknowledged that these nascent production routes can collectively represent another alternative pathway for clean production in the ironmaking stage.  
• These distinct ironmaking clean production routes require disparate capacity build-out, supporting infrastructure, and broader decarbonization measures (e.g., CO₂ pipelines or clean hydrogen availability), and decisions are required in the near-term (within the next three to five years) on which pathway to pursue. Utilizing scrap to the maximum extent possible is common to all transformative pathways. 
• Regardless of the pathway, the EAF plays a significant role in steelmaking, even when maintaining high BF-BOF production capacity, due to its role in production processes with high scrap charge. Fully decarbonizing EAFs with respect to the process emissions from the charge carbon and the natural gas used primarily in the preheating is essential for a NZ greenhouse gas emissions reduction pathway and can account for up to 15 MMT of annual CO₂e emissions. 
• It is essential that finishing stage emissions are addressed in all transformative pathways. Even in an integrated mill with CCS, capturing emissions from the finishing stage may not be considered practical. These emissions can account for up to 20 MMT of annual CO₂e emissions. Electrification or low-carbon fuels are two options for addressing these emissions. 

• The core near zero transformative pathway has the potential to reduce the subsector’s emissions to approximately 7 MMT CO₂e by 2050, a 97% reduction compared with 2018. 
• While the impact is far less than demand reduction, achieving near zero emissions will require: 
  • Energy efficiency improvements using known technologies, especially in the near and mid-term. 
  • Producing liquid hydrocarbon-based fuels from a broader suite of alternative feedstocks, including woody biomass and agricultural wastes. 
  • Low CI hydrogen and CCS, both of which will require major infrastructure development.  
• Deploying biofuels to displace demand for petroleum crude-derived fuels. 
• Electrification may have a limited role in refining decarbonization, particularly due to the need for refiners to find a use for self-generated fuels, regardless of feedstock used in fuels production. 
• In the long-term it is imperative to develop and deploy the supply chains for alternative feedstocks, including the sourcing of material, the cost-competitive conversion processes for sustainable materials, and the infrastructure to transport sustainable feedstocks (e.g., bio-oil) to refining operations. 
• Reducing demand for petroleum crude-derived fuels is necessary to reach near zero emissions, even with maximizing the adoption of other decarbonization interventions. Demand reduction alone accounts for over half of emissions reduction compared with 2018.  
• Refineries play a pivotal role in the transition toward a low-carbon future through the supply of low-carbon liquid transportation fuels. Thus, it is imperative that RD&D decisions for refining and transportation decarbonization be pursued in tandem and investments be balanced between onsite and product decarbonization. 

• The core near zero transformative pathway has the potential to reduce the subsector’s emissions to approximately 6 MMT CO₂e by 2050, a 95% reduction compared with 2018. This reduction is largely driven by increased biomass use and improved energy efficiency of existing core unit processes, including drying and steam generation.  
• The modeling was limited in that it lacked implementation of alternative pulping technologies, such as deep eutectic solvents and alternative fibers. Considering these alternative production routes can significantly change the impact of the interventions explored in the transformative pathways modeling.  
• Electrification was considered for drying technologies and steam generation from the auxiliary boiler. Aggressive electrification of the auxiliary boiler (from 20% in the core near zero pathway to 50%) had minimal impact on emissions reduction. Steam generating heat pumps and more nascent electrification technologies were not considered as part of this but can presumably offer decarbonization potential.  
• Broad adoption of the technologies in the core near zero transformative pathway minimizes the impact of recycling, imports, and demand reduction on the subsector’s decarbonization potential.  
• While the estimated reductions reach near zero greenhouse gas emissions, biogenic emissions should be considered, especially due to increased biomass consumption proposed as the primary decarbonization intervention.  
• This subsector has the opportunity to produce other value-added products through an integrated biorefinery approach. A cross-sectoral analysis is needed to evaluate the overall decarbonization impact of such an approach. 

*Biogenic emissions are not considered in this work.