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To Decarbonize Industry at Needed Pace, the Energy Department Should Reimagine Its Efforts

April 29, 2022
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Congress has recently infused the Department of Energy (DOE) with new funds aimed at cutting carbon emissions from American industry—but is the agency prepared to meet this challenge at the rapid pace needed to avert the worst impacts of climate change? And can DOE drive the deployment of transformative technologies at scale?

DOE has a proven history of funding critical research that has helped industry use energy more efficiently. Now, it must move faster and intensify its work on technology implementation to help industry reach net-zero greenhouse gas emissions by mid-century.

In a white paper released today, ACEEE offers a range of ideas that DOE could use as it reimagines its approach to industrial decarbonization. The agency’s new funding—from the bipartisan infrastructure law and Energy Act of 2020, with potentially more on the way—needs to be applied in new ways—and fast—to meet the climate challenge.

Basic research is important, but technology deployment is crucial

In recent years, DOE’s work in the industrial sector—which is primarily through its Advanced Manufacturing Office (AMO)—has become heavily focused on research. Working together, AMO and the new Office of Manufacturing and Energy Supply Chains need to drive a more applied focus that supports not only research but also implementation at companies eager to invest in low-carbon technologies.

Why is the current approach inadequate? Take the case of AMO’s research on industrial heat pumps (IHPs). In the 1980s and 1990s, AMO helped enable their development. Today, a number of European and Japanese companies are using IHPs in industrial processes to provide heat in a cleaner manner than through traditional methods (the subject of a recent ACEEE report). This is due in large part to the continued support in those countries for IHP capability advancement and deployment. But few U.S. industries are using the technology. The AMO program focused on development but not applications at scale, and it was dropped decades ago.

While federal agencies in Germany and other European countries have supported industries in advancing IHPs—and especially in deploying the technology—there’s been no similar effort in the United States. In other words, research alone is not enough.

DOE should broaden its focus on technology deployment, scale, and dispersion of low-carbon technologies across industries and applications. While the agency currently works closely with a modest number of industrial companies, it will need to deepen those partnerships and expand its efforts to engage a larger and more varied set of companies across heavy and light industry.

Leveraging funding to expand impact

DOE’s funding for AMO has roughly doubled in the past few years. That’s a welcome investment from Congress. But consider the scale of the challenge: industry currently accounts for about one-quarter of U.S. greenhouse gas emissions, and it will take trillions of dollars to decarbonize all industrial sectors. Transformative decarbonization technologies—think a direct reduction iron facility or an electric ethane cracker in the chemical industry—can take a billion dollars or more for a single project. In this light, even AMO’s expanded funding is quite modest.

AMO can and must make its dollars go further. It could package projects to better attract outside financing, including by providing in-kind services with partners and national labs to lower technical hurdles for companies, encouraging them to take on decarbonization projects that they otherwise would not.

DOE and AMO can leverage commercial financing, philanthropy, green bonds, and economic or community development funds. In Canada, for example, the multinational ELYSIS zero-carbon aluminum initiative combines funding from Apple, Rio Tinto, ALCOA, and Canadian federal and provincial governments.

Rising to the challenge

AMO should scale up its vision, capabilities, and responsiveness to enable the dramatic changes needed in industry to achieve both energy and GHG reductions. It can tap its 35-year portfolio of technologies, practices, and industrial partnerships to spur adoption of transformative low-carbon technologies. 

A reimagined DOE and AMO can more extensively partner with industrial players, public and private finance, and other agencies to catalyze change with speed and scale while developing a diverse workforce, improving competitiveness, and strengthening resilience. We call on DOE to take on the challenge, drive breakthroughs in low-carbon deployment, scale up at an accelerated pace, and tailor its approach to engage a deeper and wider portion of U.S. industry.

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