EU Industry Pathways

The industrial sector is directly responsible for around one-fifth of the EU’s greenhouse gas emissions. Although overall industrial emissions have decreased substantially since 1990, particularly emissions-intensive sectors such as steel, chemicals and cement have not yet begun to transform their assets to low-carbon production at large scale. That said, if the EU is to achieve climate neutrality by 2050, all future investments in these sectors must be directed towards low-carbon production assets. However, geopolitical turmoil increased uncertainty for European industry, and the question of resilience features ever more prominently in the discussion. Clarity on the transformation pathways for these sectors is urgently needed to enable targeted and viable investments.

Against this background, the project team investigates the potential benefits of a deep transformation towards renewable resources in European industry – particularly with regard to Europe’s strategic sovereignty – as well as the potential benefits of moderately relocating energy-intensive production steps within Europe. To this end, researchers at Agora Industry, the Wuppertal Institute and the University of Kassel are jointly developing and comparing three transformation scenarios for the European steel, petrochemicals and cement industries:

• The first scenario assumes that fossil fuels and feedstocks will continue to play a significant role in European industry, while CO2 emissions will be avoided through extensive use of Carbon Capture and Storage (CCS).
• The second scenario involves the European industry transitioning to renewable fuels and feedstocks, while maintaining current production sites and networks to a large extent.
• The third scenario involves the European industry transitioning to renewable fuels and feedstocks, coupled with a moderate relocation of energy-intensive production steps within Europe to regions with favourable conditions for renewable energies.

In addition to analysing the cost and emission balances, the researchers also examine the robustness and resilience of these scenarios, using a number of stress tests and sensitivity analyses. The scenarios are discussed and validated with stakeholders.