How to harness the collaborative potential of industrial clusters

In the race against time, rapid decarbonization of industrial clusters is crucial to expedite the path to a net-zero future. Governments and companies increasingly prioritize industrial clusters and regional collaboration to advance energy transition infrastructure and investments.

Industrial clusters uniquely provide scale, risk-sharing, and demand aggregation, playing a pivotal role in deploying large-scale energy and transport infrastructure. Additionally, they serve as essential contributors to regional competitiveness, making noteworthy contributions to GDP growth and job creation.

While the concept of industrial clusters is well-established, the stark reality of notable deficiency in both governance and collaboration, cuts across geographic and industry boundaries.

A new Transitioning Industrial Clusters Annual Report highlights the experiences and perspectives of 20 industrial clusters within the initiative. Despite unique geographical, infrastructure, policy and sectoral challenges, these clusters have developed comprehensive strategies to reach net zero while attaining their full economic and employment potential.

The initiative focuses on four strategic pillars: partnerships, policy, finance and technology.

Encouraging competitive companies to align their efforts toward a shared goal – reducing carbon emissions, fostering job creation, and contributing to economic growth – is often a formidable challenge. Despite operating in proximity and confronting similar issues, companies in clusters frequently miss the opportunity for collaboration.

Over the past year, our signatory clusters have actively forged and extended partnerships with a diverse array of organizations, cultivating ecosystems around emerging decarbonization infrastructure and supply chains.

Home to Europe’s largest integrated chemical cluster, the Port of Antwerp-Bruges, is moving closer to the Final Investment Decision for the Kairos@C and Antwerp@C projects. These endeavours focus on establishing collaborative infrastructure for cross-border carbon transport and storage, while simultaneously propelling the growth of the low-carbon hydrogen value chain within the port.

“The Port of Antwerp-Bruges hosts Europe’s largest chemical cluster and supports the European Green Deal to become climate neutral by 2050,” said Jacques Vandermeiren, Chief Executive Officer, Port of Antwerp-Bruges. “The Transitioning Industrial Clusters initiative is a means to inspire and incentivize companies to share best practices in our common pursuit of staying well below 2°C.”

In the US, the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) drive decarbonization within industrial clusters, boosting the deployment of hydrogen hubs across the country. The US Department of Energy has recently announced $7 billion to facilitate the establishment of seven clean hydrogen hubs nationwide. Among them, the H2Houston Hub and the Ohio Clean Hydrogen Hub Alliance, both part of the Transitioning Industrial Clusters initiative community, are expected to benefit from this funding.

Meanwhile, in Europe, the EU Green Deal sparks cross-border collaborations, building essential carbon and hydrogen infrastructure to fortify industries for a secure energy future.

Unlocking financing is crucial for industrial clusters to amplify their impact. Our global signatory clusters have achieved substantial milestones in the financial realm, mobilizing both public and private funds to drive cluster scaling and project development. In Europe, grants and state aid are actively supporting infrastructure implementation. Notably, Brightlands Circular Space secured €50 million to establish the world's inaugural industrial-scale circular plastics demonstration facility.

“With our focus on leading an impactful circular ecosystem for a future-oriented circular economy in Europe, it is of utmost importance that we foster competitive collaboration between the companies in our cluster as well as with other global clusters,” said Lia Voermans, Chair of Brightlands Circular Space, “We believe that this initiative provides a gateway to access the best practices and processes supporting industrial decarbonization.”

No single technology or decarbonization lever can abate all industrial emissions – it is necessary that a spectrum of technology levers, applied within a holistic value approach, work in tandem to optimize emissions reduction measures and deliver economic, social, and environmental value. Here are some concrete examples from our signatory industrial clusters:

“TEDA is committed to joining this initiative and actively participating in exchanges to learn from international, advanced industrial clusters,” said You Tiancheng, Chairman of the TEDA Administrative Commission. “By studying their experiences, TEDA aims to facilitate the acceleration of technological and managerial innovations in Chinese industrial parks. This, in turn, will expedite the transition of Chinese industrial clusters towards a future characterized by net-zero carbon emissions.”

As of today, the initiative comprises 20 signatory clusters across 10 countries across four continents, with a CO₂e emissions reduction potential of 626 million tonnes – equivalent to Australia's annual emissions. These clusters play a vital role in the global economy, directly contributing $362 billion to the GDP and impacting the creation or protection of 3.4 million direct and indirect jobs.

In 2023, three new clusters joined the initiative: Tianjin Economic-Technological Development Area in China, DKarbonation in France, and Louisiana Future Energy Cluster in the US.

Despite the progress, further efforts are needed to accelerate the transition. To maintain momentum, key themes must be addressed to prevent bottlenecks in scaling climate, economic, and social impact: