'Hard-to-abate' sectors are reducing emissions, here’s how they can accelerate progress towards net zero

For the first time in recent years, on the whole, hard-to-abate sectors have reduced absolute emissions, achieving a 0.9% drop from 2022 to 2023, as reported in the Net Zero Industry Tracker 2024. This contrasts with a 1.3% rise in global energy-related emissions during the same period. Since 2019, emissions intensity in these sectors has fallen by 4.1%, with a 1.2% decrease in the past year. Five of eight sectors, including aluminium, cement, chemicals, aviation and trucking, have lowered emissions intensity, while energy intensity across these sectors dropped 3.2% in 2022 — 1.6 times faster than the global average. Yet, hard-to-abate sectors still account for nearly 40% of global greenhouse gas emissions.

These positive trends demonstrate the potential for impactful emissions reductions in these sectors. 'Hard-to-abate' sectors is a term which traditionally refers to the challenge in many industries and heavy transport sectors to reduce reliance on traditional, energy dense fuels that are often high in carbon. The current pace, however, is insufficient to meet the 2050 net-zero targets. To accelerate this progress, the Net Zero Industry Tracker 2024 highlights key actions that the ecosystem stakeholders can take to accelerate progress towards net zero emissions.

Achieving net-zero emissions by 2050 demands a new level of collaboration across sectors, with clear strategies to address critical barriers, such as funding gaps, inconsistent carbon standards and reliance on fossil fuels. Key players — financiers, policymakers, industry bodies, companies and consumers — must align to create actionable solutions.

Collaboration between ecosystem stakeholders is vital to building resilient and responsible value chains and ensuring these efforts translate into measurable impact. Let us take a closer look at how each of these steps can contribute to driving emissions reductions in hard-to-abate sectors:

According to the Net Zero Industry Tracker 2024, $30 trillion in additional capital is required by 2050 to achieve net-zero goals in these sectors, with 57% relying on ecosystem investments outside these sectors directly. Hence, collaboration between the wider energy industry, financiers and policymakers is essential to ramp up investments and overcome barriers, such as high green premiums and limited funding.

An investable ecosystem blends financial support and policy incentives and clarity, enabling financiers to de-risk investments and policymakers to reduce green premiums by creating a level playing field. This could be done via the regulated carbon markets and through mechanisms like the Carbon Border Adjustment Mechanism, for example, which establishes a common price on carbon.

Policymakers, industrial companies and financiers must bridge funding gaps by creating incentives and public-private partnerships, such as the Transforming Industrial Cluster and First Movers Coalition, which drive investment in clean technologies, like green steel and low-carbon cement. These efforts foster transparency and collaboration to scale sustainable solutions effectively.

Every company has a different definition of 'green.' This creates market inefficiencies. According to the UNGC Accenture CEO Study, 64% of industrial sector CEOs are prioritizing responsible and transparent supply chains. CEOs are leveraging data to track ESG metrics, map supply chains and integrate renewables into manufacturing. But scaling requires standardization.

Industry bodies ought to work to establish clear carbon standards with defined thresholds for their industry, while consumers should demand and advocate for transparency in product emissions and carbon footprints.

Industry bodies can define, agree and standardize specific emissions benchmarks for their industry’s performance and, additionally, promote data sharing for traceability and learning across companies. Consumers can advocate for carbon labelling and effective reporting to enable informed purchasing, creating a ripple effect that enhances sustainability across value chains.

With renewable energy projected to provide the majority of global electricity by 2050, leveraging low-emission electricity is critical for industries to meet net-zero targets. As the largest emission reduction lever, electrification is expected to contribute 23% of cumulative emissions reductions across eight hard-to-abate manufacturing and transportation sectors, according to the Net Zero Industry Tracker 2024.

Companies must prioritize electrifying operations, especially in areas with abundant low-carbon power sources. Transitioning to renewables for manufacturing, transportation and other energy-intensive operations can drastically reduce emissions and unlock long-term cost savings as renewable energy becomes more affordable.

Businesses can phase out fossil fuels by integrating renewable electricity into their operations, investing in electrified technologies and collaborating with utilities to secure green energy, thereby cutting emissions while future-proofing against energy price volatility. However, electrification is only one part of the solution. Hard-to-abate sectors cannot electrify every part of the value chain and will need to also adopt clean fuels, such as hydrogen and biofuels, integrate CCUS, enhance energy efficiency and other decarbonization levers.

The Net Zero Industry Tracker 2024 underscores that while hard-to-abate sectors have made progress, their current pace is not sufficient to achieve net-zero emissions by 2050. The journey to net zero requires bold action from all ecosystem stakeholders, driven by a shared commitment to sustainability and net-zero goals. By combining financial and policy incentives; implementing transparent carbon standards; maximizing electrification through renewable energy; adopting clean fuels, such as hydrogen and biofuels; integrating CCUS; and, enhancing energy efficiency, we can unlock transformative change across industries and supply chains.