- Companies must separate offsets from removals in their net-zero claims
- CCS, durable removals will be structural elements of steel decarbonisation post-2030
Decarbonisation in heavy industry is often discussed using aspirational language, simplified roadmaps, or ESG narratives. In practice, industrial decarbonisation is governed by physics, chemistry, thermodynamics, asset lifetimes, capital cycles, and procurement risk. For sectors such as steel, cement, and chemicals, the question is not whether decarbonisation is required, but how it can be executed without destabilising operations, economics, or competitiveness.
A credible industrial decarbonisation strategy follows a clear hierarchy. Emissions must first be avoided wherever possible, then reduced aggressively using available technologies, and only after that captured, stored, or removed. Skipping steps or reversing this order almost always leads to inflated costs, credibility risks, or operational failure.
Decarbonisation hierarchy: From avoidance to removal
The first lever is avoidance. In industrial terms, this means eliminating inefficient assets, shutting down obsolete capacity, redesigning products to reduce material intensity, or rationalising demand. In heavy industry, however, avoidance has natural limits because steel, cement, and chemicals are structurally required inputs for economic development.
The second lever is reduction. This is where most industrial effort is concentrated today. Energy efficiency improvements, renewable electricity procurement, process optimisation, electrification of auxiliary systems, fuel switching, and selective use of hydrogen all sit within this phase. For most industrial companies, this reduction phase dominates the period up to around 2030.
The third lever is removal. Even after deep reductions, residual emissions remain. These emissions are not the result of poor performance; they are the consequence of unavoidable process chemistry, high temperature heat requirements, or transitional assets still operating. Carbon removal should only be applied to these residual emissions, not as a substitute for reduction.
Why timing matters: Pre-2030 vs post-2030
Up to roughly 2030, decarbonisation progress is relatively rapid. Efficiency gains, renewable power, and process optimisation deliver meaningful reductions at manageable cost. Beyond that point, the abatement curve begins to flatten. Each additional tonne of CO₂ avoided becomes more expensive or technically difficult.
This flattening occurs because some industrial processes cannot be fully electrified, hydrogen cannot replace all fossil inputs, and certain emissions are unavoidable due to chemical reactions. These remaining emissions define the long-term role of carbon capture, storage, and removal.
Scope 1, Scope 2, and Scope 3: Industrial reality
A credible strategy must address all three emissions scopes. Scope 1 emissions arise directly from industrial processes and fuel use. Scope 2 emissions come from purchased electricity and steam. Scope 3 emissions span upstream raw materials, logistics, and downstream product use.
Optimising one scope while ignoring others leads to distorted outcomes. Industrial decarbonisation requires coordinated action across the full value chain.
Carbon credits: Offsets vs true removals
Not all carbon credits are equal. Offsets typically represent emissions reductions achieved elsewhere, often through nature-based projects. Carbon removals physically remove CO₂ from the atmosphere and store it durably, often for centuries or longer.
As scrutiny increases from regulators, investors, and customers, companies are being forced to clearly separate offsets from removals in their net-zero claims. Credibility increasingly depends on this distinction.
Measurement, permanence, and additionality
Three concepts define the integrity of carbon claims. Measurement, reporting, and verification (MRV) determine how emissions are quantified and audited. Permanence defines how long captured or removed CO₂ remains locked away. Additionality asks whether a project would have happened without carbon credit revenue.
Weakness in any of these areas creates both counterparty risk and reputational risk.
How companies approach carbon removal today
Most industrial companies are actively evaluating carbon removal pathways. These include bioenergy with carbon capture and storage (BECCS), direct air capture with storage (DACCS), biochar, forestry, and blue carbon. The typical approach is to begin with pilots, develop internal capability around MRV and contracting, and scale later.
The decision of whether, when, and how to purchase removal credits is becoming a strategic one. Buying too early exposes companies to high costs and reputational risk. Buying too late risks supply shortages and price spikes. Long-term offtake agreements are increasingly discussed alongside spot purchases to manage volume and price risk.
CCU, CCS, and CDR: Clarifying the terms
Carbon capture and utilisation (CCU) uses CO₂ as a feedstock, often re-emitting it later. Carbon capture and storage (CCS) focuses on permanent geological storage. Carbon dioxide removal (CDR) removes CO₂ from the atmosphere and stores it durably. Confusing these categories leads to misleading decarbonisation claims.
Scale of future carbon removal demand
Today, global carbon removal volumes are small, measured in single-digit million tonnes per year. By 2030, demand is expected to rise to roughly 50–100 million tonnes annually. By 2040, this could reach several hundred million tonnes. By 2050, credible net-zero pathways require 5–10 gigatonnes per year.
Heavy industry is expected to account for roughly a quarter to a third of this demand due to the persistence of residual emissions.
Decarbonisation as industrial procurement
At scale, decarbonisation is no longer an ESG exercise. It becomes a procurement function similar to energy, raw materials, or logistics. Contract design, supplier quality, MRV assurance, price risk, and reputational exposure all matter.
Capture and storage pathways: Where the CO₂ goes
Cement illustrates the challenge clearly. Heidelberg Materials’ Brevik CCS project in Norway integrates capture, transport, and permanent offshore storage. The plant targets capture of roughly 400,000 tonnes of CO₂ per year, addressing both fuel and process emissions.
Another pathway is mineralisation. Carbfix in Iceland injects CO₂ dissolved in water into basalt formations, where it mineralises into solid carbonate. This approach offers exceptional permanence, directly addressing long term storage concerns.
Concrete mineralisation, as implemented by CarbonCure, injects CO₂ during concrete mixing, chemically binding it into the material. This reduces embodied carbon while offering partial storage.
Enhanced oil recovery remains controversial. While it can store CO₂, credibility depends on lifecycle accounting and governance. Many industrial buyers treat EOR as higher reputational risk unless controls are robust.
Capture and utilisation: Turning CO₂ into products
One of the most credible CCU examples is waste gas fermentation. ArcelorMittal and LanzaTech’s project in Ghent converts steelmaking off-gases into ethanol. This works because the gas stream is continuous and the product has established markets.
CO₂-to-methanol pathways are technically mature but economically sensitive. Hydrogen price, power cost, CO₂ purity, and policy support determine viability. Industrial clusters offer the best opportunity to integrate capture, hydrogen supply, and conversion.
Steel decarbonisation playbook
Steel decarbonisation is not a single lever but a portfolio strategy. Pre-2030 efforts focus on efficiency, yield improvement, scrap optimisation, renewable electricity, and intelligent off-gas use.
Steel plants generate significant gas streams. Recovering hydrogen and carbon monoxide, reducing flaring, and concentrating CO₂ for capture are practical steps. Pressure swing adsorption plays a key role as an enabling separation technology.
High temperature electrolysis, particularly SOEC, offers efficiency advantages when industrial heat is available. Projects such as Salzgitter and Sunfire illustrate this integration.
Post-2030, residual emissions dominate. CCS and durable removals become structural elements of steel decarbonisation, particularly under policies such as the EU’s CBAM, which directly affects trade competitiveness.
Cement and chemicals: Different physics, different levers
Cement faces unavoidable process emissions from calcination, making CCS one of the few scalable solutions. Projects such as Brevik and Slite illustrate the direction of travel.
Chemicals, by contrast, offer strong CCU potential due to large continuous markets and existing infrastructure. CO₂-to-urea, CO₂-to-methanol, and gas fermentation routes are among the most practical.
Missing Infrastructure: Storage, power, and enablers
Decarbonisation depends on infrastructure that stabilises power and hydrogen economics. Long duration storage systems such as Energy Dome’s CO₂ battery, lithium–sulfur batteries under development by Lyten, underground storage concepts such as Sage’s EarthStore, and reliable water and power systems all play enabling roles.
Closed loop hydrogen systems (where hydrogen is produced, used, recovered from off-gases, and recycled) are central to industrial decarbonisation at scale.
Carbon credits as permanent industrial function
Offsets and removals must be clearly separated. Most credible strategies prioritise reductions pre-2030, pilot removals early, and scale durable removals post-2030 through diversified, long term procurement.
Final takeaway
For steel, cement, and chemicals, decarbonisation follows a clear trajectory. Reduce aggressively before 2030. Scale the hard levers between 2030 and 2040. Treat carbon removals as a permanent procurement category by 2040–2050.
The leaders who succeed will be those willing to hold two truths simultaneously: emissions must be reduced wherever possible, and where physics or chemistry block further progress, emissions must be captured, stored, or removed honestly, measurably, and durably.
That is not ESG theory.
That is industrial realism.
This article is published by BigMint in collaboration with author Mr. R.V. Sridhar, Senior Independent Advisor, McKinsey & Co.
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