Tackling the tough stuff: steel, cement, and chemicals

Exploring the difficult pathways to decarbonizing the industrial sector.

The Carbon Copy podcast from Latitude Media

The industrial sector is set to overtake power generation and transportation as the biggest source of planet warming emissions in the U.S. by 2035, according to The Rhodium Group.

The sector’s impact is even greater on the global scale. Industry around the world accounts for more carbon dioxide emissions than all forms of transportation combined — largely driven by steel, cement and chemicals.

There are a lot of ways to decarbonize industry, but the pathways are much less clear than for electricity or automobiles.

In this episode, we’re joined by Jeff St. John, Maria Gallucci and Julian Spector, who’ve been exploring the varied paths for cleaning up the products that are foundational to the world around us.

Stories we mention in this episode

  • Canary Media: Cleaning up steel, cement and chemicals is tough — and entirely doable
  • Rhodium Group: Taking stock of U.S. emissions
  • Canary Media: ​‘Electrowinning’ could help win the race to clean up dirty steel
  • Latitude Media: The electrolyzer market is caught in limbo
  • Canary Media: To decarbonize cement, the industry needs a full transformation
  • Canary Media: The trillion-dollar quest to make green steel
  • Canary Media: We need green hydrogen to clean up heavy industry. Who’s making it?

Sign up for Latitude Media’s Frontier Forum on January 31, featuring Crux CEO Alfred Johnson, who will break down the budding market for clean energy tax credits. We’ll dissect current transactions and pricing, compare buyer and seller expectations, and look at where the market is headed in 2024.

Transcript

Stephen Lacey: Since we're talking about tough stuff, what's the toughest thing you've ever had to build in your life?

Jeff St. John: I was going to say the tree house that I built with my dad when I was a kid, but I don't think I did that much work.

Maria Galluci: A few years ago, my husband and I remodeled a family house in Ohio and built an IKEA kitchen. There's thousands of parts involved in doing that. A few shattered glass doors in the process, but it came together.

Stephen Lacey: Wait a whole Ikea kitchen. I'm on an IKEA standing desk, which took me like four hours to put together. I can't imagine a whole kitchen.

Maria Galluci: Yes, it's a journey.

Julian Spector: Sounds like stuff of nightmares. But yeah, I was thinking back to I think it was middle school. My friend Alex and I decided to just build a little trebuchet for fun, which is like a medieval siege engine akin to a catapult, but it swings through, if you can picture that. We took it down to the park and flung tennis balls.

Stephen Lacey: Did it work?

Julian Spector: It got the balls through the air. I don't think it was necessarily farther than you could do it with a lacrosse stick or something, but it propelled items.

Stephen Lacey: This is The Carbon Copy. This week we're tackling the tough stuff. The industrial sector is set to overtake power generation and transportation is the biggest source of planet warming emissions in the US by 2035. The sector's impact is even greater on the global scale. Industry around the world accounts for more carbon dioxide emissions than all forms of transportation combined. That's largely driven by steel, cement and chemicals. There are a lot of ways to decarbonize industry, but the pathways are much less clear than for electricity or automobiles. In this episode, we're exploring the varied paths for cleaning up the products that are foundational to the world around us.

I'm Stephen Lacey, executive editor at Latitude Media. I'm here with my friends and colleagues from Canary Media, Maria Galluci, Jeff St. John, Julian Spector. Maria is a clean energy reporter who focuses largely on the heart of decarbonized sectors. This is your week to shine, the tough stuff week, Maria.

Maria Galluci: Yes, my call of fame.

Stephen Lacey: Jeff St. John is the director of news and special projects at Canary Media. Hey, Jeff.

Jeff St. John: Hey, Stephen. Thanks for having us.

Stephen Lacey: Julian Spector is a senior reporter at Canary covering a wide range of topics including storage, manufacturing, and industry. You are in Portugal, which surprised us when you signed on. I am a little bit jealous of your travels.

Julian Spector: It's been fun. It's been fun, but the reporting keeps me rooted in the world of American industry and energy transition. I've been covering the hydrogen side of this industrial decarbonization topic because a lot of movement on that front.

Stephen Lacey: Let's get a little context here, and then we'll dig into some different areas. Getting to net-zero emissions in the power sector or in transportation is an extremely heavy lift, but it's become increasingly clear how we get there. Most of the emission reductions here in America that we'll see, thanks to the Inflation Reduction Act, are going to incur in those areas according to the Rhodium Group.

Industry is a very different story. As I mentioned at the top of the show, Rhodium projects that the industrial sector is going to be America's highest emitter by 2035. That's because steel, cement, chemicals, the dominant industry polluters, require extremely high heat, require massive capital investments and rely on equipment that lasts a very long time. Of course, we need heavy industry to support the build out of batteries, renewable energy power plants, efficient buildings that are going to get constructed in the coming decades. Its role is more important than ever, but the pathway to decarbonize it is still unproven.

Maria, Jeff and Julian have spent a lot of time digging into the different solution sets for industry. We're going to riff on many of them today. I want to start with just talking about the different sectors that you've focused on. We're looking at cement concrete, chemicals, steel and hydrogen.

Maria, you took on a bunch of different sectors, why don't you start. You focus on cement and concrete, ethylene and steel. Where's the best place to start? What's the hardest one?

Maria Galluci: Oh, the hardest one, I would say chemicals probably because it's not just, I mean all of these industries are difficult, but chemical manufacturing means many things and there's many different pieces. To be honest, we just scratched the surface of that with this themed week. We spent more reporting on steel and cement and concrete, in part, I think because there is a lot more activity and movement around efforts to decarbonize, whereas the chemical industry seems like just starting to wrap its head around this possibility of decarbonizing.

Stephen Lacey: Why did you focus on ethylene?

Maria Galluci: Ethylene is a key building block of a lot of the other chemicals that are made in everyday materials like diapers, detergent. Most of the plastic materials that we have, PVC pipes, even airplane wings have some ethylene, so that seems like a great place to start because ethylene is in a lot of stuff. Ethylene is in a lot of the materials that we use. It's also the most consumed primary petrochemical among these groups of what are called high-value chemicals. It's the most consumed. That seemed like a good place to start. Also, because in my reporting I noticed there were some interesting initiatives to try and electrify parts of ethylene production. That seemed like a cool opportunity to focus on an area where there actually are solutions, or I should say there are steps towards solutions within the chemical space.

Stephen Lacey: In the chemical space, for ethylene in particular, we're not necessarily talking about a change in chemistry, we're mostly talking about electrification. Is that right?

Maria Galluci: Right. In my story, I focused on the most emissions intensive part of ethylene production within the walls of the plant itself. That is generating high heat to crack ethane gas into ethylene molecules, which are then processed into other chemicals. This process of generating heat to crack ethane accounts for 90% of the carbon dioxide emissions associated with an ethylene steam cracking facility.

I focused on initiatives to electrify that portion. But you're completely right that a huge part of the lifecycle emissions of ethylene and all chemicals come from the fact that they are oil and gas feedstocks. Even electrification can't fully address some of these other issues that come with ethylene and plastics more generally, and that is they generate a lot of toxic air pollution, they generate a lot of plastic waste that ends up in waterways, in our bloodstreams, et cetera.

Stephen Lacey: I thought the approach to this sector was interesting because it's very small in terms of actual heat trapping gases compared to some of these other industrial sectors, but it's an industry, it's a sector that's only just now toying with decarbonization and electrification. You quote one expert who said, "If you had mentioned electrification in the chemical industry a few years ago, no one would've taken it seriously." But that's changed pretty dramatically. So starting to see some shifts there.

Let's turn to steel now. Maria, you were on the show a couple of weeks ago and we talked in-depth about the different methods for producing green steel and the efforts to procure more green steel to actually create demand. You and Jeff took a look at the different elements of clean steel production. Maria, why don't you just give us a quick overview, and then Jeff, I want to turn to you about some of the production methods that you looked at.

Maria Galluci: Sure. The steel industry is responsible for as much as 9% of CO2 emissions worldwide every year. The majority of those emissions come from the blast furnaces and the basic oxygen furnaces, which heat and process coal products, fossil fuels to essentially turn raw iron ore into iron that becomes steel that becomes the high strength material in buildings and cars and bridges and roads and many, many things. That's, when you think about cleaning up steel or decarbonizing steel, really the big question is what do you do to get away from the blast furnaces and basic oxygen furnaces?

Jeff St. John: I looked at a particular approach to creating, not green steel per se, but green iron, the precursor to feeding into an electric arc furnace. This particular process is called electrowinning. It's essentially putting metal oars into a solution and then zapping it with electricity in a way that separates out the pure metal molecules from everything else that's in the ore.

Electrowinning is used today to process copper, nickel and zinc. Iron has been a much tougher climb. There are a lot of complex scientific reasons why iron is harder to electrowin out of solution than other metals. But this company called Electra, out of Boulder, Colorado, is working on a process that it's piloted showing that it can get pretty pure iron, like 99 point odd percent pure, out of this electrolysis process.

There's some other companies working on it as well and a big consortium in Europe. The idea there is that you could not only get pure iron to feed into these electric arc furnaces to make steel, but you could maybe process even lower quality iron ores than are practical to process today using basic oxygen furnaces or the direct reduction of iron process using hydrogen, which is the big way that people are talking about doing green steel today.

Stephen Lacey: I know that Electra raised a bunch of money from Breakthrough Energy Ventures and Amazon and some other investors. What are they promising right now and how close to commercialization are they?

Jeff St. John: Well, they're working on a pilot plant. They say the technology works. There are some other folks, actually Fortescue, the big iron mining and hydrogen giant out of Australia, has mentioned that it has a process, which sounds something similar to electrowinning for making pure iron.

I guess the question about commercialization is how do you scale that up and how does the iron and steel industry see its value? It's interesting that you can build these things on a modular basis, like batteries. You line up a whole bunch of these things and you produce iron out of them. That can be done at much lower temperatures and you can go as big as you want to go, which is different than building a big old direct reduction of iron plant.

Then, if you can find a business case for using those lower quality iron ores, that could be a real selling point, but it's going to take a significant commitment of capital from somebody who's in the iron and steel business to answer that question.

Stephen Lacey: Jeff, a very important part of this, did they come up with the term electrowinning? That just seems like a great brand, a great thing to put out into the market. Very positive, but where did that name come from?

Jeff St. John: They did not come up with electrowinning. That's the term of art that has evolved from this ongoing area of research and technology that's been around for hundreds of years, actually. But the resulting metals are said to be electrowon. I guess if you want to be winning, it's a great technology to bank on.

Julian Spector: I think we all want to be electrowinning.

Stephen Lacey: Definitely. Then in theory, they can take this iron that they're creating through the electrowinning process and feed it into electric arc furnaces. Then those electric arc furnaces can be run with renewables, right? That's the idea.

Jeff St. John: Indeed. That is also the idea behind direct reduction of iron using hydrogen as well. The big shift is from those big blast furnaces which burn a lot of coal to the electric arc furnaces, which run on electricity.

Stephen Lacey: That mention of hydrogen brings us to Julian, who took a look at the green hydrogen market or the lack there of. Significant promises, significant plans to develop green hydrogen projects, but not a lot of demand out in the market right now. What did you find in terms of where the hydrogen market stands and where it could potentially benefit some of these industrial applications in the near-term?

Julian Spector: I was able to let my colleagues do the hard work of figuring out why specifically these industrial pathways require a clean source of hydrogen. My job was just to find out do we have enough, where's it coming from, do we have any really? I did come around to thinking there is something happening here. I think as a skeptical reporter, a lot of the hype cycle around green hydrogen seemed pretty dubious in the last few years just because there's so much talk and no one was actually going out and building facilities to produce green hydrogen. It seemed like a way for, say, a fossil gas utility to keep investing in gas infrastructure because it could say, "Hey, one day it'll be all hydrogen. Don't worry."

What I found is today there actually are a lot of companies going out and developing hydrogen production to make money on it, just the way that there are a lot of people developing wind and solar projects or battery projects. It does seem to be the newest up and coming form of clean energy development business afoot. Then that actually got a major boost just a few days ago when President Biden announced these hydrogen hubs where the DOE is putting a total of $7 billion into these regional clusters of hydrogen production and use and transportation and distribution in different corners of America.

Now we should say there's dirty hydrogen and then a whole spectrum to very clean hydrogen. The term green hydrogen gets thrown around and it can be a little fuzzy, but at best we're talking about taking clean electricity, carbon-free electricity, running that electricity through water, through the electrolysis process, and that produces hydrogen that has very low carbon impacts.

We actually don't have capacity to do that in the US today. There's a lot of fossil-based carbon emitting hydrogen in the US today. I couldn't find any commercial scale real operation pumping out green hydrogen yet, but I found a lot of companies that are either constructing right now or about to break ground. Then a whole bunch more are moving ahead, now they know about the Department of Energy funding for those hubs.

Stephen Lacey: We also took a look at the electrolyzer market at Latitude Media recently. What we found is something similar to what you wrote about, which is a chicken and egg problem. There's a concern from project developers that there's not going to be enough demand. There's not a lot of demand because there's not a lot of production, so we're stuck in this holding pattern. Are you hearing the same thing?

Julian Spector: I think we're going to break out of that pretty soon. Today, it's been hard for the people who make the electrolyzers to produce a ton of electrolyzers because if there's no one actually using electrolyzers in the US, who do you sell to? Although there is some happening in Europe and elsewhere in the world. But basically, there's now so many developers who are buying up whatever electrolyzers they can get their hands on that I think that's starting to give much more of a signal to the manufacturers to ramp up their production.

Then on the other side of it, you need the industrial customers to say, "Hey, I want to buy the hydrogen, the carbon-free or very low-carbon hydrogen." That's another chicken and egg problem because, like we talked about, there's people talking about substituting hydrogen to reduce the iron ore to make the green steel, but no one's doing that in a big commercial way yet. You can't really sell your green hydrogen to green steel makers until they're ready to use it.

One interim route I found is there is a market today for vehicles, for hydrogen fuel cell vehicles that need liquid hydrogen. It turns out the price point for liquid hydrogen today is significantly higher than the gaseous industrial hydrogen that's produced by fossil fuels in Houston and the Gulf Coast and stuff. A few of the companies like L'Air Liquide and Plug Power are constructing their green hydrogen today to sell it as a liquid for the fuels market where they think they could be much more competitive against the higher priced market that exists for that right now.

Stephen Lacey: Let's turn to the last sector that y'all are covering, and then I want to dig deeper into each of these, cement and concrete. I had a good friend who ran a concrete business and he poured foundations and sidewalks and stuff. If you ever called what he was pouring cement, he would get very upset because the final product is concrete. But cement is a very important part of the full concrete mix, and it is the most emissions-intensive piece of concrete. I know that, Jeff and Maria, you both looked at different parts of the cement and concrete business.

Maria, why don't you start and tell us a little bit about why cement itself is so emissions intensive?

Maria Galluci: Sure. You're totally right about the wording. This is a tricky industry to cover because there are so many different phrases. As somebody who's outside the cement/concrete industry learning a lot and trying not to put my foot in my mouth. But in general, the cement concrete are responsible for about 8% of human-caused CO2 emissions every year. About 40% of those emissions come from burning fossil fuels to heat the kilns. The other 60% comes from the chemical process of calcination. That's when limestone in the cement is heated, it breaks down, it releases its calcium oxide in its CO2 and the CO2 goes into the atmosphere. That's so tricky about cement is that that CO2 is literally baked into it and then released into the atmosphere. The challenge then is to find ways to either reduce the use of cement or make cement with different materials so that you're not having that challenge.

Jeff St. John: Maria summed it up well. Calcium carbonate, i.e. limestone CaC03, is roughly speaking half carbon dioxide by weight. The way you reduce the carbon impact of cement is, in some ways, to reduce the reliance on the core material and process of cement making that's been the main way that we've all made cement for hundreds of years. Well, about 150 years to be precise. But there's some real high hopes of getting at least, roughly speaking, a third to a half of that emissions down significantly in relatively short order and with not just relatively low cost, but perhaps some value premiums to the industry.

I was talking to Vanessa Chan at DOE'S Office of Technology Transitions. DOE put out this liftoff report on cement that pointed out that there are some really short-term methods to essentially reduce the amount of Portland cement. That's the core material, the limestone dried material that Maria described, with alternative materials, essentially. They're called supplementary cementitious materials sometimes or clinker substitutes because clinker is the stuff, the CaCO that comes out of the kilns, with other stuff. You can do it right now by just adding ground up limestone in 10% to 15% proportions to the amount of cement you're putting out there to the market.

You can add fly ash, the stuff that comes out of coal plants. You can add steel slag, the stuff that comes out of steel blast furnaces. You can add different types of clays that you pull out of the ground. By reducing the proportion of Portland cement that goes into your cement mix, you're reducing the carbon emissions that is tied to the amount of that cement you put in.

These supplementary cementitious material processes don't just cut the amount of embodied carbon, depending on the type of technology you're using, by 10% to 20% to 30%, maybe sometimes even 40%, they can also give you a cost and value premium. DOE's liftoff report says that you're going to have to spend 5 to 10 billion in capital investment through 2030 to get that full value here in the US, but it could yield like a billion dollars a year and basically cost benefits for the industry if they do it.

Julian Spector: Jeff, I was curious. I mean no one wants their building to fall down or be structurally weakened to reduce 20% of the carbon emissions, but how do you convince the building industry to really pick up these new lower carbon options, and do you need to see a building standing around for years and years before people start to trust the newer materials?

Jeff St. John: It's a combination of real world experience and the imprimatur of these standards entities that really does it is what folks I talked to told me. You're absolutely right that you don't just go changing your cement recipe willy-nilly. There's more than just strength. There's durability, there's set time, how long it takes between when you pour it and when it hardens to the point where you can start building the thing you wanted to build on top of it.

I mean, one of the points that Rebecca Dell made is that cement costs are about maybe 2%, 3%, 4% of an overall building cost. The cost of labor and the time it takes to build a building are a lot higher than that. You could have a much lower carbon cement, but if it takes three to five times as long to set, which allows you to move on to the next step, it might be a no-go for a construction company.

Maria Galluci: Also, for this year's we looked at Justin talking a lot about the solutions that are increasingly available today, and there's also a lot of next generation approaches as well. Companies like Prometheus Materials looking at algae, of course, I guess, the unicorn of the clean energy world. Other companies, like Forterra, are trying to mimic these natural biological processes that coral reefs, oysters use to create their own shells. They're trying to do that in a lab essentially to make the calcium carbonate or the calcium-rich materials that can then become or used in cement.

Jeff St. John: I talked about the half that was relatively short-term and lower cost to do, the other half of cement emissions is going to be a much tougher lift. DOE's liftoff report separated those into two broad categories. One is carbon capture and utilization and sequestration. Basically, capturing and preventing the carbon that's emitted from the traditional cement making process from getting into the atmosphere. That's a whole realm of endeavor that we are going to be talking about for all kinds of emitting industries and processes. It comes with a bunch of well-known challenges.

The other option is what Maria was talking about, all these alternative production methods and alternative binder chemistries. Basically, different ways to make the cement we make today and different cements to make using a variety of different processes. Those are going to be tough for all the reasons we mentioned. People are leery of new cement types, chemistries, recipes. They're leery of making big investments in an entirely new process that hasn't been tested against the very tough economics of cement production today. But there are some significant pilot projects going on at this point, and it will be very interesting to see how the big cement majors pick up on this in the next couple years.

Stephen Lacey: I think you summarized the barriers well, high capital costs, long lifetime of equipment, tight margins. An industry, like in the power sector, that's slow to change. But when things happen, they can happen fairly fast. I'm curious, as you've all outlined these sectors, you've painted some of the solution sets, is there anything that jumped out at you in your reporting that was near-term, you felt like this could happen quickly? Are there any solution sets that are much further in the distance and have a much greater problem with adoption?

Julian Spector: Well, I came away feeling a bit more bullish on low-carbon clean hydrogen's ability to compete in the near-term because I came at it with this general understanding that you see mentioned a lot that current fossil-based, methane-based hydrogen production is super cheap. Rule of thumb people say in the vicinity of a dollar per kilogram, and that doing it cleanly is going to cost many times more than that, like five more times or something, and that the clean producers are really scrambling up a steep hill.

But what I found from talking to people who are actually trying to make green hydrogen to make money off of it is it's not such a scary economic challenge. For one thing, the credits in the Inflation Reduction Act go up to $3 a kilogram. We're still waiting on the highly contentious rules to say who exactly qualifies for the highest levels of cleanliness. That brings you pretty close to the fossil.

Then, like I mentioned, the liquid hydrogen market isn't even really a market today. It's a handful of legacy producers. It's tough to be a customer buying it because there's just not a lot of options. If you have a bunch of people coming in and starting to make new hydrogen to sell to trucking or you've got forklifts, like Plug Power does, that's great. There's demand for that already. You have people like Amazon and these big industrial people already exploring hydrogen-powered vehicles for their operations with a lot of buying power.

Then at the end of the day, most of the fossil-based hydrogen isn't really getting sold out to the market anyways. It's being created in these petrochemical hubs and then put right back into refining or chemicals processes. It's in some ways a mythical opponent because the places where the super cheap hydrogen is being made aren't necessarily a place you could go and buy it for one of these industrial processes. And, if you're trying to clean up your steel so you can sell green steel, you can't buy the super cheap, dirty stuff anyways.

I came away thinking there's actually more near-term traction based on price for green hydrogen. Then there the people trying to make a living on it say they're eventually going to be the cheapest fuel ever. They're going to be cheaper than diesel and cheaper than all these other options. I can't speak to that yet, but there's potential that it'll run away faster than we expect.

Stephen Lacey: Maria, across the different sectors that you're covering, what jumps out at you as a solution with the nearest term commercial potential and what is a solution that feels pretty distant and difficult?

Maria Galluci: Well, it feels funny to call hydrogen-based steel making nearest term, but I think I was really interested to learn in my reporting that from a technology standpoint, the pieces are there. There's the hybrid project in Sweden is already making steel using 100% green hydrogen. Other projects are in the works. There's about 40, a few dozen in the works. That was interesting to me to learn that it's not necessarily a technology hurdle, although there are some things to be ironed out there. Obviously, the main challenge then is, as Julian was mentioning, making enough of the green hydrogen, getting it to where people need it, and then creating the market to justify making these expensive investments and paying more for the green steel.

Farther out on the horizon, we talked earlier about my story on electrifying ethylene steam crackers. While there are a handful of interesting initiatives in the works, they're very early stage. There are so many technical challenges beyond just how do you produce huge amounts of heat with electricity that still need to be ironed out. It's still unclear to me what will encourage companies to actually pursue these projects. Obviously, chemical companies, like every company's under pressure to achieve net-zero emissions, but it's not clear if this path will actually pan out for decarbonizing ethylene production at least.

Stephen Lacey: Jeff, what about you?

Jeff St. John: The alternative supplementary cementitious materials, it just seems like such a huge opportunity that is largely hinging on inertia to be relieved in order for it to be really picked up in a big way. There are a lot of ways to drive down the emissions intensity of cement. There's closed loop options as well. I think Maria covered a company that is re-injecting captured carbon into concrete, which is of course cement plus a bunch of rocks and aggregates and other stuff. That can actually harden the concrete and improve its structural integrity and capture carbon for a long time. There are some really interesting options for full-circle carbon reduction and sequestration involved in that.

I would say that the harder sells are the brand new processes that we're talking about, some of the brand new processes for making cement, some of the brand new processes for electrowinning iron. They offer a lot of promise and there are good economic reasons to pursue them as well. But once again, it's that question of getting these enormous global industries to really invest in retooling their capital plant to go after this. That's going to be tough.

Julian Spector: I think a key part of that is just how massive a scale these players operate at. That was something I noticed visiting Houston earlier this year is these are just massive, massive complexes. If you have a cool new technology and you've piloted it at a tiny lab bench scale, there's such a long way to go before it's even just physically big enough to be interesting to these big chemical or industrial facilities. At that point, it's also such a huge capital commitment that there has to be really clear benefits for them to just bother to overhaul such a big endeavor.

Stephen Lacey: I'm just curious if you can characterize the kinds of solutions providers that are operating in these different spaces. I mean, are they mostly just like teams of engineers who've raised $50, $100 million from Bill Gates and are working on some fancy technology that they hope to drop in? Is there a lot of sales and development happening or is it mostly just technological innovation? Does anyone want to characterize some of the commercial landscape a little bit more in terms of companies operating?

Jeff St. John: I could take a crack for cement real quick, cement and concrete. First of all, about half the world's global cement production takes place in China. There are some very large companies there. There are a couple of really large global cement producers, Holcim, Cemex, Heidelberg Materials. There are a wide array of smaller scale players in the cement production industry.

Then when you get to concrete, the whole chain from cement to actually building stuff with it is really quite diverse and in some markets quite fragmented. I'm sure you all have driven by the ready mix concrete sites along the highway. You got to build those pretty close to where your construction markets are. There are a lot of them. Some of them may be owned by the same companies that make cement. Some of them may be essentially mom and pop operations. There's a pretty fragmented industry.

Then, of course, you've got the thousands upon thousands of contractors and buyers of this stuff, but there's some important distinctions to be made there. Roughly half the cement that's used in the United States, for example, is contracted by governments to build essentially roads in public works. There's a real interesting point at which you can focus policy interventions to get governments to set essentially clean building standards or clean building material standards and not just sticks forbidding people from selling you stuff that has a higher carbon emissions impact than you want, but really carrots as well, giving people incentives to produce the lower carbon stuff.

Rebecca Dell at ClimateWorks pointed out the real value of putting pressure on the demand side because you can make this stuff anywhere in the world within certain limits of cost of transport and energy. If you want to avoid regulations, you can probably move to different places and keep making dirty stuff. If you can get the demand side, the buyers to really offer compelling premiums for lower carbon stuff, combined of course with a rigorous process by which one affirms that these low-carbon products are in fact coming with a lower embodied carbon footprint, that can be a real way to drive the investments we're talking about. She's written posts and papers about why this is a really compelling proposition for cleaning up industry.

There are, what, 90, 85, 90 million households in the US. Replacing every gas heater and every household is a pretty big pull. If you can get at a couple hundred major industrial producers and get them to change, that's a big hit right there. It's a cohesive, coherent approach to driving down a lot of big emissions really, really centrally.

Julian Spector: The supply ecosystem for hydrogen, there's a few different camps there for the electrolyzers. There's a bunch of these legacy equipment manufacturers like Siemens or Cummins. They've been around for ages. They make electrolyzers among the many other things they make. Then there's a crop of new startups that are trying to create new, better electrolyzers. One's called Electric Hydrogen that's raised a bunch of money, but there's a few others like that.

Then some of the people who are out actually building hydrogen production have gone vertically integrated. Plug Power claim to fame was selling all the hydrogen-powered forklifts for Amazon in 2017, but now they have started building their own green hydrogen production to supply lower cost hydrogen to their customers. They also acquired an electrolyzer company. They're able to manufacture their own electrolyzers, sell it to other people if they want, or just put them into their own projects.

I think that's the spread. You've got the legacy ones, you've got the new startups trying to build a better tech, and then the integrated developer manufacturer model.

Stephen Lacey: Maria, over to you. Why don't we talk about steel since we've covered the others?

Maria Galluci: Sure. I would say in general the steel industry is characterized by these large legacy players. In the United States, U.S. Steel and Cleveland-Cliffs are actually the only two companies that still operate blast furnace and basic oxygen furnaces. But there are a handful of other companies that operate these electric arc furnaces using scrap metal. Nucor being one of them. Nucor is actually America's biggest steel supplier.

Then you have a whole range of equipment manufacturers. Midrex is a company that makes these direct reduced iron plants. In terms of the startup space, obviously Boston Metal, Electra are ones that stand out, but my sense is that right now that a lot of the innovation is happening right now among these established companies with support from government programs. If you're talking about Europe especially, a lot of those projects are funded through European Union funding or state-sponsored initiatives.

Stephen Lacey: I want to talk about some optimism here to round out the show. We've outlined some pretty interesting solutions, but some very clear barriers to getting those solutions implemented. But in industry, when you have a limited number of players, as you said earlier, Jeff, if you can get a limited number of players to change their process, change their materials, you can have a huge impact across industry. At some point we'll see an inflection point. Can you outline a technological trend or a business shift that gave you optimism in your reporting around solutions in the industrial space?

Julian Spector: I was sensing a surprising amount of optimism on the hydrogen front. I mean, maybe I'm an optimistic person, but it seems like we're about to cross this line from there really being no industrial scale clean hydrogen production in the US to there being a bunch in the next two, three years even. I mean, yeah, a few projects could be done by the end of the year, but then there's a bunch more breaking ground next year. I talked to some folks like Hy Stor is planning to spin up a whole new clean industrial complex in Mississippi for 2026 where they say they have industrial customers who want the green hydrogen by then. They need to start building. They're going to store it in caves underground and stuff. Yeah, it's like shovels going into the ground in a way that was never true before. I think that's just a fundamentally new chapter for this industry.

Jeff St. John: On the cement side, there's so much opportunity, as I mentioned, for getting some really significant gains in reducing carbon intensity of cement with these relatively low cost or even cost advantaged options having to do with not just replacing a portion of that cement with other stuff that can improve the structural integrity of it, but also in fundamental energy efficiency. I talked to Holcim that's actually powering its electrical processes with renewable energy at some places.

There are some real short-term gains that are available right now, but also some of these next generation cement chemistries and processes are getting ready to start piloting production right now. Forterra's making its coral-inspired product right now at a plant in Redding, California and is going to start being ready to bring it up to market for some early-stage opportunities in non-structural concrete next year. The process of building a pilot plant to getting your new material or new process certified by the relevant bodies to getting it into those early projects is going to be happening. We're going to be able to watch it unfold.

Maria Galluci: I'd say one thing that gives me optimism is just the amount of public and community engagement around green steel in terms of advocates and organizations starting to put pressure on automakers, for example, to procure more green steel and bringing this issue out of relative obscurity and making it more central in these conversations about the clean energy transition. I think that's been really interesting to see how much engagement and interest there is beyond the industrial energy expert side, but actually making this a very real thing.

Julian Spector: I think if we back up like say 10 years, the conversation then was, okay, the solar, wind, electric vehicles, they seem promising. Then, ooh, industrial, who knows? Who even knows? I do think to come to this point where steel companies actually have begun building green steel, even at small scale and cement makers have all these different options on the menu, that's very different from where we were I think a decade ago, maybe even five years ago in the big picture sense that solutions are out there.

Stephen Lacey: Well with that, great series, guys. This is Tough Stuff Week over at Canary Media. Go check out their stories over there. They'll be rolling out these pieces throughout the week. We'll reference many of them in the show notes. Maria Galluci, Jeff St. John, Julian Spector, thanks so much.

Maria Galluci: Thanks, Stephen.

Julian Spector: Bye.

Stephen Lacey: The Carbon Copy is a co-production of Latitude Media and Canary Media. This episode was produced by me with help from Delvin Obawaje. Sean Marquand is our engineer. Our theme was produced by Sean Marquand. Latitude Media, supported by Prelude Ventures, a venture capital firm that partners with entrepreneurs across a range of sectors including energy, food, agriculture, transportation, logistics, advanced materials, manufacturing and advanced computing.

Hook us up if you like these conversations with a rating and review on Apple or Spotify. You can always find us all on social media. We're still out there posting links talking about this stuff. Let us know what you think and send a link to your friend or colleague if they would like this show. We're so grateful to have you here.

I'm Stephen Lacey. This is The Carbon Copy.

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energy transition
steel
cement
chemicals
manufacturing
green hydrogen