Low-carbon fuels refer to materials that, when burned, provide thermal energy with fewer emissions than fossil fuels. This thermal energy is often used to generate electricity for industrial facilities, such as in combined heat and power systems.

Fossil fuels have traditionally been the main source of thermal energy in American manufacturing. They are energy-dense, meaning they store a significant amount of energy per unit of volume or mass, which makes them easy to store and transport. Releasing the energy stored in these fuels through combustion has historically been be the most economic way to produce the large amounts of heat needed for industrial processes. However, combustion releases carbon dioxide and other pollutants that negatively impact the health of local communities.

Alternatives to fossil fuel combustion for industrial applications potentially include zero-carbon fuels, such as hydrogen or ammonia, and low-carbon fuels, such as biofuels made from plant waste or algae, paired with carbon capture to prevent any released carbon from escaping into the atmosphere. Biofuels are potentially a promising alternative to fossil fuels in processes, such as steel making, where both energy and a sustainable source of carbon–which is incorporated into the final product–are necessary to create a zero-carbon product.

There is also an opportunity for industrial sites to replace fuels entirely with cost-effective low- and zero-carbon energy sources. Rather than burning fuels, industrial sites can directly use nuclear, geothermal, solar thermal power, and a variety of other clean energy sources.

Decarbonization requires finding ways to deliver industrial heat without allowing carbon to escape into the atmosphere.

Integrating alternative low- and zero-carbon fuels creates a unique set of challenges for existing industrial facilities. For example, hydrogen combustion can generate high levels of nitrous oxide emissions and altered heating profiles compared to fossil fuel combustion. Therefore, retrofits or redesign of equipment and process is needed to ensure product quality with comparable emissions for these novel combustion systems.

Integrating low- and zero-carbon energy sources, such as geothermal heat or solar thermal power, typically requires installing new capital equipment to support energy collection, transportation, and storage and is generally untested at an industrial scale. Moreover, in a globally competitive marketplace, it is difficult for operators to incur the cost of replacing functional, gas-fired equipment before its end-of-life. For this reason, in addition to funding R&D to lower the costs of deploying these technologies, the U.S. Department of Energy's Industrial Efficiency and Decarbonization Office provides technical assistance to industrial facilities aiming to integrate onsite zero-energy resources into operations through its on-site energy program.