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LPO Tech Talk: Industrial Decarbonization

This Tech Talk highlights how LPO is working to support deployment of industrial decarbonization solutions in the United States to facilitate the transition to a clean energy economy.

Loan Programs Office

September 18, 2023
minute read time

The Department of Energy’s (DOE) Loan Programs Office (LPO) is working to support industrial decarbonization throughout the U.S. to achieve the nation’s climate goals. Accelerated by incentives in the President's Bipartisan Infrastructure Law and the Inflation Reduction Act, consumer pressure, and first movers in the private sector, industrial decarbonization will be important for the shift to a net-zero economy by 2050.

LPO can support decarbonization projects across industries, serving as a bridge to bankability for breakthrough projects and technologies and de-risking them so they can be developed at commercial scale and achieve market acceptance.

Why Industrial Decarbonization?

Achieving the Biden-Harris Administration’s goal of a net zero economy by 2050 will require between 700 billion and one trillion dollars of public and private sector investment in industrial decarbonization, as well as strong demand signals for low-carbon products, according to DOE’s recently published Industrial Decarbonization Liftoff Report.

Emissions from eight industrial sectors—chemicals, refining, iron and steel, food and beverage, cement, pulp and paper, aluminum, and glass—account for about 14% of total U.S. emissions. Most of those emissions come from producing heat for industrial processes, processing materials that release carbon dioxide, and generating electricity.

Specific industrial decarbonization levers vary across industrial sectors and in technological maturity and cost. Innovative low-carbon industrial technologies and processes are emerging but will require considerable investment to reach technological and commercial maturity. Electrification, which eliminates the need to burn fuel, and increased energy efficiency, which reduces overall energy needs, are also projected to play notable roles. Abating remaining emissions may also require scale-up of carbon capture, utilization, and storage (CCUS), although breakthroughs and cost reductions in innovative technologies could minimize that need.

The federal government has introduced incentives to accelerate industrial decarbonization. Incentives include the 48C Advanced Manufacturing Tax Credit, tens of billions of dollars in available funding for industrial decarbonization research, develop, demonstration, and deployment, and the Industrial Heat Shot and Clean Fuels & Products Shot category of the DOE’s Energy Earthshots Initiative. Customers expect companies to seize these opportunities to address emissions, and some companies are making bold moves to accelerate commercialization of decarbonization technologies with public sector incentives.

However, there are numerous barriers to industrial decarbonization. Challenges include a small portfolio of existing technologies ready for commercial deployment, high cost and complexity of implementation, high cost of capital, lack of competitive short-term returns, and absence of enabling infrastructure.

LPO has a critical role to play in reducing these barriers for technologically mature and commercially ready projects across industrial sectors including chemicals, refining, iron and steel, food and beverage, cement, pulp and paper, aluminum, and glass. LPO can finance early deployments of innovative technologies and processes, continuing to lower costs and de-risking projects and technologies to pave the way for subsequent projects and follow-on investors.

Possible projects may include, but are not limited to, industrial decarbonization via:

  • Raw material substitution: Using alternative raw materials that reduce lifecycle carbon emissions of the industrial product. Examples: clinker substitution to reduce carbon intensity of cements, using recycled or bio-based materials
  • Alternative production methods: Using innovative processes to reduce carbon emissions from production. Examples: Low-temperature processes, mechanical separations, novel chemistries
  • Industrial electrification: Electrifying industrial processes that currently depend on fossil fuels, especially alternatives for fossil fuel derived heat
  • Clean onsite generation and storage: Building small modular reactors, siting renewables and storage, or employing other methods to ensure reliable, low-carbon energy is available on site to power industrial processes
  • Energy efficiency: Retrofitting or building industrial facilities to operate more efficiently
  • Clean hydrogen: Retrofitting or building industrial facilities to operate on clean hydrogen instead of fossil fuels, or producing clean hydrogen for industrial use
  • Alternative fuel (non-hydrogen): Retrofitting or building industrial facilities to operate on alternative fuels, or producing alternative fuels for industrial use
  • Carbon capture and storage: Retrofitting existing facilities to capture point-source carbon emissions, especially on high purity streams

LPO Authorities That Can Support Industrial Decarbonization Projects

LPO can finance industrial decarbonization projects through several avenues:

Decarbonizing industry will be critical to achieving the nation’s climate goals. Let LPO partner with you to make your project a reality.

Next Steps

To learn more about how LPO could support your industrial decarbonization project, please request a no-cost pre-application consultation. During the consultation, LPO will work with you to determine whether the project is eligible for financing. 

To learn more about how DOE supports industrial decarbonization, visit Industrial Technologies | Department of Energy.

 

 

Contributors: Sam Goldman, Katheryn ("Kate") Scott (OTT), and Maressa Brennan (OCED)

 

Michael Reed

Photo of Michael Reed, Director, Technical and Project Management Division, Loan Programs Office

Michael Reed is the Director of the Technical and Environmental Division (TED) for the Department of Energy’s Loan Programs Office (LPO).  In this role, he provides technical management and performance monitoring of LPO’s $30 billion portfolio of clean energy projects. This portfolio includes projects in renewable energy and energy efficiency, advanced technology vehicle manufacturing, advanced fossil, nuclear, and related transmission infrastructure. Mr. Reed also oversees the technology evaluations of new applications submitted under open LPO solicitations.

Mr. Reed has over 30 years of diverse technical and leadership experience, serving as a senior executive and chief engineer in both the private and government sectors. Prior to joining LPO, Mr. Reed was the Chief Engineer of the U.S. Department of Energy’s Water Power Program, and the Vice President of Engineering for numerous defense and energy consulting companies. He has served in the U.S. Navy and the Naval Sea Systems Command, working on advanced power and propulsion systems. 

Mr. Reed earned his BS in Engineering from the US Merchant Marine Academy, and an MS in Environmental Science and Policy from The Johns Hopkins University.

Tags:
  • Industrial Decarbonization Technologies
  • Inflation Reduction Act
  • Clean Energy
  • Bipartisan Infrastructure Law
  • Decarbonization