Hard-to-abate sectors cut emissions, but net-zero 2050 requires urgent action

By Energy Connects

Dec 19, 2024

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:

Catalysing investments through incentives and returns

The why

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.

The what

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.

The how

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.

carbon emissions Hard to abate net zero goals low carbon